10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

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: 001-37718

Spring Bank Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	52-2386345
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
86 South Street Hopkinton, MA	01748
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (508) 473-5993

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	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 7(a)(2)(B) of the Securities 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 April 26, 2018, the registrant had 13,182,567 shares of common stock, $0.0001 par value per share, outstanding.

Spring Bank Pharmaceuticals, Inc.

INDEX

	PART I.FINANCIAL INFORMATION	Page
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Loss	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
	PART II.OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31
Exhibit Index		32
Signatures		33

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “design,” “expect,” “seek,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.

These forward-looking statements include, but are not limited to, statements about:

• our ongoing and planned preclinical studies and clinical trials;

• preclinical study data and clinical trial data and the timing of results of our ongoing clinical studies and/or trials;

• our plans to seek and enter into clinical trial collaborations and other broader collaborations; and

• our estimates regarding prospects, strategies, expenses, operating capital requirements, results of operations and needs for additional financing.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause actual results or events to differ materially from the forward-looking statements that we make include, but are not limited to, the following:

•Our business currently depends substantially on the success of clinical trials for inarigivir soproxil, which we refer to as inarigivir, which is still under development. If we are unable to obtain regulatory approval for, or successfully commercialize, inarigivir, our business will be materially harmed.

•We are very early in our development efforts and our product candidates may not be successful in later stage clinical trials.  Results obtained in our preclinical studies and clinical trials are not necessarily indicative of results to be obtained in future clinical trials.  As a result, our product candidates may never be approved as marketable therapeutics.

•We will need additional funding to complete the development of our product candidates and before we can expect to become profitable from the sales of our products, if approved. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

•We rely, and expect to continue to rely, on third parties to conduct our clinical trials and to manufacture our product candidates for preclinical and clinical testing. These third parties may not perform satisfactorily, which could delay our product development activities.

•If we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents which are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.

•We may not be able to retain key executives or to attract, retain and motivate key personnel.  If we are unable to retain such key personnel, it could have a material adverse impact on our business and prospects.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should also read carefully the factors described in the section “Risk Factors” of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and our website. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

	March 31,			December 31,
	2018			2017
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	23,838		$	23,649
Marketable securities		23,321			26,906
Prepaid expenses and other current assets		609			580
Total current assets		47,768			51,135
Property and equipment, net		892			687
Restricted cash		234			484
Other assets		216			35
Total	$	49,110		$	52,341
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,655		$	1,700
Accrued expenses and other current liabilities		2,130			2,734
Total current liabilities		3,785			4,434
Warrant liabilities		11,926			13,128
Other long-term liabilities		30			31
Total liabilities		15,741			17,593
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 10,000,000 shares at March 31, 2018      and December 31, 2017; no shares issued or outstanding at March 31, 2018 and      December 31, 2017		—			—
Common stock, $0.0001 par value—authorized, 200,000,000 shares at March 31, 2018      and December 31, 2017; 13,153,879 and 12,961,993 shares issued and outstanding      at March 31, 2018 and December 31, 2017, respectively		1			1
Additional paid-in capital		117,469			113,984
Accumulated deficit		(84,101	)		(79,214	)
Other comprehensive loss		—			(23	)
Total stockholders’ equity		33,369			34,748
Total	$	49,110		$	52,341

See accompanying notes to consolidated financial statements.

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SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In Thousands, Except Share and Per Share Data)

	For the Three Months Ended March 31,
	2018			2017
Operating expenses:
Research and development	$	3,977		$	2,527
General and administrative		2,223			1,987
Total operating expenses		6,200			4,514
Loss from operations		(6,200	)		(4,514	)
Other income (expense):
Interest income		134			41
Change in fair value of warrant liabilities		1,202			(2,027	)
Net loss		(4,864	)		(6,500	)
Unrealized loss on marketable securities		—			3
Comprehensive Loss	$	(4,864	)	$	(6,497	)
Net loss per common share – basic and diluted	$	(0.37	)	$	(0.69	)
Weighted-average number of shares outstanding – basic and diluted		12,991,532			9,416,259

See accompanying notes to consolidated financial statements.

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SPRING BANK PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

	For the Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(4,864	)	$	(6,500	)
Adjustments for:
Depreciation and amortization		45			36
Change in fair value of warrant liabilities		(1,202	)		2,027
Non-cash investment income		35			25
Non-cash stock-based compensation		658			500
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(29	)		359
Other assets		(181	)		—
Accounts payable		(45	)		519
Accrued expenses and other liabilities		(605	)		(1,081	)
Net cash used in operating activities		(6,188	)		(4,115	)
Cash flows from investing activities:
Proceeds from sale of marketable securities		13,550			7,714
Purchases of marketable securities		(10,000	)		—
Purchases of property and equipment		(250	)		(100	)
Net cash provided by investing activities		3,300			7,614
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs paid of $125		2,827			—
Issuance costs paid in connection with the private investment in a public entity		—			(147	)
Proceeds from exercise of stock options		—			2
Cash provided by (used in) financing activities		2,827			(145	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(61	)		3,354
Cash, cash equivalents and restricted cash, beginning of period		24,133			10,684
Cash, cash equivalents and restricted cash, end of period	$	24,072		$	14,038
Supplemental disclosures of cash flow information:
Cash paid for taxes	$	3		$	—
Cash paid for interest	$	—		$	—

See accompanying notes to consolidated financial statements.

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Spring Bank Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Spring Bank Pharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company engaged in the discovery and development of a novel class of therapeutics using a proprietary small molecule nucleic acid hybrid (“SMNH”) chemistry platform. The Company is developing its most advanced SMNH product candidate, inarigivir soproxil (“inarigivir”) (formerly known as SB 9200), for the treatment of chronic hepatitis B virus. Since inception in 2002 and prior to its initial public offering (“IPO”) in May 2016, the Company built its technology platform and product candidate pipeline, supported by grants and through private financings. In September 2015, the Company formed a wholly owned subsidiary, Sperovie Biosciences, Inc., and in December 2016, the Company formed a wholly owned subsidiary, SBP Securities Corporation.

The Company’s success is dependent upon its ability to successfully complete clinical development and obtain regulatory approval of its product candidates, successfully commercialize approved products, generate revenue, and, ultimately, attain profitable operations. The Company’s operations to date have been primarily limited to financing and staffing the Company and the development of inarigivir, SB 11285, SB 9225 and the Company’s other product candidates.

Basis of Presentation and Liquidity

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”).

The accompanying interim financial statements as of March 31, 2018 and for the three months ended March 31, 2018 and 2017, and related interim information contained within the notes to the financial statements, are unaudited. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. These interim financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2018. The results for the three months ended March 31, 2018 are not necessarily indicative of the results expected for the full fiscal year or any interim period.

As of March 31, 2018, the Company had an accumulated deficit of $84.1 million and $47.2 million in cash, cash equivalents and marketable securities.

The Company expects to continue to incur significant and increasing losses for the foreseeable future. The Company anticipates that its expenses will increase significantly as it continues to develop inarigivir, SB 11285, SB 9225 and its other product candidates.  The Company does not have any committed external source of funds. As a result, the Company will need additional financing to support its continuing operations.  Adequate additional funds may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect common stockholder rights. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to its technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sperovie Biosciences, Inc. and SBP Securities Corporation. Sperovie Biosciences, Inc. had operations consisting mainly of legal fees associated with intellectual property activities as of March 31, 2018. SBP Securities Corporation had assets primarily related to investments in marketable securities and operations consisting primarily of interest income as of March 31, 2018. All intercompany balances and transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates relied upon in preparing the accompanying financial statements related to the fair value of common stock and warrant liabilities, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, and accounting for certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase.

Restricted cash consists of $0.2 million which is held as a security deposit required in conjunction with a lease agreement entered into in October 2017. The Company had no restricted cash as of March 31, 2017.

Included in cash and cash equivalents as of March 31, 2018 and December 31, 2017, are money market fund investments of $22.4 million and $21.3 million, respectively, which are reported at fair value (Note 5).

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high-credit quality. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Investments in Marketable Securities

The Company invests excess cash balances in short-term and long-term marketable securities. The Company classifies investments in marketable securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time of purchase. At each balance sheet date presented, all investments in securities are classified as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and realized gains and losses are determined using the specific identification method. Unrealized holding gains and losses (the adjustment to fair value) and realized gains and losses are included in other income (expense) in the consolidated statement of operations. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations.

Property and Equipment, Net

Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives:

Asset Category	Useful Life
Equipment	5-7 years
Furniture and fixtures	5 years
Leasehold improvements	Lesser of 10 years or the remaining term of the respective lease

Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. Through March 31, 2018, no such impairment has occurred.

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Deferred Rent

The Company’s operating leases include rent escalation payment terms and other incentives received from landlords. Deferred rent represents the difference between actual operating lease payments due and straight-line rent expense over the term of the lease, which is recorded in accrued expenses and other current liabilities. The Company had deferred aggregate rent for its research and development facility in Milford, Massachusetts and its headquarters in Hopkinton, Massachusetts of $34,000 and $35,000 as of March 31, 2018 and December 31, 2017, respectively.

Research and Development Costs

Research and development expenses consist primarily of costs incurred for the Company’s research activities, including discovery efforts, and the development of product candidates, which include:

• expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical activities and clinical trials on the Company’s behalf as well as contract manufacturing organizations, or CMOs, that manufacture drug products for use in the Company’s preclinical and clinical trials;

• salaries, benefits and other related costs, including stock-based compensation expense, for personnel in the Company’s research and development functions;

• costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

• the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

• costs related to compliance with regulatory requirements; and

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

The Company expenses research and development costs as incurred. The Company recognizes external development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors and its clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in the Company’s consolidated financial statements as prepaid or accrued research and development expenses.

Warrants

The Company reviews the terms of all warrants issued and classifies the warrants as a component of permanent equity if they are freestanding financial instruments that are legally detachable and separately exercisable, contingently exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the warrants must require physical settlement and may not provide any guarantee of value or return. Warrants that meet these criteria are initially recorded at their grant date fair value and are not subsequently remeasured. Warrants that do not meet this criteria are classified as liabilities and remeasured to their fair value at each reporting period.

Stock-Based Compensation

The Company accounts for all stock-based payment awards granted to employees and nonemployees using a fair value method. The Company’s stock-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is generally the vesting period, on a straight-line basis. The measurement date for nonemployee awards is the date the services are completed, resulting in periodic adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards. Stock-based compensation costs for nonemployees are recognized as expense over the vesting period on a straight-line basis. Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss based on the department to which the related services are provided.

Financial Instruments

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts payable and liability classified warrants. The carrying amounts of cash and cash equivalents and accounts payable approximate their fair value due to the short-term nature of those financial instruments. The fair value of the marketable securities and liability classified warrants are remeasured to fair value each reporting period as described in Note 5.

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Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include cash equivalents, marketable securities and warrant liabilities.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. As of March 31, 2018 and December 31, 2017, both methods are equivalent. Basic and diluted net loss per share is described further in Note 2.

Income Taxes

Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the consolidated financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of interest expense. As of March 31, 2018 and December 31, 2017, the Company has not identified any material uncertain tax positions.

Guarantees and Indemnifications

As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity.

The Company leases office and laboratory space in Hopkinton, Massachusetts and research and development space in Milford, Massachusetts, under non-cancelable operating leases. The Company has standard indemnification arrangements under these leases that require it to indemnify the landlords against liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under the Company’s lease.

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Through March 31, 2018, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Segment Information

Operating segments are identified as components of an enterprise about which separate and discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief executive officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS. This standard removes inconsistencies and limitations between U.S. GAAP and IFRS in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements through improved disclosure requirements, and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period and early application is not permitted. The Company adopted this standard as of January 1, 2018, however, until the Company expects material revenue to be recognized, the adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends ASC Subtopic 825-10, Financial Instruments - Overall, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for the Company for the annual period beginning after December 15, 2017, with early adoption permitted. The adoption of this standard resulted in the cumulative unrealized gain or loss balance included in other comprehensive income at December 31, 2017, which was a $23,000 loss, to be reclassified to accumulated deficit through a cumulative effect adjustment. During the period ended March 31, 2018, the unrealized gain or loss is included in other income (expense) in the Company’s consolidated statement of operations.

In September 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230, Statement of Cash Flows, and includes provisions intended to reduce diversity in practice and provides guidance on eight specific statements of cash flows classification issues. The new standard is effective for the Company for the annual period ending after December 15, 2017, and for annual and interim periods thereafter, with early adoption permitted. The Company adopted this standard as of January 1, 2018, however, the adoption of this standard does not impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the current leasing guidance and upon adoption, will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for the Company for the annual period beginning after December 15, 2018 and can be early adopted by applying a modified retrospective approach for leases existing at, and entered into after, the beginning of the earliest comparable period presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II simply replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. This ASU is effective for public companies for the annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

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2. NET LOSS PER SHARE

The following table summarizes the computation of basic and diluted net loss per share of the Company for such periods (in thousands, except share and per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(4,864	)	$	(6,500	)
Weighted-average number of common shares-basic and diluted		12,991,532			9,416,259
Net loss per common share-basic and diluted	$	(0.37	)	$	(0.69	)

Diluted net loss per common share is the same as basic net loss per common share for all periods presented.

The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact due to the losses reported:

	Three Months Ended March 31,
	2018		2017
Common stock warrants		1,787,124		1,798,084
Stock options		1,261,065		966,300

3. INVESTMENTS

Cash in excess of the Company’s immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital.

The following table summarizes the Company’s investments, by category, as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31,		December 31,
Investments - Current:	2018		2017
Debt securities - available for sale	$	23,321	$	26,906
Total	$	23,321	$	26,906

A summary of the Company’s available-for-sale classified investments as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	At March 31, 2018
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	1,199	$	—	$	—		$	1,199
Corporate bonds		14,180		—		(33	)		14,147
United States treasury securities		7,986		—		(11	)		7,975
Total	$	23,365	$	—	$	(44	)	$	23,321
	At December 31, 2017
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	9,584	$	—	$	—		$	9,584
Corporate bonds		15,347		—		(23	)		15,324
United States treasury securities		1,998		—		—			1,998
Total	$	26,929	$	—	$	(23	)	$	26,906

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The amortized cost and fair value of the Company’s available-for-sale investments, by contract maturity, as of March 31, 2018 consisted of the following (in thousands):

	Amortized Cost		Fair Value
Due in one year or less	$	23,365	$	23,321
Due after one year through two years		—		—
Total	$	23,365	$	23,321

4. PROPERTY AND EQUIPMENT, NET

Property and equipment as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,			December 31,
	2018			2017
Equipment	$	937		$	727
Furniture and fixtures		332			292
Leasehold improvements		153			153
Total property and equipment		1,422			1,172
Less: accumulated depreciation and amortization		(530	)		(485	)
Property and equipment, net	$	892		$	687

Depreciation for the three months ended March 31, 2018 and 2017 was $45,000 and $36,000, respectively.  

5. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its commercial paper and fixed income securities within Level 2 because their fair values are determined using alternative pricing sources or models that utilized market observable inputs.

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A summary of the assets and liabilities that are measured at fair value as of March 31, 2018 and December 31, 2017 is as follows (in thousands):

			Fair Value Measurement at March 31, 2018
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	22,383	$	22,383	$	—	$	—
Fixed income securities		23,321		—		23,321		—
Total	$	45,704	$	22,383	$	23,321	$	—
Liabilities:
Warrant liabilities	$	11,926	$	—	$	—	$	11,926
Total	$	11,926	$	—	$	—	$	11,926
			Fair Value Measurement at December 31, 2017
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	21,265	$	21,265	$	—	$	—
Fixed income securities		26,906		—		26,906		—
Total	$	48,171	$	21,265	$	26,906	$	—
Liabilities:
Warrant liabilities	$	13,128	$	—	$	—	$	13,128
Total	$	13,128	$	—	$	—	$	13,128

(1) Money market funds are included within cash and cash equivalents in the accompanying consolidated balance sheets are recognized at fair value.

The following table reflects the change in the Company’s Level 3 liabilities, which consists of the warrants issued in a private placement in November 2016 (see Note 7), for the period ended March 31, 2018 (in thousands):

	November Private Placement Warrants
Balance at December 31, 2016	$	6,333
Change in fair value		6,795
Balance at December 31, 2017		13,128
Change in fair value		(1,202	)
Balance at March 31, 2018	$	11,926

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,		December 31,
	2018		2017
Clinical	$	1,480	$	1,093
Compensation and benefits		352		1,024
Accounting and legal		206		453
Other		92		164
Total accrued expenses	$	2,130	$	2,734

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7. STOCKHOLDERS’ EQUITY

Common and Preferred Stock

In June 2017, the Company issued and sold in an underwritten public offering an aggregate of 3,269,219 shares of its common stock at $13.00 per share, which included 384,604 shares pursuant to the exercise of an option to purchase additional shares granted to the underwriters in connection with the offering. The offering resulted in $39.6 million of net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.

In August 2017, the Company entered into a Controlled Equity Offering^SMSales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which the Company may offer and sell, from time to time through Cantor, shares of the Company’s common stock having an aggregate offering price of up to $50.0 million. The Company will pay Cantor a commission rate equal to 3.0% of the aggregate gross proceeds from each sale. During the three months ended March 31, 2018, the Company sold an aggregate of 190,055 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $15.53 per share.  During the year ended December 31, 2017, the Company sold an aggregate of 252,443 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $15.55 per share. 

Warrants

In connection with the amendment and restatement of a license agreement with BioHEP, the Company issued a warrant to purchase 125,000 shares of the Company’s common stock to BioHEP (the “BioHEP Warrant”), effective February 1, 2016. The Company evaluated the terms of the warrant and concluded that it should be equity-classified. The fair value of the warrant, $0.8 million, was estimated on the issuance date using a Black-Scholes pricing model based on the following assumptions: an expected term of two and a half years, expected stock price volatility of 71%, a risk free rate of 1.01%, and a dividend yield of 0%. The fair value was expensed as research and development costs.

In connection with the Company’s IPO, the Company issued to the sole book-running manager for the IPO a warrant to purchase 27,600 shares of common stock in May 2016 and a warrant to purchase 747 shares of common stock in June 2016 (together, the “IPO Warrants”). The IPO Warrants are exercisable at an exercise price of $15.00 per share and expire on May 5, 2021. The Company evaluated the terms of the IPO Warrants and concluded that they should be equity-classified. The fair value of the May 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.99 years; expected stock price volatility of 87%; a risk free rate of 1.20%; and a dividend yield of 0%. The fair value of the June 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.92 years; expected stock price volatility of 87%; a risk free rate of 1.23%; and a dividend yield of 0%. The aggregate fair value of the IPO Warrants was $0.2 million.

The Company received approximately $5.3 million in proceeds upon the exercise of warrants to purchase 641,743 shares of its common stock of the Company, which were exercised in connection with the closing of the IPO. Upon the closing of the Company’s IPO, all of the outstanding warrants that were not exercised, except the BioHEP warrant and the IPO Warrants, terminated in accordance with their original terms.

In November 2016, the Company entered into a definitive agreement with respect to the private placement of 1,644,737 shares of common stock and warrants to purchase 1,644,737 shares of common stock (the “November Private Placement Warrants”) to a group of accredited investors (the “November Private Placement”). These investors paid $9.12 for each share of common stock and warrant to purchase one share of common stock. The November Private Placement Warrants are exercisable at an exercise price of $10.79 per share and expire on November 23, 2021. The Company evaluated the terms of these warrants and concluded that they are liability-classified. In November 2016, the Company recorded the fair value of these warrants of approximately $8.3 million using a Black-Scholes pricing model. The Company must recognize any change in the value of the warrant liability each reporting period in the statement of operations. As of December 31, 2017 and March 31, 2018, the fair value of the November Private Placement Warrants was approximately $13.1 million and $11.9 million, respectively (see Note 5).

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the warrants is as follows:

	March 31, 2018			December 31, 2017
Risk-free interest rate		2.3	%		2.0	%
Expected term (in years)		3.6			3.9
Expected volatility		43.5	%		73.1	%
Expected dividend yield		0	%		0	%

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The following table summarizes the warrant activity for the year ended December 31, 2017 and for the three months ended March 31, 2018:

	Warrants
Outstanding at December 31, 2016		1,798,084
Grants		—
Exercises		(10,960	)
Expirations/cancellations		—
Outstanding at December 31, 2017		1,787,124
Grants		—
Exercises		—
Expirations/cancellations		—
Outstanding at March 31, 2018		1,787,124

2014 Stock Incentive Plan

In April 2014, the Company’s Board of Directors approved the 2014 Stock Incentive Plan (the “2014 Plan”) and authorized 750,000 shares of common stock to be issued under the 2014 Plan. The Company’s 2014 Plan provides for the issuance of common stock, stock options and other stock-based awards to employees, officers, directors, consultants, and advisors. The Company’s 2015 Stock Incentive Plan (the “2015 Plan”) became effective immediately prior to the closing of the Company’s IPO on May 11, 2016. Upon the effectiveness of the 2015 Plan, 116,863 shares of common stock that remained available for grant under the 2014 Plan became available for grant under the 2015 Plan, and no further awards were available to be issued under the 2014 Plan.

2015 Stock Incentive Plan

The 2015 Plan provides for the issuance of common stock, stock options and other stock-based awards to employees, officers, directors, consultants and advisors of the Company. The number of shares reserved for issuance under the 2015 Plan is the sum of 750,000 shares of common stock, plus the number of shares equal to the sum of (i) 116,863 shares of common stock, which was the number of shares reserved for issuance under the 2014 Plan that remained available for grant under the 2014 Plan immediately prior to the closing of the Company’s IPO, and (ii) the number of shares of common stock subject to outstanding awards under the 2014 Plan that expire, terminate or are otherwise surrendered, cancelled or forfeited. The exercise price of stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the 2015 Plan expire 10 years after the grant date, unless the Board sets a shorter term. As of March 31, 2018, the Company had 185,204 shares available for issuance under the 2015 Plan.

The following table summarizes the option activity for the year ended December 31, 2017 and the three months ended March 31, 2018:

	Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding at December 31, 2016		704,315		$	11.82	$	—
Granted		297,500			8.45		—
Exercised		(10,000	)		9.28		11,228
Cancelled		(3,250	)		12.44		—
Outstanding at December 31, 2017		988,565		$	10.83		2,617,859
Granted		272,500			12.14		—
Exercised		—			—		—
Cancelled		—			—		—
Options outstanding at March 31, 2018		1,261,065		$	11.11	$	5,381,185
Options exercisable at March 31, 2018		558,050		$	11.23	$	2,313,947

As of March 31, 2018, all options outstanding have a weighted-average remaining contractual life of 8.3 years. The weighted-average fair value of all stock options granted for the three months ended March 31, 2018 was $8.62.  Intrinsic value at March 31, 2018 is based on the closing price of the Company’s common stock of $15.38 per share.

In January 2018, the Company issued a stock option award as an inducement grant for the purchase of an aggregate of 50,000 shares of the Company’s common stock, outside of the 2015 Plan, at an exercise price of $12.02 per share. The inducement grant is excluded from the option activity table above.

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There were no stock options granted prior to 2015. The assumptions the Company used to determine the fair value of stock options granted to employees and directors in 2018 and 2017 are as follows, presented on a weighted-average basis.

	Three Months Ended March 31,
	2018			2017
Risk-free interest rate		2.4	%		2.0	%
Expected term (in years)		6.0			6.0
Expected volatility		82.7	%		78.6	%
Expected dividend yield		0	%		0	%

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 31, 2018 and 2017 (in thousands):

	For the Three Months Ended March 31,
	2018		2017
Stock-based compensation:
Research and development	$	201	$	161
General and administrative		455		339
Total Stock-based compensation	$	656	$	500

The fair value of stock options vested during the three months ended March 31, 2018 was $0.8 million. At March 31, 2018, there was $5.3 million of unrecognized stock-based compensation expense relating to stock options granted pursuant to the Plans, which will be recognized over the weighted-average remaining vesting period of 2.7 years.

Reserved Shares

As of March 31, 2018 and 2017, the Company reserved the following shares of common stock for issuance of shares resulting from exercise of outstanding warrants and options, as well as issuance of shares available for grant under the Company’s stock incentive plans:

	March 31,
	2018		2017
2016 BioHEP warrants		125,000		125,000
2016 IPO warrants		28,347		28,347
November Private Placement warrants		1,633,777		1,644,737
2014 and 2015 Stock incentive plans		1,446,269		1,460,999
Total		3,233,393		3,259,083

8. COMMITMENTS AND CONTINGENCIES

Leases

In April 2015, the Company entered into an amendment to the lease for its research and development facility in Milford, Massachusetts to extend the term of the lease through March 31, 2018 and expand the leased laboratory space.

In March 2016, the Company entered into a new operating lease for its headquarters in Hopkinton, Massachusetts with a lease term through May 31, 2021. The total payments due during the term of the lease are approximately $771,000.

In October 2017, the Company entered into a lease agreement for premises located in Hopkinton, Massachusetts. The premises covered by the lease will serve as the Company’s new principal office and laboratory space. The initial term of the lease is 125 months beginning on the date on which the landlord substantially completes certain renovations to the premises covered by the lease, which had not occurred as of March 31, 2018. The Company has the option to extend the lease one time for an additional 5-year period.  Following an eleven-month rent abatement period, the Company will be obligated to make monthly rent payments in the amount of $34,533, which is subject to increase by approximately 3% annually for the first five years of the lease and by approximately 2.5% annually thereafter. The total lease payments due during the term of the lease are approximately $4.4 million. In addition, the Company is responsible under the lease for specified costs and charges, including certain operating expenses, utilities, taxes and insurance.   

Rent paid under the leases for the three months ended March 31, 2018 and 2017 was $59,000 and $56,000, respectively.

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Future minimum commitments due under all leases at March 31, 2018 are as follows (in thousands):

Year
2018	$	148
2019		399
2020		585
2021		504
Thereafter		3,338
Total minimum lease payments	$	4,974

The commitments under the lease agreement entered into in October 2017 are included in the table above.

BioHEP Technologies Ltd. License Agreement

In January 2016, the Company entered into an amended and restated license agreement with BioHEP, which became effective on February 1, 2016.

Under the amended and restated license agreement, the Company agreed to pay BioHEP up to $3.5 million in development and regulatory milestone payments for disease(s) caused by each distinct virus for which the Company develops licensed product(s). BioHEP is also eligible to receive tiered royalties in the low-to-mid single-digits on net product sales of licensed products by the Company and its affiliates and sub licensees, and a specified share of non-royalty sublicensing revenues the Company and its affiliates receive from sub licensees, which share of sublicensing revenues is capped at a maximum aggregate of $2.0 million under all such sublicenses. Milestone and royalty payments associated with the Company’s amended and restated license agreement with BioHEP cannot reasonably estimated as to whether or when they will occur. As of March 31, 2018, there have been no milestone or royalty payments made to BioHEP.

Contingencies

The Company accrues for contingent liabilities to the extent that the liability is probable and estimable. There are no accruals for contingent liabilities in these consolidated financial statements.

During May 2015, the Company entered into a transition agreement with the Company’s former President and Chief Executive Officer. Under the transition agreement, he continued to serve as the Company’s president and chief executive officer for a transition period that ended on August 17, 2015. Following the transition period, the Company made 18 monthly payments totaling $464,000 and also provided benefits consistent with the coverage that was provided prior to the execution of the transition agreement. There was no remaining unpaid balance relating to this obligation at March 31, 2018.

9. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued, to ensure that this submission includes appropriate disclosure of events both recognized in the consolidated financial statements and events which occurred subsequently but were not recognized in the consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2017, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission, or the SEC, on February 20, 2018.

This report contains forward-looking statements that are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, or PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA. Forward-looking statements involve risks and uncertainties. In this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.

Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution our readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

We are a clinical-stage biopharmaceutical company engaged in the discovery and development of a novel class of therapeutics using our proprietary small molecule nucleic acid hybrid, or SMNH, chemistry platform. Our SMNH compounds are synthetic nucleotide segments that are designed to mimic the interactions of nucleic acids with proteins. We design our SMNH compounds to selectively target and modulate the activity of specific proteins implicated in various disease states. We are developing our lead SMNH product candidate, inarigivir soproxil, or inarigivir, for the treatment of chronic hepatitis B virus, or HBV. We have designed our antiviral product candidates, including inarigivir, to selectively activate within infected cells the cellular protein, retinoic acid-inducible gene 1 (RIG-I), to inhibit viral replication and to cause the induction of intracellular interferon signaling pathways for antiviral defense. We believe that inarigivir, as a RIG-I agonist, could play an important role in antiviral therapy as a result of its dual mechanism of action by selectively modulating the body’s immune response and inhibiting viral replication. We are also developing additional SMNH product candidates, including our lead STING (STimulator of INterferon Genes) agonist product candidate, SB 11285, which is an immunotherapeutic agent for the potential treatment of selected cancers.

In April 2017, the World Health Organization, or WHO, Global Hepatitis Report estimated that 257 million people are chronically infected with chronic HBV worldwide, and nearly 900,000 people worldwide die every year due to complications from chronic HBV infection despite the availability of vaccines against the virus.  There is no approved cure for chronic HBV and currently approved direct-acting antiviral therapies for the treatment of chronic HBV lack a broadly sustained response following the discontinuation of treatment.

We are developing inarigivir, an orally-administered selective immunomodulator, as a potential backbone in a combinatorial treatment for chronic HBV with the goal of substantially increasing chronic HBV functional cure rates in a simple, safe and selective manner. We are currently conducting a global Phase 2 multi-center clinical trial of inarigivir, which we refer to as the ACHIEVE trial. In addition to the ACHIEVE trial, we have entered into multiple collaborations and seek to enter into additional collaborations with third parties that are investigating and/or developing compounds for the treatment of chronic HBV with different pharmacological mechanisms of action than inarigivir. We are also pursuing the development of SB 9225, a co-formulation of inarigivir with tenofovir disoproxil fumarate, as a potential fixed-dose combination product for the treatment of patients with chronic HBV. We believe the immunomodulatory activity of inarigivir could become a key component of a future combinatorial treatment for patients infected with chronic HBV, increasing the percentage of chronic HBV patients who achieve a functional cure.  

In addition to inarigivir, we are developing our lead STING agonist product candidate, SB 11285, as a potential next-generation immunotherapeutic agent for the treatment of selected cancers. In our preclinical studies in multiple tumor-derived cell lines, SB 11285 has been observed to cause the induction of cytokines consistent with engagement of the target, as well as cell death and apoptosis.  Based on our preclinical studies performed to date, SB 11285 has demonstrated efficacy, without dose-limiting

18

toxicities, in multiple rodent tumor models when administered intravenously or intratumorally. These findings lead us to believe that SB 11285 has the potential to be administered clinically by either route of administration, and that SB 11285 may be used to target a variety of tumors at various anatomic sites and potentially to be used in combination with other therapeutic modalities to enhance efficacy.

To date, we have devoted substantially all of our resources to research and development efforts, including conducting clinical trials for our product candidates, protecting our intellectual property and providing general and administrative support for these operations. We have not generated any revenue to date other than from grants from the National Institutes of Health, or NIH. No additional funding remains available to us under any grant for the development of any of our product candidates. We have funded our operations primarily through proceeds received from private placements of convertible notes, common stock and/or warrants; the exercise of options and warrants; NIH grant funding; and public offerings of securities.

We have incurred significant annual net operating losses in every year since our inception and expect to continue to incur significant expenses and net operating losses for the foreseeable future. Our net losses for the three months ended March 31, 2018 and 2017 were $4.9 million and $6.5 million, respectively. As of March 31, 2018, we had an accumulated deficit of $84.1 million. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur significant expenses and increasing operating losses for the next several years.

We anticipate that our expenses will increase significantly as we continue to develop inarigivir, SB 11285 and our other product candidates.  See “—Liquidity and Capital Resources—Funding Requirements.” As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings, including our at-the-market offering program with Cantor Fitzgerald & Co., or other sources, which may include collaborations with third parties. Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies or product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve and sustain profitability, and we may never be able to do so.

As of March 31, 2018, we had $47.2 million in cash, cash equivalents and marketable securities. We expect that our cash, cash equivalents and marketable securities as of March 31, 2018 will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2019, but will not be sufficient to fund the initiation of any Phase 3 trial for inarigivir, which could occur earlier than the fourth quarter of 2019. See “—Liquidity and Capital Resources.”

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. We have no manufacturing facilities, and all of our manufacturing activities are contracted out to third parties. Additionally, we currently utilize third-party contract research organizations, or CROs, to carry out our clinical development activities, and we do not yet have a sales organization. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we will seek to continue to fund our operations through public or private equity or debt financings or other sources including geographic partnerships. However, we may be unable to raise additional funds or enter into other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our products.

Financial Operations Overview

Operating expenses

Our operating expenses since inception have consisted primarily of research and development expense and general and administrative costs.

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Research and development

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, which include:

• expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical activities and clinical trials on our behalf as well as contract manufacturing organizations, or CMOs, that manufacture drug products for use in our preclinical and clinical trials;

• salaries, benefits and other related costs, including stock-based compensation expense, for personnel in our research and development functions;

• costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

• the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

• costs related to compliance with regulatory requirements; and

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

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses.

Our primary focus of research and development since inception has been on the development of inarigivir. Our direct research and development expenses consist primarily of external costs, such as fees paid to investigators, consultants and CROs in connection with our preclinical studies and clinical trial and regulatory fees. We do not allocate employee-related costs and other indirect costs to specific research and development programs because our primary focus has been on the discovery and development of inarigivir. Our direct research and development expenses are not currently tracked on a program-by-program basis.

The successful development of our product candidates is highly uncertain. Accordingly, at this time, we cannot reasonably estimate the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of these product candidates. We are also unable to predict when, if ever, we will generate revenues from inarigivir or any of our other current or potential product candidates. This is due to the numerous risks and uncertainties associated with developing medicines, including the uncertainties of:

• establishing an appropriate safety profile with IND-enabling toxicology studies;

• successful enrollment in and completion of clinical trials;

• receipt of marketing approvals from applicable regulatory authorities;

• establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

• obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

• launching commercial sales of the products, if and when approved, whether alone or in collaboration with others; and

• a continued acceptable safety profile of the products following approval.

A change in the outcome of any of these variables with respect to any of our product candidates would significantly change the costs and timing associated with the development of that product candidate.

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Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase in the foreseeable future as we continue development of our product candidates. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

General and administrative

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates. We also expect to continue to incur significant expenses associated with being a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, and investor and public relations costs.

Other income (expense)

Other income (expense) consists of interest income earned on our cash, cash equivalents, restricted cash and marketable securities and the gain/loss on the change in the fair value of the warrant liabilities.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We believe that the estimates and assumptions involved in the accounting policies described therein may have the greatest potential impact on our consolidated financial statements and, therefore, consider these to be our critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a predetermined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:

• CROs in connection with performing research services on our behalf and clinical trials;

• investigative sites or other providers in connection with clinical trials;

• vendors in connection with preclinical and clinical development activities; and

• vendors related to product manufacturing, development and distribution of preclinical and clinical supplies.

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We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

Liability-Classified Warrants

In connection with our private placement offering in November 2016, or the November private placement, we issued warrants to purchase 1,644,737 shares of common stock to a group of accredited investors. The warrants will be exercisable beginning May 24, 2017 at an exercise price of $10.79 per share. We evaluated the terms of the warrants and concluded that they should be liability-classified. We recognize any change in the value of the warrant liability each reporting period in the statement of operations. As of March 31, 2018, the fair value of the warrants was approximately $11.9 million, which is a decrease of $1.2 million from the fair value of approximately $13.1 million as of December 31, 2017.  See Note 7 of the notes to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Stock-Based Compensation

We issue stock-based awards to employees and non-employees, generally in the form of stock options. We account for our stock-based compensation awards in accordance with Financial Accounting Standards Board, (FASB) ASC Topic 718, Compensation—Stock Compensation, or ASC 718. ASC 718 requires all stock-based payments to employees, including grants of employee stock options and modifications to existing stock awards, to be recognized in the statements of operations and comprehensive loss based on their fair values. We account for stock-based awards to consultants and non-employees in accordance with ASC Topic 505-50, Equity-Based-Payments to Non-Employees, or ASC 505-50, which requires the fair value of the award to be re-measured at fair value until a performance commitment is reached or counterparty performance is complete. Described below is the methodology we have utilized in measuring stock-based compensation expense. Stock option, common stock and restricted stock values are determined based on a blend of our stock price and the quoted market price of our comparable public companies.

We measure stock options and other stock-based awards granted to employees and directors based on the fair value on the date of grant and recognize the corresponding compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. Generally, we issue stock options and restricted stock awards with only service-based vesting conditions and record the expense for these awards using the straight-line method. We adopted ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09, effective January 1, 2017. Prior to adoption, share-based compensation expense was recognized on a straight-line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that are expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Following adoption of ASU 2016-09, we no longer apply a forfeiture rate and instead will account for forfeitures as they occur.

We measure stock options and other stock-based awards granted to consultants and nonemployees based on the fair value of the award on the date at which the related service is complete. We recognize this compensation expense over the period during which services are rendered by such consultants and nonemployees until completed. At the end of each financial reporting period prior to completion of the service, we remeasure the fair value of these awards using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model.

We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model. Use of this model requires that we make assumptions as to the fair value of our common stock, the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. Because we lack company-specific historical and implied volatility information due in part to the limited time in which we have operated as a publicly traded company, we estimate our expected volatility based on the historical volatility of a group of publicly traded peer companies. We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our traded stock price. We use the simplified method prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-

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Based Payment, to calculate the expected term of options granted to employees and directors. We base the expected term of options granted to consultants and nonemployees on the contractual term of the options. We determine the risk-free interest rate by reference to the United States Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

There were no stock options granted prior to 2015. We recognize forfeitures as they occur and the compensation expense is reversed in the period that the forfeiture occurs.

In 2015, we began issuing stock options to employees, directors and consultants. During the periods ended March 31, 2018 and 2017, we issued common stock to consultants and advisors as compensation for services and recognized expense equal to the fair value of the shares issued. The following table summarizes the classification of our stock-based compensation expenses recognized in our consolidated statements of operations and comprehensive loss (in thousands):

	For the Three Months Ended March 31,
	2018		2017
Research and development	$	201	$	161
General and administrative		455		339
	$	656	$	500

We expect the impact of our stock-based compensation expense for stock options granted to employees and non-employees to grow in future periods due to the potential increases in the fair value of our common stock and the increase in the number of grants as a result of an increase in headcount.

JOBS Act

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company,” or EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Subject to certain conditions, as an EGC, we intend to rely on certain exemptions afforded by the JOBS Act, including the exemption from: certain requirements related to the disclosure of executive compensation in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive compensation and any golden parachute payments; the requirement that the auditors provide an attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an EGC until the earliest of the last day of the fiscal year in which we have total annual gross revenues of approximately $1.07 billion or more; the last day of the fiscal year following the fifth anniversary of the date of the completion of the closing of an IPO; the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

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Results of Operations

Comparison of the Three Months Ended March 31, 2018 and 2017

The following table summarizes our results of operations for the three months ended March 31, 2018 and 2017 (in thousands):

	For the Three Months Ended March 31,						Increase
	2018			2017			(Decrease)
Operating expenses:
Research and development	$	3,977		$	2,527		$	1,450
General and administrative		2,223			1,987			236
Total operating expenses		6,200			4,514			1,686
Loss from operations		(6,200	)		(4,514	)		(1,686	)
Other income		134			41			93
Change in fair value of warrant liabilities		1,202			(2,027	)		3,229
Net loss	$	(4,864	)	$	(6,500	)	$	1,636

Research and development expenses. Research and development expenses were $4.0 million for the three months ended March 31, 2018, compared to $2.5 million for the three months ended March 31, 2017. The increase of $1.5 million was due primarily to an increase in spending on preclinical studies and clinical trial related activities for inarigivir and preclinical studies for SB 11285 of $1.2 million in the three months ended March 31, 2018, an increase in additional salaries and benefits of $0.2 million associated with higher headcount of research and development employeesin the three months ended March 31, 2018 and an increase in non-cash charges of $0.1 million related to stock-based compensation and depreciation expenses.

General and administrative expenses. General and administrative expenses were $2.2 million for the three months ended March 31, 2018, compared to $2.0 million for the three months ended March 31, 2017. The increase of $0.2 million was primarily due to an increase in non-cash charges for stock-based compensation of $0.1 million, an increase of $0.1 million for consulting-related costs during the three months ended March 31, 2018 and an increase of $0.1 million for other general and administrative costs in the three months ended March 31, 2018, offset by a decrease of $0.1 million for public company-related expenses in the three months ended March 31, 2018.

Other income. Other income for the three months ended March 31, 2018 and 2017 is solely comprised of interest income. Interest income for the three months ended March 31, 2018 and 2017 was $134,000 and $41,000, respectively, and was primarily related to the interest earned on marketable securities. The increase in interest income in the three months ended March 31, 2018 was due to a higher average balance of marketable securities as a result of the receipt of proceeds primarily from the issuances of common stock in our November Private Placement and 2017 public offering.

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities for the three months ended March 31, 2018 was a decrease of $1.2 million, which was solely related to the change in the fair value of the warrants from the November Private Placement, primarily due to a decrease in the Company’s expected stock price volatility. The change in the fair value of the warrant liabilities for the three months ended March 31, 2017 was an increase of $2.0 million and was solely related to the change in fair value of the warrants from the November Private Placement, primarily due to an increase in the Company’s stock price and expected stock price volatility.

Liquidity and Capital Resources

Sources of Liquidity

From our inception through March 31, 2018, we have financed our operations through proceeds received from private placements of convertible notes, common stock and/or warrants; the exercise of options and warrants; NIH grant funding; and public offerings of securities. As of March 31, 2018, we had cash, cash equivalents and marketable securities totaling $47.2 million and an accumulated deficit of $84.1 million.

In August 2017, we entered into a Controlled Equity Offering Sales Agreement, or Sales Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which we may offer and sell, from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $50.0 million. We will pay Cantor a commission rate equal to 3.0% of the aggregate gross proceeds from each sale. Shares sold under the Sales Agreement will be offered and sold pursuant to our Registration Statement on Form S-3 (Registration No. 333-218399) that was declared effective by the SEC on June 12, 2017, or the Registration Statement, and

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a prospectus supplement and accompanying base prospectus that we filed with the SEC on August 18, 2017.  During the three months ended March 31, 2018, we sold an aggregate of 190,055 shares of our common stock under the Sales Agreement at a weighted average selling price of $15.53 per share.As of March 31, 2018, we had sold an aggregate of 442,498 shares of our common stock under the Sales Agreement at a weighted average selling price of $15.54 per share.

In June 2017, we issued and sold in an underwritten public offering an aggregate of 3,269,219 shares of our common stock at $13.00 per share, which included 384,604 shares pursuant to the exercise of an option to purchase additional shares granted to the underwriters in connection with the offering. The shares issued in this offering were registered under the Securities Act pursuant to the Registration Statement. The offering resulted in $39.6 million of net proceeds, after deducting underwriting discounts and commissions and other offering expenses payable by us.

In November 2016, we entered into a definitive agreement with a group of accredited investors resulting in a private placement of 1,644,737 shares of our common stock and warrants to purchase 1,644,737 shares of common stock, which we refer to as the November private placement. These investors paid $9.12 for each share of common stock and warrant to purchase one share of common stock. The warrants will be exercisable beginning May 24, 2017 with a term of five years at an exercise price of $10.79. We completed the November private placement on November 23, 2016, resulting in approximately $15.0 million in gross proceeds. Net proceeds from this issuance after deducting placement agent fees and other offering-related expenses were $13.7 million.

In May 2016, we completed our IPO and sold an aggregate of 944,900 shares of common stock at a price to the public of $12.00 per share, which included 24,900 shares pursuant to the exercise of an option to purchase additional shares granted to the underwriters in connection with the IPO. The offering resulted in $8.2 million of net proceeds, after deducting underwriting discounts and commissions and other offering expenses payable by us. In connection with the closing of the IPO, we received approximately $5.3 million in proceeds upon the exercise of previously issued warrants to purchase 641,743 shares of common stock.

Cash Flows

The following table summarizes sources and uses of cash for each of the periods presented (in thousands):

	For the Three Months Ended March 31,
	2018			2017
Net cash used in operating activities	$	(6,188	)	$	(4,115	)
Net cash provided by investing activities		3,300			7,614
Net cash provided by (used in) financing activities		2,827			(145	)
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(61	)	$	3,354

Net cash used in operating activities. The use of cash in both periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital. Net cash used in operating activities was $6.2 million and $4.1 million during the three months ended March 31, 2018 and 2017, respectively. The increase in cash used in operating activities for the three months ended March 31, 2018 compared to March 31, 2017 was primarily due to an increase in prepaid expenses and other current assets, other assets and accounts payable of $1.2 million, which were offset by a decrease in the net loss of $1.6 million and accrued expenses of $0.5 million. In addition, there was an increase in the non-cash change in the fair value of the warrant liability of $3.2 million and an increase in non-cash stock-based compensation of $0.2 million.

Net cash provided by investing activities. Net cash provided by investing activities was $3.3 million for the three months ended March 31, 2018 compared to $7.6 million for the three months ended March 31, 2017. The cash provided by investing activities of $3.3 million in the three months ended March 31, 2018 was primarily the result of $13.6 million in proceeds from the sale of marketable securities, offset by $10.0 million for the purchase of marketable securities and $0.3 million for the purchase of property and equipment. The cash provided by investing activities of $7.6 million for the three months ended March 31, 2017 was mainly due to proceeds of $7.7 million from the sale of marketable securities, offset by $0.1 million for the purchase of property and equipment for the three months ended March 31, 2017.

Net cash provided by (used in) financing activities. Net cash provided by financing activities was $2.8 million during the three months ended March 31, 2018 and net cash used in financing activities was $0.1 million during the three months ended March 31, 2017. The cash provided by financing activities in the three months ended March 31, 2018 was primarily the result of $2.8 million of net proceeds from our at-the-market offering program under the Sales Agreement. The cash used in financing activities in the three months ended March 31, 2017 was primarily the result of $0.1 million for offering expenses related to the November Private Placement.

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Funding Requirements

We expect to continue to incur significant and increasing losses for the foreseeable future. We anticipate these losses to increase as our expenses increase, and we expect that our expenses will increase if and as we:

• continue to develop and conduct clinical trials of inarigivir, including our ongoing Phase 2 ACHIEVE trial of inarigivir for chronic HBV;

• continue preclinical development of SB 11285, our lead STING agonist product candidate, and initiate clinical trials of SB 11285, if supported by the preclinical data;

• initiate and continue research and preclinical and clinical development efforts for our other product candidates, including SB 9225, a potential fixed-dose co-formulation product that combines inarigivir and tenofovir disoproxil fumarate;

• seek to identify and develop additional product candidates;

• seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials, if any;

• establish sales, marketing, distribution and other commercial infrastructure in the future to commercialize various products for which we may obtain marketing approval, if any;

• require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;

• maintain, expand and protect our intellectual property portfolio;

• hire and retain additional personnel, including clinical, quality control and scientific personnel;

• add operational, financial and management information systems and personnel, including personnel to support our product development and help us continue to comply with our obligations as a public company; and

• add equipment and physical infrastructure to support our research and development programs and the buildout and transition to our new corporate headquarters.

We expect that our existing cash, cash equivalents and marketable securities as of March 31, 2018 will enable us to fund our operating expenses and capital expenditure requirements at least into the fourth quarter of 2019, but will not be sufficient to fund the initiation of any Phase 3 trial for inarigivir, which could occur earlier than the fourth quarter of 2019. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements both near and long-term, will depend on many factors, including, but not limited to:

• initiation, progress, timing, costs and results of preclinical studies and clinical trials of inarigivir, including our Phase 2 ACHIEVE clinical trial in patients with chronic HBV;

• initiation, progress, timing, costs and results of preclinical studies and clinical trials, if applicable, of SB 11285;  

• initiation, progress, timing, costs and results of preclinical studies and clinical trials of our other product candidates, including SB 9225;

• our obligation to make royalty and non-royalty sublicense payments to third-party licensors, if any, under our licensing agreements;

• the timing, receipt, and amount of milestone payments or royalties, if any, from inarigivir, SB 11285, SB 9225 or any of our other product candidates;

• the number and characteristics of product candidates that we discover or in-license and develop;

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• the outcome, timing and cost of seeking regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect;

• the costs of filing, prosecuting, defending and enforcing any patent claims and maintaining and enforcing other intellectual property rights;

• subject to receipt of marketing approval, revenue, if any, received from commercial sales of inarigivir and any other products;

• the costs and timing of the implementation of commercial-scale manufacturing activities;

• the costs and timing of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval; and

• the costs of operating as a public company.

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. We have an effective shelf registration statement on Form S-3 (File No. 333-218399), which we refer to as the Registration Statement.  In August 2017, we entered into the Sales Agreement with Cantor pursuant to which we may offer and sell, from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $50.0 million.  Shares sold under the Sales Agreement will be offered and sold pursuant to the Registration Statement and a prospectus supplement and accompanying base prospectus that we filed with the SEC on August 18, 2017.  As of March 31, 2018, we had up to $100.6 million in securities available for future issuance under the Registration Statement, which included $43.1 million in shares issuable pursuant to the Sales Agreement with Cantor. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests 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 common stockholders. Additional debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute the ownership interests of our stockholders.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations at March 31, 2018, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

	Payments Due by Period
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
Operating lease commitments	$	4,974	$	186	$	1,095	$	1,378	$	2,315
Total	$	4,974	$	186	$	1,095	$	1,378	$	2,315

In addition to the amounts shown in the above table, we have contractual obligations pursuant to our amended and restated license agreement with BioHEP. Under this agreement, we have agreed to pay up to $3.5 million in development and regulatory milestone payments to BioHEP for each distinct viral indication for which we develop licensed product(s). BioHEP is also eligible to receive tiered royalties in the low-to-mid single-digits on net product sales of licensed products by us and our affiliates and sub licensees, and a specified share of non-royalty sublicensing revenues we and our affiliates receive from sub licensees, which share of

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sublicensing revenues is capped at a maximum aggregate of $2.0 million under all such sublicenses. Milestone and royalty payments associated with our amended and restated license agreement with BioHEP have not been included in the above table of contractual obligations as we cannot reasonably estimate if or when they will occur.

In October 2017, we entered into a lease agreement for our new principal office and laboratory space. The initial term of the lease is 125 months beginning on the date on which the landlord substantially completes certain renovations to the premises covered by the lease, which we expect to occur in the second quarter of 2018. Following an 11-month rent abatement period, we will be obligated to make monthly rent payments in the amount of $34,533, which is subject to increase by approximately 3% annually for the first five years of the lease and by approximately 2.5% annually thereafter. The total lease payments due during the term of the lease are approximately $4.4 million. In addition, we are responsible under the lease for specified costs and charges, including certain operating expenses, utilities, taxes and insurance.  

We enter into contracts in the normal course of business with third party service providers for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. We have not included our payment obligations under these contracts in the table as these contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material. We could also enter into additional research, manufacturing, supplier and other agreements in the future, which may require up-front payments and even long-term commitments of cash.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS. This standard removes inconsistencies and limitations between U.S. GAAP and IFRS in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements through improved disclosure requirements, and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period and early application is not permitted. We adopted this standard as of January 1, 2018, however, until we expect material revenue to be recognized, the adoption of this standard is not expected to have an impact on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends Accounting Standards Codification, or ASC, Subtopic 825-10, Financial Instruments - Overall, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for our annual period beginning after December 15, 2017, with early adoption permitted. The adoption of this standard resulted in the cumulative unrealized gain or loss balance included in other comprehensive income at December 31, 2017, which was a $23,000 loss, to be reclassified to accumulated deficit through a cumulative effect adjustment. During the period ended March 31, 2018, the unrealized gain or loss is included in other income (expense) in our consolidated statement of operations.

In September 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230, Statement of Cash Flows, and includes provisions intended to reduce diversity in practice and provides guidance on eight specific statements of cash flows classification issues. The new standard is effective for our annual period ending after December 15, 2017, and for annual and interim periods thereafter, with early adoption permitted. We adopted this standard as of January 1, 2018, however, the adoption of this standard does not have an impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the current leasing guidance and upon adoption, will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for our annual period beginning after December 15, 2018 and can be early adopted by applying a modified retrospective approach for leases existing at, and entered into after, the beginning of the earliest

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comparable period presented in the financial statements. We are currently evaluating the impact that the adoption of this standard may have on our consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II simply replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (“ASC”) Topic 480with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. This ASU is effective for public companies for the annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact that the adoption of this standard may have on our consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. Our cash, cash equivalents and marketable securities of $47.2 million as of March 31, 2018, consisted of cash, money market accounts and short-term marketable debt securities. 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, an immediate 10% change in market interest rates would not be expected to have a material impact on the fair market value of our investment portfolio or on our financial condition or results of operations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of March 31, 2018, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Inherent Limitations of Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any material litigation.

Item 1A. Risk Factors.

There have been no material changes in or additions to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On January 8, 2018, the Company issued an option grant to the Company’s new vice president, nonclinical and translational research, as a new hire inducement option grant pursuant to Nasdaq Listing Rule 5635(c)(4) and Section 4(a)(2) of the Securities Act of 1933, as amended. The option grant is for the purchase of an aggregate of 50,000 shares of our common stock.  This stock option award is exercisable at $12.02 per share and vests as to 25% on the one year anniversary of the employee’s date of hire, with the remaining vesting monthly thereafter until January 2022, subject to continued employment with the Company.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index.

31

EXHIBIT INDEX

Exhibit Number	Description
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

32

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.

	Spring Bank Pharmaceuticals, Inc.
Date: April 27, 2018	By:	/s/ Jonathan Freve
		Jonathan Freve
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Martin Driscoll, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Spring Bank Pharmaceuticals, 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(s) 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 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 small business issuer, 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) 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

(c) 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 small business issuer’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) 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: April 27, 2018	By:	/s/ Martin Driscoll
		Martin Driscoll
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Freve, certify that:

1. I have reviewed this Quarterly Report on 10-Q of Spring Bank Pharmaceuticals, 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(s) 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 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) 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

(c) 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(s) 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: April 27, 2018	By:	/s/ Jonathan Freve
		Jonathan Freve
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting 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

In connection with the Quarterly Report of Spring Bank Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: April 27, 2018	By:	/s/ Martin Driscoll
		Martin Driscoll
		Chief Executive Officer
		(Principal Executive Officer)

Date: April 27, 2018	By:	/s/ Jonathan Freve
		Jonathan Freve
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Spring Bank Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 26, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	sbph
Entity Registrant Name	Spring Bank Pharmaceuticals, Inc.
Entity Central Index Key	0001566373
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		13,182,567

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 23,838	$ 23,649
Marketable securities	23,321	26,906
Prepaid expenses and other current assets	609	580
Total current assets	47,768	51,135
Property and equipment, net	892	687
Restricted cash	234	484
Other assets	216	35
Total	49,110	52,341
Current liabilities:
Accounts payable	1,655	1,700
Accrued expenses and other current liabilities	2,130	2,734
Total current liabilities	3,785	4,434
Warrant liabilities	11,926	13,128
Other long-term liabilities	30	31
Total liabilities	15,741	17,593
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 10,000,000 shares at March 31, 2018 and December 31, 2017; no shares issued or outstanding at March 31, 2018 and December 31, 2017
Common stock, $0.0001 par value—authorized, 200,000,000 shares at March 31, 2018 and December 31, 2017; 13,153,879 and 12,961,993 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	1	1
Additional paid-in capital	117,469	113,984
Accumulated deficit	(84,101)	(79,214)
Other comprehensive loss		(23)
Total stockholders’ equity	33,369	34,748
Total	$ 49,110	$ 52,341

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
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	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	13,153,879	12,961,993
Common stock, shares outstanding	13,153,879	12,961,993

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating expenses:
Research and development	$ 3,977	$ 2,527
General and administrative	2,223	1,987
Total operating expenses	6,200	4,514
Loss from operations	(6,200)	(4,514)
Other income (expense):
Interest income	134	41
Change in fair value of warrant liabilities	1,202	(2,027)
Net loss	(4,864)	(6,500)
Unrealized loss on marketable securities		3
Comprehensive Loss	$ (4,864)	$ (6,497)
Net loss per common share – basic and diluted	$ (0.37)	$ (0.69)
Weighted-average number of shares outstanding – basic and diluted	12,991,532	9,416,259

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (4,864)	$ (6,500)
Adjustments for:
Depreciation and amortization	45	36
Change in fair value of warrant liabilities	(1,202)	2,027
Non-cash investment income	35	25
Non-cash stock-based compensation	658	500
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(29)	359
Other assets	(181)
Accounts payable	(45)	519
Accrued expenses and other liabilities	(605)	(1,081)
Net cash used in operating activities	(6,188)	(4,115)
Cash flows from investing activities:
Proceeds from sale of marketable securities	13,550	7,714
Purchases of marketable securities	(10,000)
Purchases of property and equipment	(250)	(100)
Net cash provided by investing activities	3,300	7,614
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs paid of $125	2,827
Issuance costs paid in connection with the private investment in a public entity		(147)
Proceeds from exercise of stock options		2
Cash provided by (used in) financing activities	2,827	(145)
Net (decrease) increase in cash, cash equivalents and restricted cash	(61)	3,354
Cash, cash equivalents and restricted cash, beginning of period	24,133	10,684
Cash, cash equivalents and restricted cash, end of period	24,072	$ 14,038
Supplemental disclosures of cash flow information:
Cash paid for taxes	$ 3

XML

Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
At-The-Market Offering [Member]
Proceeds from Issuance of common stock ,Issuance costs paid	$ 125

XML

Nature of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Nature of Business and Summary of Significant Accounting Policies

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Spring Bank Pharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company engaged in the discovery and development of a novel class of therapeutics using a proprietary small molecule nucleic acid hybrid (“SMNH”) chemistry platform. The Company is developing its most advanced SMNH product candidate, inarigivir soproxil (“inarigivir”) (formerly known as SB 9200), for the treatment of chronic hepatitis B virus. Since inception in 2002 and prior to its initial public offering (“IPO”) in May 2016, the Company built its technology platform and product candidate pipeline, supported by grants and through private financings. In September 2015, the Company formed a wholly owned subsidiary, Sperovie Biosciences, Inc., and in December 2016, the Company formed a wholly owned subsidiary, SBP Securities Corporation.

The Company’s success is dependent upon its ability to successfully complete clinical development and obtain regulatory approval of its product candidates, successfully commercialize approved products, generate revenue, and, ultimately, attain profitable operations. The Company’s operations to date have been primarily limited to financing and staffing the Company and the development of inarigivir, SB 11285, SB 9225 and the Company’s other product candidates.

Basis of Presentation and Liquidity

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”).

The accompanying interim financial statements as of March 31, 2018 and for the three months ended March 31, 2018 and 2017, and related interim information contained within the notes to the financial statements, are unaudited. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. These interim financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2018. The results for the three months ended March 31, 2018 are not necessarily indicative of the results expected for the full fiscal year or any interim period.

As of March 31, 2018, the Company had an accumulated deficit of $84.1 million and $47.2 million in cash, cash equivalents and marketable securities.

The Company expects to continue to incur significant and increasing losses for the foreseeable future. The Company anticipates that its expenses will increase significantly as it continues to develop inarigivir, SB 11285, SB 9225 and its other product candidates.  The Company does not have any committed external source of funds. As a result, the Company will need additional financing to support its continuing operations.  Adequate additional funds may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect common stockholder rights. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to its technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sperovie Biosciences, Inc. and SBP Securities Corporation. Sperovie Biosciences, Inc. had operations consisting mainly of legal fees associated with intellectual property activities as of March 31, 2018. SBP Securities Corporation had assets primarily related to investments in marketable securities and operations consisting primarily of interest income as of March 31, 2018. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates relied upon in preparing the accompanying financial statements related to the fair value of common stock and warrant liabilities, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, and accounting for certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase.

Restricted cash consists of $0.2 million which is held as a security deposit required in conjunction with a lease agreement entered into in October 2017. The Company had no restricted cash as of March 31, 2017.

Included in cash and cash equivalents as of March 31, 2018 and December 31, 2017, are money market fund investments of $22.4 million and $21.3 million, respectively, which are reported at fair value (Note 5).

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high-credit quality. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Investments in Marketable Securities

The Company invests excess cash balances in short-term and long-term marketable securities. The Company classifies investments in marketable securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time of purchase. At each balance sheet date presented, all investments in securities are classified as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and realized gains and losses are determined using the specific identification method. Unrealized holding gains and losses (the adjustment to fair value) and realized gains and losses are included in other income (expense) in the consolidated statement of operations. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations.

Property and Equipment, Net

Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives:

Asset Category	Useful Life
Equipment	5-7 years
Furniture and fixtures	5 years
Leasehold improvements	Lesser of 10 years or the remaining term of the respective lease

Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. Through March 31, 2018, no such impairment has occurred.

Deferred Rent

The Company’s operating leases include rent escalation payment terms and other incentives received from landlords. Deferred rent represents the difference between actual operating lease payments due and straight-line rent expense over the term of the lease, which is recorded in accrued expenses and other current liabilities. The Company had deferred aggregate rent for its research and development facility in Milford, Massachusetts and its headquarters in Hopkinton, Massachusetts of $34,000 and $35,000 as of March 31, 2018 and December 31, 2017, respectively.

Research and Development Costs

Research and development expenses consist primarily of costs incurred for the Company’s research activities, including discovery efforts, and the development of product candidates, which include:

• expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical activities and clinical trials on the Company’s behalf as well as contract manufacturing organizations, or CMOs, that manufacture drug products for use in the Company’s preclinical and clinical trials;

• salaries, benefits and other related costs, including stock-based compensation expense, for personnel in the Company’s research and development functions;

• costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

• the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

• costs related to compliance with regulatory requirements; and

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

The Company expenses research and development costs as incurred. The Company recognizes external development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors and its clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in the Company’s consolidated financial statements as prepaid or accrued research and development expenses.

Warrants

The Company reviews the terms of all warrants issued and classifies the warrants as a component of permanent equity if they are freestanding financial instruments that are legally detachable and separately exercisable, contingently exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the warrants must require physical settlement and may not provide any guarantee of value or return. Warrants that meet these criteria are initially recorded at their grant date fair value and are not subsequently remeasured. Warrants that do not meet this criteria are classified as liabilities and remeasured to their fair value at each reporting period.

Stock-Based Compensation

The Company accounts for all stock-based payment awards granted to employees and nonemployees using a fair value method. The Company’s stock-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is generally the vesting period, on a straight-line basis. The measurement date for nonemployee awards is the date the services are completed, resulting in periodic adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards. Stock-based compensation costs for nonemployees are recognized as expense over the vesting period on a straight-line basis. Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss based on the department to which the related services are provided.

Financial Instruments

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts payable and liability classified warrants. The carrying amounts of cash and cash equivalents and accounts payable approximate their fair value due to the short-term nature of those financial instruments. The fair value of the marketable securities and liability classified warrants are remeasured to fair value each reporting period as described in Note 5.

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include cash equivalents, marketable securities and warrant liabilities.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. As of March 31, 2018 and December 31, 2017, both methods are equivalent. Basic and diluted net loss per share is described further in Note 2.

Income Taxes

Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the consolidated financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of interest expense. As of March 31, 2018 and December 31, 2017, the Company has not identified any material uncertain tax positions.

Guarantees and Indemnifications

As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity.

The Company leases office and laboratory space in Hopkinton, Massachusetts and research and development space in Milford, Massachusetts, under non-cancelable operating leases. The Company has standard indemnification arrangements under these leases that require it to indemnify the landlords against liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under the Company’s lease.

Through March 31, 2018, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Segment Information

Operating segments are identified as components of an enterprise about which separate and discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief executive officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS. This standard removes inconsistencies and limitations between U.S. GAAP and IFRS in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements through improved disclosure requirements, and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period and early application is not permitted. The Company adopted this standard as of January 1, 2018, however, until the Company expects material revenue to be recognized, the adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends ASC Subtopic 825-10, Financial Instruments - Overall, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for the Company for the annual period beginning after December 15, 2017, with early adoption permitted. The adoption of this standard resulted in the cumulative unrealized gain or loss balance included in other comprehensive income at December 31, 2017, which was a $23,000 loss, to be reclassified to accumulated deficit through a cumulative effect adjustment. During the period ended March 31, 2018, the unrealized gain or loss is included in other income (expense) in the Company’s consolidated statement of operations.

In September 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230, Statement of Cash Flows, and includes provisions intended to reduce diversity in practice and provides guidance on eight specific statements of cash flows classification issues. The new standard is effective for the Company for the annual period ending after December 15, 2017, and for annual and interim periods thereafter, with early adoption permitted. The Company adopted this standard as of January 1, 2018, however, the adoption of this standard does not impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the current leasing guidance and upon adoption, will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for the Company for the annual period beginning after December 15, 2018 and can be early adopted by applying a modified retrospective approach for leases existing at, and entered into after, the beginning of the earliest comparable period presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II simply replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. This ASU is effective for public companies for the annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

2. NET LOSS PER SHARE

The following table summarizes the computation of basic and diluted net loss per share of the Company for such periods (in thousands, except share and per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(4,864	)	$	(6,500	)
Weighted-average number of common shares-basic and diluted		12,991,532			9,416,259
Net loss per common share-basic and diluted	$	(0.37	)	$	(0.69	)

Diluted net loss per common share is the same as basic net loss per common share for all periods presented.

The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact due to the losses reported:

	Three Months Ended March 31,
	2018		2017
Common stock warrants		1,787,124		1,798,084
Stock options		1,261,065		966,300

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Investments

3 Months Ended

Mar. 31, 2018

Investments Debt And Equity Securities [Abstract]

Investments

3. INVESTMENTS

Cash in excess of the Company’s immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital.

The following table summarizes the Company’s investments, by category, as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31,		December 31,
Investments - Current:	2018		2017
Debt securities - available for sale	$	23,321	$	26,906
Total	$	23,321	$	26,906

A summary of the Company’s available-for-sale classified investments as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	At March 31, 2018
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	1,199	$	—	$	—		$	1,199
Corporate bonds		14,180		—		(33	)		14,147
United States treasury securities		7,986		—		(11	)		7,975
Total	$	23,365	$	—	$	(44	)	$	23,321
	At December 31, 2017
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	9,584	$	—	$	—		$	9,584
Corporate bonds		15,347		—		(23	)		15,324
United States treasury securities		1,998		—		—			1,998
Total	$	26,929	$	—	$	(23	)	$	26,906

The amortized cost and fair value of the Company’s available-for-sale investments, by contract maturity, as of March 31, 2018 consisted of the following (in thousands):

	Amortized Cost		Fair Value
Due in one year or less	$	23,365	$	23,321
Due after one year through two years		—		—
Total	$	23,365	$	23,321

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Property and Equipment, Net

3 Months Ended

Mar. 31, 2018

Property Plant And Equipment [Abstract]

Property and Equipment, Net

4. PROPERTY AND EQUIPMENT, NET

Property and equipment as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,			December 31,
	2018			2017
Equipment	$	937		$	727
Furniture and fixtures		332			292
Leasehold improvements		153			153
Total property and equipment		1,422			1,172
Less: accumulated depreciation and amortization		(530	)		(485	)
Property and equipment, net	$	892		$	687

Depreciation for the three months ended March 31, 2018 and 2017 was $45,000 and $36,000, respectively.  

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Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its commercial paper and fixed income securities within Level 2 because their fair values are determined using alternative pricing sources or models that utilized market observable inputs.

A summary of the assets and liabilities that are measured at fair value as of March 31, 2018 and December 31, 2017 is as follows (in thousands):

			Fair Value Measurement at March 31, 2018
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	22,383	$	22,383	$	—	$	—
Fixed income securities		23,321		—		23,321		—
Total	$	45,704	$	22,383	$	23,321	$	—
Liabilities:
Warrant liabilities	$	11,926	$	—	$	—	$	11,926
Total	$	11,926	$	—	$	—	$	11,926
			Fair Value Measurement at December 31, 2017
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	21,265	$	21,265	$	—	$	—
Fixed income securities		26,906		—		26,906		—
Total	$	48,171	$	21,265	$	26,906	$	—
Liabilities:
Warrant liabilities	$	13,128	$	—	$	—	$	13,128
Total	$	13,128	$	—	$	—	$	13,128

(1) Money market funds are included within cash and cash equivalents in the accompanying consolidated balance sheets are recognized at fair value.

The following table reflects the change in the Company’s Level 3 liabilities, which consists of the warrants issued in a private placement in November 2016 (see Note 7), for the period ended March 31, 2018 (in thousands):

	November Private Placement Warrants
Balance at December 31, 2016	$	6,333
Change in fair value		6,795
Balance at December 31, 2017		13,128
Change in fair value		(1,202	)
Balance at March 31, 2018	$	11,926

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,		December 31,
	2018		2017
Clinical	$	1,480	$	1,093
Compensation and benefits		352		1,024
Accounting and legal		206		453
Other		92		164
Total accrued expenses	$	2,130	$	2,734

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Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

7. STOCKHOLDERS’ EQUITY

Common and Preferred Stock

In June 2017, the Company issued and sold in an underwritten public offering an aggregate of 3,269,219 shares of its common stock at $13.00 per share, which included 384,604 shares pursuant to the exercise of an option to purchase additional shares granted to the underwriters in connection with the offering. The offering resulted in $39.6 million of net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.

In August 2017, the Company entered into a Controlled Equity Offering^SMSales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which the Company may offer and sell, from time to time through Cantor, shares of the Company’s common stock having an aggregate offering price of up to $50.0 million. The Company will pay Cantor a commission rate equal to 3.0% of the aggregate gross proceeds from each sale. During the three months ended March 31, 2018, the Company sold an aggregate of 190,055 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $15.53 per share.  During the year ended December 31, 2017, the Company sold an aggregate of 252,443 shares of its common stock pursuant to the Sales Agreement at a weighted-average selling price of $15.55 per share. 

Warrants

In connection with the amendment and restatement of a license agreement with BioHEP, the Company issued a warrant to purchase 125,000 shares of the Company’s common stock to BioHEP (the “BioHEP Warrant”), effective February 1, 2016. The Company evaluated the terms of the warrant and concluded that it should be equity-classified. The fair value of the warrant, $0.8 million, was estimated on the issuance date using a Black-Scholes pricing model based on the following assumptions: an expected term of two and a half years, expected stock price volatility of 71%, a risk free rate of 1.01%, and a dividend yield of 0%. The fair value was expensed as research and development costs.

In connection with the Company’s IPO, the Company issued to the sole book-running manager for the IPO a warrant to purchase 27,600 shares of common stock in May 2016 and a warrant to purchase 747 shares of common stock in June 2016 (together, the “IPO Warrants”). The IPO Warrants are exercisable at an exercise price of $15.00 per share and expire on May 5, 2021. The Company evaluated the terms of the IPO Warrants and concluded that they should be equity-classified. The fair value of the May 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.99 years; expected stock price volatility of 87%; a risk free rate of 1.20%; and a dividend yield of 0%. The fair value of the June 2016 IPO Warrants was estimated on the applicable issuance dates using a Black-Scholes pricing model based on the following assumptions: an expected term of 4.92 years; expected stock price volatility of 87%; a risk free rate of 1.23%; and a dividend yield of 0%. The aggregate fair value of the IPO Warrants was $0.2 million.

The Company received approximately $5.3 million in proceeds upon the exercise of warrants to purchase 641,743 shares of its common stock of the Company, which were exercised in connection with the closing of the IPO. Upon the closing of the Company’s IPO, all of the outstanding warrants that were not exercised, except the BioHEP warrant and the IPO Warrants, terminated in accordance with their original terms.

In November 2016, the Company entered into a definitive agreement with respect to the private placement of 1,644,737 shares of common stock and warrants to purchase 1,644,737 shares of common stock (the “November Private Placement Warrants”) to a group of accredited investors (the “November Private Placement”). These investors paid $9.12 for each share of common stock and warrant to purchase one share of common stock. The November Private Placement Warrants are exercisable at an exercise price of $10.79 per share and expire on November 23, 2021. The Company evaluated the terms of these warrants and concluded that they are liability-classified. In November 2016, the Company recorded the fair value of these warrants of approximately $8.3 million using a Black-Scholes pricing model. The Company must recognize any change in the value of the warrant liability each reporting period in the statement of operations. As of December 31, 2017 and March 31, 2018, the fair value of the November Private Placement Warrants was approximately $13.1 million and $11.9 million, respectively (see Note 5).

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the warrants is as follows:

	March 31, 2018			December 31, 2017
Risk-free interest rate		2.3	%		2.0	%
Expected term (in years)		3.6			3.9
Expected volatility		43.5	%		73.1	%
Expected dividend yield		0	%		0	%

The following table summarizes the warrant activity for the year ended December 31, 2017 and for the three months ended March 31, 2018:

	Warrants
Outstanding at December 31, 2016		1,798,084
Grants		—
Exercises		(10,960	)
Expirations/cancellations		—
Outstanding at December 31, 2017		1,787,124
Grants		—
Exercises		—
Expirations/cancellations		—
Outstanding at March 31, 2018		1,787,124

2014 Stock Incentive Plan

In April 2014, the Company’s Board of Directors approved the 2014 Stock Incentive Plan (the “2014 Plan”) and authorized 750,000 shares of common stock to be issued under the 2014 Plan. The Company’s 2014 Plan provides for the issuance of common stock, stock options and other stock-based awards to employees, officers, directors, consultants, and advisors. The Company’s 2015 Stock Incentive Plan (the “2015 Plan”) became effective immediately prior to the closing of the Company’s IPO on May 11, 2016. Upon the effectiveness of the 2015 Plan, 116,863 shares of common stock that remained available for grant under the 2014 Plan became available for grant under the 2015 Plan, and no further awards were available to be issued under the 2014 Plan.

2015 Stock Incentive Plan

The 2015 Plan provides for the issuance of common stock, stock options and other stock-based awards to employees, officers, directors, consultants and advisors of the Company. The number of shares reserved for issuance under the 2015 Plan is the sum of 750,000 shares of common stock, plus the number of shares equal to the sum of (i) 116,863 shares of common stock, which was the number of shares reserved for issuance under the 2014 Plan that remained available for grant under the 2014 Plan immediately prior to the closing of the Company’s IPO, and (ii) the number of shares of common stock subject to outstanding awards under the 2014 Plan that expire, terminate or are otherwise surrendered, cancelled or forfeited. The exercise price of stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the 2015 Plan expire 10 years after the grant date, unless the Board sets a shorter term. As of March 31, 2018, the Company had 185,204 shares available for issuance under the 2015 Plan.

The following table summarizes the option activity for the year ended December 31, 2017 and the three months ended March 31, 2018:

	Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding at December 31, 2016		704,315		$	11.82	$	—
Granted		297,500			8.45		—
Exercised		(10,000	)		9.28		11,228
Cancelled		(3,250	)		12.44		—
Outstanding at December 31, 2017		988,565		$	10.83		2,617,859
Granted		272,500			12.14		—
Exercised		—			—		—
Cancelled		—			—		—
Options outstanding at March 31, 2018		1,261,065		$	11.11	$	5,381,185
Options exercisable at March 31, 2018		558,050		$	11.23	$	2,313,947

As of March 31, 2018, all options outstanding have a weighted-average remaining contractual life of 8.3 years. The weighted-average fair value of all stock options granted for the three months ended March 31, 2018 was $8.62.  Intrinsic value at March 31, 2018 is based on the closing price of the Company’s common stock of $15.38 per share.

In January 2018, the Company issued a stock option award as an inducement grant for the purchase of an aggregate of 50,000 shares of the Company’s common stock, outside of the 2015 Plan, at an exercise price of $12.02 per share. The inducement grant is excluded from the option activity table above.

There were no stock options granted prior to 2015. The assumptions the Company used to determine the fair value of stock options granted to employees and directors in 2018 and 2017 are as follows, presented on a weighted-average basis.

	Three Months Ended March 31,
	2018			2017
Risk-free interest rate		2.4	%		2.0	%
Expected term (in years)		6.0			6.0
Expected volatility		82.7	%		78.6	%
Expected dividend yield		0	%		0	%

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 31, 2018 and 2017 (in thousands):

	For the Three Months Ended March 31,
	2018		2017
Stock-based compensation:
Research and development	$	201	$	161
General and administrative		455		339
Total Stock-based compensation	$	656	$	500

The fair value of stock options vested during the three months ended March 31, 2018 was $0.8 million. At March 31, 2018, there was $5.3 million of unrecognized stock-based compensation expense relating to stock options granted pursuant to the Plans, which will be recognized over the weighted-average remaining vesting period of 2.7 years.

Reserved Shares

As of March 31, 2018 and 2017, the Company reserved the following shares of common stock for issuance of shares resulting from exercise of outstanding warrants and options, as well as issuance of shares available for grant under the Company’s stock incentive plans:

	March 31,
	2018		2017
2016 BioHEP warrants		125,000		125,000
2016 IPO warrants		28,347		28,347
November Private Placement warrants		1,633,777		1,644,737
2014 and 2015 Stock incentive plans		1,446,269		1,460,999
Total		3,233,393		3,259,083

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. COMMITMENTS AND CONTINGENCIES

Leases

In April 2015, the Company entered into an amendment to the lease for its research and development facility in Milford, Massachusetts to extend the term of the lease through March 31, 2018 and expand the leased laboratory space.

In March 2016, the Company entered into a new operating lease for its headquarters in Hopkinton, Massachusetts with a lease term through May 31, 2021. The total payments due during the term of the lease are approximately $771,000.

In October 2017, the Company entered into a lease agreement for premises located in Hopkinton, Massachusetts. The premises covered by the lease will serve as the Company’s new principal office and laboratory space. The initial term of the lease is 125 months beginning on the date on which the landlord substantially completes certain renovations to the premises covered by the lease, which had not occurred as of March 31, 2018. The Company has the option to extend the lease one time for an additional 5-year period.  Following an eleven-month rent abatement period, the Company will be obligated to make monthly rent payments in the amount of $34,533, which is subject to increase by approximately 3% annually for the first five years of the lease and by approximately 2.5% annually thereafter. The total lease payments due during the term of the lease are approximately $4.4 million. In addition, the Company is responsible under the lease for specified costs and charges, including certain operating expenses, utilities, taxes and insurance.   

Rent paid under the leases for the three months ended March 31, 2018 and 2017 was $59,000 and $56,000, respectively.

Future minimum commitments due under all leases at March 31, 2018 are as follows (in thousands):

Year
2018	$	148
2019		399
2020		585
2021		504
Thereafter		3,338
Total minimum lease payments	$	4,974

The commitments under the lease agreement entered into in October 2017 are included in the table above.

BioHEP Technologies Ltd. License Agreement

In January 2016, the Company entered into an amended and restated license agreement with BioHEP, which became effective on February 1, 2016.

Under the amended and restated license agreement, the Company agreed to pay BioHEP up to $3.5 million in development and regulatory milestone payments for disease(s) caused by each distinct virus for which the Company develops licensed product(s). BioHEP is also eligible to receive tiered royalties in the low-to-mid single-digits on net product sales of licensed products by the Company and its affiliates and sub licensees, and a specified share of non-royalty sublicensing revenues the Company and its affiliates receive from sub licensees, which share of sublicensing revenues is capped at a maximum aggregate of $2.0 million under all such sublicenses. Milestone and royalty payments associated with the Company’s amended and restated license agreement with BioHEP cannot reasonably estimated as to whether or when they will occur. As of March 31, 2018, there have been no milestone or royalty payments made to BioHEP.

Contingencies

The Company accrues for contingent liabilities to the extent that the liability is probable and estimable. There are no accruals for contingent liabilities in these consolidated financial statements.

During May 2015, the Company entered into a transition agreement with the Company’s former President and Chief Executive Officer. Under the transition agreement, he continued to serve as the Company’s president and chief executive officer for a transition period that ended on August 17, 2015. Following the transition period, the Company made 18 monthly payments totaling $464,000 and also provided benefits consistent with the coverage that was provided prior to the execution of the transition agreement. There was no remaining unpaid balance relating to this obligation at March 31, 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

9. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued, to ensure that this submission includes appropriate disclosure of events both recognized in the consolidated financial statements and events which occurred subsequently but were not recognized in the consolidated financial statements.

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Nature of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation and Liquidity

Basis of Presentation and Liquidity

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”).

The accompanying interim financial statements as of March 31, 2018 and for the three months ended March 31, 2018 and 2017, and related interim information contained within the notes to the financial statements, are unaudited. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. These interim financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2018. The results for the three months ended March 31, 2018 are not necessarily indicative of the results expected for the full fiscal year or any interim period.

As of March 31, 2018, the Company had an accumulated deficit of $84.1 million and $47.2 million in cash, cash equivalents and marketable securities.

The Company expects to continue to incur significant and increasing losses for the foreseeable future. The Company anticipates that its expenses will increase significantly as it continues to develop inarigivir, SB 11285, SB 9225 and its other product candidates.  The Company does not have any committed external source of funds. As a result, the Company will need additional financing to support its continuing operations.  Adequate additional funds may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect common stockholder rights. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to its technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to the Company.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sperovie Biosciences, Inc. and SBP Securities Corporation. Sperovie Biosciences, Inc. had operations consisting mainly of legal fees associated with intellectual property activities as of March 31, 2018. SBP Securities Corporation had assets primarily related to investments in marketable securities and operations consisting primarily of interest income as of March 31, 2018. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates relied upon in preparing the accompanying financial statements related to the fair value of common stock and warrant liabilities, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, and accounting for certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

Cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase.

Restricted cash consists of $0.2 million which is held as a security deposit required in conjunction with a lease agreement entered into in October 2017. The Company had no restricted cash as of March 31, 2017.

Included in cash and cash equivalents as of March 31, 2018 and December 31, 2017, are money market fund investments of $22.4 million and $21.3 million, respectively, which are reported at fair value (Note 5).

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high-credit quality. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Investments in Marketable Securities

Investments in Marketable Securities

The Company invests excess cash balances in short-term and long-term marketable securities. The Company classifies investments in marketable securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time of purchase. At each balance sheet date presented, all investments in securities are classified as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and realized gains and losses are determined using the specific identification method. Unrealized holding gains and losses (the adjustment to fair value) and realized gains and losses are included in other income (expense) in the consolidated statement of operations. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives:

Asset Category	Useful Life
Equipment	5-7 years
Furniture and fixtures	5 years
Leasehold improvements	Lesser of 10 years or the remaining term of the respective lease

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. Through March 31, 2018, no such impairment has occurred.

Deferred Rent

Deferred Rent

The Company’s operating leases include rent escalation payment terms and other incentives received from landlords. Deferred rent represents the difference between actual operating lease payments due and straight-line rent expense over the term of the lease, which is recorded in accrued expenses and other current liabilities. The Company had deferred aggregate rent for its research and development facility in Milford, Massachusetts and its headquarters in Hopkinton, Massachusetts of $34,000 and $35,000 as of March 31, 2018 and December 31, 2017, respectively.

Research and Development Costs

Research and Development Costs

Research and development expenses consist primarily of costs incurred for the Company’s research activities, including discovery efforts, and the development of product candidates, which include:

• expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical activities and clinical trials on the Company’s behalf as well as contract manufacturing organizations, or CMOs, that manufacture drug products for use in the Company’s preclinical and clinical trials;

• salaries, benefits and other related costs, including stock-based compensation expense, for personnel in the Company’s research and development functions;

• costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

• the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

• costs related to compliance with regulatory requirements; and

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

The Company expenses research and development costs as incurred. The Company recognizes external development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors and its clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in the Company’s consolidated financial statements as prepaid or accrued research and development expenses.

Warrants

Warrants

The Company reviews the terms of all warrants issued and classifies the warrants as a component of permanent equity if they are freestanding financial instruments that are legally detachable and separately exercisable, contingently exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the warrants must require physical settlement and may not provide any guarantee of value or return. Warrants that meet these criteria are initially recorded at their grant date fair value and are not subsequently remeasured. Warrants that do not meet this criteria are classified as liabilities and remeasured to their fair value at each reporting period.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for all stock-based payment awards granted to employees and nonemployees using a fair value method. The Company’s stock-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is generally the vesting period, on a straight-line basis. The measurement date for nonemployee awards is the date the services are completed, resulting in periodic adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards. Stock-based compensation costs for nonemployees are recognized as expense over the vesting period on a straight-line basis. Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss based on the department to which the related services are provided.

Financial Instruments

Financial Instruments

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts payable and liability classified warrants. The carrying amounts of cash and cash equivalents and accounts payable approximate their fair value due to the short-term nature of those financial instruments. The fair value of the marketable securities and liability classified warrants are remeasured to fair value each reporting period as described in Note 5.

Fair Value Measurements

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include cash equivalents, marketable securities and warrant liabilities.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. As of March 31, 2018 and December 31, 2017, both methods are equivalent. Basic and diluted net loss per share is described further in Note 2.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the consolidated financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of interest expense. As of March 31, 2018 and December 31, 2017, the Company has not identified any material uncertain tax positions.

Guarantees and Indemnifications

Guarantees and Indemnifications

As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity.

The Company leases office and laboratory space in Hopkinton, Massachusetts and research and development space in Milford, Massachusetts, under non-cancelable operating leases. The Company has standard indemnification arrangements under these leases that require it to indemnify the landlords against liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under the Company’s lease.

Through March 31, 2018, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Segment Information

Segment Information

Operating segments are identified as components of an enterprise about which separate and discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief executive officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS. This standard removes inconsistencies and limitations between U.S. GAAP and IFRS in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements through improved disclosure requirements, and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period and early application is not permitted. The Company adopted this standard as of January 1, 2018, however, until the Company expects material revenue to be recognized, the adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends ASC Subtopic 825-10, Financial Instruments - Overall, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for the Company for the annual period beginning after December 15, 2017, with early adoption permitted. The adoption of this standard resulted in the cumulative unrealized gain or loss balance included in other comprehensive income at December 31, 2017, which was a $23,000 loss, to be reclassified to accumulated deficit through a cumulative effect adjustment. During the period ended March 31, 2018, the unrealized gain or loss is included in other income (expense) in the Company’s consolidated statement of operations.

In September 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230, Statement of Cash Flows, and includes provisions intended to reduce diversity in practice and provides guidance on eight specific statements of cash flows classification issues. The new standard is effective for the Company for the annual period ending after December 15, 2017, and for annual and interim periods thereafter, with early adoption permitted. The Company adopted this standard as of January 1, 2018, however, the adoption of this standard does not impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the current leasing guidance and upon adoption, will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for the Company for the annual period beginning after December 15, 2018 and can be early adopted by applying a modified retrospective approach for leases existing at, and entered into after, the beginning of the earliest comparable period presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II simply replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. This ASU is effective for public companies for the annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

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Nature of Business and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Summary of Estimated Useful Lives of Property and Equipment

Depreciation is provided using the straight-line method over the estimated useful lives:

Asset Category	Useful Life
Equipment	5-7 years
Furniture and fixtures	5 years
Leasehold improvements	Lesser of 10 years or the remaining term of the respective lease

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Net Loss Per Share

The following table summarizes the computation of basic and diluted net loss per share of the Company for such periods (in thousands, except share and per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(4,864	)	$	(6,500	)
Weighted-average number of common shares-basic and diluted		12,991,532			9,416,259
Net loss per common share-basic and diluted	$	(0.37	)	$	(0.69	)

Summary of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Weighted-Average Shares Outstanding

The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact due to the losses reported:

	Three Months Ended March 31,
	2018		2017
Common stock warrants		1,787,124		1,798,084
Stock options		1,261,065		966,300

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Investments (Tables)

3 Months Ended

Mar. 31, 2018

Investments Debt And Equity Securities [Abstract]

Summary of Investments by Category

The following table summarizes the Company’s investments, by category, as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31,		December 31,
Investments - Current:	2018		2017
Debt securities - available for sale	$	23,321	$	26,906
Total	$	23,321	$	26,906

Summary of Available-for-Sale Classified Investments

A summary of the Company’s available-for-sale classified investments as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	At March 31, 2018
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	1,199	$	—	$	—		$	1,199
Corporate bonds		14,180		—		(33	)		14,147
United States treasury securities		7,986		—		(11	)		7,975
Total	$	23,365	$	—	$	(44	)	$	23,321
	At December 31, 2017
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	9,584	$	—	$	—		$	9,584
Corporate bonds		15,347		—		(23	)		15,324
United States treasury securities		1,998		—		—			1,998
Total	$	26,929	$	—	$	(23	)	$	26,906

Schedule of Amortized Cost and Fair Value of Available-for-Sale Investments, by Contract Maturity

The amortized cost and fair value of the Company’s available-for-sale investments, by contract maturity, as of March 31, 2018 consisted of the following (in thousands):

	Amortized Cost		Fair Value
Due in one year or less	$	23,365	$	23,321
Due after one year through two years		—		—
Total	$	23,365	$	23,321

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Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2018

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,			December 31,
	2018			2017
Equipment	$	937		$	727
Furniture and fixtures		332			292
Leasehold improvements		153			153
Total property and equipment		1,422			1,172
Less: accumulated depreciation and amortization		(530	)		(485	)
Property and equipment, net	$	892		$	687

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value

A summary of the assets and liabilities that are measured at fair value as of March 31, 2018 and December 31, 2017 is as follows (in thousands):

			Fair Value Measurement at March 31, 2018
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	22,383	$	22,383	$	—	$	—
Fixed income securities		23,321		—		23,321		—
Total	$	45,704	$	22,383	$	23,321	$	—
Liabilities:
Warrant liabilities	$	11,926	$	—	$	—	$	11,926
Total	$	11,926	$	—	$	—	$	11,926
			Fair Value Measurement at December 31, 2017
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds (1)	$	21,265	$	21,265	$	—	$	—
Fixed income securities		26,906		—		26,906		—
Total	$	48,171	$	21,265	$	26,906	$	—
Liabilities:
Warrant liabilities	$	13,128	$	—	$	—	$	13,128
Total	$	13,128	$	—	$	—	$	13,128

(1) Money market funds are included within cash and cash equivalents in the accompanying consolidated balance sheets are recognized at fair value.

Summary of Change in Company's Level 3 Liabilities, Warrants Issued in a Private Placement

The following table reflects the change in the Company’s Level 3 liabilities, which consists of the warrants issued in a private placement in November 2016 (see Note 7), for the period ended March 31, 2018 (in thousands):

	November Private Placement Warrants
Balance at December 31, 2016	$	6,333
Change in fair value		6,795
Balance at December 31, 2017		13,128
Change in fair value		(1,202	)
Balance at March 31, 2018	$	11,926

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Payables And Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31,		December 31,
	2018		2017
Clinical	$	1,480	$	1,093
Compensation and benefits		352		1,024
Accounting and legal		206		453
Other		92		164
Total accrued expenses	$	2,130	$	2,734

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Summary of Assumptions Used to Record Fair Value of Warrants

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the warrants is as follows:

	March 31, 2018			December 31, 2017
Risk-free interest rate		2.3	%		2.0	%
Expected term (in years)		3.6			3.9
Expected volatility		43.5	%		73.1	%
Expected dividend yield		0	%		0	%

Summary of Warrant Activity

The following table summarizes the warrant activity for the year ended December 31, 2017 and for the three months ended March 31, 2018:

	Warrants
Outstanding at December 31, 2016		1,798,084
Grants		—
Exercises		(10,960	)
Expirations/cancellations		—
Outstanding at December 31, 2017		1,787,124
Grants		—
Exercises		—
Expirations/cancellations		—
Outstanding at March 31, 2018		1,787,124

Summary of Option Activity

The following table summarizes the option activity for the year ended December 31, 2017 and the three months ended March 31, 2018:

	Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding at December 31, 2016		704,315		$	11.82	$	—
Granted		297,500			8.45		—
Exercised		(10,000	)		9.28		11,228
Cancelled		(3,250	)		12.44		—
Outstanding at December 31, 2017		988,565		$	10.83		2,617,859
Granted		272,500			12.14		—
Exercised		—			—		—
Cancelled		—			—		—
Options outstanding at March 31, 2018		1,261,065		$	11.11	$	5,381,185
Options exercisable at March 31, 2018		558,050		$	11.23	$	2,313,947

Summary of Assumptions to Determine Fair Value of Stock Options Granted to Employees and Directors

There were no stock options granted prior to 2015. The assumptions the Company used to determine the fair value of stock options granted to employees and directors in 2018 and 2017 are as follows, presented on a weighted-average basis.

	Three Months Ended March 31,
	2018			2017
Risk-free interest rate		2.4	%		2.0	%
Expected term (in years)		6.0			6.0
Expected volatility		82.7	%		78.6	%
Expected dividend yield		0	%		0	%

Summary of Stock-Based Compensation Expense

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 31, 2018 and 2017 (in thousands):

	For the Three Months Ended March 31,
	2018		2017
Stock-based compensation:
Research and development	$	201	$	161
General and administrative		455		339
Total Stock-based compensation	$	656	$	500

Summary of Shares of Common Stock Reserved

As of March 31, 2018 and 2017, the Company reserved the following shares of common stock for issuance of shares resulting from exercise of outstanding warrants and options, as well as issuance of shares available for grant under the Company’s stock incentive plans:

	March 31,
	2018		2017
2016 BioHEP warrants		125,000		125,000
2016 IPO warrants		28,347		28,347
November Private Placement warrants		1,633,777		1,644,737
2014 and 2015 Stock incentive plans		1,446,269		1,460,999
Total		3,233,393		3,259,083

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Summary of Future Minimum Lease Payments for Operating Leases

Future minimum commitments due under all leases at March 31, 2018 are as follows (in thousands):

Year
2018	$	148
2019		399
2020		585
2021		504
Thereafter		3,338
Total minimum lease payments	$	4,974

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Nature of Business and Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($) Segment	Dec. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)
Nature Of Business And Summary Of Significant Accounting Policies [Line Items]
Accumulated deficit	$ (84,101,000)	$ (79,214,000)
Cash, cash equivalents, restricted cash and marketable securities	47,200,000
Restricted cash	200,000		$ 0
Impairment of long-lived assets	0
Deferred aggregate rent	34,000	35,000
Income tax benefit	0
Uncertain tax positions	0	0
Indemnification obligations loss	0
Outstanding material claims	0
Indemnification obligation reserve	$ 0
Number of operating segment | Segment	1
ASU 2016-01 [Member]
Nature Of Business And Summary Of Significant Accounting Policies [Line Items]
Reclassified to accumulated deficit through cumulative effect adjustment		23,000,000
Money Market Funds [Member]
Nature Of Business And Summary Of Significant Accounting Policies [Line Items]
Cash and cash equivalents fair value	$ 22,400,000	$ 21,300,000

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Nature of Business and Summary of Significant Accounting Policies - Summary of Estimated Useful Lives of Property and Equipment (Detail)	3 Months Ended
	Mar. 31, 2018
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	Lesser of 10 years or the remaining term of the respective lease

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Net Loss Per Share - Summary of Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share Basic And Diluted [Abstract]
Net loss	$ (4,864)	$ (6,500)
Weighted-average number of common shares-basic and diluted	12,991,532	9,416,259
Net loss per common share-basic and diluted	$ (0.37)	$ (0.69)

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Net Loss Per Share - Summary of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Weighted-Average Shares Outstanding (Detail) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Common Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities outstanding excluded from the computation of diluted weighted-average shares outstanding	1,787,124	1,798,084
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities outstanding excluded from the computation of diluted weighted-average shares outstanding	1,261,065	966,300

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Investments - Summary of Investments by Category (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Investments - Current:
Debt securities - available for sale	$ 23,321	$ 26,906
Total	$ 23,321	$ 26,906

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Investments - Summary of Available-for-Sale Classified Investments (Detail) - Investments - Current [Member] - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Cost Basis	$ 23,365	$ 26,929
Unrealized Losses	(44)	(23)
Fair Value	23,321	26,906
Corporate Bonds [Member]
Schedule Of Available For Sale Securities [Line Items]
Cost Basis	14,180	15,347
Unrealized Losses	(33)	(23)
Fair Value	14,147	15,324
Commercial Paper [Member]
Schedule Of Available For Sale Securities [Line Items]
Cost Basis	1,199	9,584
Fair Value	1,199	9,584
United States Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Cost Basis	7,986	1,998
Unrealized Losses	(11)
Fair Value	$ 7,975	$ 1,998

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Investments - Schedule of Amortized Cost and Fair Value of Available-for-Sale Investments, by Contract Maturity (Detail) $ in Thousands	Mar. 31, 2018 USD ($)
Investments Debt And Equity Securities [Abstract]
Due in one year or less, Amortized Cost	$ 23,365
Total, Amortized Cost	23,365
Due in one year or less, Fair Value	23,321
Total, Fair Value	$ 23,321

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Property and Equipment, Net - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,422	$ 1,172
Less: accumulated depreciation and amortization	(530)	(485)
Property and equipment, net	892	687
Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	937	727
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	332	292
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 153	$ 153

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Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Property Plant And Equipment [Abstract]
Depreciation and amortization expense	$ 45	$ 36

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Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 22,400	$ 21,300
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Total	45,704	48,171
Liabilities, Total	11,926	13,128
Carrying Value [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	22,383	21,265
Carrying Value [Member] | Fixed Income Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed income securities	23,321	26,906
Carrying Value [Member] | Warrant Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liabilities	11,926	13,128
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Total	22,383	21,265
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	22,383	21,265
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Total	23,321	26,906
Significant Other Observable Inputs (Level 2) [Member] | Fixed Income Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed income securities	23,321	26,906
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Total	11,926	13,128
Significant Unobservable Inputs (Level 3) [Member] | Warrant Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liabilities	$ 11,926	$ 13,128

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Fair Value Measurements - Summary of Change in Company's Level 3 Liabilities, Warrants Issued in a Private Placement (Detail) - Private Placement [Member] - Warrants [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance	$ 13,128	$ 6,333
Change in fair value	(1,202)	6,795
Ending balance	$ 11,926	$ 13,128

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Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accrued Liabilities And Other Liabilities [Abstract]
Clinical	$ 1,480	$ 1,093
Compensation and benefits	352	1,024
Accounting and legal	206	453
Other	92	164
Total accrued expenses	$ 2,130	$ 2,734

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Stockholders' Equity - Additional Information (Detail) - USD ($)		1 Months Ended					3 Months Ended		12 Months Ended
	May 11, 2016	Jan. 31, 2018	Jun. 30, 2017	Nov. 30, 2016	Jun. 30, 2016	May 31, 2016	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2015	Aug. 31, 2017	Apr. 30, 2014
Class of Stock [Line Items]
Dividend yield							0.00%	0.00%
Expected life (in years)							6 years	6 years
Proceed from exercise of warrants	$ 5,300,000
Warrants exercised, common stock shares	641,743
Number of shares remain available for grant	0
Stock options granted										0
2018 New Hire Inducement Stock Option Award [Member]
Class of Stock [Line Items]
Issuance of common stock		50,000
Shares issued price per share		$ 12.02
2014 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Number of authorized shares of common stock to be issued												750,000
Weighted-average remaining contractual life							8 years 3 months 18 days
Weighted-average fair value of all stock options granted							$ 8.62
2015 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Number of shares remain available for grant	116,863						185,204
Number of shares of common stock reserved for future issuance	750,000
Expiry date of stock options awarded	10 years
2014 and 2015 Stock Incentive Plans [Member]
Class of Stock [Line Items]
Exercise of an option to purchase additional shares granted to underwriters in connection with offering									10,000
Stock options granted							272,500		297,500
Fair value of stock options vested							$ 800,000
Unrecognized stock-based compensation expense							$ 5,300,000
Weighted-average remaining vesting period							2 years 8 months 12 days
May 2016 IPO warrants [Member]
Class of Stock [Line Items]
Expected volatility of common stock Minimum						87.00%
Risk free rate						1.20%
Dividend yield						0.00%
Expected life (in years)						4 years 11 months 26 days
June 2016 IPO warrants [Member]
Class of Stock [Line Items]
Expected volatility of common stock Minimum					87.00%
Risk free rate					1.23%
Dividend yield					0.00%
Expected life (in years)					4 years 11 months 1 day
Maximum [Member] | 2015 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Number of shares remain available for grant	116,863
Sales Agreement [Member] | Cantor Fitzgerald & Co. [Member]
Class of Stock [Line Items]
Issuance of common stock							190,055		252,443
Shares issued price per share							$ 15.53		$ 15.55
Sales Commission Percentage On Common Stock											3.00%
Sales Agreement [Member] | Cantor Fitzgerald & Co. [Member] | Maximum [Member]
Class of Stock [Line Items]
Aggregate offering price											$ 50,000,000
IPO [Member]
Class of Stock [Line Items]
Fair value of equity							$ 200,000
Warrants issued to purchase shares of common stock					747	27,600
Purchase price of common stock upon warrant exercise						$ 15.00
Warrant expiration date							May 05, 2021
Private Placement [Member]
Class of Stock [Line Items]
Issuance of common stock				1,644,737
Shares issued price per share				$ 9.12
Warrants issued to purchase shares of common stock				1,644,737
Purchase price of common stock upon warrant exercise				$ 10.79
Warrant expiration date				Nov. 23, 2021
Common Stock | 2014 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Shares issued price per share							$ 15.38
Common Stock | Public Offering [Member]
Class of Stock [Line Items]
Issuance of common stock			3,269,219
Shares issued price per share			$ 13.00
Exercise of an option to purchase additional shares granted to underwriters in connection with offering			384,604
Net proceeds from initial public offering of common stock			$ 39,600,000
Common Stock Warrants [Member]
Class of Stock [Line Items]
Issuance of common stock							125,000
Fair value of equity				$ 8,300,000			$ 800,000
Expected volatility of common stock Minimum							71.00%
Risk free rate							1.01%
Dividend yield							0.00%
Expected life (in years)							2 years 6 months
Common Stock Warrants [Member] | Private Placement [Member]
Class of Stock [Line Items]
Fair value of equity							$ 11,900,000		$ 13,100,000

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Stockholders' Equity - Summary of Assumptions Used to Record Fair Value of Warrants (Detail) - Warrants [Member]	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.30%	2.00%
Expected term (in years)	3 years 7 months 6 days	3 years 10 months 24 days
Expected volatility	43.50%	73.10%
Expected dividend yield	0.00%	0.00%

XML

Stockholders' Equity - Summary of Warrant Activity (Detail) - Common Stock Warrants [Member] - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Class of Warrant or Right [Line Items]
Outstanding, Beginning Balance	1,787,124	1,798,084
Grants	0	0
Exercises	0	(10,960)
Expirations/cancellations	0	0
Outstanding, Ending balance	1,787,124	1,787,124

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Stockholders' Equity - Summary of Option Activity (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Granted			0
2014 and 2015 Stock Incentive Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, Beginning Balance	988,565	704,315
Options Granted	272,500	297,500
Options Exercised		(10,000)
Options Cancelled		(3,250)
Options outstanding, Ending balance	1,261,065	988,565
Options exercisable	558,050
Weighted-Average Exercise Price Per Share, Options outstanding, Beginning Balance	$ 10.83	$ 11.82
Weighted-Average Exercise Price Per Share, Granted	12.14	8.45
Weighted-Average Exercise Price Per Share, Exercised		9.28
Weighted-Average Exercise Price Per Share, Cancelled		12.44
Weighted-Average Exercise Price Per Share, Options outstanding, Ending Balance	11.11	$ 10.83
Weighted-Average Exercise Price Per Share, Options exercisable	$ 11.23
Aggregate Intrinsic Value, Options outstanding, Beginning Balance	$ 2,617,859
Aggregate Intrinsic Value, Exercised		$ 11,228
Aggregate Intrinsic Value, Options outstanding, Ending Balance	5,381,185	$ 2,617,859
Aggregate Intrinsic Value, Option exercisable	$ 2,313,947

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Stockholders' Equity - Summary of Assumptions to Determine Fair Value of Stock Options Granted to Employees and Directors (Detail)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rate	2.40%	2.00%
Expected term (in years)	6 years	6 years
Expected volatility	82.70%	78.60%
Expected dividend yield	0.00%	0.00%

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Stockholders' Equity - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 658	$ 500
2014 and 2015 Stock Incentive Plans [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	656	500
2014 and 2015 Stock Incentive Plans [Member] | Stock Options [Member] | Research and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	201	161
2014 and 2015 Stock Incentive Plans [Member] | Stock Options [Member] | General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 455	$ 339

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Stockholders' Equity - Summary of Shares of Common Stock Reserved (Detail) - shares	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved	3,233,393	3,259,083
2014 and 2015 Stock Incentive Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved	1,446,269	1,460,999
Private Placement Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved	1,633,777	1,644,737
2016 BioHEP warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved	125,000	125,000
2016 IPO warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved	28,347	28,347

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended
	Oct. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Commitments And Contingencies [Line Items]
Total lease commitment		$ 4,974,000
Rent paid		59,000	$ 56,000
Accruals for contingent liabilities		0
License Agreement [Member] | BioHEP Technologies Ltd. [Member]
Commitments And Contingencies [Line Items]
Maximum estimated development and regulatory milestone payments		3,500,000
Maximum aggregate sublicensing revenues		2,000,000
Milestone and royalty payments		0
Transition Agreement [Member] | President And Chief Executive Officer [Member]
Commitments And Contingencies [Line Items]
Accruals for contingent liabilities		0
Payments for transition services		$ 464,000
Transition services monthly payments		18 months
Milford, Massachusetts [Member]
Commitments And Contingencies [Line Items]
Lease extended term date		Mar. 31, 2018
Hopkinton, Massachusetts [Member]
Commitments And Contingencies [Line Items]
Lease term expiration date		May 31, 2021
Total lease commitment	$ 4,400,000			$ 771,000
Initial term of new lease	125 months
One time option to extend new lease term	5 years
Rent abatement period	11 months
Monthly rent payments	$ 34,533
Percentage of annual rent increase for first five years	3.00%
Percentage of annual rent increase after five years	2.50%

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Commitments and Contingencies - Summary of Future Minimum Lease Payments for Operating Leases (Detail) $ in Thousands	Mar. 31, 2018 USD ($)
Leases, Operating [Abstract]
2018	$ 148
2019	399
2020	585
2021	504
Thereafter	3,338
Total minimum lease payments	$ 4,974