10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 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: 001-38318

Odonate Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	82-2493065
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4747 Executive Drive, Suite 510

San Diego, CA 92121

(858) 731-8180

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See 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	☒	Smaller reporting company	☒
		Emerging growth company	☒

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

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

As of October 10, 2018, there were 26,827,729 shares of common stock outstanding.

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017	3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017 (Unaudited)	4
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 (Unaudited)	5
	Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	19
	SIGNATURES	20

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PART I. FINANCIAL INFORMATION

In this Quarterly Report on Form 10-Q, unless context requires otherwise, references to “we,” “us,” “our,” “Odonate” or “the Company” refer to: (i) Odonate Therapeutics, Inc. as of and following the completion of the conversion from a Delaware limited liability company to a Delaware corporation on December 6, 2017 (the “Conversion”); and (ii) Odonate Therapeutics, LLC before the completion of the Conversion. All common stock and per share amounts for all periods presented in this Quarterly Report on Form 10-Q have been adjusted retroactively, where applicable, to reflect the Conversion.

Item 1. Financial Statements

ODONATE THERAPEUTICS, INC.

Condensed Balance Sheets

(in thousands, except par value and share amounts)

	September 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Current assets:
Cash	$	160,969		$	198,105
Prepaid expenses		2,333			4,841
Total current assets		163,302			202,946
Property and equipment, net		1,894			165
Restricted cash		250			-
Other		699			383
Total assets	$	166,145		$	203,494
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	6,017		$	4,302
Accrued expenses		8,943			3,210
Deferred rent, current portion		29			-
Total current liabilities		14,989			7,512
Deferred rent, less current portion		479			-
Total liabilities		15,468			7,512
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $0.01 par value—100,000,000 shares authorized; 26,826,699 and 26,890,356 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		244			240
Additional paid-in capital		249,922			235,034
Accumulated deficit		(99,489	)		(39,292	)
Total stockholders' equity		150,677			195,982
Total liabilities and stockholders' equity	$	166,145		$	203,494

See accompanying notes.

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ODONATE THERAPEUTICS, INC.

Condensed Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Operating expenses:
Research and development	$	21,667		$	9,126		$	53,151		$	14,862
General and administrative		2,960			1,246			8,136			2,136
Total operating expenses		24,627			10,372			61,287			16,998
Loss from operations		(24,627	)		(10,372	)		(61,287	)		(16,998	)
Interest income		701			-			1,090			-
Net loss	$	(23,926	)	$	(10,372	)	$	(60,197	)	$	(16,998	)
Net loss per share:
Basic and diluted	$	(0.98	)	$	(0.74	)	$	(2.47	)	$	(1.37	)
Weighted-average shares outstanding:
Basic and diluted		24,453,910			14,036,856			24,402,842			12,427,219

See accompanying notes.

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ODONATE THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(60,197	)	$	(16,998	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity-based compensation		4,775			2,198
Depreciation and amortization		231			10
Non-cash contributions for expenses		64			1,730
Changes in operating assets and liabilities:
Prepaid expenses and other assets		2,192			(864	)
Accounts payable		1,443			(50	)
Accrued expenses		5,733			2,191
Deferred rent		432			-
Net cash used in operating activities		(45,327	)		(11,783	)
Cash flows from investing activities:
Purchases of property and equipment		(1,612	)		(68	)
Net cash used in investing activities		(1,612	)		(68	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		9,848			83,974
Proceeds from issuance of common stock under ESPP		205			-
Initial public offering costs		-			(218	)
Net cash provided by financing activities		10,053			83,756
Net (decrease) increase in cash and restricted cash		(36,886	)		71,905
Cash and restricted cash, beginning of period		198,105			2,599
Cash and restricted cash, end of period	$	161,219		$	74,504
Supplemental disclosure of cash flow information:
Issuance costs included in accounts payable and accrued expenses	$	-		$	571
Property and equipment purchases included in accounts payable	$	272		$	35

See accompanying notes.

5

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

1. Business

Odonate Therapeutics, Inc. (“Odonate” or the “Company”) is a pharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. The Company’s initial focus is on the development of tesetaxel, an investigational, orally administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. Tesetaxel has several pharmacologic properties that make it unique among taxanes, including: oral administration with a low pill burden; a long (~8-day) terminal plasma half-life in humans, enabling the maintenance of adequate drug levels with relatively infrequent dosing; no history of hypersensitivity (allergic) reactions; and significant activity against chemotherapy-resistant tumors. In patients with metastatic breast cancer, tesetaxel was shown to have significant, single-agent antitumor activity in two multicenter, Phase 2 studies. The Company is conducting a multinational, multicenter, randomized, Phase 3 study in patients with locally advanced or metastatic breast cancer, known as CONTESSA. The Company’s goal for tesetaxel is to develop an effective chemotherapy choice for patients that provides quality-of-life advantages over current alternatives.

On December 11, 2017, the Company closed its initial public offering (“IPO”) of 6,250,000 shares of common stock at a public offering price of $24.00 per share. On January 10, 2018, the underwriters exercised their option to purchase 441,073 additional shares of common stock in the Company’s IPO. The aggregate gross proceeds from the IPO were $160.6 million, and the net proceeds were $147.3 million after deducting underwriting discounts and commissions and offering costs.

As of September 30, 2018, the Company had $161.0 million in cash. The Company has incurred operating losses and negative cash flows from operations since inception. Management believes the Company’s existing cash as of September 30, 2018 will be sufficient to meet the Company’s anticipated cash requirements through at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The Company’s condensed financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”)for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim financial results are not necessarily indicative of results anticipated for the full year. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of the Company’s condensed financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed financial statements and the accompanying notes. The most significant estimates in the Company’s condensed financial statements relate to accrued expenses and equity-based compensation expense. These estimates are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

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Summary of Significant Accounting Policies

During the nine months ended September 30, 2018, other than the policies described below, there were no changes to the Company’s significant accounting policies as described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Cash and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. As of September 30, 2018, the Company held no cash equivalents. Cash is classified as restricted cash when it is reserved for a specific purpose and, therefore, is not available for immediate or general business use.

Property and Equipment

Property and equipment consists of office equipment, software, furniture and fixtures and leasehold improvements. Office equipment, software and furniture and fixtures are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets, which generally ranges from three to five years. Leasehold improvements are amortized over the lesser of the estimated useful life or the remaining term of the lease.

Deferred Rent

Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. Tenant improvement allowances and other lease incentives are recorded as deferred rent and amortized on a straight-line basis over the term of the lease as reductions to rent expense.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”). This guidance requires lessees to recognize operating leases with a term greater than one year on the balance sheet as a right-of-use asset and corresponding lease liability. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018, and early adoption is permitted. Although ASU 2016-02 is required to be adopted at the earliest period presented using a modified retrospective approach, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which allows for an alternative transition method of adoption by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to adopt ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Although the Company is in the process of evaluating the impact the adoption of ASU 2016-02 will have on its financial statements, the Company expects the most significant changes will be the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for its San Diego Lease and New York Lease (see Note 5).

3. Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration of common stock equivalents. The basic net loss per share calculation excludes 2,205,770 and 2,365,950 outstanding shares of common stock held by Odonate Holdings, LLC (“Odonate Holdings”) as of September 30, 2018 and 2017, respectively, to be used to settle incentive units previously issued under the Odonate Management Holdings Equity Incentive Plan (the “Management Plan”). These shares of common stock are subject to cancellation until such incentive units are vested and exercised and, as such, are considered common stock equivalents. Therefore, the

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shares of common stock held by Odonate Holdings are excluded from the basic net loss per share calculation until the incentive units are exercised.During the three and nine months ended September 30, 2018, 209,712 shares of common stock held by Odonate Holdings were transferred to incentive unitholders on the net exercise of 218,868 incentive units and are included in the basic net loss per share calculation.During the three and nine months ended September 30, 2018,61,024 and506,764shares of common stock held by Odonate Holdings were cancelled as a result of incentive unit forfeitures, respectively.

Diluted net loss per share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. Common stock equivalents were excluded from the calculation of diluted net loss per share because they were anti-dilutive.

4. Accrued Expenses

Accrued expenses consist of the following:

	September 30,		December 31,
	2018		2017
	(in thousands)
Accrued clinical development costs	$	6,257	$	3,033
Accrued compensation and related expenses		2,615		169
Other accrued expenses		71		8
Total accrued expenses	$	8,943	$	3,210

5. Commitments and Contingencies

Commitments

In March 2018, the Company entered into an agreement to lease office space in San Diego, California (the “San Diego Lease”) with aggregate payments of approximately $0.8 million over the term of the lease. The San Diego Lease expires on December 31, 2019. The Company has an option to extend the San Diego Lease for an additional 5 years at the end of the initial term.

In February 2018, the Company entered into an agreement to lease office space in New York, New York (the “New York Lease”) with aggregate payments of approximately $2.8 million over the 7-year term of the lease. The Company has an option to extend the New York Lease for an additional three years at the end of the initial term. Further, the Company provided a standby letter of credit of $0.3 million in lieu of a security deposit during the term of the lease, subject to a reduction 3.5 years after the lease commencement. As of September 30, 2018, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash.

The Company enters into contracts in the normal course of business with third-party contract research organizations, contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.

Contingencies

The Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation.

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6. Stockholders’ Equity

Common Stock Sales

On December 11, 2017, the Company closed its IPO of 6,250,000 shares of common stock at a public offering price of $24.00 per share. On January 10, 2018, the underwriters exercised their option to purchase 441,073 additional shares of common stock in the Company’s IPO. The aggregate gross proceeds from the IPO were $160.6 million, and the net proceeds were $147.3 million after deducting underwriting discounts and commissions and offering costs.

Non-cash Contributions for Expenses

Non-cash contributions for expenses represent certain services and other benefits received by the Company from an affiliate without charge to the Company (see Note 10). These services and other benefits are recorded as expense with corresponding increases to additional paid-in capital. No services and other benefits provided without charge to the Company were recorded for the three months ended September 30, 2018. The Company recorded expense, and corresponding increases to additional paid-in capital, of $0.1 million for the nine months ended September 30, 2018 and $0.1 million and $1.7 million for the three and nine months ended September 30, 2017, respectively, for services and other benefits provided without charge to the Company.

7. Equity Incentive Plans

2017 Stock Option Plan

A total of 4,800,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Stock Option Plan (the “2017 Plan”). As of September 30, 2018, 3,361,031 shares of common stock remained available for future grants under the 2017 Plan.

2017 Employee Stock Purchase Plan

A total of 500,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2018, 488,810 shares of common stock remained available for future grants under the ESPP.

Management Plan

Prior to the Conversion, the Company issued an aggregate of 2,931,402 incentive units under the Management Plan. As of September 30, 2018, 2,205,770 outstanding shares of common stock were held by Odonate Holdings to be used to settle incentive units previously issued under the Management Plan. Following the Conversion, the Company has not granted, and will no longer grant, any incentive units.

Equity Awards

The activity related to equity awards, which are comprised of stock options and incentive units, during the nine months ended September 30, 2018 is summarized as follows:

	Equity Awards			Weighted-average Exercise Price per Share
Outstanding at December 31, 2017		3,115,101		$	5.50
Granted		1,396,391		$	23.27
Exercised		(218,868	)	$	0.78
Cancelled/forfeited		(647,885	)	$	9.91
Outstanding at September 30, 2018		3,644,739		$	11.81
Exercisable at September 30, 2018		797,772		$	2.31

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Equity-based Compensation Expense

For the nine months ended September 30, 2018 and 2017, the weighted-average grant-date fair value per equity award was $15.24 and $12.05, respectively. The Company estimated the fair value of each equity award on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended
	September 30,
	2018	2017
Expected volatility	71% - 73%	73% - 76%
Expected life	6 years	6-10 years
Risk-free interest rate	2.3% - 2.8%	2.0% - 2.3%
Expected dividend yield	0%	0%

Under the ESPP, eligible employees may purchase shares of the Company’s common stock twice per month at a price equal to 85% of the closing price of the Company’s common stock on the date of each purchase. The benefit received by the employees, which is equal to a 15% discount on the shares of the Company’s common stock purchased, is recognized as equity-based compensation expense on the date of each purchase.

The classification of equity-based compensation expense is summarized as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Equity-based compensation expense:
Research and development	$	1,844	$	1,756	$	4,047	$	2,066
General and administrative		331		132		728		132
Total equity-based compensation expense	$	2,175	$	1,888	$	4,775	$	2,198

As of September 30, 2018, total unrecognized equity-based compensation expense related to unvested equity awards was $24.7 million, which will be recognized over a weighted-average period of 2.9 years. As of September 30, 2018, there was no unrecognized equity-based compensation expense related to shares of common stock issued under the ESPP.

8. Income Taxes

Prior to the Conversion, the Company operated as a limited liability company (“LLC”). An LLC combines corporate protection from personal liability for business debts along with the pass-through tax structure of a partnership or sole proprietorship. Business income from an LLC is passed through the business to the LLC members, who report their share of profits or losses on their respective income tax returns. Net operating losses incurred by the Company through the date of the Conversion were passed through to the LLC members and are not able to be carried forward to the Company. Accordingly, no provision for income taxes is reflected in the Company’s condensed financial statements for the three and nine months ended September 30, 2017 and through the Conversion.

From the Conversion through September 30, 2018, the Company did not record a provision for income taxes due to a full valuation allowance against its deferred tax assets.

As of September 30, 2018 and December 31, 2017, the Company established a full valuation allowance against its federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets.

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As of September 30, 2018 and December 31, 2017, the Company had no unrecognized tax benefits. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.

9. License Agreement

In 2013, the Company licensed rights to tesetaxel in all major markets from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), the original inventor of the product. Under the Daiichi Sankyo license agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize tesetaxel in the following countries: France, Germany, Italy, Spain, the United Kingdom and the U.S. The Company is required to make aggregate future milestone payments of up to $31.0 million, contingent on attainment of certain regulatory milestones. Additionally, the Company will pay Daiichi Sankyo a tiered royalty that ranges from the low to high single digits, depending on annual net sales of tesetaxel.

10. Related Party Transactions

Commencing in 2016, the Company received certain services and other benefits from an affiliate (the “Affiliate”) of the Chairman and Chief Executive Officer of the Company. The Company was not charged any fees for these services and other benefits, which included personnel costs for research and development and administrative functions, rent and facility costs and other direct expenses. No expense for services and other benefits provided without charge to the Company was recorded for the three months ended September 30, 2018. The Company recorded expense, and corresponding increases to additional paid-in capital, of $0.1 million for the nine months ended September 30, 2018 and $0.1 million and $1.7 million for the three and nine months ended September 30, 2017, respectively, for services and other benefits provided without charge to the Company. Personnel costs were based on actual costs incurred by the Affiliate, which were allocated based on the estimated percentage of time employees spent on Odonate on an employee-by-employee basis. Rent and facility costs were based on actual costs incurred by the Affiliate and allocated based on the Company’s use of shared space using headcount. Other direct expenses paid by the Affiliate were specifically identifiable to the Company and were allocated directly to the Company. The Chairman and Chief Executive Officer of the Company has elected to receive an annual salary of $1.00 and to not receive any bonuses, equity or other compensation.

Management believes that the method used to allocate costs is a fair and reasonable reflection of the utilization of the services provided to, or the benefit received by, the Company during the periods presented. The allocations may not, however, reflect the costs that the Company would have incurred if the Company had not received these services. Actual costs would depend on a number of factors, including strategic decisions in the areas of hiring, facility location and whether to outsource certain functions.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2017.

Forward-looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, and such statements may involve substantial risks and uncertainties. All statements, other than statements of historical facts included in this Quarterly Report on Form 10-Q, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans or intentions relating to acquisitions, business trends and other information referred to under this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are not historical facts and reflect our current views with respect to future events. Forward-looking statements are also based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other factors are described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017. We caution you that these risks, uncertainties and other factors may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Company Overview

We are a pharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. Our initial focus is on the development of tesetaxel, an investigational, orally administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. Tesetaxel has several pharmacologic properties that make it unique among taxanes, including: oral administration with a low pill burden; a long (~8-day) terminal plasma half-life in humans, enabling the maintenance of adequate drug levels with relatively infrequent dosing; no history of hypersensitivity (allergic) reactions; and significant activity against chemotherapy-resistant tumors. In patients with metastatic breast cancer, tesetaxel was shown to have significant, single-agent antitumor activity in two multicenter, Phase 2 studies. We are conducting a multinational, multicenter, randomized, Phase 3 study in patients with locally advanced or metastatic breast cancer, known as CONTESSA, and we expect to report top-line results from this study in 2020. Our goal for tesetaxel is to develop an effective chemotherapy choice for patients that provides quality-of-life advantages over current alternatives.

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Components of Our Results of Operations

Research and Development Expense

Research and development expense consists primarily of costs associated with the development of our product candidates and includes: salaries, equity-based compensation expense, benefits, travel and other related costs for personnel engaged in research and development functions; expense incurred under agreements with contract research organizations (“CROs”), investigative sites and consultants that conduct our nonclinical and clinical studies; manufacturing development and scale-up expense and the cost of acquiring and manufacturing clinical study materials and commercial materials, including manufacturing registration and validation batches; payments to consultants engaged in the development of our product candidates, including equity-based compensation expense (if any), travel and other expense; costs related to compliance with quality and regulatory requirements; and research and development facility-related expense, which includes direct and allocated expense and other related costs.

Research and development expense is charged to operations as incurred when these expenditures relate to our research and development efforts and have no alternative future use. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

All of our research and development expense to date has been incurred in connection with the development of tesetaxel. We expect our research and development expense to continue to increase as we advance tesetaxel through clinical development, including the conduct of our ongoing Phase 3 study, CONTESSA.

General and Administrative Expense

General and administrative expense consists primarily of salaries, equity-based compensation expense, benefits, travel, facility-related expense and other related costs for personnel in finance and administrative functions. General and administrative expense also includes professional fees for legal, patent, consulting, accounting and audit services and other related costs. We expect our general and administrative expense to continue to increase as we build our infrastructure to support our continued research and development of tesetaxel.

Results of Operations

The following table summarizes our results of operations for each of the periods below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Research and development expense	$	21,667	$	9,126	$	53,151	$	14,862
General and administrative expense	$	2,960	$	1,246	$	8,136	$	2,136
Interest income	$	701	$	-	$	1,090	$	-

13

Research and Development Expense

The following table summarizes our research and development expense for each of the periods below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Clinical development costs	$	13,860	$	4,446	$	34,341	$	6,669
Personnel and related costs		5,811		1,928		14,464		4,464
Equity-based compensation expense		1,844		1,756		4,047		2,066
Other research and development costs		152		996		299		1,663
Total research and development expense	$	21,667	$	9,126	$	53,151	$	14,862

Research and development expense was $21.7 million and $53.2 million for the three and nine months ended September 30, 2018, respectively, compared to $9.1 million and $14.9 million for the same periods in 2017, respectively. The increase in research and development expense was due to increased activities in connection with our tesetaxel clinical development program.

General and Administrative Expense

The following table summarizes our general and administrative expense for each of the periods below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
General and administrative costs	$	2,629	$	1,114	$	7,408	$	2,004
Equity-based compensation expense		331		132		728		132
Total general and administrative expense	$	2,960	$	1,246	$	8,136	$	2,136

General and administrative expense was $3.0 million and $8.1 million for the three and nine months ended September 30, 2018, respectively, compared to $1.2 million and $2.1 million for the same periods in 2017, respectively. The increase in general and administrative expense was due to increased administrative support costs in connection with our tesetaxel clinical development program.

Interest Income

Interest income was $0.7 million and $1.1 million for the three and nine months ended September 30, 2018, respectively, and consists of income generated from cash held in savings accounts. No interest income was generated for the same periods in 2017.

Liquidity and Capital Resources

As of September 30, 2018 and December 31, 2017, we had cash in the amount of $161.0 million and $198.1 million, respectively. We believe that our existing cash as of September 30, 2018 will be sufficient to meet our anticipated cash requirements through at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

We have incurred losses in each year since our inception. Our net loss was $23.9 million and $60.2 million for the three and nine months ended September 30, 2018, respectively, compared to $10.4 million and $17.0 million for the same periods in 2017, respectively. As of September 30, 2018 and December 31, 2017, we had an accumulated deficit of $99.5 million and $39.3 million, respectively. Substantially all of our operating losses resulted from expenses incurred in connection with advancing tesetaxel through development activities and general and administrative costs associated with our operations.

14

To date, we have funded our operations through the sale of equity securities. Since our inception, we have raised $238.3 million in net proceeds from the sale of equity securities.

The following table summarizes our net cash flow activity for each of the periods below:

	Nine Months Ended
	September 30,
	2018			2017
	(in thousands)
Net cash (used in) provided by:
Operating activities	$	(45,327	)	$	(11,783	)
Investing activities		(1,612	)		(68	)
Financing activities		10,053			83,756
Net (decrease) increase in cash and restricted cash	$	(36,886	)	$	71,905

Net cash used in operating activities was $45.3 million and $11.8 million for the nine months ended September 30, 2018 and 2017, respectively. Net cash used in operating activities was the result of our net loss and change in working capital, partially offset by equity-based compensation expense, depreciation and amortization expense and non-cash contributions for expenses by an affiliate of a significant stockholder.

Net cash used in investing activities was $1.6 million and $0.1 million for the nine months ended September 30, 2018 and 2017, respectively. Net cash used in investing activities was the result of purchases of property and equipment.

Net cash provided by financing activities was $10.1 million and $83.8 million for the nine months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018, net cash provided by financing activities was the result of net proceeds of $9.8 million from the exercise of the underwriters’ option to purchase additional shares of common stock in our initial public offering and $0.2 million in proceeds from the issuance of stock under our ESPP. For the nine months ended September 30, 2017, net cash provided by financing activities was the result of our sale of common stock in private financings for net proceeds of $84.0 million, partially offset by initial public offering costs of $0.2 million.

Until such time as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic partnerships and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt 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. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, associated intellectual property, our other technologies, future revenue streams or research programs 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 or future commercialization efforts or grant rights to develop and market our product candidate even if we would otherwise prefer to develop and market such product candidate ourselves.

Contractual Obligations and Commitments

In March 2018, we entered into an agreement to lease office space in San Diego, California (the “San Diego Lease”) with aggregate payments of approximately $0.8 million over the term of the lease. The San Diego Lease expires on December 31, 2019. We have an option to extend the San Diego Lease for an additional 5 years at the end of the initial term.

15

In February 2018, we entered into an agreement to lease office space in New York, New York (the “New York Lease”) with aggregate payments of approximately $2.8 million over the 7-year term of the lease. Wehave an option to extend the New York Lease for an additional three years at the end of the initial term. Further, we provided a standby letter of credit of $0.3 million in lieu of a security deposit during the term of the lease, subject to a reduction after 3.5 years. As ofSeptember 30, 2018, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash.

We enter into contracts in the normal course of business with CROs, contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.

In 2013, we licensed rights to tesetaxel in all major markets from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), the original inventor of the product. Under the Daiichi Sankyo license agreement, we are obligated to use commercially reasonable efforts to develop and commercialize tesetaxel in the following countries: France, Germany, Italy, Spain, the United Kingdom and the U.S. We are required to make aggregate future milestone payments of up to $31.0 million, contingent on attainment of certain regulatory milestones. Additionally, we will pay Daiichi Sankyo a tiered royalty that ranges from the low to high single digits, depending on annual net sales of tesetaxel.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules of the SEC.

Jumpstart Our Business Startups Act

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under this act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. However, we intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended. We will remain an emerging growth company for 5 years unless, prior to that time, we: (i) have more than $1.07 billion in annual gross revenue; (ii) have a market value for our common stock held by non-affiliates of more than $700 million as of the last day of our second fiscal quarter of any fiscal year; or (iii) issue more than $1.0 billion of non-convertible debt over a three-year period.

Critical Accounting Policies and Significant Judgments and Estimates

We believe the estimates, assumptions and judgments involved in the accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2017 are most critical to understanding and evaluating our reported financial results. During the three and nine months ended September 30, 2018, there were no changes to our critical accounting policies and estimates as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2017.

Recent Accounting Pronouncements

See Note 2 to our condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

16

Item 3. Quantitative and Qualitative Disclosures about Market Risk

During the three and nine months ended September 30, 2018, there were no material changes to our market risks as disclosed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2017.

Item 4. Controls and Procedures

Management’s Evaluation of our 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 September 30, 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 (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 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.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 1A. Risk Factors

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017. There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Securities and Use of Proceeds

On December 11, 2017, we closed our initial public offering (“IPO”) of 6,250,000 shares of common stock at a public offering price of $24.00 per share. On January 10, 2018, the underwriters exercised their option to purchase 441,073 additional shares of common stock in our IPO. The aggregate gross proceeds from the IPO were $160.6 million, and the net proceeds were $147.3 million after deducting underwriting discounts and commissions and offering costs.

There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on December 8, 2017.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

18

Item 6. Exhibits

Exhibit No.	Description
3.1	Certificate of Incorporation of Odonate (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-221533), as filed with the SEC on November 27, 2017)
3.2	Bylaws of Odonate (incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-221533), as filed with the SEC on November 27, 2017)
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32.1#	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 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

# Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act

19

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.

	Odonate Therapeutics, Inc.
Date: October 23, 2018	By:	/s/    Kevin C. Tang
		Kevin C. Tang
		Chairman and Chief Executive Officer
		(principal executive officer)
		/s/    John G. Lemkey
		John G. Lemkey
		Chief Financial Officer
		(principal financial and accounting officer)

20

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Kevin C. Tang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc.;

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

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

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

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

a. All significant deficiencies and material weaknesses in the design or operation of internal controls 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 controls over financial reporting.

Date: October 23, 2018	By:	/s/    Kevin C. Tang
		Kevin C. Tang
		Chairman and Chief Executive Officer (principal executive officer)

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, John G. Lemkey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc.;

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

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

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

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

a. All significant deficiencies and material weaknesses in the design or operation of internal controls 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 controls over financial reporting.

Date: October 23, 2018	By:	/s/    John G. Lemkey
		John G. Lemkey
		Chief Financial Officer (principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TOSECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Odonate Therapeutics, Inc., (the “Company”) for the quarterly period ended September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, 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:

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

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

Date: October 23, 2018

/s/    Kevin C. Tang

Kevin C. Tang

Chairman and Chief Executive Officer

(principal executive officer)

/s/    John G. Lemkey

John G. Lemkey

Chief Financial Officer

(principal financial and accounting officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Note: A signed original of this written statement required by §906 has been provided to Odonate Therapeutics, Inc. and will be retained by Odonate Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 10, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	ODT
Entity Registrant Name	Odonate Therapeutics, Inc.
Entity Central Index Key	0001717452
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		26,827,729

XML

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 160,969	$ 198,105
Prepaid expenses	2,333	4,841
Total current assets	163,302	202,946
Property and equipment, net	1,894	165
Restricted cash	250
Other	699	383
Total assets	166,145	203,494
Current liabilities:
Accounts payable	6,017	4,302
Accrued expenses	8,943	3,210
Deferred rent, current portion	29
Total current liabilities	14,989	7,512
Deferred rent, less current portion	479
Total liabilities	15,468	7,512
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $0.01 par value—100,000,000 shares authorized; 26,826,699 and 26,890,356 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	244	240
Additional paid-in capital	249,922	235,034
Accumulated deficit	(99,489)	(39,292)
Total stockholders' equity	150,677	195,982
Total liabilities and stockholders' equity	$ 166,145	$ 203,494

XML

Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Common stock, par or stated value per share	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	26,826,699	26,890,356
Common stock, shares outstanding	26,826,699	26,890,356

XML

Condensed Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Operating expenses:
Research and development	$ 21,667	$ 9,126	$ 53,151	$ 14,862
General and administrative	2,960	1,246	8,136	2,136
Total operating expenses	24,627	10,372	61,287	16,998
Loss from operations	(24,627)	(10,372)	(61,287)	(16,998)
Interest income	701		1,090
Net loss	$ (23,926)	$ (10,372)	$ (60,197)	$ (16,998)
Net loss per share:
Basic and diluted	$ (0.98)	$ (0.74)	$ (2.47)	$ (1.37)
Weighted-average shares outstanding:
Basic and diluted	24,453,910	14,036,856	24,402,842	12,427,219

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (60,197)	$ (16,998)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity-based compensation	4,775	2,198
Depreciation and amortization	231	10
Non-cash contributions for expenses	64	1,730
Changes in operating assets and liabilities:
Prepaid expenses and other assets	2,192	(864)
Accounts payable	1,443	(50)
Accrued expenses	5,733	2,191
Deferred rent	432
Net cash used in operating activities	(45,327)	(11,783)
Cash flows from investing activities:
Purchases of property and equipment	(1,612)	(68)
Net cash used in investing activities	(1,612)	(68)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs	9,848	83,974
Proceeds from issuance of common stock under ESPP	205
Initial public offering costs		(218)
Net cash provided by financing activities	10,053	83,756
Net (decrease) increase in cash and restricted cash	(36,886)	71,905
Cash and restricted cash, beginning of period	198,105	2,599
Cash and restricted cash, end of period	161,219	74,504
Supplemental disclosure of cash flow information:
Issuance costs included in accounts payable and accrued expenses		571
Property and equipment purchases included in accounts payable	$ 272	$ 35

XML

Business

9 Months Ended

Sep. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Business

ODONATE THERAPEUTICS, INC.

Notes to Condensed Financial Statements

(Unaudited)

1. Business

Odonate Therapeutics, Inc. (“Odonate” or the “Company”) is a pharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. The Company’s initial focus is on the development of tesetaxel, an investigational, orally administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. Tesetaxel has several pharmacologic properties that make it unique among taxanes, including: oral administration with a low pill burden; a long (~8-day) terminal plasma half-life in humans, enabling the maintenance of adequate drug levels with relatively infrequent dosing; no history of hypersensitivity (allergic) reactions; and significant activity against chemotherapy-resistant tumors. In patients with metastatic breast cancer, tesetaxel was shown to have significant, single-agent antitumor activity in two multicenter, Phase 2 studies. The Company is conducting a multinational, multicenter, randomized, Phase 3 study in patients with locally advanced or metastatic breast cancer, known as CONTESSA. The Company’s goal for tesetaxel is to develop an effective chemotherapy choice for patients that provides quality-of-life advantages over current alternatives.

On December 11, 2017, the Company closed its initial public offering (“IPO”) of 6,250,000 shares of common stock at a public offering price of $24.00 per share. On January 10, 2018, the underwriters exercised their option to purchase 441,073 additional shares of common stock in the Company’s IPO. The aggregate gross proceeds from the IPO were $160.6 million, and the net proceeds were $147.3 million after deducting underwriting discounts and commissions and offering costs.

As of September 30, 2018, the Company had $161.0 million in cash. The Company has incurred operating losses and negative cash flows from operations since inception. Management believes the Company’s existing cash as of September 30, 2018 will be sufficient to meet the Company’s anticipated cash requirements through at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

XML

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The Company’s condensed financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”)for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim financial results are not necessarily indicative of results anticipated for the full year. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of the Company’s condensed financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed financial statements and the accompanying notes. The most significant estimates in the Company’s condensed financial statements relate to accrued expenses and equity-based compensation expense. These estimates are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Summary of Significant Accounting Policies

During the nine months ended September 30, 2018, other than the policies described below, there were no changes to the Company’s significant accounting policies as described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Cash and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. As of September 30, 2018, the Company held no cash equivalents. Cash is classified as restricted cash when it is reserved for a specific purpose and, therefore, is not available for immediate or general business use.

Property and Equipment

Property and equipment consists of office equipment, software, furniture and fixtures and leasehold improvements. Office equipment, software and furniture and fixtures are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets, which generally ranges from three to five years. Leasehold improvements are amortized over the lesser of the estimated useful life or the remaining term of the lease.

Deferred Rent

Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. Tenant improvement allowances and other lease incentives are recorded as deferred rent and amortized on a straight-line basis over the term of the lease as reductions to rent expense.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”). This guidance requires lessees to recognize operating leases with a term greater than one year on the balance sheet as a right-of-use asset and corresponding lease liability. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018, and early adoption is permitted. Although ASU 2016-02 is required to be adopted at the earliest period presented using a modified retrospective approach, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which allows for an alternative transition method of adoption by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to adopt ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Although the Company is in the process of evaluating the impact the adoption of ASU 2016-02 will have on its financial statements, the Company expects the most significant changes will be the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for its San Diego Lease and New York Lease (see Note 5).

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Net Loss per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Net Loss per Share

3. Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration of common stock equivalents. The basic net loss per share calculation excludes 2,205,770 and 2,365,950 outstanding shares of common stock held by Odonate Holdings, LLC (“Odonate Holdings”) as of September 30, 2018 and 2017, respectively, to be used to settle incentive units previously issued under the Odonate Management Holdings Equity Incentive Plan (the “Management Plan”). These shares of common stock are subject to cancellation until such incentive units are vested and exercised and, as such, are considered common stock equivalents. Therefore, the shares of common stock held by Odonate Holdings are excluded from the basic net loss per share calculation until the incentive units are exercised. During the three and nine months ended September 30, 2018, 209,712 shares of common stock held by Odonate Holdings were transferred to incentive unitholders on the net exercise of 218,868 incentive units and are included in the basic net loss per share calculation. During the three and nine months ended September 30, 2018, 61,024 and 506,764 shares of common stock held by Odonate Holdings were cancelled as a result of incentive unit forfeitures, respectively.

Diluted net loss per share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. Common stock equivalents were excluded from the calculation of diluted net loss per share because they were anti-dilutive.

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Accrued Expenses

9 Months Ended

Sep. 30, 2018

Payables And Accruals [Abstract]

Accrued Expenses

4. Accrued Expenses

Accrued expenses consist of the following:

	September 30,		December 31,
	2018		2017
	(in thousands)
Accrued clinical development costs	$	6,257	$	3,033
Accrued compensation and related expenses		2,615		169
Other accrued expenses		71		8
Total accrued expenses	$	8,943	$	3,210

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Commitments

In March 2018, the Company entered into an agreement to lease office space in San Diego, California (the “San Diego Lease”) with aggregate payments of approximately $0.8 million over the term of the lease. The San Diego Lease expires on December 31, 2019. The Company has an option to extend the San Diego Lease for an additional 5 years at the end of the initial term.

In February 2018, the Company entered into an agreement to lease office space in New York, New York (the “New York Lease”) with aggregate payments of approximately $2.8 million over the 7-year term of the lease. The Company has an option to extend the New York Lease for an additional three years at the end of the initial term. Further, the Company provided a standby letter of credit of $0.3 million in lieu of a security deposit during the term of the lease, subject to a reduction 3.5 years after the lease commencement. As of September 30, 2018, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash.

The Company enters into contracts in the normal course of business with third-party contract research organizations, contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.

Contingencies

The Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity

6. Stockholders’ Equity

Common Stock Sales

On December 11, 2017, the Company closed its IPO of 6,250,000 shares of common stock at a public offering price of $24.00 per share. On January 10, 2018, the underwriters exercised their option to purchase 441,073 additional shares of common stock in the Company’s IPO. The aggregate gross proceeds from the IPO were $160.6 million, and the net proceeds were $147.3 million after deducting underwriting discounts and commissions and offering costs.

Non-cash Contributions for Expenses

Non-cash contributions for expenses represent certain services and other benefits received by the Company from an affiliate without charge to the Company (see Note 10). These services and other benefits are recorded as expense with corresponding increases to additional paid-in capital. No services and other benefits provided without charge to the Company were recorded for the three months ended September 30, 2018. The Company recorded expense, and corresponding increases to additional paid-in capital, of $0.1 million for the nine months ended September 30, 2018 and $0.1 million and $1.7 million for the three and nine months ended September 30, 2017, respectively, for services and other benefits provided without charge to the Company.

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Equity Incentive Plans

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Incentive Plans

7. Equity Incentive Plans

2017 Stock Option Plan

A total of 4,800,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Stock Option Plan (the “2017 Plan”). As of September 30, 2018, 3,361,031 shares of common stock remained available for future grants under the 2017 Plan.

2017 Employee Stock Purchase Plan

A total of 500,000 shares of common stock have been reserved for issuance under the Odonate Therapeutics, Inc. 2017 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2018, 488,810 shares of common stock remained available for future grants under the ESPP.

Management Plan

Prior to the Conversion, the Company issued an aggregate of 2,931,402 incentive units under the Management Plan. As of September 30, 2018, 2,205,770 outstanding shares of common stock were held by Odonate Holdings to be used to settle incentive units previously issued under the Management Plan. Following the Conversion, the Company has not granted, and will no longer grant, any incentive units.

Equity Awards

The activity related to equity awards, which are comprised of stock options and incentive units, during the nine months ended September 30, 2018 is summarized as follows:

	Equity Awards			Weighted-average Exercise Price per Share
Outstanding at December 31, 2017		3,115,101		$	5.50
Granted		1,396,391		$	23.27
Exercised		(218,868	)	$	0.78
Cancelled/forfeited		(647,885	)	$	9.91
Outstanding at September 30, 2018		3,644,739		$	11.81
Exercisable at September 30, 2018		797,772		$	2.31

Equity-based Compensation Expense

For the nine months ended September 30, 2018 and 2017, the weighted-average grant-date fair value per equity award was $15.24 and $12.05, respectively. The Company estimated the fair value of each equity award on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended
	September 30,
	2018	2017
Expected volatility	71% - 73%	73% - 76%
Expected life	6 years	6-10 years
Risk-free interest rate	2.3% - 2.8%	2.0% - 2.3%
Expected dividend yield	0%	0%

Under the ESPP, eligible employees may purchase shares of the Company’s common stock twice per month at a price equal to 85% of the closing price of the Company’s common stock on the date of each purchase. The benefit received by the employees, which is equal to a 15% discount on the shares of the Company’s common stock purchased, is recognized as equity-based compensation expense on the date of each purchase.

The classification of equity-based compensation expense is summarized as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Equity-based compensation expense:
Research and development	$	1,844	$	1,756	$	4,047	$	2,066
General and administrative		331		132		728		132
Total equity-based compensation expense	$	2,175	$	1,888	$	4,775	$	2,198

As of September 30, 2018, total unrecognized equity-based compensation expense related to unvested equity awards was $24.7 million, which will be recognized over a weighted-average period of 2.9 years. As of September 30, 2018, there was no unrecognized equity-based compensation expense related to shares of common stock issued under the ESPP.

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

Prior to the Conversion, the Company operated as a limited liability company (“LLC”). An LLC combines corporate protection from personal liability for business debts along with the pass-through tax structure of a partnership or sole proprietorship. Business income from an LLC is passed through the business to the LLC members, who report their share of profits or losses on their respective income tax returns. Net operating losses incurred by the Company through the date of the Conversion were passed through to the LLC members and are not able to be carried forward to the Company. Accordingly, no provision for income taxes is reflected in the Company’s condensed financial statements for the three and nine months ended September 30, 2017 and through the Conversion.

From the Conversion through September 30, 2018, the Company did not record a provision for income taxes due to a full valuation allowance against its deferred tax assets.

As of September 30, 2018 and December 31, 2017, the Company established a full valuation allowance against its federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets.

As of September 30, 2018 and December 31, 2017, the Company had no unrecognized tax benefits. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.

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License Agreement

9 Months Ended

Sep. 30, 2018

License Agreement [Abstract]

License Agreement

9. License Agreement

In 2013, the Company licensed rights to tesetaxel in all major markets from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), the original inventor of the product. Under the Daiichi Sankyo license agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize tesetaxel in the following countries: France, Germany, Italy, Spain, the United Kingdom and the U.S. The Company is required to make aggregate future milestone payments of up to $31.0 million, contingent on attainment of certain regulatory milestones. Additionally, the Company will pay Daiichi Sankyo a tiered royalty that ranges from the low to high single digits, depending on annual net sales of tesetaxel.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

10. Related Party Transactions

Commencing in 2016, the Company received certain services and other benefits from an affiliate (the “Affiliate”) of the Chairman and Chief Executive Officer of the Company. The Company was not charged any fees for these services and other benefits, which included personnel costs for research and development and administrative functions, rent and facility costs and other direct expenses. No expense for services and other benefits provided without charge to the Company was recorded for the three months ended September 30, 2018. The Company recorded expense, and corresponding increases to additional paid-in capital, of $0.1 million for the nine months ended September 30, 2018 and $0.1 million and $1.7 million for the three and nine months ended September 30, 2017, respectively, for services and other benefits provided without charge to the Company. Personnel costs were based on actual costs incurred by the Affiliate, which were allocated based on the estimated percentage of time employees spent on Odonate on an employee-by-employee basis. Rent and facility costs were based on actual costs incurred by the Affiliate and allocated based on the Company’s use of shared space using headcount. Other direct expenses paid by the Affiliate were specifically identifiable to the Company and were allocated directly to the Company. The Chairman and Chief Executive Officer of the Company has elected to receive an annual salary of $1.00 and to not receive any bonuses, equity or other compensation.

Management believes that the method used to allocate costs is a fair and reasonable reflection of the utilization of the services provided to, or the benefit received by, the Company during the periods presented. The allocations may not, however, reflect the costs that the Company would have incurred if the Company had not received these services. Actual costs would depend on a number of factors, including strategic decisions in the areas of hiring, facility location and whether to outsource certain functions.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation and Use of Estimates

Basis of Presentation and Use of Estimates

The Company’s condensed financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”)for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim financial results are not necessarily indicative of results anticipated for the full year. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of the Company’s condensed financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed financial statements and the accompanying notes. The most significant estimates in the Company’s condensed financial statements relate to accrued expenses and equity-based compensation expense. These estimates are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Cash and Restricted Cash

Cash and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. As of September 30, 2018, the Company held no cash equivalents. Cash is classified as restricted cash when it is reserved for a specific purpose and, therefore, is not available for immediate or general business use.

Property and Equipment

Property and Equipment

Property and equipment consists of office equipment, software, furniture and fixtures and leasehold improvements. Office equipment, software and furniture and fixtures are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets, which generally ranges from three to five years. Leasehold improvements are amortized over the lesser of the estimated useful life or the remaining term of the lease.

Deferred Rent

Deferred Rent

Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. Tenant improvement allowances and other lease incentives are recorded as deferred rent and amortized on a straight-line basis over the term of the lease as reductions to rent expense.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”). This guidance requires lessees to recognize operating leases with a term greater than one year on the balance sheet as a right-of-use asset and corresponding lease liability. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018, and early adoption is permitted. Although ASU 2016-02 is required to be adopted at the earliest period presented using a modified retrospective approach, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which allows for an alternative transition method of adoption by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to adopt ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Although the Company is in the process of evaluating the impact the adoption of ASU 2016-02 will have on its financial statements, the Company expects the most significant changes will be the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for its San Diego Lease and New York Lease (see Note 5).

Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration of common stock equivalents. The basic net loss per share calculation excludes 2,205,770 and 2,365,950 outstanding shares of common stock held by Odonate Holdings, LLC (“Odonate Holdings”) as of September 30, 2018 and 2017, respectively, to be used to settle incentive units previously issued under the Odonate Management Holdings Equity Incentive Plan (the “Management Plan”). These shares of common stock are subject to cancellation until such incentive units are vested and exercised and, as such, are considered common stock equivalents. Therefore, the shares of common stock held by Odonate Holdings are excluded from the basic net loss per share calculation until the incentive units are exercised. During the three and nine months ended September 30, 2018, 209,712 shares of common stock held by Odonate Holdings were transferred to incentive unitholders on the net exercise of 218,868 incentive units and are included in the basic net loss per share calculation. During the three and nine months ended September 30, 2018, 61,024 and 506,764 shares of common stock held by Odonate Holdings were cancelled as a result of incentive unit forfeitures, respectively.

Diluted net loss per share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. Common stock equivalents were excluded from the calculation of diluted net loss per share because they were anti-dilutive.

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2018

Payables And Accruals [Abstract]

Summary of Accrued Expenses

Accrued expenses consist of the following:

	September 30,		December 31,
	2018		2017
	(in thousands)
Accrued clinical development costs	$	6,257	$	3,033
Accrued compensation and related expenses		2,615		169
Other accrued expenses		71		8
Total accrued expenses	$	8,943	$	3,210

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Equity Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Activity Related to Equity Awards Comprised of Stock Options and Incentive Units

The activity related to equity awards, which are comprised of stock options and incentive units, during the nine months ended September 30, 2018 is summarized as follows:

	Equity Awards			Weighted-average Exercise Price per Share
Outstanding at December 31, 2017		3,115,101		$	5.50
Granted		1,396,391		$	23.27
Exercised		(218,868	)	$	0.78
Cancelled/forfeited		(647,885	)	$	9.91
Outstanding at September 30, 2018		3,644,739		$	11.81
Exercisable at September 30, 2018		797,772		$	2.31

Schedule of Estimated Fair Value of Equity Award on Grant Date Using Black-Scholes Option-pricing Model

The Company estimated the fair value of each equity award on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended
	September 30,
	2018	2017
Expected volatility	71% - 73%	73% - 76%
Expected life	6 years	6-10 years
Risk-free interest rate	2.3% - 2.8%	2.0% - 2.3%
Expected dividend yield	0%	0%

Summary of Equity-based Compensation Expense

The classification of equity-based compensation expense is summarized as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Equity-based compensation expense:
Research and development	$	1,844	$	1,756	$	4,047	$	2,066
General and administrative		331		132		728		132
Total equity-based compensation expense	$	2,175	$	1,888	$	4,775	$	2,198

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Business - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended
	Jan. 10, 2018	Dec. 11, 2017	Sep. 30, 2018	Dec. 31, 2017
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Cash			$ 160,969	$ 198,105
Cash requirements minimum period			1 year
IPO
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Sale of common stock, number of shares issued	441,073	6,250,000
Sale of common stock, price per share		$ 24.00
Sale of common stock, gross proceeds from IPO			$ 160,600
Net proceeds from sale of common stock			$ 147,300

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Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Cash equivalents	$ 0
Minimum
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Property and equipment, estimated useful life	3 years
Maximum
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Property and equipment, estimated useful life	5 years

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Net Loss per Share - Additional Information (Details) - Management Plan - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share Basic [Line Items]
Outstanding shares of common stock underlying incentive units	2,205,770	2,205,770	2,365,950
Shares of common stock underlying incentive units cancelled due to forfeitures	61,024	506,764
Shares of common stock underlying incentive units transferred due to exercise	209,712	209,712
Shares of common stock underlying incentive units exercised		218,868

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Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Payables And Accruals [Abstract]
Accrued clinical development costs	$ 6,257	$ 3,033
Accrued compensation and related expenses	2,615	169
Other accrued expenses	71	8
Total accrued expenses	$ 8,943	$ 3,210

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2018	Feb. 28, 2018	Sep. 30, 2018
Operating Leased Assets [Line Items]
Restricted cash			$ 250
San Diego Lease
Operating Leased Assets [Line Items]
Aggregate payment of rental expense	$ 800
Lease expiration date	Dec. 31, 2019
Additional lease extended term	5 years
New York Lease
Operating Leased Assets [Line Items]
Aggregate payment of rental expense		$ 2,800
Additional lease extended term		3 years
Lease initial term		7 years
New York Lease | Letter of Credit
Operating Leased Assets [Line Items]
Security deposit		$ 300
Period of reduction in security deposit		3 years 6 months
Restricted cash			$ 300

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Stockholders' Equity - Additional Information (Details) - USD ($)			3 Months Ended		9 Months Ended
	Jan. 10, 2018	Dec. 11, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Subsidiary Sale Of Stock [Line Items]
Non-cash contributions for expenses					$ 64,000	$ 1,730,000
Services and Other Benefits
Subsidiary Sale Of Stock [Line Items]
Non-cash contributions for expenses			$ 0	$ 100,000	100,000	$ 1,700,000
IPO
Subsidiary Sale Of Stock [Line Items]
Net proceeds from sale of common stock					147,300,000
Sale of common stock, gross proceeds from IPO					$ 160,600,000
Sale of common stock, number of shares issued	441,073	6,250,000
Sale of common stock, price per share		$ 24.00

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Equity Incentive Plans - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 06, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighed average grant-date fair value per equity award	$ 15.24	$ 12.05
Unrecognized equity-based compensation expense not yet recognized	$ 24,700,000
Unrecognized equity-based compensation expense not yet recognized, period for recognition	2 years 10 months 24 days
2017 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock reserved for issuance	4,800,000
Common stock available for future grants	3,361,031
ESPP
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock reserved for issuance	500,000
Common stock available for future grants	488,810
Purchase price of common stock as percentage of fair value of common stock	85.00%
Percentage of discount to employees on purchase of common stock	15.00%
Unrecognized equity-based compensation expense not yet recognized	$ 0
Management Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Aggregate number of incentive units issued			2,931,402
Outstanding shares of common stock underlying incentive units	2,205,770

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Equity Incentive Plans - Summary of Activity Related to Equity Awards Comprised of Stock Options and Incentive Units (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Equity Awards
Equity awards outstanding, Beginning balance | shares	3,115,101
Equity awards, Granted | shares	1,396,391
Equity awards, Exercised | shares	(218,868)
Equity awards, Cancelled/forfeited | shares	(647,885)
Equity awards outstanding, Ending balance | shares	3,644,739
Equity awards exercisable | shares	797,772
Weighted Average Exercise Price per Share
Weighted average exercise price per share outstanding, Beginning balance | $ / shares	$ 5.50
Weighted average exercise price per share outstanding, Granted | $ / shares	23.27
Weighted average exercise price per share outstanding, Exercised | $ / shares	0.78
Weighted average exercise price per share outstanding, Cancelled/forfeited | $ / shares	9.91
Weighted average exercise price per share outstanding, Ending balance | $ / shares	11.81
Weighted average exercise price per share, Exercisable | $ / shares	$ 2.31

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Equity Incentive Plans - Schedule of Estimated Fair Value of Equity Award on Grant Date Using Black-Scholes Option-pricing Model (Details)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility, minimum	71.00%	73.00%
Expected volatility, maximum	73.00%	76.00%
Expected life	6 years
Risk-free interest rate, minimum	2.30%	2.00%
Risk-free interest rate, maximum	2.80%	2.30%
Expected dividend yield	0.00%	0.00%
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life		6 years
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life		10 years

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Equity Incentive plans - Summary of Equity-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	$ 2,175	$ 1,888	$ 4,775	$ 2,198
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	1,844	1,756	4,047	2,066
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	$ 331	$ 132	$ 728	$ 132

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended	10 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 0	$ 0	$ 0
Unrecognized tax benefits			$ 0	$ 0

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License Agreement - Additional Information (Details)	Dec. 31, 2013 USD ($)
Tesetaxel | Daiichi Sankyo
License Agreement [Line Items]
Aggregate future milestone payments	$ 31,000,000

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Related Party Transactions - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Related Party Transaction [Line Items]
Non-cash contributions for expenses			$ 64,000	$ 1,730,000
Services and Other Benefits
Related Party Transaction [Line Items]
Non-cash contributions for expenses	$ 0	$ 100,000	100,000	$ 1,700,000
Chairman and Chief Executive Officer
Related Party Transaction [Line Items]
Annual salary of chairman and chief executive officer of the company			$ 1.00