At September 30, 2019 and December 31, 2018, the Company had 40,618,706 and 37,695,912 shares of preferred stock, par value $0.001 per share, in authorized capital, respectively.

At September 30, 2019, the Company’s redeemable convertible preferred stock consisted of the following:

	Preferred Stock Authorized		Preferred Stock Issued and Outstanding		Carrying Value
Series A-1 Preferred Stock		14,225,324		14,225,324	$	142,253
Series A-2 Preferred Stock		17,000,000		17,000,000		170,000
Series A-3 Preferred Stock		4,705,882		4,705,882		80,000
Series B Preferred Stock		4,687,500		4,687,500		75,000
Total		40,618,706		40,618,706	$	467,253

At December 31, 2018, the Company’s redeemable convertible preferred stock also consisted of the following:

	Preferred Stock Authorized		Preferred Stock Issued and Outstanding		Carrying Value
Series A-1 Preferred Stock		14,225,324		14,225,324	$	142,253
Series A-2 Preferred Stock		17,000,000		17,000,000		170,000
Series A-3 Preferred Stock		6,470,588		—		—
Series B Preferred Stock		—		—		—
Total		37,695,912		31,225,324	$	312,253

On February 23, 2018 (the “Transaction Date”), pursuant to the Series A Preferred Stock Purchase Agreement, by and among the Company and certain purchasers, and as part of an initial tranche closing, the Company issued 14,225,324 shares of Series A-1 preferred stock and 14,000,000 shares of Series A-2 preferred stock, par value $0.001 per share, at a purchase price of $10.00 per share, resulting in gross proceeds of approximately $282,253 to the Company (the “Initial Tranche Closing”).

In addition to the Initial Tranche Closing, the Series A Preferred Stock Purchase Agreement provided for the issuance of up to 6,470,588 shares of Series A-3 at a purchase price of $17.00 per share upon acceptance for review by the U.S. FDA of the Company’s first biologics license application for lead product candidate, inebilizumab, for the indication neuromyelitis optica spectrum disorder (the “Milestone Closing”). However, at any time prior to the Milestone Closing, the board of directors could determine that the Company required additional capital to fund its operations, upon which the board of directors may cause the Company to sell and the holders of the Series A-2 to purchase up to 3,000,000 additional shares of Series A-2 preferred stock at a purchase price of $10.00 per share (the “Additional Closing”). In December 2018, the Additional Closing occurred, and the Company received $30,000 in exchange for 3,000,000 shares of Series A-2. As of December 31, 2018, $12,000 of the $30,000 was recorded as a receivable as funds were not received until January 2019 and the Company provided supplemental non-cash financing disclosure on its statement of cash flows for the year ended December 31, 2018. The proceeds received upon the Additional Closing would reduce the proceeds from the Milestone Closing. Both the Additional Closing and Milestone Closing were evaluated and determined to be embedded features within the Series A Preferred Stock that did not require bifurcation. In addition, if any holder of Series A-2 preferred stock failed to purchase the committed amount under either the Additional Closing or Milestone Closing (“Purchaser Default”), then all shares of Series A-2 preferred stock held by such holder would automatically be converted into shares of Common Stock as is determined by dividing (i) the aggregate number of shares of Series A-2 preferred stock held by such individual by (ii) 10 and (b) if such individual had previously converted their Series A-2 shares to Common Stock, 90% of such shares would automatically be redeemed by the Company for no consideration (the “Special Mandatory Redemption”). The Special Mandatory Redemption was evaluated and determined to be accounted for as an embedded derivative. However, the Company determined an insignificant value should be ascribed to the Special Mandatory Redemption as the likelihood of a Purchaser Default occurring was deemed to be remote both at the Transaction Date and December 31, 2018.

In September 2019, the Company issued an aggregate of 4,705,882 shares of Series A-3 preferred stock at a purchase price of $17.00 per share for an aggregate gross consideration of $80,000.

During June 2019, pursuant to the Series B Preferred Stock Purchase Agreement, by and among the Company and certain purchasers, the Company issued 4,687,500 shares of Series B preferred stock, par value $0.001 per share, at a purchase price of $16.00 per share, resulting in gross proceeds of approximately $75,000 to the Company.

Prior to the closing of the IPO, the holders of the Preferred Stock had the following rights and preferences:

Each holder of the Preferred Stock was entitled to the number of votes equal to the number of shares of Common Stock into which the number of shares of Preferred Stock held by such holder were convertible and should vote together with the holders of Common Stock as a single class. The holders of the preferred stock were entitled to elect seven of the eight directors on the Board of Directors. Two of the seven directors were elected by the Series A-1 preferred stockholders, four of the directors were elected by the Series A-2 preferred stockholders, one of the directors was elected by the Series B preferred stockholders, and the remaining director is the Company’s chief executive officer.

The Series B preferred stock accrued cumulative dividends on a daily basis at a fixed dividend rate of $1.28 per share per annum payable only when, as and if declared by the Board of Directors of the Company, prior and in preference to any declaration or payment of any dividend on shares of any other class or series of capital stock of the Company (“Accruing Dividends”) unless the holders of the Series B preferred stock first (and Series A preferred stock thereafter) received, or simultaneously received, a dividend in an amount at least equal to the formula included in the Company’s charter which varied based on whether the dividend was on the Common Stock or on any other class or series not convertible into Common Stock. Through September 30, 2019, no dividends had been declared or paid by the Company.

In the event of any liquidation, dissolution or winding-up of the Company or a Deemed Liquidation Event (as defined below), the holders of the Series B preferred stock then outstanding would be entitled to be paid out of the assets of the Company available for distribution to stockholders, and before any payment would be made to holders of Series A preferred stock and Common Stock, in an amount per share equal to the original issue price per share, plus all Accruing Dividends accrued but unpaid thereon, whether or not declared, together with all other declared but unpaid dividends thereon. If upon such event, the assets of the Company available for distribution were insufficient to permit payment in full to the holders of Series B preferred stock, the proceeds would be ratably distributed among the holders of Series B preferred stock. After satisfaction of the Series B preferred stock liquidation preference, the holders of the Series A preferred stock were entitled to be paid before any payment shall be made to the holders of Common Stock in an amount equal to the original issue price per share, plus any declared but unpaid dividends thereon. Due to this redemption option, the Preferred Stock was recorded in mezzanine equity and subject to subsequent measurement under the guidance provided under ASC 480-10-S99. In accordance with that guidance, the Company has elected to not recognize any subsequent changes in the redemption value as the Company has determined it is not probable that the Preferred Stock will become redeemable.

After payments have been made in full to the holders of the Preferred Stock, the remaining assets of the Company available for distribution would be distributed among the holders of Preferred Stock and the holders of Common Stock on a pro-rata basis as if the shares of Preferred Stock were converted into Common Stock immediately prior to the liquidation event.

A merger or consolidation involving the Company in which the stockholders of the Company do not own a majority of the outstanding shares of the surviving company shall be considered a Deemed Liquidation Event. A sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company shall also be considered a Deemed Liquidation Event. As of September 30, 2019 and December 31, 2018, the liquidation preference of the outstanding shares of the Preferred Stock was approximately $468,995 and $312,253, respectively.

Each share of Preferred Stock was convertible into Common Stock at the option of the holder at any time after the date of issuance. In addition, each share of Preferred Stock would be automatically converted into shares of Common Stock, at the applicable conversion ratio then in effect, upon the earlier of (i) a qualified public offering with net proceeds of at least $75,000 and a price of not less than $17.60 per share, subject to appropriate adjustment for any stock dividend, stock split, combination or other similar recapitalization, (ii) by the affirmative vote of the holders of at least 75% of the then-outstanding Series A preferred stock and a majority of the holders of the outstanding shares of the Series B preferred stock, if such vote was obtained prior to the Milestone Closing or (iii) by the affirmative vote of the holders of at least 75% of the then-outstanding shares of Series A-2 preferred stock and Series A-3 preferred stock (voting together as a single class on an as-converted to Common Stock basis) and a majority of the outstanding shares of Series B preferred stock (voting together as a single class on an as-converted to Common Stock basis) if such vote was obtained after the Milestone Closing. Upon conversion, the shares of Preferred Stock would be converted into Common Stock, at par value, with the remainder recorded to additional paid-in capital.

The conversion ratio of the Preferred Stock was determined by dividing the original issue price per share by the conversion price in effect at the time of conversion. The initial conversion price was equal to the original issuance price of the Preferred Stock and was subject to appropriate adjustment in the event of any stock dividend, stock split, combination or recapitalization affecting the Preferred Stock.

Upon the closing of the IPO, the Company’s outstanding Preferred Stock converted into an aggregate of 40,618,706 shares of common stock. Upon conversion of the Preferred Stock, the Company reclassified the carrying value of the Preferred Stock to common stock and additional paid-in capital.