10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

OR

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     .

Commission File Number: 001-37490

Sierra Oncology, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-0138994
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Sierra Oncology, Inc.

c/o 2150 – 885 West Georgia Street

Vancouver, British Columbia, Canada V6C 3E8

(Address of principal executive offices and zip code)

(604) 558-6536

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes   ☒    No   ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes   ☒    No   ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☒

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐    No   ☒

As of May 6, 2019, there were 74,688,283 shares of the Registrant’s Common Stock outstanding.

Securities registered pursuant to Section 12(b) of the Act:

(Title of class)	(Trading Symbol)	(Name of exchange on which registered)
Common Stock, $0.001 par value	SRRA	The Nasdaq Stock Market LLC

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets		2
Condensed Consolidated Statements of Operations		3
Condensed Consolidated Statement of Stockholders’ Equity		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures About Market Risk		21
Item 4. Controls and Procedures		21
Part II. Other Information
Item 1. Legal Proceedings		22
Item 1A. Risk Factors		23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 3. Defaults Upon Senior Securities		23
Item 4. Mine Safety Disclosures		23
Item 5. Other Information		23
Item 6. Exhibits		23
Signatures		24

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (Quarterly Report) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and section 27A of the Securities Act of 1933, as amended (Securities Act). All statements contained in this Quarterly Report other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q. These forward-looking statements may include, but are not limited to, statements regarding our future clinical development activities, expected timing and results of clinical trials, future results of operations and financial position, our business strategy and plans and our objectives for future operations. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements to conform these statements to actual results or to changes in our expectations, except as required by law. You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

As used in this Quarterly Report on Form 10-Q, the terms “Sierra Oncology,” “the Company,” “we,” “us” and “our” refer to Sierra Oncology, Inc., a Delaware corporation, and its subsidiaries taken as a whole, unless otherwise noted. Sierra Oncology is our registered trademark. The “Sierra Oncology” logo and all product names are our common law trademarks. This Quarterly Report may contain additional trade names, trademarks and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

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PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SIERRA ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

	March 31, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	90,908		$	106,046
Prepaid expenses and other current assets		3,699			2,706
Total current assets		94,607			108,752
Property and equipment, net		150			168
Operating lease right-of-use asset		716			—
Other assets		622			549
TOTAL ASSETS	$	96,095		$	109,469
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued and other liabilities	$	6,619		$	8,812
Accounts payable		619			1,287
Total current liabilities		7,238			10,099
Term loan		4,763			4,891
Operating lease liabilities		503			—
TOTAL LIABILITIES		12,504			14,990
Commitments and Contingencies (Note 8)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of March 31, 2019 and December 31, 2018; nil shares issued and outstanding as of March 31, 2019 and December 31, 2018		—			—
Common stock, $0.001 par value; 500,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 74,688,283 and 74,365,965 shares issued and outstanding as of March 31, 2019 and December 31, 2018		74			74
Additional paid-in capital		773,961			771,817
Accumulated deficit		(690,444	)		(677,412	)
TOTAL STOCKHOLDERS’ EQUITY		83,591			94,479
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	96,095		$	109,469

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

SIERRA ONCOLOGY, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2019			2018
Operating expenses:
Research and development	$	10,137		$	8,334
General and administrative		3,365			3,420
Total operating expenses		13,502			11,754
Loss from operations		(13,502	)		(11,754	)
Other income, net		325			272
Loss before provision for (benefit from) income taxes, net		(13,177	)		(11,482	)
Provision for (benefit from) income taxes, net		(145	)		43
Net loss	$	(13,032	)	$	(11,525	)
Net loss per common share, basic and diluted	$	(0.17	)	$	(0.19	)
Weighted-average shares used in computing net loss per common share, basic and diluted		74,485,295			59,722,743

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIERRA ONCOLOGY, INC.

Condensed Consolidated Statement of Stockholders’ Equity

(unaudited)

(in thousands, except share data)

	Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance—December 31, 2018		74,365,965	$	74	$	771,817	$	(677,412	)	$	94,479
Issuance of common stock for exercise of stock options		322,318		—		445		—			445
Stock-based compensation		—		—		1,699		—			1,699
Net loss		—		—		—		(13,032	)		(13,032	)
Balance—March 31, 2019		74,688,283	$	74	$	773,961	$	(690,444	)	$	83,591

	Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance—December 31, 2017		52,395,223	$	52	$	718,751	$	(624,077	)	$	94,726
Issuance of common stock for exercise of stock options		64,458		—		101		—			101
Stock-based compensation		—		—		1,499		—			1,499
Issuance of common stock, net of offering costs of $3.2 million		21,850,000		22		45,974		—			45,996
Net loss		—		—		—		(11,525	)		(11,525	)
Balance—March 31, 2018		74,309,681	$	74	$	766,325	$	(635,602	)	$	130,797

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIERRA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,032	)	$	(11,525	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,699			1,499
Depreciation and amortization		62			29
Other		(26	)		41
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(1,003	)		(795	)
Accrued, other and operating lease liabilities		(2,599	)		(1,261	)
Accounts payable		(667	)		(597	)
Net cash used in operating activities		(15,566	)		(12,609	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(14	)		—
Net cash used in investing activities		(14	)		—
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon follow-on offering, net of offering costs		—			45,996
Proceeds from exercise of common stock options		445			101
Net cash provided by financing activities		445			46,097
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(3	)		(20	)
NET INCREASE / (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(15,138	)		33,468
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period		106,346			100,536
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	91,208		$	134,004
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for (refund of) income taxes, net	$	(29	)	$	73
Cash paid for interest	$	81		$	—
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Right-of-use asset obtained in exchange for operating lease obligation	$	771		$	—
Property and equipment purchases included in accrued and other liabilities	$	—		$	21
Offering costs included in accrued and other liabilities	$	—		$	209

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SIERRA ONCOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. The Company and Basis of Presentation

Organization and Description of Business

Sierra Oncology, Inc. (together with its subsidiaries, collectively referred to as the “Company”), a Delaware corporation, is a clinical stage drug development company advancing targeted therapeutics for the treatment of patients with unmet medical needs in hematology and oncology. In August 2018, the Company acquired its lead drug candidate, momelotinib, a potent, selective and orally-bioavailable JAK1, JAK2 and ACVR1 inhibitor that has been investigated in two completed Phase 3 clinical trials for the treatment of myelofibrosis and has demonstrated a potentially differentiated therapeutic profile encompassing anemia-related clinical benefits, as well as achieving substantive splenic volume reduction and constitutional symptom control. The Company is also advancing SRA737 and SRA141. SRA737 is a potent, highly selective, orally bioavailable small molecule inhibitor of Checkpoint kinase 1 (Chk1), a key regulator of cell cycle progression and the DNA Damage Response (DDR) replication stress response. SRA141 is a potent, selective and orally bioavailable small molecule inhibitor of cell division cycle 7 kinase (Cdc7), a key regulator of DNA replication and involved in the DDR network.

The Company’s primary activities since inception have been conducting research and development activities, conducting preclinical and clinical testing, recruiting personnel, performing business and financial planning, identifying and evaluating additional drug candidates for potential in-licensing or acquisition, and raising capital to support development activities.

The Company has not generated any product revenue related to its primary business purpose to date, nor has it generated any income, and is subject to a number of risks and uncertainties, which include dependence on key individuals, the need to identify and successfully develop commercially viable products, the need to obtain regulatory approval for its products and commercialize them, and the need to obtain adequate additional financing to fund the development of its product candidates.

As of March 31, 2019, the Company had $90.9 million of cash and cash equivalents. The Company believes that its balance of cash and cash equivalents as of the date of the issuance of these condensed consolidated financial statements is sufficient to fund its current operational plan for at least the next twelve months though it may pursue raising additional capital through equity financings or other arrangements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and notes required for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. There were no significant changes to the accounting policies during the three months ended March 31, 2019 from the significant accounting policies described in Note 2 to the consolidated financial statements in the 2018 Form 10-K, with the exception of the policies noted below. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

These unaudited condensed consolidated financial statements and related disclosure have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2018 included herein was derived from the audited consolidated financial statements as of that date.

6

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of stock options and the warrant issued, accruals such as research and development costs, and recoverability of the Company’s net deferred tax assets and related valuation allowance. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Operating Lease Right-of-Use Asset and Lease Liabilities

On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) on a modified retrospective basis and did not restate comparative periods as permitted under the transition guidance. The Company elected the package of practical expedients as permitted, which carries forward the Company’s assessments prior to the date of initial application with respect to lease classifications, initial direct costs as well as whether an existing contract contains a lease. The Company also elected to account for lease and non-lease components separately under transition relief available.

The Company recognizes operating leases with terms greater than one year as right-of-use (ROU) assets and lease liabilities on its condensed consolidated balance sheet using the portfolio approach. Lease liabilities and ROU assets are recorded based on the present value of future lease payments over the contractual terms of the operating leases. The Company utilized its incremental borrowing rate from information available as at the date of initial adoption in determining the present value of the future lease payments. The lease liabilities and ROU asset are amortized over the term of the lease with operating lease expenses being recognized on a straight-line basis over the lease terms. Please see Note 6, Leases below for further disclosures associated with the impact of the new standard.

Stock-Based Compensation

The Company accounts for stock-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for stock-based compensation awards is the date of grant and the expense is recognized on a straight-line basis over the vesting period, which is generally the service period. The Company accounts for forfeitures as they occur.

On January 1, 2019, the Company adopted FASB ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the guidance for share-based payments issued for goods and services for employees and nonemployees. The adoption of this new accounting guidance did not have a material impact on the Company’s condensed consolidated financial statements.

3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, stock options and the warrant for common stock are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following shares of common stock equivalents were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	March 31, 2019		March 31, 2018
	(in thousands)
Options to purchase common stock		13,198,385		10,202,831
Warrant for common stock		73,529		—
Total potential dilutive shares		13,271,914		10,202,831

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4. Fair Value Measurements

The Company measures and reports its cash equivalents and restricted cash at fair value. The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	90,238	$	—	$	—	$	90,238
Restricted money market funds		300		—		—		300
Total financial assets	$	90,538	$	—	$	—	$	90,538
	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	105,224	$	—	$	—	$	105,224
Restricted money market funds		300		—		—		300
Total financial assets	$	105,524	$	—	$	—	$	105,524

Money market funds and restricted money market funds are measured at fair value on a recurring basis using quoted prices and are classified as a Level 1 input.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2019.

5. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Cash	$	670	$	822
Cash equivalents:
Money market accounts		90,238		105,224
Total cash and cash equivalents	$	90,908	$	106,046

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows.

	March 31, 2019		March 31, 2018
	(in thousands)
Cash and cash equivalents	$	90,908	$	133,829
Restricted cash included in other assets		300		175
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$	91,208	$	134,004

8

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Other receivables	$	1,487	$	751
Prepaid research and development project costs		1,050		762
Prepaid insurance		371		555
Income taxes receivable		138		163
Other		653		475
Total prepaid expenses and other current assets	$	3,699	$	2,706

Property and Equipment, net

Property and equipment, net consists of the following:

	March 31, 2019			December 31, 2018
	(in thousands)
Software	$	327		$	325
Leasehold improvements		112			112
Computer equipment		89			89
Furniture and fixtures		3			3
Property and equipment, gross		531			529
Less: accumulated depreciation		(381	)		(361	)
Total property and equipment, net	$	150		$	168

Depreciation related to the Company’s property and equipment was $21,000 and $29,000 for the three months ended March 31, 2019 and 2018, respectively.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Accrued research and development costs	$	3,995	$	4,485
Accrued employee-related costs		1,233		3,223
Accrued professional fees		704		357
Operating lease liabilities		171		—
Current portion of term loan		168		—
Accrued restructuring costs		30		33
Other		318		714
Total accrued and other liabilities	$	6,619	$	8,812

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6. Leases

In June 2017, the Company entered into an operating lease agreement to lease the office space in Vancouver, Canada commencing March 1, 2018. The lease expires on February 28, 2023 and can be extended for an additional term of 5 years.

In January 2016, the Company entered into an operating lease agreement to lease office space near San Francisco, California. The operating lease agreement expires on April 30, 2019. In September 2017, the Company entered into a sublease agreement to sublet the premises to a third party until April 30, 2019.

On January 1, 2019, with the adoption of ASU 2016-02, the Company recognized operating lease right-of-use asset of $0.8 million and operating lease liabilities of $0.7 million for these leases.

The components of lease expense and related cash flows for the three months ended March 31, 2019 were as follows:

	March 31, 2019
	(in thousands)
Operating lease cost		51
Short-term lease cost		29
		80
Operating cash flows used for operating leases	$	40

The total rent expense was $0.1 million for the three months ended March 31, 2018.

As of March 31, 2019, the weighted average remaining lease term and discount rate for the operating leases are 3.9 years and 6.5%, respectively.

As of March 31, 2019, maturities of lease liabilities due under the lease agreements are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
Remainder of 2019	$	157
2020		212
2021		216
2022		172
Total lease payments		757
Less imputed interest		(83	)
Total	$	674

In addition to base rent, these leases require payment of non-lease and non-component costs. These costs are not included.

7. Term Loan

On August 21, 2018, the Company entered into a Loan and Security Agreement (Loan Agreement) with Silicon Valley Bank (SVB), pursuant to which the Company may obtain a loan of aggregate principal amount of up to $15.0 million (Term Loans), which becomes available in three tranches, each of an aggregate principal amount of up to $5.0 million. Contemporaneously with executing the Loan Agreement, the Company drew down the first $5.0 million tranche. The second and third $5.0 million tranches may be drawn only upon the achievement of certain development milestones. Borrowings under the Loan Agreement bear interest at the greater of (i) 6.0% or (ii) a floating per annum rate 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019), with interest only due and payable monthly, until March 1, 2020, at which time interest and principal will be due and payable monthly in equal monthly payments; are subject to a final payment fee equal to 6.75% of the aggregate principal amount.

The Company may prepay all, but not less than all, of the loaned amounts subject to a prepayment fee. The Loan Agreement is secured by substantially all of the Company’s personal property, except for its intellectual property and requires the Company to maintain the lesser of $10 million or 80% of its cash and cash equivalents with SVB. The Loan Agreement contains customary covenants and customary events of default. The occurrence of an event of default could result in an increase to the applicable interest rate of 5.0%, and the consequent obligation for the Company to repay all amounts outstanding under the Loan Agreement.

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In connection with the Loan Agreement, the Company issued a warrant to SVB to purchase 73,529 of the Company’s common stock at a price per share of $1.87. The warrant was immediately exercisable, will expire on August 21, 2028, contains a cashless exercise provision and is classified as equity. If the Company is to draw the second or third tranche available under the Loan Agreement, the Company will grant an additional amount of common stock issuable upon exercise of the warrant based upon the principal amount advanced. In no event will the number of common stock issuable pursuant to the exercise of the warrant exceed 220,588 in aggregate.

The fair value of the warrant and the debt issuance costs were recorded as debt discounts and together with the final payment fee are being amortized using the effective interest rate method over the term of the loan. As of March 31, 2019, the effective interest rate on the initial tranche of the loan was 9.89% and the unamortized debt discount was $0.1 million. Amortization of the debt discount and accrual of final payment was $0.1 million for the three months ended March 31, 2019.

Scheduled payments due under the Loan Agreement, excluding the final payment fee of $0.3 million and interest payments, are as follows:

	March 31, 2019
	(in thousands)
2020	$	1,667
2021		2,000
2022		1,333
Total	$	5,000

During the three months ended March 31, 2019, the Company recognized $0.1 million of interest expense related to the Loan Agreement. The Company did not incur interest expense for the three months ended March 31, 2018.

8. Commitments and Contingencies

Asset Purchase Agreement

In August 2018, the Company entered into an asset purchase agreement with Gilead Sciences, Inc. (Gilead) whereby the Company acquired worldwide rights to the pharmaceutical product momelotinib, an investigational inhibitor of Janus kinase, together with all related intellectual property rights and certain other related assets. The Company paid Gilead an upfront payment of $3.0 million in August 2018. The Company will be required to pay Gilead milestone payments of up to an aggregate of $195.0 million upon the achievement of certain development, regulatory and commercial milestones events, including a milestone payment of $5.0 million upon the dosing of the first patient in a registrational clinical trial. These milestones will be accrued once they are considered probable of occurring. In addition, the Company is required to pay Gilead mid-teen to high twenty percent tiered royalties based upon net sales.

License Agreements

In September 2016, the Company entered into an exclusive license agreement with CRT Pioneer Fund LP (CPF) for worldwide rights, know-how and materials to develop SRA737, a small molecule inhibitor targeting Chk1, a promising therapeutic target to treat cancer. Pursuant to the agreement, the Company made a one-time upfront payment of $7.0 million to CPF in October 2016 and paid $2.0 million to CPF in January 2017 for the successful transfer of two ongoing Phase I clinical trials. Additional milestone payments of up to an aggregate of $319.5 million may become payable to CPF upon the achievement of certain developmental, regulatory and commercial milestones, and will be accrued once they are considered probable of occurring. In addition, the Company is required to pay CPF, on a product-by-product and country-by-country basis, tiered high single-digit to low double-digit royalties on the net sales of any product successfully developed.

In May 2016, the Company entered into an exclusive license agreement (Carna License Agreement) with Carna Biosciences, Inc. (Carna) for worldwide rights to develop and commercialize SRA141, a small molecule kinase inhibitor targeting Cdc7. In exchange for this exclusive right, the Company paid Carna an upfront payment of $0.9 million in June 2016. The Company will be required to pay Carna milestone payments of up to an aggregate of $270.0 million upon achievement of certain developmental, regulatory and commercial milestone events, including a milestone payment of $4.0 million upon dosing of the first patient in the first Phase 1 clinical trial for SRA141. These milestones will be accrued once they are considered probable of occurring. As of March 31, 2019, the Company had not recorded any milestone payments to Carna. In addition, the Company is required to pay Carna tiered single-digit royalties on net sales of product candidates (as defined under the Carna License Agreement).

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Legal

On November 9, 2016, a purported securities class action lawsuit was filed in the United States District Court for the Southern District of New York against the Company and certain of its executive officers (the New York Lawsuit). The New York Lawsuit was brought by purported stockholders of the Company seeking to represent a class consisting of stockholders who purchased stock between July 15, 2015 and June 6, 2016. The New York Lawsuit asserts claims under Sections 10(b) and 20(a) of the Exchange Act and seeks unspecified damages and other relief. On March 13, 2018, the United States District Court for the Southern District of New York granted the defendants’ motion to dismiss and entered a final judgment dismissing the New York Lawsuit with prejudice. Plaintiffs thereafter filed an appeal. On December 3, 2018, the United States Court of Appeals for the Second Circuit affirmed the district court’s final judgment of dismissal. The plaintiffs did not file a notice or petition for further appellate review in this matter.

On November 18, 2016, a purported securities class action lawsuit was filed in the Superior Court of the State of California for the County of San Mateo against the Company, certain of its executive officers and directors, and the underwriters for the Company’s initial public offering of its common stock. On February 9, 2017, a substantially identical putative class action suit was filed in the Superior Court of the State of California for the County of San Mateo asserting the same claims on behalf of the same putative class (the two lawsuits together, the California Lawsuits). The California Lawsuits were brought by purported stockholders of the Company seeking to represent a class consisting of stockholders who purchased stock pursuant to and/or traceable to the Company’s Registration Statement on Form S-1. The lawsuits assert claims under Sections 11 and 15 of the Exchange Act and seek unspecified damages and other relief. On August 1, 2018, all parties reached a mutually acceptable proposed resolution to the California Lawsuits by way of a mediated settlement, which is subject to final approval by the court. While the Company believes that the claims are without merit, it believes settlement will reduce the ultimate cost and distraction of further litigation. The Company does not expect its portion of the settlement amount to have a material impact on its condensed consolidated financial statements.

From time to time, the Company may become subject to other legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any other material legal proceedings, nor is it aware of any pending or threatened litigation that, in the Company’s opinion, would have a material adverse effect on the business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

9. Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans, shares reserved for issuance under the employee stock purchase plan and issued warrant.

	March 31, 2019		December 31, 2018
Outstanding stock options under equity incentive plans		13,198,385		10,504,412
Shares reserved for future option grants under equity incentive plans		1,903,372		1,945,025
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Shares reserved under warrant upon contingent events		147,059		147,059
Outstanding warrant		73,529		73,529
Total common stock reserved for issuance		16,022,345		13,370,025

10. Stock-Based Compensation

In the accompanying condensed consolidated statements of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2019		2018
Research and development	$	1,184	$	998
General and administrative		515		501
Total stock-based compensation	$	1,699	$	1,499

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Determination of Fair Value

The estimated grant-date fair values of all of the Company’s stock-based awards were calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2019			2018
Expected term (in years)		5.3 — 6.9			5.4 — 6.9
Expected volatility		91 — 94	%		88 — 91	%
Risk-free interest rate		2.5 — 2.6	%		2.7 — 2.8	%
Expected dividend rate		—	%		—	%

Equity Incentive Plans

2018 Equity Inducement Plan

In September 2018, the Company’s Compensation Committee approved the 2018 Equity Inducement Plan (2018 Plan). The number of shares available for awards under the 2018 Plan was set to 1,500,000. The exercise price of each stock-based award issued under the 2018 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. As of March 31, 2019, 11,617,575 shares were reserved for issuance under the 2015 Plan. The number of shares reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

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A summary of activity under the 2008 Plan, 2015 Plan and 2018 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2018		1,945,025			10,504,412		$	2.86		7.80	$	545
Awards authorized		2,974,638
Options granted		(3,093,300	)		3,093,300			1.93
Options exercised		—			(322,318	)		1.38
Options forfeited/cancelled		77,009			(77,009	)		5.59
Outstanding — March 31, 2019		1,903,372			13,198,385		$	2.66		8.13	$	1,358
Exercisable — March 31, 2019					6,571,244		$	3.09		7.06	$	1,185
Vested and expected to vest — March 31, 2019					13,198,385		$	2.66		8.13	$	1,358

The weighted-average grant date fair values of options granted during the three months ended March 31, 2019 and 2018 was $1.47 and $1.76 per share, respectively. The aggregate intrinsic value of options exercised was $0.1 million for the three months ended March 31, 2019 and 2018. The total grant date fair value of options vested for the three months ended March 31, 2019 and 2018 was $2.7 million and $1.7 million, respectively.

As of March 31, 2019, total unrecognized stock-based compensation related to unvested stock options was $10.8 million. These costs are expected to be recognized over a remaining weighted-average period of 2.7 years as of March 31, 2019.

2015 Employee Stock Purchase Plan

The Company adopted the 2015 Employee Stock Purchase Plan (ESPP) and initially reserved 700,000 shares of common stock as of its effective date of July 15, 2015. The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The aggregate number of shares issued over the term of the 2015 Employee Stock Purchase Plan will not exceed 3,400,000 shares of common stock.

Under the ESPP, participants are offered the option to purchase shares of the Company’s common stock at a 15% discount during a series of discrete offering periods, subject to any plan limitations. The ESPP will not become effective until such time as the Compensation Committee determines in the future, and as of March 31, 2019, the initial offering periods had not commenced. As of March 31, 2019, no shares of common stock have been issued to employees participating in the ESPP and 700,000 shares were available for issuance under the ESPP.

11. Income Taxes

The Company did not record a provision for U.S. federal income taxes for the three months ended March 31, 2019 because it expects to generate a loss for the year ended December 31, 2019. The net income tax benefit of $0.1 million for the three months ended March 31, 2019 primarily represented income tax benefit resulting from foreign research and development tax credits. Income tax expense of $43,000 for the three months ended March 31, 2018 represented foreign taxes. The Company’s net U.S. deferred tax assets continue to be offset by a full valuation allowance.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this quarterly report and with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2018, included in our Annual Report on Form 10-K. This discussion and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Overview

We are a clinical stage drug development company advancing targeted therapeutics for the treatment of patients with unmet medical needs in hematology and oncology. We have a highly experienced management team with a proven track record of success in hematology and oncology drug development. We are an ambitious company, oriented towards achieving the successful registration and commercialization of our product candidates.

During the third quarter of 2018, we acquired from Gilead Sciences, Inc. (Gilead) our lead product candidate momelotinib, a potent, selective and orally-bioavailable JAK1, JAK2 and ACVR1 inhibitor. Momelotinib has been investigated in two completed Phase 3 trials for the treatment of myelofibrosis and has demonstrated a potentially differentiated therapeutic profile encompassing anemia-related clinical benefits, as well as achieving substantive splenic volume reduction and constitutional symptom control.

In December 2018, we reported new clinical data for momelotinib collated from the two completed SIMPLIFY Phase 3 clinical trials and a translational biology study in transfusion dependent patients with myelofibrosis. Data from the latter study were also concurrently presented in a poster at the 60^th American Society of Hematology Annual Meeting & Exposition in San Diego, California. We reported aggregated transfusion independence responses from more than 150 intermediate and high-risk transfusion dependent myelofibrosis patients demonstrating robust and consistent response rates within and across the clinical studies. More than 44% of these patients became transfusion free for at least 12 weeks and nearly 50% were transfusion independent for at least 8 weeks.

We are currently advancing discussions with regulators to determine the registration path for momelotinib and anticipate reporting next steps in the second quarter of 2019. Our anticipated registration strategy envisions conducting one additional Phase 3 trial in second line myelofibrosis patients, in order to recapitulate the meaningful clinical benefits observed in the two previously completed Phase 3 trials, and we have started undertaking preparatory activities for this planned study.

We are also advancing SRA737, our potent, highly selective, orally bioavailable small molecule inhibitor of Checkpoint kinase 1 (Chk1). Chk1 is a key regulator of cell cycle progression and the DNA Damage Response (DDR) replication stress response. In cancer cells, intrinsic replication stress is induced by factors such as oncogenes (e.g., CCNE1 or MYC), genetic mutations in DNA repair machinery (e.g., BRCA1 or FANCA), genetic mutations leading to a dysregulated cell cycle (e.g., TP53 or RAD50) or other genomic alterations. Replication stress can also be induced by certain exogeneous factors, such as the use of non-cytotoxic low-dose gemcitabine (LDG). This replication stress results in persistent DNA damage and genomic instability leading to an increased dependency on Chk1 for survival. Targeted inhibition of Chk1 by SRA737 may therefore be synthetically lethal to cancer cells with elevated intrinsic replication stress, either alone or in combination with LDG, in a range of tumor indications. The combination of SRA737 with other modalities, such as other agents that target the DDR network and certain chemotherapeutics, may also provide synergistic anti-tumor activity via a variety of potential biological mechanisms. Importantly, the oral bioavailability of SRA737 may afford greater dosing flexibility for both monotherapy and combination therapy settings than is possible with intravenously administered agents.

We are pursuing an innovative development plan for SRA737, which is currently being evaluated in two Phase 1/2 clinical trials in patients with advanced cancer. Our SRA737-01 trial is intended to evaluate SRA737’s potential to induce synthetic lethality as monotherapy, while the SRA737-02 trial is intended to evaluate the combination of SRA737 potentiated by non-cytotoxic LDG. We expect to report preliminary data from both trials at the 2019 ASCO Annual Meeting being held in early June 2019.

In addition, we have designed clinical trials and have conducted preclinical research evaluating SRA737 in combination with other DDR-targeted agents, including poly ADP-ribose polymerase (PARP) inhibitors, as well as with immuno-oncology therapeutics, that could guide the next planned wave of clinical development for our asset, potentially further broadening its therapeutic utility.

• In the first quarter of 2018, we announced an agreement with Janssen Research & Development, LLC (Janssen), under which they have agreed to supply us with the PARP inhibitor niraparib, facilitating the potential initiation of a PARP inhibitor combination trial with SRA737 for the treatment of prostate cancer. We are currently evaluating the optimal timing to commence this trial within the context of our recently expanded portfolio.

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• During the first quarter of 2019, we reported preclinical data for SRA737+LDG, in combination with immunotherapy, in a late-breaking oral presentation at the American Association of Cancer Research (AACR) Annual Meeting 2019. In the study, SRA737+LDG demonstrated significant anti-tumor activity when combined with anti-PD-L1 in a mouse model of SCLC, resulting in durable tumor regressions. These findings provide a mechanistic basis for the growing body of evidence demonstrating a synergistic interplay between replication stress and anti-tumor immune responses and afford a compelling rationale for evaluating SRA737+LDG with immunotherapy in the clinic.

Our pipeline also includes SRA141, a potent, selective, orally bioavailable small molecule inhibitor of cell division cycle 7 kinase (Cdc7). During the first quarter of 2019, we reported preclinical data in a late-breaking poster presented at the AACR Annual Meeting 2019, highlighting a potentially novel mechanism of cytotoxicity for SRA141 that is distinct from other agents. This differentiated mechanism of action, in which SRA141 alters DNA replication dynamics and delays cell cycle progression, could support a unique spectrum of clinical opportunities for SRA141 as both monotherapy and in combination with other agents. We successfully completed the IND filing process with the FDA for SRA141 in 2018 and have prepared for a potential Phase 1/2 trial with this drug candidate in patients with advanced colorectal cancer. We are currently evaluating the optimal timing to commence our first clinical trial with SRA141 within the context of our recently expanded portfolio.

We retain the global commercialization rights to momelotinib, SRA737 and SRA141.

Since inception, we have devoted substantially all of our resources to research and development activities, including the clinical development of our current product candidates, momelotinib, SRA737 and SRA141, and our former lead product candidate PNT2258, and to provide general and administrative support for these operations. We have never generated revenue and have incurred significant net losses since inception. Our net losses were $13.0 million and $11.5 million for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, we had an accumulated deficit of $690.4 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

• invest to further develop our product candidates, momelotinib, a small molecule inhibitor targeting JAK1, JAK2 and ACVR1; SRA737, a small molecule inhibitor targeting Chk1; and SRA141, a small molecule inhibitor targeting Cdc7;

• achieve development milestones that trigger payments due under certain agreements, including a milestone payment of $5.0 million that would be due to Gilead upon the dosing of the first patient in a registrational clinical trial for momelotinib and a milestone payment of $4.0 million that would be due to Carna Biosciences, Inc. (Carna) upon dosing of the first patient in the first Phase 1 clinical trial for SRA141;

• hire additional clinical, scientific, drug development and management personnel, as well as personnel to support any future commercialization efforts;

• invest in scaling our manufacturing capacity to support development and our global commercialization strategy;

• seek regulatory and marketing approvals for any product candidates that we may develop;

• ultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;

• acquire or in-license additional product candidates and technologies;

• develop additional product candidates;

• defend against and resolve lawsuits or other legal issues;

• maintain, expand and protect our intellectual property portfolio; and

• add operational, financial and management information systems and personnel to continue to operate as a public company.

We have funded our operations to date primarily from the issuance and sale of our common stock through public offerings, and our convertible and redeemable convertible preferred stock in private financings and, to a lesser extent, through debt financings and exercises of our preferred stock warrants. As of March 31, 2019, we had cash and cash equivalents of $90.9 million.

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Components of Statements of Operations

Operating Expenses

Research and Development

Research and development expenses consist primarily of the following:

• fees or milestone payments incurred in connection with license and asset purchase agreements;

• personnel-related costs, which include salaries, benefits, stock-based compensation, recruitment fees and travel costs;

• costs associated with research and preclinical studies, clinical trials, regulatory activities and manufacturing activities to support clinical activities;

• fees paid to external service providers that conduct certain research and development, clinical and manufacturing activities on our behalf; and

• facility-related costs, which include direct and allocated expenses for rent and maintenance of facilities, depreciation and amortization expenses and other supplies.

The largest recurring component of our total operating expenses has historically been our investment in research and development activities, including the preclinical and clinical development of our product candidates SRA737 and SRA141. We expect our research and development expenses will increase over the next few years as we advance our development programs, including our recently acquired product candidate momelotinib, achieve development milestones that trigger payments due under certain agreements, pursue regulatory approval of our product candidates in the United States and other jurisdictions, expand our portfolio of product candidates and prepare for potential commercialization, which will require a significant investment in areas related to contract manufacturing and inventory buildup.

The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for momelotinib, SRA737, SRA141 or any future product candidates. The probability of success of our product candidates may be affected by numerous factors, including clinical data, regulatory developments, competition, manufacturing capability and commercial viability. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization of momelotinib, SRA737, SRA141 or any future product candidates.

General and Administrative

General and administrative expenses consist of personnel-related costs, facility-related costs, allocated expenses and professional fees for services, including legal, patent prosecution and maintenance, human resources, audit and accounting services. Personnel-related costs consist of salaries, benefits, stock-based compensation, recruitment fees, severance costs and travel costs.

We expect to incur additional expenses associated with supporting our growing research and development activities, continuing to operate as a public company and other administration and professional services.

Other Income, net

Other income, net primarily consists of (i) interest and dividends earned on our cash and cash equivalents, (ii) interest expense associated with our term loan and non-cash interest costs associated with the amortization of the debt discount and accrual of the final payment fee, and (iii) foreign currency exchange gains and losses related to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. Foreign currency exchange gains and losses may fluctuate in the future due to changes in foreign currency exchange rates.

Provision for (Benefit from) Income Taxes, net

Provision for (benefit from) income taxes, net consists of federal and state income taxes in the United States, income tax benefit resulting from research and development tax credits in Canada, income taxes in Canada and Australia, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and changes in related valuation allowance.

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We did not record a provision for U.S. federal income taxes for the three months ended March 31, 2019 because we expect to generate a loss for the year ended December 31, 2019. Our tax benefit relates to research and development tax credits in Canada and our income tax provision relates to income taxes in Canada and Australia. Our net U.S. deferred tax assets continue to be offset by a full valuation allowance.

Results of Operations

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

	Three Months Ended March 31,						Change
	2019			2018			$
	(in thousands)
Operating expenses:
Research and development	$	10,137		$	8,334		$	1,803
General and administrative		3,365			3,420			(55	)
Total operating expenses		13,502			11,754			1,748
Loss from operations		(13,502	)		(11,754	)		(1,748	)
Other income, net		325			272			53
Loss before provision for (benefit from) income taxes, net		(13,177	)		(11,482	)		(1,695	)
Provision for (benefit from) income taxes, net		(145	)		43			(188	)
Net loss	$	(13,032	)	$	(11,525	)	$	(1,507	)

Research and Development

Research and development expenses increased $1.8 million, from $8.3 million for the three months ended March 31, 2018 to $10.1 million for the three months ended March 31, 2019. The increase was primarily due to an increase of $1.7 million in clinical trial costs related to momelotinib and SRA737, and a $1.3 million increase in personnel-related and overhead costs for the three months ended March 31, 2019. These increased costs were partially offset by a $0.8 million decrease in third party manufacturing costs related to SRA737 and a $0.4 million decrease in research and preclinical costs for the three months ended March 31, 2019.

General and Administrative

General and administrative expenses remained consistent at $3.4 million for the three months ended March 31, 2019 and 2018.

Other Income, net

Other income, net of $0.3 million for the three months ended March 31, 2019 primarily comprised of interest income, partially offset by interest expense on the SVB loan. Other income, net of $0.3 million for the three months ended March 31, 2018 primarily consisted of interest income.

Provision for (benefit from) income taxes, net

Net benefit from income taxes was $0.1 million for the three months ended March 31, 2019, compared to provision for income taxes of $43,000 for the three months ended March 31, 2018. The net benefit from income taxes during the three months ended March 31, 2019 primarily represented benefit from foreign research and development tax credits.

Liquidity and Capital Resources

Capital Resources

Since our inception, we have never generated revenue and have incurred significant net losses. We have funded our operations to date primarily from the issuance and sale of our common stock through public offerings, and our convertible and redeemable convertible preferred stock in private financings and, to a lesser extent, through debt financings and exercises of our preferred stock warrants. Our net losses for the three months ended March 31, 2019 and 2018 were $13.0 million and $11.5 million, respectively. As of March 31, 2019, we had an accumulated deficit of $690.4 million. Our principal sources of liquidity as of March 31, 2019 were cash and cash equivalents of $90.9 million.

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We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

• invest to further develop our product candidates, momelotinib, a small molecule inhibitor targeting JAK1, JAK2 and ACVR1; SRA737, a small molecule inhibitor of Chk1; and SRA141, a small molecule inhibitor targeting Cdc7;

• achieve development milestones that trigger payments due under certain agreements, including a milestone payment of $5.0 million that would be due to Gilead upon the dosing of the first patient in a registrational clinical trial for momelotinib and a milestone payment of $4.0 million that would be due to Carna upon dosing of the first patient in the first Phase 1 clinical trial for SRA141;

• hire additional clinical, scientific, drug development and management personnel, as well as personnel to support any future commercialization efforts;

• invest in scaling our manufacturing capacity to support development and our global commercialization strategy;

• seek regulatory and marketing approvals for any product candidates that we may develop;

• ultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;

• acquire or in-license additional product candidates and technologies;

• develop additional product candidates;

• defend against and resolve lawsuits or other legal issues;

• maintain, expand and protect our intellectual property portfolio; and

• add operational, financial and management information systems and personnel to continue to operate as a public company.

To fund our current operating plans, we will need to raise additional capital. Our existing cash and cash equivalents will not be sufficient for us to complete development of our product candidates and, if applicable, to prepare for commercializing any product candidate that may receive approval. Accordingly, we will continue to require substantial additional capital to continue our clinical development and potential commercialization activities; however, we believe that our existing cash and cash equivalents will be sufficient to fund our current operating plans through at least the next twelve months. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. However, our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts.

We plan to continue to fund our current operating plans’ needs through equity financings or other arrangements. To the extent that we raise additional capital through future equity financings, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. There can be no assurance that such additional financing, if available, can be obtained on terms acceptable to us. If we are unable to obtain such additional financing, we would need to reevaluate our future operating plans.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three Months Ended March 31,
	2019			2018
	(in thousands)
Cash used in operating activities	$	(15,566	)	$	(12,609	)
Cash used in investing activities		(14	)		—
Cash provided by financing activities		445			46,097
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(3	)		(20	)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(15,138	)	$	33,468

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Cash Flows from Operating Activities

For the three months ended March 31, 2019, cash used in operating activities of $15.6 million was attributable to a net loss of $13.0 million and a net change of $4.3 million in our net operating assets and liabilities, partially offset by $1.7 million in non-cash charges. The non-cash charges consisted primarily of $1.7 million in stock-based compensation. The change in net operating assets and liabilities was primarily attributable to a decrease in our accounts payable, accrued and other liabilities and operating lease liabilities of $3.3 million and an increase in prepaid expenses and other assets of $1.0 million.

For the three months ended March 31, 2018, cash used in operating activities of $12.6 million was attributable to a net loss of $11.5 million, partially offset by $1.6 million in non-cash charges and a net change of $2.7 million in our net operating assets and liabilities. The non-cash charges consisted primarily of $1.5 million in stock-based compensation. The change in net operating assets and liabilities was primarily attributable to a decrease in our accounts payable and accrued and other liabilities of $1.9 million and an increase in prepaid expenses and other assets of $0.8 million.

Cash Flows from Investing Activities

For the three months ended March 31, 2019, cash used in investing activities was attributable to the purchase of property and equipment. There were no investing activities for the three months ended March 31, 2018.

Cash Flows from Financing Activities

For the three months ended March 31, 2019, cash provided by financing activities of $0.4 million consisted of net proceeds received from the exercise of options to purchase common stock.

For the three months ended March 31, 2018, cash provided by financing activities of $46.1 million was primarily attributable to net proceeds received from the sale and issuance of our common stock upon our follow-on offerings.

Off-Balance Sheet Arrangements

We do not currently engage in off-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purpose entities and other structure finance entities.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that the assumptions and estimates associated with research and development expenses and stock-based compensation have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Operations included in our Annual Report on Form 10-K for the year ended December 31, 2018.

20

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency risk.

Interest Rate Sensitivity

We had cash and cash equivalents of $90.9 million as of March 31, 2019, which consisted primarily of bank deposits and money market funds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our consolidated financial condition or results of operations. We do not believe that our cash or cash equivalents have significant risk of default or illiquidity.

In addition, we had an outstanding balance of $5.0 million under our Loan Agreement as of March 31, 2019. Borrowings under the Loan Agreement bear interest at the greater of 6% or a floating per annum rate of 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019). The effect of a hypothetical 10% change in interest rates would not have a material impact on our operating loss.

Foreign Currency Risk

Our consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A substantial majority of our expenses are denominated in U.S. Dollars, with the remainder in Canadian Dollars, British Pounds and Australian Dollars. Our consolidated results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative instruments. The effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have a material impact on our operating loss.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2019 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21

PART II

ITEM 1. LEGAL PROCEEDINGS

On November 9, 2016, a purported securities class action lawsuit was filed in the United States District Court for the Southern District of New York against us and certain of our executive officers (the New York Lawsuit). The New York Lawsuit was brought by purported stockholders of our company seeking to represent a class consisting of stockholders who purchased stock between July 15, 2015 and June 6, 2016. The New York Lawsuit asserts claims under Sections 10(b) and 20(a) of the Exchange Act and seeks unspecified damages and other relief. On March 13, 2018, the United States District Court for the Southern District of New York granted the defendants’ motion to dismiss and entered a final judgment dismissing the New York Lawsuit with prejudice. Plaintiffs thereafter filed an appeal. On December 3, 2018, the United States Court of Appeals for the Second Circuit affirmed the district court’s final judgment of dismissal. The plaintiffs did not file a notice or petition for further appellate review in this matter.

On November 18, 2016, a purported securities class action lawsuit was filed in the Superior Court of the State of California for the County of San Mateo against us, certain of our executive officers and directors, and the underwriters for our initial public offering of our common stock. On February 9, 2017, a substantially identical putative class action suit was filed in the Superior Court of the State of California for the County of San Mateo asserting the same claims on behalf of the same putative class (the two lawsuits together, the California Lawsuits). The California Lawsuits were brought by purported stockholders of our company seeking to represent a class consisting of stockholders who purchased stock pursuant to and/or traceable to our Registration Statement on Form S-1. The lawsuits assert claims under Sections 11 and 15 of the Exchange Act and seek unspecified damages and other relief. On August 1, 2018, all parties reached a mutually acceptable proposed resolution to the California Lawsuits by way of a mediated settlement, which is subject to final approval by the court. While we believe that the claims are without merit, we believe settlement will reduce the ultimate cost and distraction of further litigation. We do not believe that our portion of the settlement amount will have a material impact on our consolidated financial statements.

From time to time, we may become subject to other legal proceedings, claims and litigation arising in the ordinary course of business. In addition, we may receive letters alleging infringement of patents or other intellectual property rights. We are not currently a party to any other material legal proceedings, nor are we aware of any pending or threatened litigation that, in the opinion of our management, would have a material adverse effect on our business, operating results, cash flows or financial conditions should such litigation be resolved unfavorably. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

22

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Use of Proceeds

On July 15, 2015, our Registration Statement on Form S-1 (File No. 333-204921) relating to the IPO of our common stock was declared effective by the SEC. Pursuant to such Registration Statement, we sold an aggregate of 9,315,000 shares of our common stock at a price of $17.00 per share for aggregate cash proceeds of approximately $143.6 million, net of underwriting discounts and commissions and offering costs.

We intend to use the remaining net proceeds from our IPO to advance the development of product candidates momelotinib, SRA737 and SRA141, acquire or in-license additional product candidates and technologies and for other general corporate purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth below. Where so indicated, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.

			Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit No.	Exhibit Filing Date	Filed/Furnished Herewith
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document.					X
101.SCH	XBRL Taxonomy Extension Schema Document.					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.					X

* This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SIERRA ONCOLOGY, INC.
Date: May 8, 2019	By:	/s/ Nick Glover
		Dr. Nick Glover
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: May 8, 2019	By:	/s/ Sukhi Jagpal
		Sukhi Jagpal
		Chief Financial Officer
		(Principal Financial Officer)

24

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Nick Glover, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sierra Oncology, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019

/s/ Nick Glover

Dr. Nick Glover

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Sukhi Jagpal, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sierra Oncology, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019

/s/ Sukhi Jagpal

Sukhi Jagpal

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Nick Glover, Chief Executive Officer of Sierra Oncology, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2019 (Report), as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 8, 2019

/s/ Nick Glover

Dr. Nick Glover

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Sukhi Jagpal, Chief Financial Officer of Sierra Oncology, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2019 (Report), as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 8, 2019

/s/ Sukhi Jagpal

Sukhi Jagpal

Chief Financial Officer

(Principal Financial Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 06, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	SRRA
Entity Registrant Name	Sierra Oncology, Inc.
Entity Central Index Key	0001290149
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		74,688,283

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 90,908	$ 106,046
Prepaid expenses and other current assets	3,699	2,706
Total current assets	94,607	108,752
Property and equipment, net	150	168
Operating lease right-of-use asset	716
Other assets	622	549
TOTAL ASSETS	96,095	109,469
CURRENT LIABILITIES:
Accrued and other liabilities	6,619	8,812
Accounts payable	619	1,287
Total current liabilities	7,238	10,099
Term loan	4,763	4,891
Operating lease liabilities	503
TOTAL LIABILITIES	12,504	14,990
Commitments and Contingencies (Note 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of March 31, 2019 and December 31, 2018; nil shares issued and outstanding as of March 31, 2019 and December 31, 2018
Common stock, $0.001 par value; 500,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 74,688,283 and 74,365,965 shares issued and outstanding as of March 31, 2019 and December 31, 2018	74	74
Additional paid-in capital	773,961	771,817
Accumulated deficit	(690,444)	(677,412)
TOTAL STOCKHOLDERS' EQUITY	83,591	94,479
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 96,095	$ 109,469

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	74,688,283	74,365,965
Common stock, shares outstanding	74,688,283	74,365,965

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating expenses:
Research and development	$ 10,137	$ 8,334
General and administrative	3,365	3,420
Total operating expenses	13,502	11,754
Loss from operations	(13,502)	(11,754)
Other income, net	325	272
Loss before provision for (benefit from) income taxes, net	(13,177)	(11,482)
Provision for (benefit from) income taxes, net	(145)	43
Net loss	$ (13,032)	$ (11,525)
Net loss per common share, basic and diluted	$ (0.17)	$ (0.19)
Weighted-average shares used in computing net loss per common share, basic and diluted	74,485,295	59,722,743

XML

Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]
Stockholders Equity, Beginning Balance at Dec. 31, 2017	$ 94,726	$ 52	$ 718,751	$ (624,077)
Stockholders Equity, Beginning Balance, Shares at Dec. 31, 2017		52,395,223
Issuance of common stock for exercise of stock options	101		101
Issuance of common stock for exercise of stock options, Shares		64,458
Stock-based compensation	1,499		1,499
Issuance of common stock, net of offering costs	45,996	$ 22	45,974
Issuance of common stock, net of offering costs, Shares		21,850,000
Net loss	(11,525)			(11,525)
Stockholders Equity, Ending Balance at Mar. 31, 2018	130,797	$ 74	766,325	(635,602)
Stockholders Equity, Ending Balance, Shares at Mar. 31, 2018		74,309,681
Stockholders Equity, Beginning Balance at Dec. 31, 2018	94,479	$ 74	771,817	(677,412)
Stockholders Equity, Beginning Balance, Shares at Dec. 31, 2018		74,365,965
Issuance of common stock for exercise of stock options	445		445
Issuance of common stock for exercise of stock options, Shares		322,318
Stock-based compensation	1,699		1,699
Net loss	(13,032)			(13,032)
Stockholders Equity, Ending Balance at Mar. 31, 2019	$ 83,591	$ 74	$ 773,961	$ (690,444)
Stockholders Equity, Ending Balance, Shares at Mar. 31, 2019		74,688,283

XML

Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Net of offering costs	$ 3.2
Common Stock [Member]
Net of offering costs	3.2
Additional Paid-In Capital [Member]
Net of offering costs	$ 3.2

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (13,032)	$ (11,525)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,699	1,499
Depreciation and amortization	62	29
Other	(26)	41
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,003)	(795)
Accrued, other and operating lease liabilities	(2,599)	(1,261)
Accounts payable	(667)	(597)
Net cash used in operating activities	(15,566)	(12,609)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(14)
Net cash used in investing activities	(14)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon follow-on offering, net of offering costs		45,996
Proceeds from exercise of common stock options	445	101
Net cash provided by financing activities	445	46,097
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(3)	(20)
NET INCREASE / (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(15,138)	33,468
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of period	106,346	100,536
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of period	91,208	134,004
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for (refund of) income taxes, net	(29)	73
Cash paid for interest	81
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Right-of-use asset obtained in exchange for operating lease obligation	$ 771
Property and equipment purchases included in accrued and other liabilities		21
Offering costs included in accrued and other liabilities		$ 209

XML

The Company and Basis of Presentation

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Company and Basis of Presentation

1. The Company and Basis of Presentation

Organization and Description of Business

Sierra Oncology, Inc. (together with its subsidiaries, collectively referred to as the “Company”), a Delaware corporation, is a clinical stage drug development company advancing targeted therapeutics for the treatment of patients with unmet medical needs in hematology and oncology. In August 2018, the Company acquired its lead drug candidate, momelotinib, a potent, selective and orally-bioavailable JAK1, JAK2 and ACVR1 inhibitor that has been investigated in two completed Phase 3 clinical trials for the treatment of myelofibrosis and has demonstrated a potentially differentiated therapeutic profile encompassing anemia-related clinical benefits, as well as achieving substantive splenic volume reduction and constitutional symptom control. The Company is also advancing SRA737 and SRA141. SRA737 is a potent, highly selective, orally bioavailable small molecule inhibitor of Checkpoint kinase 1 (Chk1), a key regulator of cell cycle progression and the DNA Damage Response (DDR) replication stress response. SRA141 is a potent, selective and orally bioavailable small molecule inhibitor of cell division cycle 7 kinase (Cdc7), a key regulator of DNA replication and involved in the DDR network.

The Company’s primary activities since inception have been conducting research and development activities, conducting preclinical and clinical testing, recruiting personnel, performing business and financial planning, identifying and evaluating additional drug candidates for potential in-licensing or acquisition, and raising capital to support development activities.

The Company has not generated any product revenue related to its primary business purpose to date, nor has it generated any income, and is subject to a number of risks and uncertainties, which include dependence on key individuals, the need to identify and successfully develop commercially viable products, the need to obtain regulatory approval for its products and commercialize them, and the need to obtain adequate additional financing to fund the development of its product candidates.

As of March 31, 2019, the Company had $90.9 million of cash and cash equivalents. The Company believes that its balance of cash and cash equivalents as of the date of the issuance of these condensed consolidated financial statements is sufficient to fund its current operational plan for at least the next twelve months though it may pursue raising additional capital through equity financings or other arrangements.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and notes required for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. There were no significant changes to the accounting policies during the three months ended March 31, 2019 from the significant accounting policies described in Note 2 to the consolidated financial statements in the 2018 Form 10-K, with the exception of the policies noted below. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

These unaudited condensed consolidated financial statements and related disclosure have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2018 included herein was derived from the audited consolidated financial statements as of that date.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of stock options and the warrant issued, accruals such as research and development costs, and recoverability of the Company’s net deferred tax assets and related valuation allowance. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Operating Lease Right-of-Use Asset and Lease Liabilities

On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) on a modified retrospective basis and did not restate comparative periods as permitted under the transition guidance. The Company elected the package of practical expedients as permitted, which carries forward the Company’s assessments prior to the date of initial application with respect to lease classifications, initial direct costs as well as whether an existing contract contains a lease. The Company also elected to account for lease and non-lease components separately under transition relief available.

The Company recognizes operating leases with terms greater than one year as right-of-use (ROU) assets and lease liabilities on its condensed consolidated balance sheet using the portfolio approach. Lease liabilities and ROU assets are recorded based on the present value of future lease payments over the contractual terms of the operating leases. The Company utilized its incremental borrowing rate from information available as at the date of initial adoption in determining the present value of the future lease payments. The lease liabilities and ROU asset are amortized over the term of the lease with operating lease expenses being recognized on a straight-line basis over the lease terms. Please see Note 6, Leases below for further disclosures associated with the impact of the new standard.

Stock-Based Compensation

The Company accounts for stock-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for stock-based compensation awards is the date of grant and the expense is recognized on a straight-line basis over the vesting period, which is generally the service period. The Company accounts for forfeitures as they occur.

On January 1, 2019, the Company adopted FASB ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the guidance for share-based payments issued for goods and services for employees and nonemployees. The adoption of this new accounting guidance did not have a material impact on the Company’s condensed consolidated financial statements.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net Loss Per Share

3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, stock options and the warrant for common stock are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following shares of common stock equivalents were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	March 31, 2019		March 31, 2018
	(in thousands)
Options to purchase common stock		13,198,385		10,202,831
Warrant for common stock		73,529		—
Total potential dilutive shares		13,271,914		10,202,831

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company measures and reports its cash equivalents and restricted cash at fair value. The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	90,238	$	—	$	—	$	90,238
Restricted money market funds		300		—		—		300
Total financial assets	$	90,538	$	—	$	—	$	90,538
	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	105,224	$	—	$	—	$	105,224
Restricted money market funds		300		—		—		300
Total financial assets	$	105,524	$	—	$	—	$	105,524

Money market funds and restricted money market funds are measured at fair value on a recurring basis using quoted prices and are classified as a Level 1 input.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2019.

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Balance Sheet Components

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

5. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Cash	$	670	$	822
Cash equivalents:
Money market accounts		90,238		105,224
Total cash and cash equivalents	$	90,908	$	106,046

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows.

	March 31, 2019		March 31, 2018
	(in thousands)
Cash and cash equivalents	$	90,908	$	133,829
Restricted cash included in other assets		300		175
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$	91,208	$	134,004

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Other receivables	$	1,487	$	751
Prepaid research and development project costs		1,050		762
Prepaid insurance		371		555
Income taxes receivable		138		163
Other		653		475
Total prepaid expenses and other current assets	$	3,699	$	2,706

Property and Equipment, net

Property and equipment, net consists of the following:

	March 31, 2019			December 31, 2018
	(in thousands)
Software	$	327		$	325
Leasehold improvements		112			112
Computer equipment		89			89
Furniture and fixtures		3			3
Property and equipment, gross		531			529
Less: accumulated depreciation		(381	)		(361	)
Total property and equipment, net	$	150		$	168

Depreciation related to the Company’s property and equipment was $21,000 and $29,000 for the three months ended March 31, 2019 and 2018, respectively.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Accrued research and development costs	$	3,995	$	4,485
Accrued employee-related costs		1,233		3,223
Accrued professional fees		704		357
Operating lease liabilities		171		—
Current portion of term loan		168		—
Accrued restructuring costs		30		33
Other		318		714
Total accrued and other liabilities	$	6,619	$	8,812

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

6. Leases

In June 2017, the Company entered into an operating lease agreement to lease the office space in Vancouver, Canada commencing March 1, 2018. The lease expires on February 28, 2023 and can be extended for an additional term of 5 years.

In January 2016, the Company entered into an operating lease agreement to lease office space near San Francisco, California. The operating lease agreement expires on April 30, 2019. In September 2017, the Company entered into a sublease agreement to sublet the premises to a third party until April 30, 2019.

On January 1, 2019, with the adoption of ASU 2016-02, the Company recognized operating lease right-of-use asset of $0.8 million and operating lease liabilities of $0.7 million for these leases.

The components of lease expense and related cash flows for the three months ended March 31, 2019 were as follows:

	March 31, 2019
	(in thousands)
Operating lease cost		51
Short-term lease cost		29
		80
Operating cash flows used for operating leases	$	40

The total rent expense was $0.1 million for the three months ended March 31, 2018.

As of March 31, 2019, the weighted average remaining lease term and discount rate for the operating leases are 3.9 years and 6.5%, respectively.

As of March 31, 2019, maturities of lease liabilities due under the lease agreements are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
Remainder of 2019	$	157
2020		212
2021		216
2022		172
Total lease payments		757
Less imputed interest		(83	)
Total	$	674

In addition to base rent, these leases require payment of non-lease and non-component costs. These costs are not included.

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Term Loan

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Term Loan

7. Term Loan

On August 21, 2018, the Company entered into a Loan and Security Agreement (Loan Agreement) with Silicon Valley Bank (SVB), pursuant to which the Company may obtain a loan of aggregate principal amount of up to $15.0 million (Term Loans), which becomes available in three tranches, each of an aggregate principal amount of up to $5.0 million. Contemporaneously with executing the Loan Agreement, the Company drew down the first $5.0 million tranche. The second and third $5.0 million tranches may be drawn only upon the achievement of certain development milestones. Borrowings under the Loan Agreement bear interest at the greater of (i) 6.0% or (ii) a floating per annum rate 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019), with interest only due and payable monthly, until March 1, 2020, at which time interest and principal will be due and payable monthly in equal monthly payments; are subject to a final payment fee equal to 6.75% of the aggregate principal amount.

The Company may prepay all, but not less than all, of the loaned amounts subject to a prepayment fee. The Loan Agreement is secured by substantially all of the Company’s personal property, except for its intellectual property and requires the Company to maintain the lesser of $10 million or 80% of its cash and cash equivalents with SVB. The Loan Agreement contains customary covenants and customary events of default. The occurrence of an event of default could result in an increase to the applicable interest rate of 5.0%, and the consequent obligation for the Company to repay all amounts outstanding under the Loan Agreement.

In connection with the Loan Agreement, the Company issued a warrant to SVB to purchase 73,529 of the Company’s common stock at a price per share of $1.87. The warrant was immediately exercisable, will expire on August 21, 2028, contains a cashless exercise provision and is classified as equity. If the Company is to draw the second or third tranche available under the Loan Agreement, the Company will grant an additional amount of common stock issuable upon exercise of the warrant based upon the principal amount advanced. In no event will the number of common stock issuable pursuant to the exercise of the warrant exceed 220,588 in aggregate.

The fair value of the warrant and the debt issuance costs were recorded as debt discounts and together with the final payment fee are being amortized using the effective interest rate method over the term of the loan. As of March 31, 2019, the effective interest rate on the initial tranche of the loan was 9.89% and the unamortized debt discount was $0.1 million. Amortization of the debt discount and accrual of final payment was $0.1 million for the three months ended March 31, 2019.

Scheduled payments due under the Loan Agreement, excluding the final payment fee of $0.3 million and interest payments, are as follows:

	March 31, 2019
	(in thousands)
2020	$	1,667
2021		2,000
2022		1,333
Total	$	5,000

During the three months ended March 31, 2019, the Company recognized $0.1 million of interest expense related to the Loan Agreement. The Company did not incur interest expense for the three months ended March 31, 2018.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Asset Purchase Agreement

In August 2018, the Company entered into an asset purchase agreement with Gilead Sciences, Inc. (Gilead) whereby the Company acquired worldwide rights to the pharmaceutical product momelotinib, an investigational inhibitor of Janus kinase, together with all related intellectual property rights and certain other related assets. The Company paid Gilead an upfront payment of $3.0 million in August 2018. The Company will be required to pay Gilead milestone payments of up to an aggregate of $195.0 million upon the achievement of certain development, regulatory and commercial milestones events, including a milestone payment of $5.0 million upon the dosing of the first patient in a registrational clinical trial. These milestones will be accrued once they are considered probable of occurring. In addition, the Company is required to pay Gilead mid-teen to high twenty percent tiered royalties based upon net sales.

License Agreements

In September 2016, the Company entered into an exclusive license agreement with CRT Pioneer Fund LP (CPF) for worldwide rights, know-how and materials to develop SRA737, a small molecule inhibitor targeting Chk1, a promising therapeutic target to treat cancer. Pursuant to the agreement, the Company made a one-time upfront payment of $7.0 million to CPF in October 2016 and paid $2.0 million to CPF in January 2017 for the successful transfer of two ongoing Phase I clinical trials. Additional milestone payments of up to an aggregate of $319.5 million may become payable to CPF upon the achievement of certain developmental, regulatory and commercial milestones, and will be accrued once they are considered probable of occurring. In addition, the Company is required to pay CPF, on a product-by-product and country-by-country basis, tiered high single-digit to low double-digit royalties on the net sales of any product successfully developed.

In May 2016, the Company entered into an exclusive license agreement (Carna License Agreement) with Carna Biosciences, Inc. (Carna) for worldwide rights to develop and commercialize SRA141, a small molecule kinase inhibitor targeting Cdc7. In exchange for this exclusive right, the Company paid Carna an upfront payment of $0.9 million in June 2016. The Company will be required to pay Carna milestone payments of up to an aggregate of $270.0 million upon achievement of certain developmental, regulatory and commercial milestone events, including a milestone payment of $4.0 million upon dosing of the first patient in the first Phase 1 clinical trial for SRA141. These milestones will be accrued once they are considered probable of occurring. As of March 31, 2019, the Company had not recorded any milestone payments to Carna. In addition, the Company is required to pay Carna tiered single-digit royalties on net sales of product candidates (as defined under the Carna License Agreement).

Legal

On November 9, 2016, a purported securities class action lawsuit was filed in the United States District Court for the Southern District of New York against the Company and certain of its executive officers (the New York Lawsuit). The New York Lawsuit was brought by purported stockholders of the Company seeking to represent a class consisting of stockholders who purchased stock between July 15, 2015 and June 6, 2016. The New York Lawsuit asserts claims under Sections 10(b) and 20(a) of the Exchange Act and seeks unspecified damages and other relief. On March 13, 2018, the United States District Court for the Southern District of New York granted the defendants’ motion to dismiss and entered a final judgment dismissing the New York Lawsuit with prejudice. Plaintiffs thereafter filed an appeal. On December 3, 2018, the United States Court of Appeals for the Second Circuit affirmed the district court’s final judgment of dismissal. The plaintiffs did not file a notice or petition for further appellate review in this matter.

On November 18, 2016, a purported securities class action lawsuit was filed in the Superior Court of the State of California for the County of San Mateo against the Company, certain of its executive officers and directors, and the underwriters for the Company’s initial public offering of its common stock. On February 9, 2017, a substantially identical putative class action suit was filed in the Superior Court of the State of California for the County of San Mateo asserting the same claims on behalf of the same putative class (the two lawsuits together, the California Lawsuits). The California Lawsuits were brought by purported stockholders of the Company seeking to represent a class consisting of stockholders who purchased stock pursuant to and/or traceable to the Company’s Registration Statement on Form S-1. The lawsuits assert claims under Sections 11 and 15 of the Exchange Act and seek unspecified damages and other relief. On August 1, 2018, all parties reached a mutually acceptable proposed resolution to the California Lawsuits by way of a mediated settlement, which is subject to final approval by the court. While the Company believes that the claims are without merit, it believes settlement will reduce the ultimate cost and distraction of further litigation. The Company does not expect its portion of the settlement amount to have a material impact on its condensed consolidated financial statements.

From time to time, the Company may become subject to other legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any other material legal proceedings, nor is it aware of any pending or threatened litigation that, in the Company’s opinion, would have a material adverse effect on the business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

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Common Stock Reserved for Issuance

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Common Stock Reserved for Issuance

9. Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans, shares reserved for issuance under the employee stock purchase plan and issued warrant.

	March 31, 2019		December 31, 2018
Outstanding stock options under equity incentive plans		13,198,385		10,504,412
Shares reserved for future option grants under equity incentive plans		1,903,372		1,945,025
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Shares reserved under warrant upon contingent events		147,059		147,059
Outstanding warrant		73,529		73,529
Total common stock reserved for issuance		16,022,345		13,370,025

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

In the accompanying condensed consolidated statements of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2019		2018
Research and development	$	1,184	$	998
General and administrative		515		501
Total stock-based compensation	$	1,699	$	1,499

Determination of Fair Value

The estimated grant-date fair values of all of the Company’s stock-based awards were calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2019			2018
Expected term (in years)		5.3 — 6.9			5.4 — 6.9
Expected volatility		91 — 94	%		88 — 91	%
Risk-free interest rate		2.5 — 2.6	%		2.7 — 2.8	%
Expected dividend rate		—	%		—	%

Equity Incentive Plans

2018 Equity Inducement Plan

In September 2018, the Company’s Compensation Committee approved the 2018 Equity Inducement Plan (2018 Plan). The number of shares available for awards under the 2018 Plan was set to 1,500,000. The exercise price of each stock-based award issued under the 2018 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. As of March 31, 2019, 11,617,575 shares were reserved for issuance under the 2015 Plan. The number of shares reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

A summary of activity under the 2008 Plan, 2015 Plan and 2018 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2018		1,945,025			10,504,412		$	2.86		7.80	$	545
Awards authorized		2,974,638
Options granted		(3,093,300	)		3,093,300			1.93
Options exercised		—			(322,318	)		1.38
Options forfeited/cancelled		77,009			(77,009	)		5.59
Outstanding — March 31, 2019		1,903,372			13,198,385		$	2.66		8.13	$	1,358
Exercisable — March 31, 2019					6,571,244		$	3.09		7.06	$	1,185
Vested and expected to vest — March 31, 2019					13,198,385		$	2.66		8.13	$	1,358

The weighted-average grant date fair values of options granted during the three months ended March 31, 2019 and 2018 was $1.47 and $1.76 per share, respectively. The aggregate intrinsic value of options exercised was $0.1 million for the three months ended March 31, 2019 and 2018. The total grant date fair value of options vested for the three months ended March 31, 2019 and 2018 was $2.7 million and $1.7 million, respectively.

As of March 31, 2019, total unrecognized stock-based compensation related to unvested stock options was $10.8 million. These costs are expected to be recognized over a remaining weighted-average period of 2.7 years as of March 31, 2019.

2015 Employee Stock Purchase Plan

The Company adopted the 2015 Employee Stock Purchase Plan (ESPP) and initially reserved 700,000 shares of common stock as of its effective date of July 15, 2015. The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The aggregate number of shares issued over the term of the 2015 Employee Stock Purchase Plan will not exceed 3,400,000 shares of common stock.

Under the ESPP, participants are offered the option to purchase shares of the Company’s common stock at a 15% discount during a series of discrete offering periods, subject to any plan limitations. The ESPP will not become effective until such time as the Compensation Committee determines in the future, and as of March 31, 2019, the initial offering periods had not commenced. As of March 31, 2019, no shares of common stock have been issued to employees participating in the ESPP and 700,000 shares were available for issuance under the ESPP.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company did not record a provision for U.S. federal income taxes for the three months ended March 31, 2019 because it expects to generate a loss for the year ended December 31, 2019. The net income tax benefit of $0.1 million for the three months ended March 31, 2019 primarily represented income tax benefit resulting from foreign research and development tax credits. Income tax expense of $43,000 for the three months ended March 31, 2018 represented foreign taxes. The Company’s net U.S. deferred tax assets continue to be offset by a full valuation allowance.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and notes required for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. There were no significant changes to the accounting policies during the three months ended March 31, 2019 from the significant accounting policies described in Note 2 to the consolidated financial statements in the 2018 Form 10-K, with the exception of the policies noted below. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

These unaudited condensed consolidated financial statements and related disclosure have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2018 included herein was derived from the audited consolidated financial statements as of that date.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of stock options and the warrant issued, accruals such as research and development costs, and recoverability of the Company’s net deferred tax assets and related valuation allowance. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Operating Lease Right-of-Use Asset and Lease Liabilities

Operating Lease Right-of-Use Asset and Lease Liabilities

On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) on a modified retrospective basis and did not restate comparative periods as permitted under the transition guidance. The Company elected the package of practical expedients as permitted, which carries forward the Company’s assessments prior to the date of initial application with respect to lease classifications, initial direct costs as well as whether an existing contract contains a lease. The Company also elected to account for lease and non-lease components separately under transition relief available.

The Company recognizes operating leases with terms greater than one year as right-of-use (ROU) assets and lease liabilities on its condensed consolidated balance sheet using the portfolio approach. Lease liabilities and ROU assets are recorded based on the present value of future lease payments over the contractual terms of the operating leases. The Company utilized its incremental borrowing rate from information available as at the date of initial adoption in determining the present value of the future lease payments. The lease liabilities and ROU asset are amortized over the term of the lease with operating lease expenses being recognized on a straight-line basis over the lease terms. Please see Note 6, Leases below for further disclosures associated with the impact of the new standard.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for stock-based compensation awards is the date of grant and the expense is recognized on a straight-line basis over the vesting period, which is generally the service period. The Company accounts for forfeitures as they occur.

On January 1, 2019, the Company adopted FASB ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the guidance for share-based payments issued for goods and services for employees and nonemployees. The adoption of this new accounting guidance did not have a material impact on the Company’s condensed consolidated financial statements.

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Outstanding Shares of Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share

The following shares of common stock equivalents were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	March 31, 2019		March 31, 2018
	(in thousands)
Options to purchase common stock		13,198,385		10,202,831
Warrant for common stock		73,529		—
Total potential dilutive shares		13,271,914		10,202,831

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Assets Measured on Recurring Basis

The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	90,238	$	—	$	—	$	90,238
Restricted money market funds		300		—		—		300
Total financial assets	$	90,538	$	—	$	—	$	90,538
	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	105,224	$	—	$	—	$	105,224
Restricted money market funds		300		—		—		300
Total financial assets	$	105,524	$	—	$	—	$	105,524

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Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Cash	$	670	$	822
Cash equivalents:
Money market accounts		90,238		105,224
Total cash and cash equivalents	$	90,908	$	106,046

Summary of Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows.

	March 31, 2019		March 31, 2018
	(in thousands)
Cash and cash equivalents	$	90,908	$	133,829
Restricted cash included in other assets		300		175
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$	91,208	$	134,004

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Other receivables	$	1,487	$	751
Prepaid research and development project costs		1,050		762
Prepaid insurance		371		555
Income taxes receivable		138		163
Other		653		475
Total prepaid expenses and other current assets	$	3,699	$	2,706

Summary of Property and Equipment, Net

Property and equipment, net consists of the following:

	March 31, 2019			December 31, 2018
	(in thousands)
Software	$	327		$	325
Leasehold improvements		112			112
Computer equipment		89			89
Furniture and fixtures		3			3
Property and equipment, gross		531			529
Less: accumulated depreciation		(381	)		(361	)
Total property and equipment, net	$	150		$	168

Summary of Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	March 31, 2019		December 31, 2018
	(in thousands)
Accrued research and development costs	$	3,995	$	4,485
Accrued employee-related costs		1,233		3,223
Accrued professional fees		704		357
Operating lease liabilities		171		—
Current portion of term loan		168		—
Accrued restructuring costs		30		33
Other		318		714
Total accrued and other liabilities	$	6,619	$	8,812

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of Components of Lease Expense and Related Cash Flows

The components of lease expense and related cash flows for the three months ended March 31, 2019 were as follows:

	March 31, 2019
	(in thousands)
Operating lease cost		51
Short-term lease cost		29
		80
Operating cash flows used for operating leases	$	40

Schedule of Maturities Lease Liabilities under Leases Agreement

As of March 31, 2019, maturities of lease liabilities due under the lease agreements are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
Remainder of 2019	$	157
2020		212
2021		216
2022		172
Total lease payments		757
Less imputed interest		(83	)
Total	$	674

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Term Loan (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Estimated Future Principal Payments Due Under Loan Agreement

Scheduled payments due under the Loan Agreement, excluding the final payment fee of $0.3 million and interest payments, are as follows:

	March 31, 2019
	(in thousands)
2020	$	1,667
2021		2,000
2022		1,333
Total	$	5,000

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Common Stock Reserved for Issuance (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Schedule of Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans, shares reserved for issuance under the employee stock purchase plan and issued warrant.

	March 31, 2019		December 31, 2018
Outstanding stock options under equity incentive plans		13,198,385		10,504,412
Shares reserved for future option grants under equity incentive plans		1,903,372		1,945,025
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Shares reserved under warrant upon contingent events		147,059		147,059
Outstanding warrant		73,529		73,529
Total common stock reserved for issuance		16,022,345		13,370,025

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense for Employees and Non-employees

In the accompanying condensed consolidated statements of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2019		2018
Research and development	$	1,184	$	998
General and administrative		515		501
Total stock-based compensation	$	1,699	$	1,499

Schedule of Estimated Grant-date Fair Value of Stock-based Awards Using Black-Scholes Option Pricing Model Assumptions

The estimated grant-date fair values of all of the Company’s stock-based awards were calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2019			2018
Expected term (in years)		5.3 — 6.9			5.4 — 6.9
Expected volatility		91 — 94	%		88 — 91	%
Risk-free interest rate		2.5 — 2.6	%		2.7 — 2.8	%
Expected dividend rate		—	%		—	%

Summary of Stock-Based Compensation Activity

A summary of activity under the 2008 Plan, 2015 Plan and 2018 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2018		1,945,025			10,504,412		$	2.86		7.80	$	545
Awards authorized		2,974,638
Options granted		(3,093,300	)		3,093,300			1.93
Options exercised		—			(322,318	)		1.38
Options forfeited/cancelled		77,009			(77,009	)		5.59
Outstanding — March 31, 2019		1,903,372			13,198,385		$	2.66		8.13	$	1,358
Exercisable — March 31, 2019					6,571,244		$	3.09		7.06	$	1,185
Vested and expected to vest — March 31, 2019					13,198,385		$	2.66		8.13	$	1,358

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The Company and Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 90,908	$ 106,046	$ 133,829

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Net Loss Per Share - Schedule of Outstanding Shares of Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share (Detail) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	13,271,914	10,202,831
Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	13,198,385	10,202,831
Warrants for Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	73,529

XML

Fair Value Measurements - Schedule of Fair Value of Financial Assets Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial Assets
Total financial assets	$ 90,538	$ 105,524
Money Market Funds [Member]
Financial Assets
Total financial assets	90,238	105,224
Restricted Money Market Funds [Member]
Financial Assets
Total financial assets	300	300
Level 1 [Member]
Financial Assets
Total financial assets	90,538	105,524
Level 1 [Member] | Money Market Funds [Member]
Financial Assets
Total financial assets	90,238	105,224
Level 1 [Member] | Restricted Money Market Funds [Member]
Financial Assets
Total financial assets	$ 300	$ 300

XML

Fair Value Measurements - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 USD ($)
Fair Value Disclosures [Abstract]
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	$ 0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3	$ 0

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Balance Sheet Components - Summary of Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Cash and Cash Equivalents [Abstract]
Cash	$ 670	$ 822
Cash equivalents:
Money market accounts	90,238	105,224
Total cash and cash equivalents	$ 90,908	$ 106,046	$ 133,829

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Balance Sheet Components - Summary of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 90,908	$ 106,046	$ 133,829
Restricted cash included in other assets	300		175
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$ 91,208	$ 106,346	$ 134,004	$ 100,536

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Balance Sheet Components - Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other receivables	$ 1,487	$ 751
Prepaid research and development project costs	1,050	762
Prepaid insurance	371	555
Income taxes receivable	138	163
Other	653	475
Total prepaid expenses and other current assets	$ 3,699	$ 2,706

XML

Balance Sheet Components - Summary of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 531	$ 529
Less: accumulated depreciation	(381)	(361)
Total property and equipment, net	150	168
Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	327	325
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	112	112
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	89	89
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3	$ 3

XML

Balance Sheet Components - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Depreciation related to property and equipment	$ 62	$ 29

XML

Balance Sheet Components - Summary of Accrued and Other Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued research and development costs	$ 3,995	$ 4,485
Accrued employee-related costs	1,233	3,223
Accrued professional fees	704	357
Operating lease liabilities	171
Current portion of term loan	168
Accrued restructuring costs	30	33
Other	318	714
Total accrued and other liabilities	$ 6,619	$ 8,812

XML

Leases - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Jan. 31, 2016	Mar. 31, 2019	Mar. 31, 2018	Jan. 01, 2019
Loss Contingencies [Line Items]
Operating lease right-of-use asset		$ 716		$ 800
Operating lease liability		$ 757		$ 700
Rent expense			$ 100
Weighted-average remaining lease term, operating leases (Year)		3 years 10 months 24 days
Weighted-average discount rate, Operating leases		6.50%
Operating Lease Agreement To Lease Office Space [Member] | San Francisco [Member]
Loss Contingencies [Line Items]
Operating lease agreement expiration date	Apr. 30, 2019
Vancouver Lease [Member] | Vancouver [Member]
Loss Contingencies [Line Items]
Operating lease agreement expiration date		Feb. 28, 2023
Additional lease term to be extended		5 years

XML

Leases - Schedule of Components of Lease Expense and Related Cash Flows (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 51
Short-term lease cost	29
Total Lease Cost	80
Operating cash flows used for operating leases	$ 40

XML

Leases - Schedule of Maturities Lease Liabilities under Leases Agreement (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Leases [Abstract]
Remainder of 2019	$ 157
2020	212
2021	216
2022	172
Total lease payments	757	$ 700
Less imputed interest	(83)
Total	$ 674

XML

Term Loan - Additional Information (Detail)		3 Months Ended
	Aug. 21, 2018 USD ($) Tranches	Mar. 31, 2019 USD ($) $ / shares shares	Mar. 31, 2018 USD ($)
Debt Instrument [Line Items]
Amount borrowed		$ 5,000,000
Silicon Valley Bank [Member] | Maximum [Member]
Debt Instrument [Line Items]
Number of common stock issuable | shares		220,588
Silicon Valley Bank [Member] | Term Loans [Member]
Debt Instrument [Line Items]
Aggregate principal amount of loans	$ 15,000,000
Number of tranches | Tranches	3
Loan agreement, description		Contemporaneously with executing the Loan Agreement, the Company drew down the first $5.0 million tranche. The second and third $5.0 million tranches may be drawn only upon the achievement of certain development milestones.
Loan agreement, frequency of payments		Monthly
Interest payment description		Borrowings under the Loan Agreement bear interest at the greater of (i) 6.0% or (ii) a floating per annum rate 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019), with interest only due and payable monthly, until March 1, 2020, at which time interest and principal will be due and payable monthly in equal monthly payments; are subject to a final payment fee equal to 6.75% of the aggregate principal amount.
Final payment fee as percent of aggregate principal amount of borrowing	6.75%
Minimum requirement of cash and cash equivalents held with bank		$ 10,000,000
Minimum percentage requirement of cash and cash equivalents held with bank		80.00%
Applicable interest rate of loan		5.00%
Loan payment fee		$ 300,000
Interest expense		$ 100,000	$ 0
Silicon Valley Bank [Member] | Term Loans [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Loan agreement bear interest rate		6.50%
Variable rate on borrowings above prime rate, percentage	1.00%
Silicon Valley Bank [Member] | Term Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Loan agreement bear interest rate	6.00%
Silicon Valley Bank [Member] | Term Loans [Member] | Tranche One [Member]
Debt Instrument [Line Items]
Aggregate principal amount of loans	$ 5,000,000
Amount borrowed	5,000,000
Effective interest rate of loan		9.89%
Unamortized debt discount		$ 100,000
Amortization of debt discount and accrual of final payment		$ 100,000
Silicon Valley Bank [Member] | Term Loans [Member] | Tranche Two [Member]
Debt Instrument [Line Items]
Aggregate principal amount of loans	5,000,000
Silicon Valley Bank [Member] | Term Loans [Member] | Tranche Three [Member]
Debt Instrument [Line Items]
Aggregate principal amount of loans	$ 5,000,000
Silicon Valley Bank [Member] | Warrants to Purchase Common Stock [Member]
Debt Instrument [Line Items]
Warrant expiration date		Aug. 21, 2028
Silicon Valley Bank [Member] | Warrants to Purchase Common Stock [Member] | Term Loans [Member]
Debt Instrument [Line Items]
Warrants issued in connection with loan | shares		73,529
Price per share of issued warrants | $ / shares		$ 1.87

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Term Loan - Schedule of Estimated Future Principal Payments Due Under Loan Agreement (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Debt Disclosure [Abstract]
2020	$ 1,667
2021	2,000
2022	1,333
Total	$ 5,000

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	1 Months Ended			3 Months Ended
	Aug. 31, 2018 USD ($)	Oct. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2019 USD ($) Payments	Jan. 31, 2017 USD ($)
Carna License Agreement [Member]
Loss Contingencies [Line Items]
Aggregate milestone payment				$ 270.0
Upfront payment paid			$ 0.9
Number of milestone payments recorded | Payments				0
Milestone payment				$ 4.0
CPF License Agreements [Member]
Loss Contingencies [Line Items]
Milestone payment					$ 2.0
Upfront payment paid		$ 7.0
Additional milestone payment payable				319.5
Asset Purchase Agreement [Member]
Loss Contingencies [Line Items]
Upfront payment paid	$ 3.0
Aggregate milestone payment				195.0
Milestone payment				$ 5.0

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Common Stock Reserved for Issuance - Schedule of Common Stock Reserved for Issuance (Detail) - shares	Mar. 31, 2019	Dec. 31, 2018	Jul. 15, 2015
Class of Stock [Line Items]
Total common stock reserved for future issuance	16,022,345	13,370,025
Equity Incentive Plans [Member]
Class of Stock [Line Items]
Awards outstanding	13,198,385	10,504,412
Total common stock reserved for future issuance	1,903,372	1,945,025
2015 Employee Stock Purchase Plan [Member]
Class of Stock [Line Items]
Total common stock reserved for future issuance	700,000	700,000	700,000
Warrants to Purchase Common Stock [Member]
Class of Stock [Line Items]
Total common stock reserved for future issuance	147,059	147,059
Outstanding warrant	73,529	73,529

XML

Stock-Based Compensation - Schedule of Stock-based Compensation Expense for Employees and Non-employees (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 1,699	$ 1,499
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	1,184	998
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 515	$ 501

XML

Stock-Based Compensation - Schedule of Estimated Grant-date Fair Values of Stock-based Awards Using Black-Scholes Option Pricing Model Assumptions (Detail)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, Minimum	91.00%	88.00%
Expected volatility, Maximum	94.00%	91.00%
Risk-free interest rate, Minimum	2.50%	2.70%
Risk-free interest rate, Maximum	2.60%	2.80%
Expected dividend rate	0.00%	0.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 3 months 18 days	5 years 4 months 24 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 10 months 24 days	6 years 10 months 24 days

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Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended
	Jul. 15, 2015	Jul. 14, 2015	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance			16,022,345		13,370,025
2015 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance	700,000		700,000		700,000
Stock option grants description			The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company's common stock as of the immediately preceding December 31.
Percentage threshold of outstanding shares increased annually under the plan	1.00%
Common shares authorized to be issued during the period	3,400,000
Options to purchase shares of common stock, discount percentage	15.00%
Number of common stock issued			0
2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance			11,617,575
Stock option life in years			10 years
Stock option grants description			The number of shares reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company's common stock as of the immediately preceding December 31.
Percentage threshold of outstanding shares increased annually under the plan		4.00%
2008 Plan, 2015 Plan and 2018 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards issued			3,093,300
Awards outstanding			13,198,385		10,504,412
Weighted-average grant date fair values of options granted			$ 1.47	$ 1.76
Aggregate intrinsic value of options exercised			$ 0.1	$ 0.1
Total grant date fair value of options vested			2.7	$ 1.7
Total unrecognized stock-based compensation related to unvested stock options			$ 10.8
Weighted-average period			2 years 8 months 12 days
Common shares authorized to be issued during the period			2,974,638
2018 Equity Inducement Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance			1,500,000
Stock option life in years			10 years
Awards issued			0
Awards outstanding			0

XML

Stock-Based Compensation - Summary of Stock-Based Compensation Activity (Detail) - 2008 Plan, 2015 Plan and 2018 Plan [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Options Outstanding, Shares Available for Grant
Shares Available for Grant, Beginning balance	1,945,025
Shares Available for Grant, Awards authorized	2,974,638
Shares Available for Grant, Granted	(3,093,300)
Shares Available for Grant, Exercised	0
Shares Available for Grant, forfeited/cancelled	77,009
Shares Available for Grant, Ending balance	1,903,372	1,945,025
Options Outstanding, Number of Shares Outstanding
Number of Shares Outstanding, Beginning balance	10,504,412
Number of Shares Outstanding, Options granted	3,093,300
Number of Shares Outstanding, Options exercised	(322,318)
Number of Shares Outstanding, Options forfeited/cancelled	(77,009)
Number of Shares Outstanding, Ending balance	13,198,385	10,504,412
Number of Shares Outstanding, Exercisable	6,571,244
Number of Shares Outstanding, Vested and expected to vest	13,198,385
Options Outstanding, Weighted-Average Exercise Price Per Share
Weighted-Average Exercise Price Per Share, Beginning balance	$ 2.86
Weighted-Average Exercise Price Per Share, Options granted	1.93
Weighted-Average Exercise Price Per Share, Options exercised	1.38
Weighted-Average Exercise Price Per Share, Options forfeited/cancelled	5.59
Weighted-Average Exercise Price Per Share, Ending balance	2.66	$ 2.86
Weighted-Average Exercise Price Per Share, Exercisable	3.09
Weighted-Average Exercise Price Per Share, Vested and expected to vest	$ 2.66
Options Outstanding, Weighted-Average Remaining Contractual Term (Years)
Weighted-Average Remaining Contractual Term (Years)	8 years 1 month 17 days	7 years 9 months 18 days
Weighted-Average Remaining Contractual Term (Year), Exercisable	7 years 21 days
Weighted-Average Remaining Contractual Term (Year), Vested and expected to vest	8 years 1 month 17 days
Options Outstanding, Aggregate Intrinsic Value of Outstanding Options
Aggregate Intrinsic Value of Outstanding Options	$ 1,358	$ 545
Aggregate Intrinsic Value of Outstanding Options, Exercisable	1,185
Aggregate Intrinsic Value of Outstanding Options, Vested and expected to vest	$ 1,358

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Provision for federal income taxes	$ 0
Income tax expense (benefit) for foreign taxes	$ 100,000	$ 43,000.0