Summary of Significant Accounting Policies and Recent Accounting Pronouncements

2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

The audited consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB) and the rules and regulations of the SEC.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Blueprint Medicines Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities, and Blueprint Medicines (Switzerland) GmbH. All intercompany transactions and balances have been eliminated.

Due to the underwritten public offerings completed on December 13, 2016, April 4, 2017, and December 15, 2017, there were significant increases in shares outstanding in the years ended December 31, 2017 and 2016, which impacts the year-over-year comparability of the Company’s net loss per share calculations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. Management’s estimation process often may yield a range of potentially reasonable estimates and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: revenue recognition, stock‑based compensation expense, accrued expenses, and income taxes.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606, using the modified retrospective transition method. Under this method, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 605, Revenue Recognition (ASC 605). The Company only applied the modified retrospective transition method to contracts that were not completed as of January 1, 2018, the effective date of adoption for ASC 606. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into licensing agreements that are within the scope of ASC 606, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must use significant judgment to determine: (a) the performance obligations based on the determination under step (ii) above; (b) the transaction price under step (iii) above; and (c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment to determine whether milestones or other variable consideration, except for royalties and sales-based milestones, should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

Amounts received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.

Exclusive Licenses. If the license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a promise or performance obligation is distinct from the other promises, the Company considers factors such as the research, development, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the collaboration partner can benefit from a promise for its intended purpose without the receipt of the remaining promise, whether the value of the promise is dependent on the unsatisfied promise, whether there are other vendors that could provide the remaining promise, and whether it is separately identifiable from the remaining promise. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing agreement. Such a change could have a material impact on the amount of revenue the Company records in future periods.

Research and Development Services. The promises under the Company’s collaboration agreements may include research and development services to be performed by the Company on behalf of the partner. Payments or reimbursements resulting from the Company’s research and development efforts are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts. Reimbursements from and payments to the partner that are the result of a collaborative relationship with the partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction to research and development expense.

Customer Options. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options that are not determined to be material rights are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised.

Milestone Payments. At the inception of each arrangement that includes research or development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Royalties. For arrangements that include sales-based royalties, including milestone payments upon first commercial sales and milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

For a complete discussion of accounting for collaboration revenues, see Note 8, “Collaborations.”

Prior to January 1, 2018, the Company recognized revenue from license and collaboration agreements in accordance with FASB ASC Topic 605, Revenue Recognition (ASC 605). Accordingly, revenue was recognized when all of the following criteria were met:

persuasive evidence of an arrangement exists;

delivery has occurred or services have been rendered;

the seller’s price to the buyer is fixed or determinable; and

collectability is reasonably assured.

Amounts received prior to satisfying the revenue recognition criteria were recognized as deferred revenue in the Company’s balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date were classified as deferred revenue, current portion. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date were classified as deferred revenue, net of current portion.

When evaluating multiple element arrangements, the Company considered whether the deliverables under the arrangement represented separate units of accounting. This evaluation required subjective determinations and required management to make judgments about the individual deliverables and whether such deliverables were separable from the other aspects of the contractual relationship. In determining the units of accounting, management evaluated certain criteria, including whether the deliverables have standalone value, based on the consideration of the relevant facts and circumstances for each arrangement. The consideration received was allocated among the separate units of accounting using the relative selling price method, and the applicable revenue recognition criteria were applied to each of the separate units. Deliverables were considered separate units of accounting provided that: (i) the delivered item(s) has value to the customer on a stand-alone basis and (ii) if the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. In assessing whether an item had stand-alone value, the Company considered factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, the Company considered whether the collaboration partner could use the deliverable(s) for their intended purpose without the receipt of the remaining element(s), whether the value of the deliverable is dependent on the undelivered item(s) and whether there were other vendors that can provide the undelivered element(s). The Company’s collaboration agreements with Alexion and Roche do not contain a general right of return relative to the delivered item(s).

Arrangement consideration that is fixed or determinable was allocated among the separate units of accounting using the relative selling price method. Then, the applicable revenue recognition criteria in ASC 605-25 were applied to each of the separate units of accounting in determining the appropriate period and pattern of recognition. The Company determined the selling price of a unit of accounting following the hierarchy of evidence prescribed by ASC 605-25. Accordingly, the Company determined the estimated selling price for units of accounting within each arrangement using vendor-specific objective evidence (VSOE) of selling price, if available, third-party evidence (TPE) of selling price if VSOE is not available, or best estimate of selling price (BESP) if neither VSOE nor TPE is available. The Company typically used BESP to estimate the selling price, since it generally did not have VSOE or TPE of selling price for its units of accounting. Determining the BESP for a unit of accounting required significant judgment. In developing the BESP for a unit of accounting, the Company considered applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validated the BESP for units of accounting by evaluating whether changes in the key assumptions used to determine the BESP would have a significant effect on the allocation of arrangement consideration between multiple units of accounting.

In the event that an element of a multiple element arrangement did not represent a separate unit of accounting, the Company recognized revenue from the combined element over the period over which it expected to fulfill its performance obligations or as undelivered items were delivered, as appropriate, if all of the other revenue recognition criteria in ASC 605-25 were met. If the pattern of performance in which the service was provided to the customer could be determined and objectively measurable performance measures existed, then the Company recognized revenue under the arrangement using the proportional performance method. If there was no discernible pattern of performance and/or objectively measurable performance measures did not exist, then the Company recognized revenue under the arrangement on a straight-line basis over the period the Company was expected to complete its performance obligations. Revenue recognized was limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method or proportional performance method, as applicable, as of the period ending date.

The Company’s multiple-element revenue arrangements may include the following:

Exclusive Licenses

The deliverables under the Company’s collaboration agreements may include exclusive licenses to research, develop, manufacture and commercialize licensed products. To account for this element of an arrangement, management evaluated whether an exclusive license had stand-alone value from the undelivered elements based on the consideration of the relevant facts and circumstances of the arrangement, including the research and development capabilities of the collaboration partner. The Company recognized the arrangement consideration allocated to licenses upon delivery of the license if facts and circumstances indicated that the license had stand-alone value from the undelivered elements, which generally included research and development services. The Company deferred arrangement consideration allocated to licenses if facts and circumstances indicated that the delivered license did not have stand-alone value from the undelivered elements.

When management believed a license did not have stand-alone value from the other deliverables to be provided in the arrangement, the Company recognized revenue attributed to the license on a proportional basis over the Company’s contractual or estimated performance period, which was typically the term of the Company’s research and development obligations. If management could not reasonably estimate when the Company’s performance obligation ends, then revenue was deferred until management could reasonably estimate when the performance obligation ended. The periods over which revenue should be recognized were subject to estimates by management and could change over the course of the research and development and licensing agreement.

Research and Development Services

The deliverables under the Company’s collaboration agreements may include research and development services to be performed by the Company on behalf of the partner. Payments or reimbursements resulting from the Company’s research and development efforts were recognized as the services were performed and presented on a gross basis because the Company was the principal for such efforts, so long as there was persuasive evidence of an arrangement, the fee was fixed or determinable, and collection of the related amount was reasonably assured.

Milestone Revenue

The Company’s collaboration agreements may include contingent milestone payments related to specified pre-clinical milestones, development milestones and sales-based commercial milestones.

At the inception of an arrangement that includes milestone payments, the Company evaluated whether each milestone was substantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation included an assessment of whether:

the consideration was commensurate with either the Company’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the Company’s performance to achieve the milestone;

the consideration related solely to past performance; and

the consideration was reasonable relative to all of the deliverables and payment terms within the arrangement.

The Company evaluated factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone in making this assessment. There was considerable judgment involved in determining whether a milestone satisfied all of the criteria required to conclude that a milestone was substantive. Milestones that were not considered substantive were accounted for as license payments and recognized over the remaining period of performance from the date of achievement of the milestone. Milestones that were considered substantive was recognized in their entirety upon successful accomplishment of the milestone with a cumulative catch up adjustments, assuming all other revenue recognition criteria were met.

Collaborative Arrangements

The Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenues as such amounts are incurred by the collaboration partner. Where amounts owed to a collaboration partner exceed the Company’s collaboration revenues in each quarterly period, such amounts are classified as research and development expense. For those elements of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606.

For a complete discussion of accounting for collaboration revenues, see Note 8, “Collaborations.”

Fair Value Measurements

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

Level 1 — Fair values are determined utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;

Level 2 — Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves and foreign currency spot rates; and

Level 3 — inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company’s financial assets, which include cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market based approaches, to determine value.

There have been no changes to the valuation methods during the years ended December 31, 2018 and 2017.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with original final maturities of 90 days or less from the date of purchase to be cash equivalents. As of December 31, 2018 and December 31, 2017, cash equivalents were comprised of money market funds and other debt securities with maturities less than 90 days from the date of purchase. Cash equivalents are reported at fair value.

Available-for-Sale Investments

The Company classifies marketable securities with a remaining maturity when purchased of greater than three months as available-for-sale. Marketable securities with a remaining maturity date greater than one year are classified as non-current. Available-for-sale securities are maintained by an investment manager and may consist of U.S. Treasury securities and U.S. government agency securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Any premium or discount arising at purchase is amortized and/or accreted to interest income and/or expense over the life of the instrument. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other-than-temporary” and, if so, will mark the investment to market through a charge to the Company’s statement of operations and comprehensive loss.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non‑owner sources. Other comprehensive income (loss) consisted of foreign currency translation adjustments and unrealized gains and losses on investments.

Research and Development Costs

Expenditures relating to research and development are expensed in the period incurred. Research and development expenses consist of both internal and external costs associated with the development of the Company’s selective cancer therapies and building of its discovery platform.

In certain circumstances, the Company is required to make nonrefundable advance payments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, the nonrefundable advance payments are deferred and capitalized, even when there is no alternative future use for the research and development, until related goods or services are provided. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense.

Property and Equipment, Net

Property and equipment consists of lab equipment, furniture and fixtures, computer equipment, software, and leasehold improvements, all of which is stated at cost. Expenditures for maintenance and repairs are recorded to expense as incurred, whereas major betterments are capitalized as additions to property and equipment. Depreciation is recognized over the estimated useful lives of the assets using the straight‑line method.

Impairment of Long‑Lived Assets

The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long‑lived assets may warrant revision or that the carrying value of these assets may be impaired. The Company has not recognized any impairment charges through December 31, 2018.

Stock‑Based Compensation Expense

Stock-based compensation awards are accounted for in accordance with ASC 718, Compensation –Stock Compensation, or ASC 718. The Company expenses the fair value of stock awards granted to employees and members of the board of directors over the requisite service period, which is typically the vesting period. Prior to 2017, expense was recognized net of estimated forfeitures and adjusted to reflect actual forfeitures. Effective January 1, 2017, upon adoption of ASU No. 2016-09, Compensation – Stock Compensation under the modified retrospective approach, the Company began recognizing gross stock compensation expense with actual forfeitures recognized as they occur. Compensation cost for restricted stock awards issued to employees is measured using the grant date intrinsic value of the award and is adjusted to reflect actual forfeitures. Fair value of options granted to employees at the date of grant are estimated using the Black‑Scholes option‑pricing model that requires management to apply judgment and make estimates, including:

expected volatility, which is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available. For these analyses, the Company selects companies with comparable characteristics to itself including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. The Company intends to consistently apply this process using representative companies until a sufficient amount of historical information regarding the volatility of its own share price becomes available;

risk‑free interest rate, which is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption;

expected term, which is calculated using the simplified method, as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107, Share‑Based Payment, as the Company has insufficient historical information regarding its stock options to provide a basis for an estimate. Under this approach, the weighted-average expected life is presumed to be the average of the contractual term of ten years and the weighted-average vesting term of the stock options, taking into consideration multiple vesting tranches;

dividend yield, which is zero based on the fact that the Company never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Stock‑based awards issued to non‑employees, including directors for non‑board‑related services, are accounted for based on the fair value of such services received or of the intrinsic value of equity instruments issued, whichever is more reliably measured. The measurement date for non-employee awards is the date of grant without changes in the fair value of the award. Stock‑based awards subject to service‑based vesting conditions are expensed on a straight‑line basis over the vesting period.

The purchase price of common stock under the Company’s 2015 employee stock purchase plan (2015 ESPP) is equal to 85% of the lesser of (i) the fair market value per share of the common stock on the first business day of an offering period and (ii) the fair market value per share of the common stock on the purchase date. The fair value of the discounted purchases made under 2015 ESPP is calculated using the Black-Scholes valuation model. The fair value of the look-back provision plus the 15% discount is recognized as compensation expense over the 180-day purchase period.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions using a more‑likely‑than‑not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in the law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity, and changes in facts or circumstances related to a tax position.

Foreign currency translation

The financial statements of the Company’s subsidiary with functional currency other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders’ equity and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction gains and losses are included in other (expense) income, net in the results of operations.

Reclassifications

Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current presentation.

Concentrations of Credit Risk and Off‑Balance‑Sheet Risk

The Company has no significant off‑balance‑sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk primarily consist of cash and cash equivalents, investments and accounts receivable.

The Company maintains its cash, cash equivalents and investments in a custodian account at high quality financial institutions, and as of December 31, 2018 and 2017, substantially all the Company’s cash, cash equivalents and investments were invested in money market funds and U.S. treasury obligations, and consequently, the Company believes that such funds are subject to minimal credit risk. The Company has adopted an investment policy that limits the amounts the Company may invest in any one type of investment. The Company has not experienced any credit losses and does not believe it is exposed to any significant credit risk on these funds.

Accounts receivable represents amounts due from the Company’s collaboration partners. The Company monitors economic conditions to identify facts or circumstances that may indicate that its accounts receivable is at risk of collection.

Segment and Geographic Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the chief executive officer. The Company and the chief operating decision maker view the Company’s operations and manage its business as one operating segment. The Company operates in the United States and Switzerland.

New Accounting Pronouncement

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards have or may have a material impact on its consolidated financial statements and disclosures.

Revenue recognition

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers. ASU No. 2014-09 superseded the revenue recognition requirements in ASC 605 and created ASC 606 described above. Effective January 1, 2018, the Company adopted ASC 606 using the modified retrospective transition method.

As a result of adopting ASC 606, the Company has recorded a cumulative-effect increase to opening accumulated deficit of $5.3 million as of January 1, 2018 and a corresponding increase to deferred revenue primarily as a result of the treatment of the up-front consideration received from Roche in March 2016 that was recorded under ASC 605 prior to the adoption of ASC 606. A summary of the amount by which each financial statement line item was affected by the impact of the cumulative adjustment is set forth in the table below.


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of January 1, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	4,478	$	(895)	$	5,373
Deferred revenue, net of current portion	$	36,210	$	6,210	$	30,000
Accumulated deficit	$	(360,904)	$	(5,315)	$	(355,589)

A summary of the amount by which each financial statement line item was affected in the current reporting period by ASC 606 as compared with the guidance that was in effect prior to the adoption of ASC 606 is set forth in the tables below.


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	3,600	$	(1,540)	$	5,140
Deferred revenue, net of current portion	$	42,567	$	17,056	$	25,511
Accumulated deficit	$	(597,545)	$	(15,516)	$	(582,029)


		Impact of ASC 606 Adoption on Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Collaboration revenue	$	44,521	$	(10,201)	$	54,722
Net loss	$	(236,642)	$	(10,201)	$	(226,441)
Net loss per share - basic and diluted	$	(5.39)	$	(0.23)	$	(5.16)


		Impact of ASC 606 Adoption on Consolidated Statement of Cash Flows for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Net Loss	$	(236,642)	$	(10,201)	$	(226,441)
Changes in deferred revenue	$	5,479	$	757	$	4,722

The most significant change to the Company’s accounting for revenue as a result of the adoption of ASC 606 relates to its revenue recognition pattern under step (v) above for the Company’s collaboration and license agreement with Roche (as amended, the Roche agreement). Under ASC 605, the Company was recognizing the revenue allocated to each unit of accounting on straight‑line basis over the period the Company expected to complete its obligations. Under ASC 606, the Company is recognizing the revenue allocated to each performance obligation measuring progress using an input method over the period the Company expects to complete each performance obligation. ASC 606 also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. For further discussion of the adoption of this standard, see Note 8, “Collaborations.”

Leasing

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This new standard establishes a right-of-use (ROU) model that requires all lessees to recognize ROU assets and liabilities on their balance sheet that arise from leases with terms longer than 12 months as well as provide disclosures with respect to certain qualitative and quantitative information related to their leasing arrangements. This new standard became effective for the Company on January 1, 2019.

The FASB subsequently issued the following amendments to ASU 2016-02, Leases (Topic 842), which have the same effective date and transition date of January 1, 2019:

ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends certain narrow aspects of the guidance issued in ASU 2016-02; and

ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for a transition approach to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption as well as an additional practical expedient for lessors to not separate non-lease components from the associated lease component.

ASU No. 2018-20, Narrow-Scope Improvements for Lessors, which contains certain narrow scope improvements to the guidance issued in ASU 2016-02

The Company elected to adopt the new leasing standards using a modified retrospective transition approach to be applied to leases existing as of, or entered into after, January 1, 2019. The Company also elected the “package of practical expedients”, which permits the Company not to reassess under the new standards for prior conclusions about lease identification, lease classification and initial direct costs. The Company is continuing to assess its existing lease contracts, finalize the calculations, including discount rate assumptions, to evaluate the impact that the new leasing standards may have on its consolidated results of operations, financial position and disclosures. The Company is also continuing to establish new processes and internal controls that may be required to comply with the new lease accounting and disclosure requirements set by the new standard. The Company expects that the adoption of the new leasing standards will result in the recognition of material ROU assets and liabilities in its consolidated balance sheets. The Company does not expect the adoption of the new leasing standards will have a material impact to its consolidated statements of income.

Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This standard will be effective for the Company on January 1, 2020. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial position and results of operations.

Debt Securities

In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period to the earliest call date. This standard became effective for the Company on January 1, 2019, and was adopted using a modified retrospective transition approach. Based upon the Company’s marketable debt securities held as of December 31, 2018, the adoption of this standard did not result in a significant adjustment to the Company’s marketable debt securities.

Fair Value Measurements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. This standard modifies certain disclosure requirements on fair value measurements. This standard will be effective for the Company on January 1, 2020. The Company does not expect that the adoption of this standard will have a material impact on the disclosures.

Collaborative Arrangements

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard makes targeted improvements for collaborative arrangements as follows:

Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

Adds unit-of-account guidance to ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606; and

Requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting that transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer.

This standard will be effective for the Company on January 1, 2020; however, early adoption is permitted. A retrospective transition approach is required for either all contracts or only for contracts that are not completed at the date of initial application of ASC 606, with a cumulative adjustment to opening retained earnings. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial position and results of operations.

Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. This standard will be effective for the Company on January 1, 2020, however, early adoption is permitted. The Company currently is evaluating the impact the adoption may have on its consolidated financial position and results of operations.

Statement of Cash Flows: Restricted Cash

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash. which requires that amounts generally described as restricted cash and restricted cash equivalents be included within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard became effective on January 1, 2018 and is effective on a retrospective basis. The adoption of this new standard did not have a material impact on the Company’s consolidated financial position, results of operations or statement of cash flows; however, it has resulted in the reclassification of certain prior year amounts in the Company’s consolidated statements of cash flows to conform to current year presentation.

Cash Equivalents and Investments

12 Months Ended

Dec. 31, 2018

Cash Equivalents and Investments

3. Cash Equivalents and Investments

Cash equivalents and investments, available-for-sale, consisted of the following at December 31, 2018 and December 31, 2017 (in thousands):


	Amortized		Unrealized		Unrealized		Fair
December 31, 2018	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	68,064	$	—	$	—	$	68,064
Investments, available-for-sale:
U.S. treasury obligations		426,112		—		(164)		425,948
Total	$	494,176	$	—	$	(164)	$	494,012


	Amortized		Unrealized		Unrealized		Fair
December 31, 2017	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	400,304	$	—	$	—	$	400,304
Investments, available-for-sale:
U.S. treasury obligations		273,321		—		(269)		273,052
Total	$	673,625	$	—	$	(269)	$	673,356

The cost of securities sold is determined based on the specific identification method for purposes of recording realized gains and losses. During the years ended December 31, 2018 and 2017, there were no realized gains or losses on sales of investments, and no investments were adjusted for other than temporary declines in fair value.

At December 31, 2018 and 2017, the Company held 54 and 37 securities, respectively, that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position for less than twelve months as of December 31, 2018 and 2017 were $397.5 million and $273.1 million, respectively, and there were no securities held by the Company in an unrealized loss position for more than twelve months. The Company has the intent and ability to hold such securities until recovery. The Company determined that there was no material change in the credit risk of the above investments. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of December 31, 2018 and December 31, 2017.

No available-for-sale securities held as of December 31, 2018 or December 31, 2017 had remaining maturities greater than one year.

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2018

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2018 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2018		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	68,064	$	68,064	$	—	$	—
Investments, available-for-sale:
U.S Treasury obligations		425,948		425,948		—		—
Total	$	494,012	$	494,012	$	—	$	—

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2017 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2017		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	400,304	$	400,304	$	—	$	—
Investments, available-for-sale:
U.S Treasury obligations		273,052		273,052		—		—
Total	$	673,356	$	673,356	$	—	$	—

At December 31, 2017, the fair value of the Company’s term loan payable was determined using current applicable rates for similar instruments as of the balance sheet date. The carrying value of the Company’s term loan payable approximated fair value because the Company’s interest rate yield approximated current market rates. The Company’s term loan payable was a Level 3 liability within the fair value hierarchy.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Property and Equipment, Net

12 Months Ended

Dec. 31, 2018

Property and Equipment, Net

6. Property and Equipment, Net

Property and equipment and related accumulated depreciation are as follows (in thousands):


	Estimated
	Useful Life	December 31,			December 31,
	(Years)	2018		2017
Lab equipment	5	$	6,232	$	3,604
Furniture and fixtures	4		2,369		837
Computer equipment	3		1,805		624
Leasehold improvements	Term of lease		26,640		4,681
Software	3		280		263
Construction-in-progress			956		18,998
			38,282		29,007
Less: accumulated depreciation and amortization			(8,655)		(4,644)
Total property and equipment, net		$	29,627	$	24,363

Depreciation expense for the years ended December 31, 2018, 2017 and 2016 was $4.2 million, $1.6 million and $1.6 million, respectively.

Accrued Expenses

12 Months Ended

Dec. 31, 2018

Accrued Expenses

7. Accrued Expenses

Accrued expenses consist of the following (in thousands):


	December 31,		December 31,
	2018		2017
External research and development	$	36,213	$	17,493
Employee compensation		8,071		5,766
Accrued professional fees		3,379		1,394
Property and equipment costs		912		4,176
Pre-commercial accrual		1,044		261
Other		2,092		1,451
	$	51,711	$	30,541

Collaborations	12 Months Ended
Collaborations	Dec. 31, 2018
Disclosure Text Block
Collaborations	8. Collaborations CStone Pharmaceuticals On June 1, 2018, the Company entered into a Collaboration and License Agreement (the CStone agreement) with CStone pursuant to which the Company granted CStone exclusive rights to develop and commercialize the Company’s drug candidates BLU-554, avapritinib and BLU-667, including back-up forms and certain other forms thereof, in Mainland China, Hong Kong, Macau and Taiwan (each, a CStone region and collectively, the CStone territory), either as a monotherapy or as part of a combination therapy. The Company will retain exclusive rights to the licensed products outside the CStone territory. The Company received an upfront cash payment of $40.0 million, and subject to the terms of the CStone agreement, will be eligible to receive up to approximately $346.0 million in milestone payments, including $118.5 million related to development and regulatory milestones and $227.5 million related to sales-based milestones. In addition, CStone will be obligated to pay the Company tiered percentage royalties on a licensed product-by-licensed product basis ranging from the mid-teens to low twenties on annual net sales of each licensed product in the CStone territory, subject to adjustment in specified circumstances. CStone will be responsible for costs related to the development of the licensed products in the CStone territory, other than specified costs related to the development of BLU-554 as a combination therapy in the CStone territory that will be shared by the Company and CStone. Pursuant to the terms of the CStone agreement, CStone will be responsible for conducting all development and commercialization activities in the CStone territory related to the licensed products, and the Company and CStone plan to conduct a proof-of-concept clinical trial in China evaluating BLU-554 in combination with CS1001, a clinical stage anti-programmed death ligand-1 immunotherapy being developed by CStone, as a first-line therapy for the treatment of patients with hepatocellular carcinoma. The CStone agreement will continue on a licensed product-by-licensed product and CStone region-by-CStone region basis until the later of (i) 12 years after the first commercial sale of a licensed product in a CStone region in the CStone territory and (ii) the date of expiration of the last valid patent claim related to the Company’s patent rights or any joint collaboration patent rights for the licensed product that covers the composition of matter, method of use or method of manufacturing such licensed product in such region. Subject to the terms of the CStone agreement, CStone may terminate the CStone agreement in its entirety or with respect to one or more licensed products for convenience by providing written notice to the Company after June 1, 2019, and CStone may terminate the CStone agreement with respect to a licensed product for convenience at any time by providing written notice to the Company following the occurrence of specified events. In addition, the Company may terminate the CStone agreement under specified circumstances if CStone or certain other parties challenges the Company’s patent rights or any joint collaboration patent rights or if CStone or its affiliates do not conduct any material development or commercialization activities with respect to one or more licensed products for a specified period of time, subject to specified exceptions. Either party may terminate the CStone agreement for the other party’s uncured material breach or insolvency. In certain termination circumstances, the parties are entitled to retain specified licenses to be able to continue to exploit the licensed products, and in the event of termination by CStone for the Company’s uncured material breach, the Company will be obligated to pay CStone a low single digit percentage royalty on a licensed product-by-licensed product basis on annual net sales of such licensed product in the CStone territory, subject to a cap and other specified exceptions. The Company evaluated the CStone agreement to determine whether it is a collaborative arrangement for purposes of ASC 808. The Company determined that there were two material components of the CStone agreement: (i) the CStone territory-specific license and related activities in the CStone territory, and (ii) the parties’ participation in global development of the licensed products. The Company concluded that the CStone territory-specific license and related activities in the CStone territory are not within the scope of ASC 808 because the Company is not exposed to significant risks and rewards. The Company concluded that CStone is a customer with regard to the component that includes the CStone territory-specific license and related activities in CStone territory, which include manufacturing. For the parties’ participation in global development of the licensed products, the Company concluded that the research and development activities and cost-sharing payments related to such activities are within the scope of ASC 808 as both parties are active participants exposed to the risk of the activities under the CStone agreement. The Company concluded that CStone is not a customer with regard to the global development component in the context of the CStone agreement. Therefore, payments received by the Company for global development activities under the CStone agreement, including manufacturing, will be accounted for as a reduction of related expenses. Accordingly, the Company recorded a reduction of expenses of $0.5 million for the year ended December 31, 2018. The Company evaluated the CStone territory-specific license and related activities in the CStone territory under ASC 606 as these transactions are considered transactions with a customer. The Company identified the following material promises under the arrangement: (1) the three exclusive licenses granted in the CStone territory to develop, manufacture and commercialize the three licensed products; (2) the initial know-how transfer for each licensed product; (3) manufacturing activities related to development and commercial supply of the licensed products; (4) participation in the joint steering committee (JSC) and joint project teams (JPT); (5) regulatory responsibilities; and (6) manufacturing technology and continuing know-how transfers. The Company determined that each licensed product is distinct from the other licensed products. In addition, the Company determined that the exclusive licenses and initial know-how transfers for each licensed product were not distinct from each other, as each exclusive license has limited value without the corresponding initial know-how transfer. For purposes of ASC 606, the Company determined that that participation on the JSC and JPTs, the regulatory responsibilities and the manufacturing technology and continuing know-how transfers are qualitatively and quantitatively immaterial in the context of the CStone agreement and therefore are excluded from performance obligations. As such, the Company determined that these six material promises, described above, should be combined into one performance obligation for each of the three candidates. The Company evaluated the provision of manufacturing activities related to development and commercial supply of the licensed products as an option for purposes of ASC 606 to determine whether these manufacturing activities provide CStone with any material rights. The Company concluded that the manufacturing activities were not issued at a significant and incremental discount, and therefore do not provide CStone with any material rights. As such, the manufacturing activities are excluded as performance obligations at the outset of the arrangement. Based on these assessments, the Company identified three distinct performance obligations at the outset of the CStone agreement, which consists of the following for each licensed product: (1) the exclusive license and (2) the initial know-how transfer. Under the CStone agreement, in order to evaluate the transaction price for purposes of ASC 606, the Company determined that the upfront amount of $40.0 million constituted the entirety of the consideration to be included in the transaction price as of the outset of the arrangement, which was allocated to the three performance obligations. The potential milestone payments that the Company is eligible to receive were excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and if necessary, the Company will adjust its estimate of the transaction price. There was no adjustment in the transaction price as of December 31, 2018. Because the performance obligations have been satisfied, any addition to the transaction price would be immediately recognized as revenue. The Company satisfied the performance obligations upon delivery of the licenses, initial know-how transfers and product trademark and recognized the upfront payment of $40.0 million as revenue during the second quarter of 2018, and there was no revenue deferred as a contract liability associated with the CStone agreement as of December 31, 2018. Roche In March 2016, the Company entered into a collaboration and license agreement (as amended, Roche agreement) with Roche for the discovery, development and commercialization of up to five small molecule therapeutics targeting kinases believed to be important in cancer immunotherapy, as single products or possibly in combination with other therapeutics. The parties are currently conducting activities for up to five programs under the collaboration, including up to two collaboration programs leveraging the Company’s novel target discovery engine and proprietary compound library to select potential targets. Under the Roche agreement, Roche is granted up to five option rights to obtain an exclusive license to exploit products derived from the collaboration programs in the field of cancer immunotherapy. Such option rights are triggered upon the achievement of Phase 1 proof-of-concept. For up to three of the five collaboration programs, if Roche exercises its option, Roche will receive worldwide, exclusive commercialization rights for the licensed products. For up to two of the five collaboration programs, if Roche exercises its option, the Company will retain commercialization rights in the United States for the licensed products, and Roche will receive commercialization rights outside of the United States for the licensed products. The Company will also retain worldwide rights to any products for which Roche elects not to exercise its applicable option. Prior to Roche’s exercise of an option, the Company will have the lead responsibility for drug discovery and pre-clinical development of all collaboration programs. In addition, the Company will have the lead responsibility for the conduct of all Phase 1 clinical trials other than those Phase 1 clinical trials for any product in combination with Roche’s portfolio of therapeutics, for which Roche will have the right to lead the conduct of such Phase 1 clinical trials. Pursuant to the Roche agreement, the parties will share the costs of Phase 1 development for each collaboration program. In addition, Roche will be responsible for post-Phase 1 development costs for each licensed product for which it retains global commercialization rights, and the Company and Roche will share post-Phase 1 development costs for each licensed product for which the Company retains commercialization rights in the United States. The Company received an upfront cash payment of $45.0 million in March 2016 upon execution of the Roche agreement, and subject to the terms of the Roche agreement, the Company will be eligible to receive up to approximately $965.0 million in contingent option fees and milestone payments related to specified research, pre-clinical, clinical, regulatory and sales-based milestones. Of the total contingent payments, up to approximately $215.0 million are for option fees and milestone payments for research, pre-clinical and clinical development events prior to licensing across all five potential collaboration programs, including contingent milestone payments for initiation of each of the collaboration programs for which the parties will work together to select targets (pre-option exercise milestones). In June 2018, the Company achieved and received a $10.0 million research milestone payment. In addition, for any licensed product for which Roche retains worldwide commercialization rights, the Company will be eligible to receive tiered royalties ranging from low double-digits to high-teens on future net sales of the licensed product. For any licensed product for which the Company retains commercialization rights in the United States, the Company and Roche will be eligible to receive tiered royalties ranging from mid-single-digits to low double-digits on future net sales in the other party’s respective territories in which it commercializes the licensed product. The upfront cash payment and any payments for milestones, option fees and royalties are non-refundable, non-creditable and not subject to set-off. The Roche agreement will continue until the date when no royalty or other payment obligations are or will become due, unless earlier terminated in accordance with the terms of the Roche agreement. Prior to its exercise of its first option, Roche may terminate the Roche agreement at will, in whole or on a collaboration target-by-collaboration target basis, upon 120 days’ prior written notice to the Company. Following its exercise of an option, Roche may terminate the Roche agreement at will, in whole, on a collaboration target-by-collaboration target basis, on a collaboration program-by-collaboration program basis or, if a licensed product has been commercially sold, on a country-by-country basis, (i) upon 120 days’ prior written notice if a licensed product has not been commercially sold or (ii) upon 180 days’ prior written notice if a licensed product has been commercially sold. Either party may terminate the Roche agreement for the other party’s uncured material breach or insolvency and in certain other circumstances agreed to by the parties. In certain termination circumstances, the Company is entitled to retain specified licenses to be able to continue to exploit the licensed products. The Company assessed this arrangement in accordance with ASC 606 upon the adoption of the new standard on January 1, 2018, and concluded that the contract counterparty, Roche, is a customer prior to the exercise, if any, of an option by Roche. The Company identified the following material promises under the arrangement: (1) a non-transferable, sub-licensable and non-exclusive license to use the Company’s intellectual property and collaboration compounds to conduct research activities; (2) research and development activities through Phase 1 clinical trials under the research plan; (3) five option rights for licenses to develop, manufacture, and commercialize the collaboration targets; (4) participation on a joint research committee (JRC) and joint development committee (JDC); and (5) regulatory responsibilities under Phase 1 clinical trials. The Company determined that the license and research and development activities were not distinct from another, as the license has limited value without the performance of the research and development activities. Participation on the JRC and JDC to oversee the research and development activities was determined to be quantitatively and qualitatively immaterial and therefore is excluded from performance obligations. The regulatory responsibilities related to filings and obtaining approvals related to the products that may result from each program do not represent separate performance obligations based on their dependence on the research and development efforts. As such, the Company determined that these promises should be combined into a single performance obligation. The Company evaluated the option rights for licenses to develop, manufacture, and commercialize the collaboration targets to determine whether it provides Roche with any material rights. The Company concluded that the options were not issued at a significant and incremental discount, and therefore do not provide material rights. As such, they are excluded as performance obligations at the outset of the arrangement. Based on these assessments, the Company identified one performance obligation at the outset of the Roche agreement, which consists of: (1) the non-exclusive license; (2) the research and development activities through Phase 1; and (3) regulatory responsibilities under Phase 1 clinical trials. Under the Roche agreement, in order to evaluate the appropriate transaction price, the Company determined that as of January 1, 2018, the upfront amount of $45.0 million constituted the entirety of the consideration to be included in the transaction price as of the outset of the arrangement, which was allocated to the single performance obligation. The option exercise payments that may be received are excluded from the transaction price until each customer option is exercised as it was determined that the options are not material rights. The potential milestone payments that the Company is eligible to receive prior to the exercise of the options were initially excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust its estimate of the transaction price. In June 2018, the Company achieved and received a $10.0 million research milestone payment related to the Roche agreement, and it became probable that a significant reversal of cumulative revenue would not occur for the $10.0 million research milestone achieved. At such time, the associated consideration was added to the estimated transaction price and allocated to the existing performance obligation. The Company recognized a cumulative catch-up of $1.2 million to revenue for this developmental milestone during the second quarter of 2018, representing the amount that would have been recognized had the milestone payment been included in the transaction price from the outset of the arrangement. The Company recognized revenue associated with the performance obligation as the research and development services are provided using an input method, according to the costs incurred as related to the research and development activities on each program and the costs expected to be incurred in the future to satisfy the performance obligation. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. The amounts received that have not yet been recognized as revenue are deferred as a contract liability on the Company’s consolidated balance sheet, and will be recognized over the remaining research and development period until the performance obligation is satisfied. During the year ended 2018, there has been no significant changes in the costs expected to be incurred in the future to satisfy the performance obligation, and the Company recognized revenue of $4.5 million under the Roche collaboration, of which $2.9 million was recognized as a result of the change in the contract liability balances as of January 1, 2018. As of December 31, 2018, the Company had revenue deferred as a contract liability related to the Roche agreement of $46.2 million, of which $3.6 million was included in current liabilities, and the research and development services related to the performance obligation are expected to be performed over a remaining period of approximately six years. Prior to January 1, 2018, the Company recognized revenue in accordance with ASC 605. The Company determined that there were five deliverables under the Roche collaboration: (i) a non-transferable, sub-licensable and non-exclusive license to use the Company’s intellectual property and collaboration compounds to conduct research activities;(ii) conducting research and development activities through Phase 1 clinical trials under the research plan; (iii) providing pre-clinical and clinical supply of collaboration compounds; (iv) participation on a joint research committee (JRC) and joint development committee (JDC); and (v) regulatory responsibilities under Phase 1 clinical trials. The Company determined that the license did not have value to Roche on a stand-alone basis due to the specialized nature of the research activities to be provided by the Company that are not available in the marketplace and the fact that the license is to perform research and development only. Therefore, the license has limited value without the performance of the research and development activities and is not separable. The pre-clinical and clinical supply activities are integral to the performance of the research and development activities and can only be used for the performance of such activities, and the regulatory responsibilities are dependent on the research and development activities. The Company determined that the best estimate for the selling price of the JRC and JDC participation was inconsequential. Accordingly, the Company combined the license, pre-clinical and clinical supply, JRC and JDC participation and regulatory responsibilities deliverables with the research and development activities, the last item to be delivered in the arrangement, as one unit of accounting. The Company is recognizing the total allocable arrangement consideration consisting of the upfront payment of $45.0 million as revenue on a straight-line basis over the Company’s best estimate of the period it expects to perform research and development activities. The Company evaluated whether the option fees that may be received in connection with the Roche agreement are substantive. The Company concluded that the option fees were substantive due to the uncertainty around whether the goals of the collaboration would be achieved, and therefore the options were not a deliverable in the current arrangement. If Roche elects to exercise the options, the exercises and related contingent deliverables would be accounted for as a separate arrangement. The Company evaluated whether the milestones that may be received in connection with the Roche agreement are substantive milestones. Pre-option exercise milestones that are expected to be achieved as a result of the Company’s efforts during the performance of the research and development activities were considered substantive and would be recognized as revenue upon the achievement of the milestone, assuming all other revenue recognition criteria are met. The development event milestones were not considered substantive because the Company does not contribute effort to the achievement of such milestones as they are expected to be achieved after the performance of the research and development activities. Consideration received with respect to these milestones would be added to the total arrangement consideration that has been allocated to the identified units of accounting. There were no milestones achieved prior to the adoption of ASC 606 on January 1, 2018. During the years ended 2017 and 2016, the Company recognized revenue under the Roche collaboration of $5.2 million and $4.5 million, respectively, which represented a portion of the $45.0 million upfront payment. Alexion In March 2015, the Company entered into a research, development and commercialization agreement (Alexion agreement) with Alexion to research, develop and commercialize one or more drug candidates targeting the ALK2 kinase for the treatment of fibrodysplasia ossificans progressiva (FOP). On July 26, 2017, the Company received written notice from Alexion of its election to terminate the Alexion agreement for convenience, and the termination became effective on October 24, 2017. Since the Alexion agreement terminated prior to January 1, 2018, the Company recognized revenue from the Alexion collaboration in accordance with ASC 605. Pursuant to the Alexion agreement, the Company was responsible for research and pre-clinical development activities related to any drug candidates, and Alexion was responsible for all clinical development, manufacturing and commercialization activities related to any drug candidates. In addition, Alexion was responsible for funding 100% of the Company’s research and development costs incurred under the research plan, including pass through costs and a negotiated yearly rate per full time equivalent for its employees’ time and their associated overhead expenses. Prior to the termination, the Company had received an aggregate amount of $18.8 million in upfront and milestone payments, which consistent of a $15.0 million non-refundable upfront payment in March 2015 upon execution of the Alexion agreement and an aggregate amount of $3.8 million in pre-clinical milestone payments. As a result of the termination of the Alexion agreement, the Company was not entitled to receive payment from Alexion for any research and development expenses incurred after the effective date of termination. The Company determined that there were three deliverables under the former Alexion collaboration: (i) an exclusive license to research, develop, manufacture and commercialize the licensed products and the compounds in the field in the territory, (ii) conducting research and development activities under the research plan and (iii) participation on a joint steering committee (JSC) and joint project team (JPT). The Company determined that the license did not have value to Alexion on a stand-alone basis due to the specialized nature of the research services to be provided by the Company that are not available in the marketplace. Therefore, the deliverables were not separable and, accordingly, the license, undelivered research and development activities and JSC and JPT participation were a single unit of accounting. The Company recognized revenue for the $15.0 million upfront payment and a $1.8 million non-substantive milestone payment utilizing the proportional performance model over the period of performance, which ended October 24, 2017, and recognized revenue for the remaining $2.0 million substantive milestone payments upon achievement. As a result of the termination, the Company did not recognize revenue under the Alexion agreement for the year ended December 31, 2018. During the year ended December 31, 2017, the Company recognized revenue under the former Alexion collaboration of $16.2 million, which represents $9.5 million of reimbursable research and development costs, as well as a portion of the $15.0 million upfront payment and the $1.8 million non-substantive milestone payment previously received. During the year ended December 31, 2016, the Company recognized revenue under the Alexion agreement of $23.3 million, which represents $14.6 million of reimbursable research and development costs, $1.8 million in milestone payments that were recognized upon achievement, as well as a portion of the $15.0 million upfront payment and the $1.8 million non-substantive milestone payment previously received. During the year ended December 31, 2017, the Company received $12.7 million related to reimbursable research and development costs under the former Alexion collaboration.

Stock-based compensations

12 Months Ended

Dec. 31, 2018

Stock-based compensation

10. Stock-based compensations

2015 Stock Option and Incentive Plan

In 2015, the Company’s board of directors and stockholders approved the 2015 Stock Option and Incentive Plan (the 2015 Plan), which replaced the Company’s 2011 Stock Option and Grant Plan, as amended (the 2011 Plan). The 2015 Plan includes incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance share awards and cash‑based awards. The Company initially reserved a total of 1,460,084 shares of common stock for the issuance of awards under the 2015 Plan. The 2015 Plan provides that the number of shares reserved and available for issuance under the 2015 Plan will be cumulatively increased on January 1 of each calendar year by 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or such lesser amount as specified by the compensation committee of the board of directors. For the calendar year beginning January 1, 2018 and 2019, the number of shares reserved for issuance under the 2015 Plan was increased by 1,743,101 and 1,761,481 shares, respectively. In addition, the total number of shares reserved for issuance is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. At December 31, 2018, there were 1,776,005 shares available for future grant under the 2015 Plan.

Stock-based compensation expense

The Company recognized stock-based compensation expense totaling $30.5 million, $12.5 million and $6.1 million for the year ended December 31, 2018, 2017 and 2016, respectively.

Stock-based compensation expense by award type included within the consolidated statements of operations and comprehensive loss was as follows (in thousands):


		Year Ended
		December 31,
		2018		2017		2016
Stock options	$	30,095	$	12,317	$	5,134
Restricted stock units		167		—		—
Restricted stock awards		—		2		839
Employee stock purchase plan		272		204		167
Total stock-based compensation expense	$	30,534	$	12,523	$	6,140

Stock‑based compensation expense by classification within the consolidated statements of operations and comprehensive loss is as follows (in thousands):


	Year Ended
	December 31,
	2018		2017		2016
Research and development	$	17,019	$	6,296	$	2,674
General and administrative		13,515		6,227		3,466
Total stock-based compensation expense	$	30,534	$	12,523	$	6,140

At December 31, 2018, there was $93.2 million of total unrecognized compensation cost related to non-vested stock awards, which is expected to be recognized over a weighted‑average period of 2.8 years. Due to an operating loss, the Company does not record tax benefits associated with stock‑based compensation or option exercises. Tax benefit will be recorded when realized.

Stock Options

Stock options granted by the Company generally vest ratably over four years, with a one‑year cliff for new employee awards and are exercisable from the date of grant for a period of ten years. The fair value of each option issued to employees was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:



	Year Ended
	December 31, 2018		December 31, 2017		December 31, 2016
Risk-free interest rate	2.77	%	2.07	%	1.55	%
Expected dividend yield	—	%	—	%	—	%
Expected term (years)	6.0		6.0		6.0
Expected stock price volatility	69.08	%	74.58	%	75.94	%

The following table summarizes the stock option activity for the year ended December 31, 2018:


		Weighted-		Remaining	Aggregate
		Average		Contractual	Intrinsic
		Exercise		Life	Value(1)
	Shares	Price		(in Years)	(in thousands)
Outstanding at December 31, 2017	3,304,166	$	22.45	8.04	$	174,985
Granted	1,832,270		77.64
Exercised	(445,622)		12.54
Canceled	(133,014)		55.65
Outstanding at December 31, 2018	4,557,800	$	44.64	7.96	$	86,675
Exercisable at December 31, 2018	2,103,540	$	24.32	6.97	$	68,641

(1)

Intrinsic value represents the amount by which the fair market value as of December 31, 2018 of the underlying common stock exceeds the exercise price of the option.

The weighted‑average grant date fair value of options granted in the years ended December 31, 2018, 2017 and 2016 was $49.40, $28.04 and $13.06, respectively. The total intrinsic value of options exercised in the years ended December 31, 2018, 2017, and 2016 was $29.4 million, $17.8 million and $3.1 million, respectively.

At December 31, 2018, the total unrecognized compensation expense related to unvested stock option awards was $90.9 million, which is expected to be recognized over a weighted-average period of approximately 2.7 years.

Restricted stock units

Restricted stock units granted by the Company generally vest ratably over four years. The following table summarizes the restricted stock units activity for the year ended December 31, 2018:


		Weighted-Average
		Grant Date
	Shares	Fair Value
Unvested shares at December 31, 2017	—	$	—
Granted	36,868		66.28
Vested	—		—
Forfeited	—		—
Unvested shares at December 31, 2018	36,868		66.28

No restricted stock units vested during the years ended December 31, 2018, 2017 and 2016. At December 31, 2018, the total unrecognized compensation expense related to unvested restricted stock units was $2.3 million, which we expect to recognize over a weighted-average period of approximately 3.7 years.

Restricted stock awards

Restricted stock awards granted by the Company generally vest ratably over four years. The Company did not grant restricted stock awards to any employees or directors during the years ended December 31, 2018 or 2017. Outstanding restricted stock awards previously granted to employees and directors were fully vested as of December 31, 2017. The total fair value of restricted stock awards that vested during the years ended December 31, 2017 and 2016 was $0.1 million and $2.7 million, respectively.

2015 Employee Stock Purchase Plan

In 2015, the Company’s board of directors and stockholders approved the 2015 ESPP, which became effective upon the closing of the IPO in May 2015. The Company initially reserved a total of 243,347 shares of common stock for issuance under the 2015 ESPP. The 2015 ESPP provides that the number of shares reserved and available for issuance under the 2015 ESPP will be cumulatively increased on January 1 of each calendar years by 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or such lesser amount as specified by the compensation committee of the board of directors. For the calendar year beginning January 1, 2018 and 2019, the number of shares reserved for issuance under the 2015 ESPP was increased by 435,775 and 440,370 shares, respectively. The Company issued 13,878, 16,703 and 23,325 shares under the ESPP during the years ended 2018, 2017 and 2016 respectively.

Net Loss per Share

12 Months Ended

Dec. 31, 2018

Net Loss per Share

11. 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 for common stock equivalents. 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. For purposes of the dilutive net loss per share calculation, stock options, unvested restricted stock units and ESPP shares are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share, as their effect would be anti‑dilutive; therefore, basic and diluted net loss per share were the same for all periods presented as a result of the Company’s net loss.

The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti‑dilutive effect.


	Year Ended
	December 31,
	2018	2017	2016
Stock options	4,557,800	3,304,166	2,622,741
Restricted stock units	36,868	—	—
Restricted stock awards	—	—	2,125
ESPP shares	10,275	5,663	7,798
Total	4,604,943	3,309,829	2,632,664

The weighted average number of common shares used in net loss per share on a basic and diluted basis were 43,867,433, 37,792,929 and 27,491,669 for the years ended December 31, 2018, 2017 and 2016, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Taxes

13. Income Taxes

A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows for the years ended December 31, 2018, 2017 and 2016


	Year Ended
	December 31,
	2018		2017		2016
Federal income tax (benefit) at statutory rate	21.00	%	34.00	%	34.00	%
Permanent differences	1.71		0.49		(2.74)
Federal research and development credits	1.79		0.97		1.02
Federal orphan drug credits	18.06		6.40		6.63
State income tax, net of federal benefit	7.08		5.40		4.81
Other	0.04		0.83		(0.78)
Deferred rate change	—		(27.58)		—
Change in valuation allowance	(49.68)		(20.54)		(42.94)
Effective income tax rate	—	%	(0.03)	%	—	%

The Company had net losses in all periods presented and therefore has not recognized any federal or state income tax expense.

During 2018, the Company completed a detailed study of its R&D credits and Orphan Drug Credit carryforwards. As a result, the Company adjusted its deferred tax asset balances and the impacts are included on the Federal research and developmental credit and Federal orphan drug credit lines in the effective rate reconciliation above. The impacts of the increases in the deferred tax asset balances have been completely offset by an increase in the Company's valuation allowance which is included in the change in valuation allowance line on the reconciliation above.

The Company’s deferred tax assets and liabilities consist of the following:


	Year Ended
	December 31,
	2018		2017		2016
Deferred tax assets:
Net operating loss carryforwards	$	127,421	$	78,829	$	69,443
Research and development credit carryforwards		13,714		5,950		3,833
Orphan drug credit carryforwards		68,536		14,574		5,095
Accrued expenses and other		12,248		4,660		2,914
Deferred revenue		10,320		9,664		2,627
Deferred lease incentive		3,993		4,462		1,324
Deferred rent		1,436		1,142		366
Total gross deferred tax asset		237,668		119,281		85,602
Deferred tax liability		(4,162)		(4,801)		(1,535)
Debt discount		—		(2)		(14)
Valuation allowance		(233,506)		(114,478)		(84,053)
Net deferred tax asset	$	—	$	—	$	—

Management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $233.5 million, $114.5 million and $84.1 million has been established at December 31, 2018, 2017 and 2016, respectively. The change in the valuation allowance was $119.0 million, $30.4 million and $31.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company has incurred net operating losses (NOL) since inception. At December 31, 2018, the Company had federal and state NOL carryforwards of $464.9 million and $471.3 million, respectively, which expire beginning in 2030. As of December 31, 2018, the Company had federal and state research and development tax credit carryforwards of $8.5 million and $6.2 million, respectively, which expire beginning in 2029. As of December 31, 2018, the Company had federal orphan drug credits of $68.5 million, which expire beginning in 2035 and state investment tax credits of $0.5 million, which expire beginning in 2018.

The Internal Revenue Code of 1986, as amended (the Code), provides for a limitation of the annual use of net operating losses and other tax attributes (such as research and development tax credit carryforwards) following certain ownership changes (as defined by the Code) that could limit the Company’s ability to utilize these carryforwards. At this time, the Company has not completed a study to assess whether an ownership change under Section 382 of the Code has occurred, or whether there have been multiple ownership changes since the Company’s formation. The Company may have experienced ownership changes, as defined by the Code, as a result of past financing transactions. Accordingly, the Company’s ability to utilize the aforementioned carryforwards may be limited. In addition, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, the Company may not be able to take full advantage of these carryforwards for federal or state income tax purposes.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the accompanying statements of operations and comprehensive loss. As of December 31, 2018 and December 31, 2017, the Company has no accrued interest related to uncertain tax positions. In many cases, the Company’s uncertain tax positions are related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, it is generally subject to examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is available.

On December 22, 2017, H.R.1, known as the Tax Cuts and Jobs Act, was enacted. This new law did not have a significant impact on the Company’s consolidated financial statements for the year ended December 31, 2017 because it maintains a valuation allowance on the majority of its net operating losses and other deferred tax assets. However, the reduction of the U.S. federal corporate tax rate from 35% to 21% resulted in increases to the amounts reflected in “Deferred rate change” in the Company’s tax reconciliation table above for the year ended December 31, 2017 compared to the year ended December 31, 2016. The change in the U.S. federal corporate tax rate, which was effective January 1, 2018, was also reflected in the Company’s deferred tax table above.

As permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, we recorded provisional estimates during the year ended December 31, 2017, and have subsequently finalized our accounting analysis based on the guidance, interpretations, and data available as of December 31, 2018. Adjustments made in the fourth quarter of 2018 upon finalization of our accounting analysis were not material to the Company’s consolidated financial statements.

Commitments

12 Months Ended

Dec. 31, 2018

Commitments

14. Commitments

38 Sidney Street

On February 12, 2015, the Company entered into a lease for approximately 38,500 rentable square feet of office and laboratory space at 38 Sidney Street in Cambridge, Massachusetts, which the Company gained control over on June 15, 2015, and occupancy commenced in October 2015. The initial term of the lease agreement will expire on October 31, 2022, unless terminated sooner. The Company has an option to extend the lease for five additional years. The lease has a total commitment of $17.8 million over the initial seven-year term. The Company has agreed to pay an initial annual base rent of approximately $2.3 million, which rises periodically until it reaches approximately $2.8 million. The Company is recording rent expense on a straight-line basis through the end of the lease term and deferred rent on the consolidated balance sheet accordingly. The lease provided the Company with an allowance for leasehold improvements of $4.3 million. The Company accounts for leasehold improvement incentives as a reduction to rent expense ratably over the lease term and the balance from the leasehold improvement incentives is included in lease incentive obligations on the balance sheet. The lease agreement required the Company to pay a security deposit of $1.3 million, of which $0.2 million was released in February 2018. The remaining $1.1 million is recorded in restricted cash on the Company’s balance sheet as of December 31, 2018.

In the first quarter of 2018, the Company subleased its former corporate headquarters at 38 Sidney Street, Cambridge, Massachusetts through October 31, 2020. Subject to the terms of the sublease agreement and the master lease agreement, including a right of recapture by the Company, the sublessee has the option to extend the sublease through October 31, 2022. The sublease includes a total commitment by the sublessee of $8.2 million over the 32-month term of the sublease agreement. During the 32-month term, the Company will be responsible for total rental payments of $6.9 million and an additional $0.7 million in total payments related to the Company’s profit on the sublease income which are payable by the Company to the landlord. As of December 31, 2018, the minimum sublease rental commitment by the sublessee was $5.7 million.

45 Sidney Street

On April 28, 2017, the Company entered into a lease agreement for approximately 99,833 rentable square feet of office and laboratory space located at 45 Sidney Street in Cambridge, Massachusetts. The initial term of the lease agreement commenced on October 1, 2017 and will expire on November 30, 2029, unless terminated sooner. The lease agreement also provides the Company with an option to extend the lease agreement for two consecutive five-year periods at the then fair market annual rent, as defined in the lease agreement.

During the initial term of the lease agreement, the Company has agreed to pay an initial annual base rent of approximately $7.7 million, which increases annually until it reaches approximately $10.6 million in the last year of the initial term. The Company is recording rent expense on a straight-line basis through the end of the lease term and deferred rent on the consolidated balance sheet accordingly. The lease provided the Company with a tenant improvement allowance of approximately $14.2 million for improvements to be made to the premises. The Company accounts for leasehold improvement incentives as a reduction to rent expense ratably over the lease term and the balance from the leasehold improvement incentives is included in lease incentive obligations on the balance sheet. The lease agreement required the Company to pay a security deposit of $3.5 million, which is recorded in restricted cash on the Company’s balance sheet.

On September 19, 2018, the Company entered into an amendment to the lease agreement for its office and laboratory space located at 45 Sidney Street in Cambridge, Massachusetts to expand the rentable square footage from approximately 99,833 square feet to approximately 139,216 square feet. The initial term of the lease with respect to the expansion premises will commence on March 1, 2019 and will expire on November 30, 2029, unless terminated sooner. Pursuant to the lease amendment, the date on which the Company will become responsible for paying rent with respect to the expansion space will be the earlier of (i) the date upon which the Company first occupies the expansion premises for business purposes or (ii) July 1, 2019. The Company currently anticipates the rent commencement date for the expansion premises will be approximately July 1, 2019.

The Company has agreed to pay an initial annual base rent of approximately $3.2 million for the expansion premises, which increases annually until it reaches approximately $4.2 million in the last year of the initial term for the expansion premises. Pursuant to the lease amendment, the landlord has also agreed to provide the Company with a tenant improvement allowance of approximately $3.2 million for improvements to be made to the expansion premises. The lease amendment required the Company to pay an additional security deposit of $0.8 million to the landlord for the expansion premises, which is recorded in restricted cash on the Company’s balance sheet as of December 31, 2018.

The future minimum lease payments through 2023 and thereafter under non-cancellable operating leases as of December 31, 2018 (including the expansion premises) are as follows (in thousands):


2019		12,909
2020		14,926
2021		15,349
2022		15,304
2023		13,331
Thereafter		88,273
Total minimum lease payments (1)	$	160,092

(1)

Minimum lease payments have not been reduced by minimum sublease rentals of $5.7 million due in the future under our non-cancelable sublease for the office and laboratory space located at 38 Sidney Street, Cambridge, Massachusetts. The minimum lease payments above do not include any related common area maintenance charges or real estate taxes.

The Company records rent expense under its lease agreements on a straight-line basis. For the years ended December 31, 2018, 2017, and 2016, rent expense, net of sublease income, was $7.3 million, $6.3 million, and $1.8 million, respectively.

Selected Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2018

Selected Quarterly Financial Data (unaudited)

16. Selected Quarterly Financial Data (unaudited)

The following table contains selected quarterly financial information for 2018 and 2017. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair statement of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


		Three Months Ended
		March 31, 2018		June 30, 2018		September 30, 2018		December 31, 2018
		(in thousands, except per share data)
Total revenue	$	954	$	41,439	$	1,095	$	1,033
Total operating expenses		59,865		70,906		76,603		84,175
Total other income (expense), net		2,362		2,419		2,785		2,820
Net loss	$	(56,549)	$	(27,048)	$	(72,723)	$	(80,322)
Net loss per share — basic and diluted	$	(1.29)	$	(0.62)	$	(1.66)	$	(1.83)


		Three Months Ended
		March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
		(in thousands, except per share data)
Total revenue	$	5,840	$	5,890	$	8,068	$	1,628
Total operating expenses		34,170		40,104		46,678		51,721
Total other expense, net		353		802		907		1,066
Net loss	$	(27,977)	$	(33,412)	$	(37,703)	$	(49,027)
Net loss per share — basic and diluted	$	(0.84)	$	(0.86)	$	(0.96)	$	(1.23)

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

12 Months Ended

Dec. 31, 2018

Policy Text Blocks

Basis of Presentation

Use of Estimates

Revenue recognition

Revenue Recognition

For a complete discussion of accounting for collaboration revenues, see Note 8, “Collaborations.”

persuasive evidence of an arrangement exists;

delivery has occurred or services have been rendered;

the seller’s price to the buyer is fixed or determinable; and

collectability is reasonably assured.

The Company’s multiple-element revenue arrangements may include the following:

Exclusive Licenses

Research and Development Services

Milestone Revenue

The Company’s collaboration agreements may include contingent milestone payments related to specified pre-clinical milestones, development milestones and sales-based commercial milestones.

the consideration related solely to past performance; and

the consideration was reasonable relative to all of the deliverables and payment terms within the arrangement.

Collaborative Arrangements

For a complete discussion of accounting for collaboration revenues, see Note 8, “Collaborations.”

Fair Value Measurements

Level 1 — Fair values are determined utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;

There have been no changes to the valuation methods during the years ended December 31, 2018 and 2017.

Cash and cash equivalents

Available-for-sale Investments

Available-for-Sale Investments

Comprehensive Income (Loss)

Research and Development Costs

Property and Equipment, Net

Impairment of Long Lived Assets

Impairment of Long‑Lived Assets

Stock-Based Compensation Expense

Stock‑Based Compensation Expense

risk‑free interest rate, which is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption;

dividend yield, which is zero based on the fact that the Company never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Income Taxes

Foreign currency translation

Reclassifications

Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current presentation.

Concentrations of Credit Risk and Off-Balance-Sheet Risk

Concentrations of Credit Risk and Off‑Balance‑Sheet Risk

Segment and Geographic Information

Recent Accounting Pronouncements

New Accounting Pronouncement

Revenue recognition


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of January 1, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	4,478	$	(895)	$	5,373
Deferred revenue, net of current portion	$	36,210	$	6,210	$	30,000
Accumulated deficit	$	(360,904)	$	(5,315)	$	(355,589)


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	3,600	$	(1,540)	$	5,140
Deferred revenue, net of current portion	$	42,567	$	17,056	$	25,511
Accumulated deficit	$	(597,545)	$	(15,516)	$	(582,029)


		Impact of ASC 606 Adoption on Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Collaboration revenue	$	44,521	$	(10,201)	$	54,722
Net loss	$	(236,642)	$	(10,201)	$	(226,441)
Net loss per share - basic and diluted	$	(5.39)	$	(0.23)	$	(5.16)


		Impact of ASC 606 Adoption on Consolidated Statement of Cash Flows for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Net Loss	$	(236,642)	$	(10,201)	$	(226,441)
Changes in deferred revenue	$	5,479	$	757	$	4,722

Leasing

The FASB subsequently issued the following amendments to ASU 2016-02, Leases (Topic 842), which have the same effective date and transition date of January 1, 2019:

ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends certain narrow aspects of the guidance issued in ASU 2016-02; and

ASU No. 2018-20, Narrow-Scope Improvements for Lessors, which contains certain narrow scope improvements to the guidance issued in ASU 2016-02

Credit Losses

Debt Securities

Fair Value Measurements

Collaborative Arrangements

Internal-Use Software

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Standards Update 2014-09

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Schedule of financial statement impact of the cumulative adjustment


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of January 1, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	4,478	$	(895)	$	5,373
Deferred revenue, net of current portion	$	36,210	$	6,210	$	30,000
Accumulated deficit	$	(360,904)	$	(5,315)	$	(355,589)


		Impact of ASC 606 Adoption on Consolidated Balance Sheet as of December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Deferred revenue, current portion	$	3,600	$	(1,540)	$	5,140
Deferred revenue, net of current portion	$	42,567	$	17,056	$	25,511
Accumulated deficit	$	(597,545)	$	(15,516)	$	(582,029)


		Impact of ASC 606 Adoption on Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Collaboration revenue	$	44,521	$	(10,201)	$	54,722
Net loss	$	(236,642)	$	(10,201)	$	(226,441)
Net loss per share - basic and diluted	$	(5.39)	$	(0.23)	$	(5.16)


		Impact of ASC 606 Adoption on Consolidated Statement of Cash Flows for the Year Ended December 31, 2018
(in thousands)		As reported under ASC 606		Adjustments		Balances without adoption of ASC 606
Net Loss	$	(236,642)	$	(10,201)	$	(226,441)
Changes in deferred revenue	$	5,479	$	757	$	4,722

Cash Equivalents and Investments (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of cash equivalents and investments, available-for-sale

Cash equivalents and investments, available-for-sale, consisted of the following at December 31, 2018 and December 31, 2017 (in thousands):


	Amortized		Unrealized		Unrealized		Fair
December 31, 2018	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	68,064	$	—	$	—	$	68,064
Investments, available-for-sale:
U.S. treasury obligations		426,112		—		(164)		425,948
Total	$	494,176	$	—	$	(164)	$	494,012


	Amortized		Unrealized		Unrealized		Fair
December 31, 2017	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	400,304	$	—	$	—	$	400,304
Investments, available-for-sale:
U.S. treasury obligations		273,321		—		(269)		273,052
Total	$	673,625	$	—	$	(269)	$	673,356

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of financial instruments measured at fair value

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2018 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2018		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	68,064	$	68,064	$	—	$	—
Investments, available-for-sale:
U.S Treasury obligations		425,948		425,948		—		—
Total	$	494,012	$	494,012	$	—	$	—

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2017 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2017		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	400,304	$	400,304	$	—	$	—
Investments, available-for-sale:
U.S Treasury obligations		273,052		273,052		—		—
Total	$	673,356	$	673,356	$	—	$	—

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of property and equipment

Property and equipment and related accumulated depreciation are as follows (in thousands):


	Estimated
	Useful Life	December 31,			December 31,
	(Years)	2018		2017
Lab equipment	5	$	6,232	$	3,604
Furniture and fixtures	4		2,369		837
Computer equipment	3		1,805		624
Leasehold improvements	Term of lease		26,640		4,681
Software	3		280		263
Construction-in-progress			956		18,998
			38,282		29,007
Less: accumulated depreciation and amortization			(8,655)		(4,644)
Total property and equipment, net		$	29,627	$	24,363

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):


	December 31,		December 31,
	2018		2017
External research and development	$	36,213	$	17,493
Employee compensation		8,071		5,766
Accrued professional fees		3,379		1,394
Property and equipment costs		912		4,176
Pre-commercial accrual		1,044		261
Other		2,092		1,451
	$	51,711	$	30,541

Stock-based compensations (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Stock-based compensation expense allocation by type of awards

Stock-based compensation expense by award type included within the consolidated statements of operations and comprehensive loss was as follows (in thousands):


		Year Ended
		December 31,
		2018		2017		2016
Stock options	$	30,095	$	12,317	$	5,134
Restricted stock units		167		—		—
Restricted stock awards		—		2		839
Employee stock purchase plan		272		204		167
Total stock-based compensation expense	$	30,534	$	12,523	$	6,140

Summary of stock-based compensation expense recognized in statements of operations


		Year Ended
		December 31,
		2018		2017		2016
Stock options	$	30,095	$	12,317	$	5,134
Restricted stock units		167		—		—
Restricted stock awards		—		2		839
Employee stock purchase plan		272		204		167
Total stock-based compensation expense	$	30,534	$	12,523	$	6,140

Stock‑based compensation expense by classification within the consolidated statements of operations and comprehensive loss is as follows (in thousands):


	Year Ended
	December 31,
	2018		2017		2016
Research and development	$	17,019	$	6,296	$	2,674
General and administrative		13,515		6,227		3,466
Total stock-based compensation expense	$	30,534	$	12,523	$	6,140

Assumptions used in estimating fair value of stock options on grant date



	Year Ended
	December 31, 2018		December 31, 2017		December 31, 2016
Risk-free interest rate	2.77	%	2.07	%	1.55	%
Expected dividend yield	—	%	—	%	—	%
Expected term (years)	6.0		6.0		6.0
Expected stock price volatility	69.08	%	74.58	%	75.94	%

Summary of stock option activity


		Weighted-		Remaining	Aggregate
		Average		Contractual	Intrinsic
		Exercise		Life	Value(1)
	Shares	Price		(in Years)	(in thousands)
Outstanding at December 31, 2017	3,304,166	$	22.45	8.04	$	174,985
Granted	1,832,270		77.64
Exercised	(445,622)		12.54
Canceled	(133,014)		55.65
Outstanding at December 31, 2018	4,557,800	$	44.64	7.96	$	86,675
Exercisable at December 31, 2018	2,103,540	$	24.32	6.97	$	68,641

(1)

Intrinsic value represents the amount by which the fair market value as of December 31, 2018 of the underlying common stock exceeds the exercise price of the option.

Summary of unvested restricted stock


		Weighted-Average
		Grant Date
	Shares	Fair Value
Unvested shares at December 31, 2017	—	$	—
Granted	36,868		66.28
Vested	—		—
Forfeited	—		—
Unvested shares at December 31, 2018	36,868		66.28

Net Loss per Share (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of common stock equivalents excluded from calculation of diluted net loss per share applicable to common stockholders


	Year Ended
	December 31,
	2018	2017	2016
Stock options	4,557,800	3,304,166	2,622,741
Restricted stock units	36,868	—	—
Restricted stock awards	—	—	2,125
ESPP shares	10,275	5,663	7,798
Total	4,604,943	3,309,829	2,632,664

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of the reconciliation of the effective tax rate


	Year Ended
	December 31,
	2018		2017		2016
Federal income tax (benefit) at statutory rate	21.00	%	34.00	%	34.00	%
Permanent differences	1.71		0.49		(2.74)
Federal research and development credits	1.79		0.97		1.02
Federal orphan drug credits	18.06		6.40		6.63
State income tax, net of federal benefit	7.08		5.40		4.81
Other	0.04		0.83		(0.78)
Deferred rate change	—		(27.58)		—
Change in valuation allowance	(49.68)		(20.54)		(42.94)
Effective income tax rate	—	%	(0.03)	%	—	%

Schedule of the deferred tax assets and liabilities


	Year Ended
	December 31,
	2018		2017		2016
Deferred tax assets:
Net operating loss carryforwards	$	127,421	$	78,829	$	69,443
Research and development credit carryforwards		13,714		5,950		3,833
Orphan drug credit carryforwards		68,536		14,574		5,095
Accrued expenses and other		12,248		4,660		2,914
Deferred revenue		10,320		9,664		2,627
Deferred lease incentive		3,993		4,462		1,324
Deferred rent		1,436		1,142		366
Total gross deferred tax asset		237,668		119,281		85,602
Deferred tax liability		(4,162)		(4,801)		(1,535)
Debt discount		—		(2)		(14)
Valuation allowance		(233,506)		(114,478)		(84,053)
Net deferred tax asset	$	—	$	—	$	—

Commitments (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of future minimum lease payments

The future minimum lease payments through 2023 and thereafter under non-cancellable operating leases as of December 31, 2018 (including the expansion premises) are as follows (in thousands):


2019		12,909
2020		14,926
2021		15,349
2022		15,304
2023		13,331
Thereafter		88,273
Total minimum lease payments (1)	$	160,092

(1)

Selected Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of quarterly financial information


		Three Months Ended
		March 31, 2018		June 30, 2018		September 30, 2018		December 31, 2018
		(in thousands, except per share data)
Total revenue	$	954	$	41,439	$	1,095	$	1,033
Total operating expenses		59,865		70,906		76,603		84,175
Total other income (expense), net		2,362		2,419		2,785		2,820
Net loss	$	(56,549)	$	(27,048)	$	(72,723)	$	(80,322)
Net loss per share — basic and diluted	$	(1.29)	$	(0.62)	$	(1.66)	$	(1.83)


		Three Months Ended
		March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
		(in thousands, except per share data)
Total revenue	$	5,840	$	5,890	$	8,068	$	1,628
Total operating expenses		34,170		40,104		46,678		51,721
Total other expense, net		353		802		907		1,066
Net loss	$	(27,977)	$	(33,412)	$	(37,703)	$	(49,027)
Net loss per share — basic and diluted	$	(0.84)	$	(0.86)	$	(0.96)	$	(1.23)

Nature of Business (Details) - USD ($) $ / shares in Units, $ in Thousands					12 Months Ended
	Dec. 15, 2017	Apr. 04, 2017	Dec. 13, 2016	May 05, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Nature of Business
Proceeds from public offerings of common stock, net of commissions and underwriting discounts						$ 542,225	$ 135,125
Proceeds from issuance of common stock					$ 6,425	$ 5,271	$ 928
Cash, cash equivalents and investments					$ 494,000
IPO
Nature of Business
Stock sold (in shares)				9,367,708
Share price (in dollars per share)				$ 18.00
Proceeds from public offerings of common stock, net of commissions and underwriting discounts				$ 154,800
Follow-on Offering
Nature of Business
Stock sold (in shares)	4,259,259	5,750,000	5,750,000
Share price (in dollars per share)	$ 81.00	$ 40.00	$ 25.00
Proceeds from issuance of common stock	$ 325,700	$ 215,600	$ 134,500
Underwriters' Option
Nature of Business
Stock sold (in shares)	555,555	750,000	750,000	1,221,874

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Stock-Based Compensation Expense (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock Options
Stock-based compensation
Expected dividend yield	0.00%	0.00%	0.00%
Award expiration period	10 years	10 years	10 years
Employee Stock
Stock-based compensation
Purchase price on common stock (as a percent)	85.00%	85.00%	85.00%
Discount on fair value, offering date (as a percent)	15.00%	15.00%	15.00%
Discount on fair value, purchase date (as a percent)	15.00%	15.00%	15.00%
Award expiration period	180 days	180 days	180 days

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Impact of ASC 606 Adoption - Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Deferred revenue, current portion	$ 3,600	$ 4,478	$ 5,373
Deferred revenue, net of current portion	42,567	36,210	30,000
Accumulated deficit	(597,545)	(360,904)	$ (355,589)
Difference between Revenue Guidance in Effect before and after Topic 606 \| Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Deferred revenue		5,300
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Deferred revenue, current portion	(1,540)	(895)
Deferred revenue, net of current portion	17,056	6,210
Accumulated deficit	(15,516)	(5,315)
Calculated under Revenue Guidance in Effect before Topic 606 \| Accounting Standards Update 2014-09
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Deferred revenue, current portion	5,140	5,373
Deferred revenue, net of current portion	25,511	30,000
Accumulated deficit	$ (582,029)	$ (355,589)

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Impact of ASC 606 Adoption - Consolidated Statement of Operations and Comprehensive Loss (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Collaboration revenue	$ 1,033	$ 1,095	$ 41,439	$ 954	$ 1,628	$ 8,068	$ 5,890	$ 5,840	$ 44,521	$ 21,426	$ 27,772
Net loss	$ (80,322)	$ (72,723)	$ (27,048)	$ (56,549)	$ (49,027)	$ (37,703)	$ (33,412)	$ (27,977)	$ (236,642)	$ (148,119)	$ (72,495)
Net loss per share - basic and diluted (in dollars per share)	$ (1.83)	$ (1.66)	$ (0.62)	$ (1.29)	$ (1.23)	$ (0.96)	$ (0.86)	$ (0.84)	$ (5.39)	$ (3.92)	$ (2.64)
Accounting Standards Update 2014-09 \| Calculated under Revenue Guidance in Effect before Topic 606
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Collaboration revenue									$ 54,722
Net loss									$ (226,441)
Net loss per share - basic and diluted (in dollars per share)									$ (5.16)
Accounting Standards Update 2014-09 \| Difference between Revenue Guidance in Effect before and after Topic 606
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Collaboration revenue									$ (10,201)
Net loss									$ (10,201)
Net loss per share - basic and diluted (in dollars per share)									$ (0.23)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Impact of ASC 606 Adoption - Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Net loss	$ (236,642)	$ (148,119)	$ (72,495)
Changes in deferred revenue	5,479	$ (11,861)	$ 33,594
Accounting Standards Update 2014-09 \| Difference between Revenue Guidance in Effect before and after Topic 606
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Net loss	(10,201)
Changes in deferred revenue	757
Accounting Standards Update 2014-09 \| Calculated under Revenue Guidance in Effect before Topic 606
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Net loss	(226,441)
Changes in deferred revenue	$ 4,722

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (a)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
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-Subparagraph (c)(1)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8736-108599

Reference 6: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
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-Section 55
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-URI http://asc.fasb.org/extlink&oid=84234705&loc=SL4591551-111686

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109223946&loc=d3e3000-108585

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=108774443&loc=SL4569616-111683

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=84234705&loc=SL4591552-111686

+ Details

Cash Equivalents and Investments - Tabular Disclosure - Cash Equivalents (Details) - Money market funds - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Cash equivalents:
Cash equivalents, Amortized Cost	$ 68,064	$ 400,304
Cash equivalents	$ 68,064	$ 400,304

Cash Equivalents and Investments - Tabular Disclosure - Investments, Available-for-sale (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Investments, available-for-sale:
Available-for-sale, Amortized Cost	$ 426,112	$ 273,321
Available-for-sale, Unrealized Losses	(164)	(269)
Investments, available-for-sale	$ 425,948	$ 273,052
Investments, available-for-sale, type	us-gaap:USTreasurySecuritiesMember	us-gaap:USTreasurySecuritiesMember

Cash Equivalents and Investments - Gains or Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Realized gain (loss) on sales of investments
Realized gain (loss) on sales of investments	$ 0	$ 0
Adjustment for other than temporary fair value decline
Adjustment for other than temporary fair value decline	$ 0	$ 0

Cash Equivalents and Investments - Unrealized Loss Position (Details) $ in Thousands	Dec. 31, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Unrealized loss position, number of positions
Number of held securities in an unrealized loss position for less than 12 months \| security	54	37
Number of held securities in an unrealized loss position for 12 months or longer \| security	0	0
Unrealized loss position, aggregate fair value
Unrealized loss position for less than 12 months \| $	$ 397,500	$ 273,100
Unrealized loss position for more than 12 months \| $	$ 0	$ 0

Cash Equivalents and Investments - Remaining Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Investments, available-for-sale
Investments, available-for-sale, remaining maturities year two through five	$ 0	$ 0
Investments, available-for-sale, remaining maturities year six through ten	0	0
Investments, available-for-sale, remaining maturities after year ten	$ 0	$ 0

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Fair Value of Financial Instruments
Investments, available-for-sale	$ 425,948	$ 273,052
Investments, available-for-sale, type	us-gaap:USTreasurySecuritiesMember	us-gaap:USTreasurySecuritiesMember
Money market funds
Fair Value of Financial Instruments
Cash equivalents	$ 68,064	$ 400,304
Recurring
Fair Value of Financial Instruments
Investments, available-for-sale	425,948	273,052
Total	494,012	673,356
Recurring \| Money market funds
Fair Value of Financial Instruments
Cash equivalents	68,064	400,304
Recurring \| Active Markets (Level 1)
Fair Value of Financial Instruments
Investments, available-for-sale	425,948	273,052
Total	494,012	673,356
Recurring \| Active Markets (Level 1) \| Money market funds
Fair Value of Financial Instruments
Cash equivalents	$ 68,064	$ 400,304

Property and Equipment, Net - Estimated Useful Lives (Details)	12 Months Ended
	Dec. 31, 2018
Lab equipment
Property and Equipment, Net
Estimated Useful Life (Years)	5 years
Furniture and fixtures
Property and Equipment, Net
Estimated Useful Life (Years)	4 years
Computer equipment
Property and Equipment, Net
Estimated Useful Life (Years)	3 years
Leasehold improvements
Property and Equipment, Net
Estimated Useful Life	Term of lease
Software
Property and Equipment, Net
Estimated Useful Life (Years)	3 years

Property and Equipment, Net - Property and Equipment and Related Accumulated Depreciation (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Property and Equipment, Net
Gross property and equipment	$ 38,282	$ 29,007
Less: accumulated depreciation and amortization	(8,655)	(4,644)
Total property and equipment, net	29,627	24,363
Lab equipment
Property and Equipment, Net
Gross property and equipment	6,232	3,604
Furniture and fixtures
Property and Equipment, Net
Gross property and equipment	2,369	837
Computer equipment
Property and Equipment, Net
Gross property and equipment	1,805	624
Leasehold improvements
Property and Equipment, Net
Gross property and equipment	26,640	4,681
Software
Property and Equipment, Net
Gross property and equipment	280	263
Construction-in-progress
Property and Equipment, Net
Gross property and equipment	$ 956	$ 18,998

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accrued Expenses
External research and development	$ 36,213	$ 17,493
Employee compensation	8,071	5,766
Accrued professional fees	3,379	1,394
Property and equipment costs	912	4,176
Pre-commercial accrual	1,044	261
Other	2,092	1,451
Total accrued expenses	$ 51,711	$ 30,541

Collaborations (Details) $ in Thousands		1 Months Ended			3 Months Ended									12 Months Ended			34 Months Ended
Collaborations (Details) $ in Thousands	Jun. 01, 2018 USD ($) item	Jun. 30, 2018 USD ($)	Mar. 31, 2016 USD ($) item	Mar. 31, 2015 USD ($) item	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Jan. 01, 2018 USD ($)
Collaborations
Collaboration revenue					$ 1,033	$ 1,095	$ 41,439	$ 954	$ 1,628	$ 8,068	$ 5,890	$ 5,840		$ 44,521	$ 21,426	$ 27,772
Current portion of deferred revenue					3,600				$ 5,373					3,600	5,373		$ 5,373	$ 4,478
Roche
Collaborations
Collaboration revenue														4,500	5,200	4,500
Revenue recognized, change in contract liability														2,900
Collaboration \| C Stone
Collaborations
Non-refundable upfront payment received	$ 40,000
Eligible milestone payments	$ 346,000
Licensed product term from first commercial sale	12 years
Number of materials components \| item	2
Reduced from total operating expenses														500
Number of option rights to obtain exclusive license \| item	3
Number of potential collaboration programs \| item	3
Number of material promises \| item	6
Number of collaboration programs with exclusive commercialization rights for licensed products \| item	3
Initial cash payment	$ 40,000
Collaboration revenue							40,000
Deferred revenue					0									0
Collaboration \| C Stone \| Development and regulatory milestones
Collaborations
Eligible milestone payments	118,500
Collaboration \| C Stone \| Sales-based milestones
Collaborations
Eligible milestone payments	$ 227,500
Collaboration \| Roche
Collaborations
Non-refundable upfront payment received			$ 45,000
Number of option rights to obtain exclusive license \| item			5
Number of potential collaboration programs \| item			5
Initial cash payment			$ 45,000										$ 45,000
Deferred revenue					46,200									46,200
Reversal of cumulative milestone revenue not occur for developmental milestone							10,000
Cumulative catch-up of revenue for developmental milestone recognized							1,200
Number of collaboration programs with agreed upon targets \| item			2
Total eligible contingent option fees and milestone payments			$ 965,000										$ 965,000
Eligible option fees and milestones prior to licensing for all potential collaboration programs			$ 215,000
Current portion of deferred revenue					$ 3,600									$ 3,600
Number of deliverables \| item													5
Achieved research milestone payment received which will be recognized over period of performance		$ 10,000					$ 10,000
Research and development services, performance period					6 years									6 years
Collaboration \| Roche \| Prior To Exercise License Right Option
Collaborations
Written termination notice period			120 days
Collaboration \| Roche \| Exercise Of License Right Option
Collaborations
Number of collaboration programs with exclusive commercialization rights for licensed products \| item			3
Number of collaboration programs with specified commercial rights for each party \| item			2
Collaboration \| Roche \| Exercise Of License Option Product Not Commercially Sold
Collaborations
Written termination notice period			120 days
Collaboration \| Roche \| Exercise Of License Option Product Commercially Sold
Collaborations
Written termination notice period			180 days
Collaboration \| Alexion
Collaborations
Non-refundable upfront payment received				$ 15,000											15,000	15,000
Collaboration revenue														$ 0	16,200	23,300
Non-refundable upfront and milestone payment received				$ 18,800
Non-refundable milestone payment received																	3,800
Collaboration revenue, upfront payment																	15,000
Collaboration revenue, non-substantive milestone payment																	1,800
Collaboration revenue, substantive milestone payment																	$ 2,000
Collaborative partner's funding responsibility of research and development costs incurred under the research plan (as a percent)				100.00%
Number of deliverables \| item				3
Achieved milestone payment received which will be recognized over period of performance																1,800
Reimbursable research and development costs recognized															9,500	14,600
Non-substantive milestone payment previously															1,800	$ 1,800
Reimbursable research and development costs received															$ 12,700

Term Loan - General Information (Details) - Secured Debt $ in Millions	1 Months Ended
	Nov. 30, 2014 USD ($)	May 31, 2013 USD ($) tranche	Dec. 31, 2018 USD ($)
Term Loan
Percentage fee payable on total loan advances at end of loan (as a percent)			4.00%
outstanding principal			$ 0.0
outstanding interest			$ 0.0
2013 Term Loan
Term Loan
Face amount		$ 5.0
Number of tranches \| tranche		3
2013 Term Loan \| Prime Rate
Term Loan
Fixed rate based on percentage points added to base rate (as a percent)		2.00%
2014 Term Loan
Term Loan
Face amount	$ 5.0
Proceeds from term loan	$ 5.0

Stock-based compensations - 2015 Stock Option and Incentive Plan (Details) - 2015 Stock Option and Incentive Plan - shares			12 Months Ended
	Jan. 01, 2019	Jan. 01, 2018	Dec. 31, 2018	Apr. 08, 2015
Stock-based compensation
Initial shares of common stock authorized for issuance of stock awards				1,460,084
Increase in number of shares available for grant (as a percent)			4.00%
Increase in number of shares available for grant	1,761,481	1,743,101
Number of shares available for grant			1,776,005

Stock-based compensations - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Total stock based compensation expense
Total stock-based compensation expense	$ 30,534	$ 12,523	$ 6,140
Research and development
Total stock based compensation expense
Total stock-based compensation expense	17,019	6,296	2,674
General and administrative
Total stock based compensation expense
Total stock-based compensation expense	13,515	6,227	3,466
Stock Options
Total stock based compensation expense
Total stock-based compensation expense	30,095	12,317	5,134
Restricted stock units
Total stock based compensation expense
Total stock-based compensation expense	167
Restricted stock awards
Total stock based compensation expense
Total stock-based compensation expense		2	839
Employee Stock
Total stock based compensation expense
Total stock-based compensation expense	$ 272	$ 204	$ 167

Stock-based compensations - Unrecognized Compensation Costs (Details) $ in Millions	Dec. 31, 2018 USD ($)
Stock-based compensation
Total unrecognized compensation cost related to non-vested stock awards	$ 93.2
Weighted-average period over which unrecognized compensation cost will be recognized	2 years 9 months 18 days
Stock Options
Stock-based compensation
Total unrecognized compensation cost related to non-vested stock option awards	$ 90.9
Weighted-average period over which unrecognized compensation cost will be recognized	2 years 8 months 12 days
Restricted stock units
Stock-based compensation
Total unrecognized compensation cost related to non-vested stock awards	$ 2.3
Weighted-average period over which unrecognized compensation cost will be recognized	3 years 8 months 12 days

Stock-based compensations - Awards - General Information (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock Options
Stock-based compensation
Award expiration period	10 years	10 years	10 years
2015 Stock Option and Incentive Plan \| Stock Options
Stock-based compensation
Award vesting period	4 years	4 years	4 years
Cliff vesting period for new employees	1 year	1 year	1 year
Award expiration period	10 years	10 years	10 years
2015 Stock Option and Incentive Plan \| Restricted stock units
Stock-based compensation
Award vesting period	4 years	4 years	4 years
2015 Stock Option and Incentive Plan \| Restricted stock awards
Stock-based compensation
Award vesting period	4 years	4 years	4 years

Stock-based compensations - Weighted Average Assumptions - Tabular Disclosure (Details) - Stock Options	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Assumptions used in estimating the fair value of stock options granted
Risk-free interest rate	2.77%	2.07%	1.55%
Expected dividend yield	0.00%	0.00%	0.00%
Expected term (in years)	6 years	6 years	6 years
Expected stock price volatility	69.08%	74.58%	75.94%

Stock-based compensations - Stock Options - Activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Shares
Outstanding at beginning of period (in shares)	3,304,166
Granted (in shares)	1,832,270
Exercised (in shares)	(445,622)
Cancelled (in shares)	(133,014)
Outstanding at end of period (in shares)	4,557,800	3,304,166
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 22.45
Granted (in dollars per share)	77.64
Exercised (in dollars per share)	12.54
Cancelled (in dollars per share)	55.65
Outstanding at end of period (in dollars per share)	$ 44.64	$ 22.45
Additional disclosures
Shares - Exercisable (in shares)	2,103,540
Weighted-Average Exercise Price - Exercisable (in dollars per share)	$ 24.32
Remaining Contractual Life - Outstanding	7 years 11 months 16 days	8 years 15 days
Remaining Contractual Life - Exercisable	6 years 11 months 19 days
Aggregate Intrinsic Value - Outstanding	$ 86,675	$ 174,985
Aggregate Intrinsic Value - Exercisable	$ 68,641

Stock-based compensations - Weighted Average Assumptions - Additional Information (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Additional disclosures
Weighted-average grant date fair value of options granted	$ 49.40	$ 28.04	$ 13.06
Total intrinsic value of options exercised	$ 29.4	$ 17.8	$ 3.1

Stock-based compensations - Unvested Restricted Stock - Activity (Details) - Restricted stock units	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Shares
Unvested at beginning of period (in shares) \| shares	0
Granted (in shares) \| shares	36,868
Vested (in shares) \| shares	0
Forfeited (in shares) \| shares	0
Unvested at end of period (in shares) \| shares	36,868
Weighted-Average Grant Date Fair Value
Unvested at beginning or period (in dollars per share) \| $ / shares	$ 0.00
Granted (in dollars per share) \| $ / shares	66.28
Vested (in dollars per share) \| $ / shares	0.00
Forfeited (in dollars per share) \| $ / shares	0.00
Unvested at end of period (in dollars per share) \| $ / shares	$ 66.28

Stock-based compensations - Restricted Stock Awards (Details) - Restricted stock awards - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock Awards
Total fair value of restricted stock that vested		$ 0.1	$ 2.7
Employees or directors
Stock Awards
Granted (in shares)	0	0

Stock-based compensations - Employee Stock Purchase Plan (Details) - shares	1 Months Ended	12 Months Ended
	May 31, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2019	Jan. 01, 2018
Stock-based compensation
ESPP shares issued during period (in shares)		13,878	16,703	23,325
Employee Stock
Stock-based compensation
Number of common shares reserved for future issuance (in shares)	243,347
Annual increase for common stock for issuance (as a percent)	1.00%
Increase of common shares reserved for future issuance (in shares)					440,370	435,775

Net Loss per Share - Anti-dilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share	4,604,943	3,309,829	2,632,664
Stock Options
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share	4,557,800	3,304,166	2,622,741
Restricted stock units
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share	36,868
Restricted stock awards
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share			2,125
Employee Stock
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share	10,275	5,663	7,798

Net Loss per Share - Weighted Average Number of Common Shares (Details) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net Loss per Share
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic	43,867,433	37,792,929	27,491,669
Weighted-average number of common shares used in net loss per share applicable to common stockholders - diluted	43,867,433	37,792,929	27,491,669

Convertible Preferred Stock - Preferred Stock (Details)	Dec. 31, 2018 shares	Dec. 31, 2017 shares	Dec. 31, 2016 shares	May 31, 2015 series shares
Preferred Stock Disclosures
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000		5,000,000
Number of series of preferred stock, minimum \| series				1
Preferred stock, shares issued (in shares)	0	0	0
Preferred stock, shares outstanding (in shares)	0	0	0

Income Taxes - Reconciliation (Details)		12 Months Ended
Income Taxes - Reconciliation (Details)	Dec. 22, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate
Federal income tax (benefit) at statutory rate	35.00%	21.00%	34.00%	34.00%
Permanent differences		1.71%	0.49%	(2.74%)
Federal research and development credits		1.79%	0.97%	1.02%
Federal orphan drug credits		18.06%	6.40%	6.63%
State income tax, net of federal benefit		7.08%	5.40%	4.81%
Other		0.04%	0.83%	(0.78%)
Deferred rate change			(27.58%)
Change in valuation allowance		(49.68%)	(20.54%)	(42.94%)
Effective income tax rate		0.00%	(0.03%)	0.00%

Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets:
Net operating loss carryforwards	$ 127,421	$ 78,829	$ 69,443
Research and development credit carryforwards	13,714	5,950	3,833
Orphan drug credit carryforwards	68,536	14,574	5,095
Accrued expenses and other	12,248	4,660	2,914
Deferred revenue	10,320	9,664	2,627
Deferred lease incentive	3,993	4,462	1,324
Deferred rent	1,436	1,142	366
Total gross deferred tax asset	237,668	119,281	85,602
Deferred tax liability	(4,162)	(4,801)	(1,535)
Debt discount		(2)	(14)
Valuation allowance	(233,506)	(114,478)	(84,053)
Net deferred tax asset	$ 0	$ 0	$ 0

Income Taxes - Tax Credit Carryforwards (Details) $ in Millions	Dec. 31, 2018 USD ($)
Research and Development Tax Credit \| Federal
Tax Credit Carryforwards
Tax credit carryforwards	$ 8.5
Research and Development Tax Credit \| State
Tax Credit Carryforwards
Tax credit carryforwards	6.2
Orphan Drug Tax Credit \| Federal
Tax Credit Carryforwards
Tax credit carryforwards	68.5
Investment Tax Credit \| State
Tax Credit Carryforwards
Tax credit carryforwards	$ 0.5

Commitments - General Information (Details) $ in Thousands					1 Months Ended	3 Months Ended
Commitments - General Information (Details) $ in Thousands	Sep. 19, 2018 USD ($) ft²	Mar. 31, 2018 USD ($)	Oct. 01, 2017 USD ($) ft² period	Feb. 12, 2015 USD ($) ft²	Feb. 28, 2015 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Operating Leases
Total commitment under the operating lease							$ 160,092
Total commitment in sublease							5,700
Corporate Headquarters Lease
Operating Leases
Area leased (in square feet) \| ft²				38,500
Extension period of lease term				5 years
Total commitment under the operating lease		$ 6,900		$ 17,800		$ 6,900
Lease term				7 years
Base annual rent, initial				$ 2,300
Base annual rent, maximum				2,800
Allowance for leasehold improvements				4,300
Security deposit included in restricted cash				$ 1,300			1,100
Security deposit released					$ 200
Total commitment in sublease		$ 8,200				8,200	$ 5,700
Sublease term		32 months
Sublease payable						$ 700
Office and Laboratory Space in Cambridge Massachusetts, 45 Sidney Street
Operating Leases
Area leased (in square feet) \| ft²	139,216		99,833
Extension period of lease term			5 years
Base annual rent, initial	$ 3,200		$ 7,700
Base annual rent, maximum	4,200		10,600
Security deposit included in restricted cash	800		3,500
Tenant improvement allowance	$ 3,200		$ 14,200
Number of extensions \| period			2

Commitments - Future Minimum Lease Payments - Tabular Disclosure (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Future minimum lease payments
2019	$ 12,909
2020	14,926
2021	15,349
2022	15,304
2023	13,331
Thereafter	88,273
Total minimum lease payments	$ 160,092

Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Selected Quarterly Financial Data
Total revenue	$ 1,033	$ 1,095	$ 41,439	$ 954	$ 1,628	$ 8,068	$ 5,890	$ 5,840	$ 44,521	$ 21,426	$ 27,772
Total operating expenses	84,175	76,603	70,906	59,865	51,721	46,678	40,104	34,170	291,549	172,673	100,349
Total other income (expense), net	2,820	2,785	2,419	2,362	1,066	907	802	353	10,386	3,128	82
Net loss	$ (80,322)	$ (72,723)	$ (27,048)	$ (56,549)	$ (49,027)	$ (37,703)	$ (33,412)	$ (27,977)	$ (236,642)	$ (148,119)	$ (72,495)
Net loss per share — basic and diluted (in dollars per share)	$ (1.83)	$ (1.66)	$ (0.62)	$ (1.29)	$ (1.23)	$ (0.96)	$ (0.86)	$ (0.84)	$ (5.39)	$ (3.92)	$ (2.64)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.