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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2020	May 01, 2020
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Registrant Name	Aclaris Therapeutics, Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		41,866,345
Entity Central Index Key	0001557746
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash, cash equivalents and restricted cash	$ 53,992	$ 35,937
Marketable securities	25,013	39,078
Accounts receivable, net	933	704
Prepaid expenses and other current assets	2,776	3,118
Discontinued operations - current assets		4,966
Total current assets	82,714	83,803
Property and equipment, net	2,187	2,470
Intangible assets	7,180	7,199
Other assets	4,731	4,825
Total assets	96,812	98,297
Current liabilities:
Accounts payable	6,946	9,917
Accrued expenses	10,374	7,721
Current portion of lease liabilities	624	637
Discontinued operations - current liabilities	2,659	4,157
Total current liabilities	20,603	22,432
Other liabilities	3,477	3,736
Long-term debt, net	10,573
Contingent consideration	3,435	1,668
Deferred tax liability	549	549
Total liabilities	38,637	28,385
Stockholders' Equity:
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at March 31, 2020 and December 31, 2019
Common stock, $0.00001 par value; 100,000,000 shares authorized at March 31, 2020 and December 31, 2019; 41,832,220 and 41,485,638 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
Additional paid-in capital	527,241	523,505
Accumulated other comprehensive income (loss)	47	(66)
Accumulated deficit	(469,113)	(453,527)
Total stockholders’ equity	58,175	69,912
Total liabilities and stockholders’ equity	$ 96,812	$ 98,297

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	41,832,220	41,485,638
Common stock, shares outstanding	41,832,220	41,485,638

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue, net	$ 1,407	$ 1,263
Costs and expenses:
Cost of revenue		1,207
Cost of revenue	1,269
Research and development	9,444	19,643
General and administrative	6,200	7,464
Total costs and expenses	16,913	28,314
Loss from operations	(15,506)	(27,051)
Other income (expense), net	178	(230)
Loss from continuing operations	(15,328)	(27,281)
Loss from discontinued operations	(258)	(10,284)
Net loss	$ (15,586)	$ (37,565)
Net loss per share, basic and diluted	$ (0.37)	$ (0.91)
Weighted average common shares outstanding, basic and diluted (in shares)	41,618,429	41,248,663
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax of $0	$ 60	$ 34
Foreign currency translation adjustments	53	(14)
Total other comprehensive income (loss)	113	20
Comprehensive loss	(15,473)	(37,545)
Contract research
Revenue, net	1,189	$ 1,263
Other revenue
Revenue, net	$ 218

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Unrealized gain (loss) on marketable securities, tax	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Gain (Loss)	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2018		$ 507,366	$ (69)	$ (292,173)	$ 215,124
Balance at beginning of period (in shares) at Dec. 31, 2018	41,210,725
Increase (Decrease) in Stockholders' Equity
Vesting of RSUs		(188)			(188)
Vesting of RSUs, shares	58,918
Unrealized gain on marketable securities			34		34
Foreign currency translation adjustment			(14)		(14)
Stock-based compensation expense		4,862			4,862
Net loss				(37,565)	(37,565)
Balance at end of period at Mar. 31, 2019		512,040	(49)	(329,738)	182,253
Balance at end of period (in shares) at Mar. 31, 2019	41,269,643
Balance at beginning of period at Dec. 31, 2019		523,505	(66)	(453,527)	$ 69,912
Balance at beginning of period (in shares) at Dec. 31, 2019	41,485,638				41,485,638
Increase (Decrease) in Stockholders' Equity
Vesting of RSUs		(95)			$ (95)
Vesting of RSUs, shares	346,582
Fair value of warrants issued		378			378
Unrealized gain on marketable securities			60		60
Foreign currency translation adjustment			53		53
Stock-based compensation expense		3,453			3,453
Net loss				(15,586)	(15,586)
Balance at end of period at Mar. 31, 2020		$ 527,241	$ 47	$ (469,113)	$ 58,175
Balance at end of period (in shares) at Mar. 31, 2020	41,832,220				41,832,220

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (15,586)	$ (37,565)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	576	2,226
Stock-based compensation expense	3,453	4,862
Change in fair value of contingent consideration	1,767
Changes in operating assets and liabilities:
Accounts receivable	4,737	(10,956)
Prepaid expenses and other assets	338	1,789
Accounts payable	(4,317)	(197)
Accrued expenses	2,227	8,523
Net cash used in operating activities	(6,805)	(31,318)
Cash flows from investing activities:
Purchases of property and equipment	(124)	(284)
Purchases of marketable securities	(8,869)	(73,100)
Proceeds from sales and maturities of marketable securities	22,935	82,000
Net cash provided by (used in) investing activities	13,942	8,616
Cash flows from financing activities:
Proceeds from debt financing, net of issuance costs	10,950
Finance lease payments	(57)	(120)
Proceeds from the issuance of stock	25
Net cash (used in) provided by financing activities	10,918	(120)
Net increase (decrease) in cash and cash equivalents	18,055	(22,822)
Cash, cash equivalents and restricted cash at beginning of period	35,937	57,019
Cash, cash equivalents and restricted cash at end of period	53,992	34,197
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable	16	24
Offering costs included in accounts payable	$ 30
Operating lease asset recorded as a result of new accounting standard		$ 2,132

Organization and Nature of Business	3 Months Ended
Organization and Nature of Business	Mar. 31, 2020
Organization and Nature of Business
Organization and Nature of Business	1. Organization and Nature of Business Overview Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. In July 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. In August 2017, Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof. Aclaris Therapeutics, Inc., ATIL and Confluence are referred to collectively as the “Company.” The Company is a physician-led biopharmaceutical company focused on immuno-inflammatory diseases. The Company currently has a pipeline of drug candidates focused on immuno-inflammatory diseases, as well as one product approved by the U.S. Food and Drug Administration (“FDA”) that it is not currently distributing, marketing or selling, and other investigational drug candidates. In September 2019, the Company announced the completion of a strategic review of its business, as a result of which it refocused its resources on its immuno-inflammatory development programs. The Company is pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its drug candidates and ESKATA (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”), the Company’s non-marketed FDA-approved product. Liquidity The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. At March 31, 2020, the Company had cash, cash equivalents and restricted cash and marketable securities of $79,005 and an accumulated deficit of $469,113. Since inception, the Company has incurred net losses and negative cash flows from its operations. Prior to the acquisition of Confluence in August 2017, the Company had never generated revenue. There can be no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, development activities, including clinical and preclinical testing of the Company’s drug candidates, will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its drug candidates and to generate revenue from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets or to raise additional capital to finance its operations. The Company expects that it will require additional capital to complete the clinical development of ATI-450, to develop its preclinical compounds, and to support its discovery efforts. Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If the Company is unable to raise sufficient additional capital or generate revenue from transactions with third-party partners for the development and/or commercialization of its drug candidates, it may need to substantially curtail planned operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that its consolidated financial statements are issued. As of the report date, the Company believes the actions described below are probable of being implemented effectively and of alleviating the conditions or events that exist which raise substantial doubt about its ability to continue as a going concern within one year after the date of the issuance of these condensed consolidated financial statements. The Company believes its existing cash, cash equivalents and marketable securities are sufficient to fund its operating and capital expenditure requirements for a period greater than 12 months from the date of issuance of these condensed consolidated financial statements. The Company has taken a number of actions to support its operations and meet its liquidity needs. In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its drug candidates and ESKATA. As a result of this decision, the Company restructured its operations and terminated employees, which lowered operating costs. In October 2019, the Company sold the worldwide rights to RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to further its focus on its development programs and improve cash flow. In March 2020, the Company borrowed $11,000 under a term loan facility with Silicon Valley Bank. The Company’s plans to further alleviate the substantial doubt about its going concern, which are probable of effectively being implemented and mitigating these conditions, primarily include its ability to control the timing and spending on its research and development programs. The Company may also consider other plans to fund its operations including: (1) raising additional capital through debt or equity financings; (2) identification of third-party partners to further develop, obtain marketing approval for and/or commercialize its drug candidates and ESKATA, which may generate revenue and/or milestone payments; (3) reducing spending on one or more research and development programs by delaying or discontinuing development; and/or (4) further restructuring its operations to change its overhead structure. Finally, additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy.

Summary of Significant Accounting Policies	3 Months Ended
Summary of Significant Accounting Policies	Mar. 31, 2020
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All significant intercompany transactions have been eliminated. Based upon the revenue from contract research services, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations. Discontinued Operations In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 6). The accompanying condensed consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to the Company’s commercial products as discontinued operations (see Note 15). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown of economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2020 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2020, the results of its operations and comprehensive loss for the three months ended March 31, 2020 and 2019, its changes in stockholders’ equity for the three months ended March 31, 2020 and 2019 and its cash flows for the three months ended March 31, 2020 and 2019. The condensed consolidated balance sheet data as of December 31, 2019 was derived from audited financial statements but does not include all disclosures required by GAAP. The financial data and other information disclosed in these notes related to the three months ended March 31, 2020 and 2019 are unaudited. The results for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2020. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2020. Cash, Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which have consisted of money market accounts, commercial paper and corporate debt securities with original maturities of less than three months, are stated at fair value. Restricted cash as of March 31, 2020 consisted of $1,750 placed in escrow pursuant to the asset purchase agreement with EPI Health, LLC. Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company 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) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue. The Company recognizes contract research revenue in the amount to which it has the right to invoice. Other Revenue Licenses of Intellectual Property – The Company recognizes revenue received from non-refundable, upfront fees related to the licensing of intellectual property when the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the license has been transferred to the customer, and the customer is able to use and benefit from the license. Milestone Payments – At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached 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 amount allocated to the license of intellectual property. Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Definite-lived intangible assets consist of a research technology platform the Company acquired through the acquisition of Confluence. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D is either amortized over its estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its condensed consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s condensed consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s condensed consolidated balance sheet for both operating and finance leases. Contingent Consideration The Company initially recorded a contingent consideration liability related to future potential payments based upon the achievement of certain development, regulatory and commercial milestones, as well as future projected sales performance, resulting from the acquisition of Confluence, at its estimated fair value on the date of acquisition. The ultimate amount of future payments, if any, is based on criteria such as sales performance and the achievement of certain regulatory and sales milestones. The Company estimates the fair value of the contingent consideration liability related to the achievement of regulatory milestones by assigning an achievement probability to each potential milestone and discounting the associated cash payment to its present value using a risk-adjusted rate of return. The Company estimates the fair value of the contingent consideration liability associated with sales milestones and royalties by estimating future sales levels, assigning an achievement probability and discounting the associated cash payment amounts to their present values using a credit-risk-adjusted interest rate. Significant assumptions used in the Company’s estimates include the probability of success of achieving regulatory and sales milestones, which are based upon an asset’s current stage of development and ranged between 4% and 15%. The Company evaluates fair value estimates of contingent consideration liabilities on a periodic basis. Any change in fair value reflects new information about the likelihood of the payment of the contingent consideration and the passage of time. For example, if the timing of the development of an acquired drug candidate, or the size of potential commercial opportunities related to an acquired drug, differ from the Company’s assumptions, then the fair value of contingent consideration would be adjusted accordingly. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s condensed consolidated statement of operations. Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components. Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant.

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2020

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values:


	March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	27,210	$	—	$	—	$	27,210
Marketable securities		—		25,013		—		25,013
Total assets	$	27,210	$	25,013	$	—	$	52,223


Liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	3,435	$	3,435
Total liabilities	$	—	$	—	$	3,435	$	3,435


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	21,277	$	—	$	—	$	21,277
Marketable securities		—		39,078		—		39,078
Total assets	$	21,277	$	39,078	$	—	$	60,355


Liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	1,668	$	1,668
Total liabilities	$	—	$	—	$	1,668	$	1,668

As of March 31, 2020 and December 31, 2019, the Company’s cash equivalents consisted of investments with maturities of less than three months and included a money market fund, which was valued based upon Level 1 inputs, and the Company’s marketable securities consisted of investments with maturities of more than three months and included commercial paper, corporate debt, asset-backed securities and government obligations, which were valued based upon Level 2 inputs. In determining the fair value of its Level 2 investments, the Company relied on quoted prices for identical securities in markets that are not active. These quoted prices were obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities. Quarterly, the Company compares the quoted prices obtained from the third-party pricing service to other available independent pricing information to validate the reasonableness of the quoted prices provided. The Company evaluates whether adjustments to third-party pricing is necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service. During the three months ended March 31, 2020 and 2019, there were no transfers between Level 1, Level 2 and Level 3. The increase in contingent consideration of $1,767 during the three months ended March 31, 2020 was the result of updates to the Company’s assumptions as a result of the successful completion of a Phase 1 clinical trial for ATI-450.

As of March 31, 2020 and December 31, 2019, the fair value of the Company’s available for sale marketable securities by type of security was as follows:


	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	3,835	$	—	$	(3)	$	3,832
Commercial paper		9,061		—		—		9,061
Asset-backed securities		2,002		—		—		2,002
U.S. government agency debt securities		10,051		67		—		10,118
Total marketable securities	$	24,949	$	67	$	(3)	$	25,013


	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	7,815	$	2	$	—	$	7,817
Commercial paper		15,129		—		—		15,129
Asset-backed securities		8,004		4		—		8,008
U.S. government agency debt securities		8,126		1		(3)		8,124
Total marketable securities	$	39,074	$	7	$	(3)	$	39,078

- Definition

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.

+ References + Details

Property and Equipment, Net

3 Months Ended

Mar. 31, 2020

Property and Equipment, Net

Property and Equipment, Net

4. Property and Equipment, Net

Property and equipment, net consisted of the following:


		March 31,		December 31,
	2020		2019
Computer equipment	$	1,315	$	1,315
Finance lease right-of-use assets		435		435
Lab equipment		1,265		1,250
Furniture and fixtures		647		647
Leasehold improvements		889		889
Property and equipment, gross		4,551		4,536
Accumulated depreciation		(2,364)		(2,066)
Property and equipment, net	$	2,187	$	2,470

Depreciation expense was $298 and $402 for the three months ended March 31, 2020 and 2019, respectively.

Intangible Assets

3 Months Ended

Mar. 31, 2020

Intangible Assets

Intangible Assets

5. Intangible Assets

Intangible assets consisted of the following:


		Gross Cost				Accumulated Amortization
	Remaining		March 31,		December 31,		March 31,		December 31,
	Life (years)	2020		2019		2020		2019
Other intangible assets	7.3		751		751		200		181
Total definite-lived intangible assets			751		751		200		181
IPR&D	na		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	200	$	181

As of March 31, 2020, estimated future amortization expense is as follows:


Year Ending December 31,
2020	$	56
2021		75
2022		75
2023		75
2024		75
Thereafter		195
Total	$	551

Accrued Expenses

3 Months Ended

Mar. 31, 2020

Accrued Expenses

Accrued Expenses

6. Accrued Expenses

Accrued expenses consisted of the following:


		March 31,		December 31,
	2020		2019
Employee compensation expenses	$	1,419	$	3,321
Research and development expenses		2,322		2,857
Professional fees		166		168
Payable to EPI Health		5,241		—
Other		1,226		1,375
Total accrued expenses	$	10,374	$	7,721

Restructuring Charges

In September 2019, the Company announced the completion of a strategic review and its decision to refocus on its immuno-inflammatory development programs and to actively seek partners for its commercial products. As a result, the Company terminated 63 employees (“terminated employees”) and gave notice to an additional 23 employees (“noticed employees”) who were asked to provide transition services through termination dates ranging between 4 to 10 months from the date notice was given. The terminated employees were entitled to receive cash severance payments as well as cash payments in lieu of sixty days’ notice required by the Worker Adjustment and Retraining Notification Act (the “WARN Act”). The noticed employees were entitled to receive one-time cash severance payments which were not contingent upon providing additional services to the Company. In addition, certain noticed employees earned retention bonuses if they continued to be employed by the Company through certain termination dates. The Company recorded a restructuring charge for the one-time severance and WARN Act payments, which was triggered immediately upon either terminating or giving notice to the impacted employees. The Company expensed the cost of retention bonuses for noticed employees over their respective service terms. During the three months ended March 31, 2020, the Company recognized expense of $79 related to retention bonuses for noticed employees, and made cash payments of $343 related to severance and retention bonuses to noticed employees.

Payable to EPI Health

As of March 31, 2020, the Company had $5,241 payable to EPI Health, LLC (“EPI Health”) (see Note 15 for additional information).

Debt	3 Months Ended
Debt	Mar. 31, 2020
Debt
Debt	7. Debt Loan and Security Agreement – Silicon Valley Bank In March 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”). The Loan and Security Agreement provides for $11,000 in term loans, of which the Company borrowed the entire amount on March 30, 2020. The Loan and Security Agreement is secured by substantially all of the assets of the Company other than intellectual property. In connection with the Loan and Security Agreement, the Company issued to SVB a warrant to purchase up to 460,251 shares of common stock (the “Warrant”). The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach. The term loan repayment schedule provides for interest only payments beginning April 1, 2020 and continuing through March 1, 2022, followed by 24 consecutive equal monthly installments of principal, plus monthly payments of accrued interest, starting on April 1, 2022 and continuing through the maturity date of March 1, 2024. All outstanding principal and accrued and unpaid interest will be due and payable on the maturity date. The Loan and Security Agreement provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street Journal plus 2% and (ii) 6.75%. The Loan and Security Agreement includes a final payment fee equal to 5% of the original principal amount borrowed. The Company has the option to prepay the outstanding balance of the term loans in full, subject to a prepayment premium of (i) 3% of the original principal amount borrowed for any prepayment on or prior to the first anniversary of March 30, 2020, (ii) 2% of the original principal amount borrowed for any prepayment after the first anniversary and on or before the second anniversary of March 30, 2020 or (iii) 1% of the original principal amount borrowed for any prepayment after the second anniversary of March 30, 2020 but before March 1, 2024.

Stockholders' Equity	3 Months Ended
Stockholders' Equity	Mar. 31, 2020
Stockholders' Equity
Stockholders' Equity	8. Stockholders’ Equity Preferred Stock As of March 31, 2020 and December 31, 2019, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock. There were no shares of preferred stock outstanding as of March 31, 2020 or December 31, 2019. Common Stock As of March 31, 2020 and December 31, 2019, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $0.00001 par value common stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding. No dividends have been declared through March 31, 2020. Warrants In connection with the Loan and Security Agreement with SVB, the Company issued the Warrant to SVB. The Warrant has an initial exercise price of $0.956 per share, subject to adjustment as provided in the Warrant. The Warrant became immediately exercisable in full upon the funding of the term loan facility. The Warrant will terminate, if not earlier exercised, on the earlier of March 29, 2030 and the closing of certain merger or other transactions in which the consideration is cash, stock of a publicly-traded acquirer or a combination thereof. The Company assigned a fair value of $378 to the Warrant using a Black-Scholes valuation methodology, and also concluded that the Warrant was indexed to its own stock and therefore classified the Warrant as an equity instrument.

Stock-Based Awards

3 Months Ended

Mar. 31, 2020

Stock-Based Awards

Stock-Based Awards

9. Stock‑Based Awards

2015 Equity Incentive Plan

In September 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and the Company’s stockholders approved the 2015 Plan. The 2015 Plan became effective in connection with the Company’s initial public offering in October 2015. Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance stock awards, cash-based awards and other stock-based awards. The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock. The number of shares of common stock that may be issued under the 2015 Plan will automatically increase on January 1 of each year ending on January 1, 2025, in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31 of the preceding calendar year or (ii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that expire, are otherwise terminated, settled in cash or repurchased by the Company under the 2015 Plan and the 2012 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of January 1, 2020, the number of shares of common stock that may be issued under the 2015 Plan was increased by 1,451,997 shares. As of March 31, 2020, 1,299,002 shares remained available for grant under the 2015 Plan.

2017 Inducement Plan

In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”). The 2017 Inducement Plan is a non-shareholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Company had 451,850 stock options and 47,590 RSUs outstanding as of March 31, 2020 under the 2017 Inducement Plan. All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired.

2012 Equity Compensation Plan

Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 679,264 and 745,735 were outstanding as of March 31, 2020 and December 31, 2019, respectively. Stock options granted under the 2012 Plan vest over four years and expire after ten years.

Stock Option Valuation

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the three months ended March 31, 2020 and 2019 were as follows:


	Three Months Ended
	March 31,
	2020		2019
Risk-free interest rate	0.97	%	2.53	%
Expected term (in years)	6.2		6.3
Expected volatility	85.28	%	101.70	%
Expected dividend yield	0	%	0	%

The Company recognizes compensation expense for awards over their vesting period. Compensation expense for awards includes the impact of forfeitures in the period when they occur.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2020:


					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number		Exercise		Contractual	Intrinsic
	of Shares		Price		Term	Value
					(in years)
Outstanding as of December 31, 2019	3,102,221		$	20.33	6.55	$	148
Granted	602,800			1.28
Exercised	—			—
Forfeited and cancelled	(275,088)			21.36
Outstanding as of March 31, 2020	3,429,933		$	16.90	6.70	$	21
Options vested and expected to vest as of March 31, 2020	3,429,933		$	16.90	6.70	$	21
Options exercisable as of March 31, 2020	2,121,161	(1)	$	19.47	5.46	$	21

(1)

All options granted under the 2012 Plan are exercisable immediately, subject to a repurchase right in the Company’s favor that lapses as the option vests. This amount reflects the number of shares under options that were vested, as opposed to exercisable, as of March 31, 2020.

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2020 was $0.93 per share.

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2020:


		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share

Outstanding as of December 31, 2019	3,592,915	$	4.62
Granted	977,385		1.26
Vested	(430,896)		6.62
Forfeited and cancelled	(269,345)		4.96
Outstanding as of March 31, 2020	3,870,059	$	3.52

Stock‑Based Compensation

Stock‑based compensation expense included in total costs and expenses on the condensed consolidated statement of operations included the following:


	Three Months Ended
	March 31,
	2020		2019
Cost of revenue	$	260	$	206
Research and development		816		1,594
General and administrative		2,377		2,472
Total stock-based compensation expense	$	3,453	$	4,272

As of March 31, 2020, the Company had unrecognized stock‑based compensation expense for stock options and RSUs of $10,292 and $10,689, respectively, which is expected to be recognized over weighted average periods of 1.72 years and 2.27 years, respectively.

Net Loss per Share

3 Months Ended

Mar. 31, 2020

Net Loss per Share

Net Loss per Share

10. Net Loss per Share

Basic and diluted net loss per share is summarized in the following table:


	Three Months Ended
	March 31,
	2020		2019
Numerator:
Net loss	$	(15,586)	$	(37,565)
Denominator:
Weighted average shares of common stock outstanding		41,618,429		41,248,663
Net loss per share, basic and diluted	$	(0.37)	$	(0.91)

The Company’s potentially dilutive securities, which included stock options, RSUs and warrants, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share. Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share attributable to common stockholders for the three months ended March 31, 2020 and 2019. All share amounts presented in the table below represent the total number outstanding as of March 31, 2020 and 2019.



	March 31,
	2020	2019
Options to purchase common stock	3,429,933	4,182,584
Restricted stock unit awards	3,870,059	1,968,023
Warrants issued to SVB	460,251	—
Total potential shares of common stock	7,760,243	6,150,607

Leases

3 Months Ended

Mar. 31, 2020

Leases

Leases

11. Leases

Operating Leases

Agreements for Office Space

In November 2017, the Company entered into a sublease agreement with Auxilium Pharmaceuticals, LLC (the “Sublandlord”) pursuant to which it subleases 33,019 square feet of office space for its headquarters in Wayne, Pennsylvania. The sublease has a term that runs through October 2023. If for any reason the lease between Chesterbrook Partners, LP (“the Landlord”) and Sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate.

In February 2019, the Company entered into a sublease agreement with a third party for 21,056 square feet of office and laboratory space in St. Louis, Missouri. The lease commenced in June 2019 and has a term that runs through June 2029.

Supplemental balance sheet information related to operating leases is as follows:


		March 31,		December 31,
Operating Leases:	2020		2019
Gross cost	$	5,213	$	5,213
Accumulated amortization		(633)		(480)
Other Assets	$	4,580	$	4,733

Other current liabilities	$	547		526
Other liabilities		3,404		3,548
Total operating lease liabilities	$	3,951	$	4,074

Amortization expense related to operating lease right-of-use assets and liabilities was $257 and $143 for the three months ended March 31, 2020 and 2019, respectively.

Finance Leases

Laboratory Equipment

The Company leases laboratory equipment which is used in its laboratory space in St. Louis, Missouri under two finance lease financing arrangements which the Company entered into in August 2017 and October 2017. The leases have terms which end in October 2020 and December 2020, respectively.

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2020
Related Party Transactions
Related Party Transactions	12. Related Party Transactions Mallinckrodt plc In April 2018, Bryan Reasons was appointed to the Company’s board of directors. Subsequently, in March 2019, Mr. Reasons became the Chief Financial Officer of Mallinckrodt plc. Prior to Mr. Reasons joining Mallinckrodt plc, the Company entered into a master services agreement with a subsidiary (“Mallinckrodt”) of Mallinckrodt plc in November 2018, pursuant to which Confluence provides laboratory services to Mallinckrodt in the ordinary course of business. Mr. Reasons was not involved in the negotiation or execution of the agreement, but may be deemed to have an interest in the ongoing transactions based on his employment as an executive officer of Mallinckrodt plc. As of March 31, 2020 and December 31, 2019, the Company had invoiced Mallinckrodt for $228 and $57, respectively, under the master services agreement. Mr. Reasons had no financial interest in this transaction.

Agreements Related to Intellectual Property	3 Months Ended
Agreements Related to Intellectual Property	Mar. 31, 2020
Agreements Related to Intellectual Property
Agreements Related to Intellectual Property	13. Agreements Related to Intellectual Property Asset Purchase Agreement – EPI Health, LLC In October 2019, the Company sold RHOFADE to EPI Health pursuant to an asset purchase agreement. EPI Health agreed to pay the Company a high single-digit royalty calculated as a percentage of net sales on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, 10 years from the date of the first commercial sale of RHOFADE in such country. The Company recorded royalty income under the asset purchase agreement of $218 and $0 during the three months ended March 31, 2020 and 2019, respectively. EPI Health has also agreed to pay the Company potential sales milestone payments of up to $20,000 in the aggregate upon the achievement of specified levels of net sales of products covered by the asset purchase agreement, and 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions. Agreement and Plan of Merger - Confluence In August 2017, the Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”). In November 2018, the Company achieved a development milestone specified in the Confluence Agreement which was comprised of $2,500 in cash and 253,208 shares of its common stock with a fair value of $2,200. The Company also agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75,000, based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement. In addition, the Company agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. In addition, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any incremental consideration (in excess of the development and milestone payments described above) received from such sale, license or transfer in specified circumstances. License and Collaboration Agreement – Rigel Pharmaceuticals, Inc. In August 2015, the Company entered into an exclusive, worldwide license and collaboration agreement with Rigel Pharmaceuticals, Inc. (“Rigel”) for the development and commercialization of products containing two specified JAK inhibitors, which the Company refers to as ATI-501 and ATI-502. Under the agreement, the Company agreed to make aggregate payments of up to $80,000 upon the achievement of specified development milestones. During the three months ended September 30, 2019, the Company made a milestone payment of $4,000 to Rigel upon the achievement of a specified development milestone. With respect to any products the Company commercializes under the agreement, the Company will pay Rigel quarterly tiered royalties on its annual net sales of each product at a high single‑digit percentage of annual net sales, subject to specified reductions, until the date that all of the patent rights for that product have expired, as determined on a country‑by‑country and product‑by‑product basis or, in specified countries under specified circumstances, ten years from the first commercial sale of such product. In connection with an amendment of the agreement with Rigel in October 2019, the Company agreed to pay Rigel an amendment fee of $1,500 in three installments of $500 in January 2020, April 2020 and July 2020. In addition, the parties modified certain other development milestones, and the Company agreed to increase the potential payments payable upon the achievement of such milestones from $10,000 to $10,500 in the aggregate.

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2020
Income Taxes
Income Taxes	14. Income Taxes The Company did not record a federal or state income tax benefit for losses incurred during the three months ended March 31, 2020 and 2019 due to the Company’s conclusion that a valuation allowance was required for those periods.

Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations

Discontinued Operations

15. Discontinued Operations

The components of loss from discontinued operations as reported in the Company’s condensed consolidated statement of operations were as follows:


	Three Months Ended
	March 31,
	2020		2019
Revenues:
Product sales, net	$	—	$	3,778
Total revenue, net		—		3,778

Costs and expenses:
Cost of revenue		—		1,570
Research and development		—		276
Sales and marketing		257		9,688
General and administrative		1		869
Amortization of definite-lived intangible		—		1,659
Total costs and expenses		258		14,062
Loss from discontinued operations	$	(258)	$	(10,284)

Net loss from discontinued operations per share, basic and diluted	$	(0.01)	$	(0.25)
Weighted average common shares outstanding, basic and diluted		41,618,429		41,248,663

The following table presents the details of product sales, net included in discontinued operations:


	Three Months Ended
	March 31,
	2020		2019
ESKATA	$	—	$	72
RHOFADE		—		3,706
Total product sales, net	$	—	$	3,778

The following table presents information related to assets and liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet:


	March 31,		December 31,
	2020		2019
Accounts receivable, net	$	—	$	4,966
Discontinued operations - current assets	$	—	$	4,966


Accounts payable	$	306	$	1,705
Accrued expenses		2,353		2,452
Discontinued operations - current liabilities	$	2,659	$	4,157

The following table presents certain non-cash items related to discontinued operations, which are included in the Company’s condensed consolidated statement of cash flows:


	Three Months Ended
	March 31,
	2020		2019
Depreciation and amortization	$	—	$	125
Stock-based compensation expense		—		590
Total non-cash items	$	—	$	715

The Company relied on Allergan Sales, LLC (“Allergan”) to distribute RHOFADE on its behalf pursuant to the terms of a transition services agreement. Accounts receivable, net as of March 31, 2020 and December 31, 2019 included $0 and $4,966, respectively, related to amounts invoiced by Allergan for sales of RHOFADE. In addition, during the three months ended March 31, 2020, in accordance with the asset purchase agreement with EPI Health, the Company received $5,241 from Allergan related to sales of RHOFADE that occurred after the date the Company sold RHOFADE to EPI Health. Accordingly, the $5,241 is payable to EPI Health and is included in accrued expenses on the Company’s condensed consolidated balance sheet as of March 31, 2020.

Segment Information

3 Months Ended

Mar. 31, 2020

Segment Information

Segment Information

16. Segment Information

The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services to clients through Confluence, the Company’s wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. Corporate and other includes general and administrative expenses as well as eliminations of intercompany transactions. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States.

The Company’s results of operations by segment for the three months ended March 31, 2020 and 2019 are summarized in the tables below:


			Contract		Corporate		Total
Three Months Ended March 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	218	$	3,407	$	(2,218)	$	1,407
Cost of revenue		—		3,386		(2,117)		1,269
Research and development		9,545		—		(101)		9,444
General and administrative		—		753		5,447		6,200
Loss from operations	$	(9,327)	$	(732)	$	(5,447)	$	(15,506)
Loss from discontinued operations	$	(257)	$	—	$	(1)	$	(258)


			Contract		Corporate		Total
Three Months Ended March 31, 2019	Therapeutics		Research		and Other		Company
Total revenue	$	—	$	5,190	$	(3,927)	$	1,263
Cost of revenue		—		5,037		(3,830)		1,207
Research and development		19,740		—		(97)		19,643
General and administrative		—		531		6,933		7,464
Loss from operations	$	(19,740)	$	(378)	$	(6,933)	$	(27,051)
Loss from discontinued operations	$	(9,415)	$	—	$	(869)	$	(10,284)

Intersegment Revenue

Revenue for the contract research segment included $2,218 and $3,927 for services performed on behalf of the therapeutics segment for the three months ended March 31, 2020 and 2019, respectively. All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations.

Legal Proceedings	3 Months Ended
Legal Proceedings	Mar. 31, 2020
Legal Proceedings
Legal Proceedings	17. Legal Proceedings Securities Class Action On July 30, 2019, plaintiff Linda Rosi (“Rosi”) filed a putative class action complaint captioned Rosi v. Aclaris Therapeutics, Inc., et al. in the U.S. District Court for the Southern District of New York against the Company and certain of its executive officers. The complaint alleges that the defendants violated federal securities laws by, among other things, failing to disclose an alleged likelihood that regulators would scrutinize advertising materials related to ESKATA and find that the materials minimized the risks or overstated the efficacy of the product. The complaint seeks unspecified compensatory damages on behalf of Rosi and all other persons and entities that purchased or otherwise acquired the Company’s securities between May 8, 2018 and June 20, 2019. On September 5, 2019, an additional plaintiff, Robert Fulcher (“Fulcher”), filed a substantially identical putative class action complaint captioned Fulcher v. Aclaris Therapeutics, Inc., et al. in the same court against the same defendants. On November 6, 2019, the court consolidated the Rosi and Fulcher actions (together, the “Consolidated Securities Action”) and appointed Fulcher “lead plaintiff” for the putative class. On January 24, 2020, Fulcher filed a consolidated amended complaint in the Consolidated Securities Action, naming two additional executive officers as defendants, extending the putative class period to August 12, 2019, and adding allegations concerning, among other things, alleged statements and omissions throughout the putative class period concerning ESKATA’s risks, tolerability and effectiveness. The defendants’ deadline to answer, move against or otherwise respond to the consolidated amended complaint was originally scheduled for March 27, 2020, but was extended until April 17, 2020. The defendants filed a motion to dismiss the consolidated amended complaint on April 17, 2020. The Company and the other defendants dispute plaintiffs’ claims in the Consolidated Securities Action and intend to defend the matter vigorously. Stockholder Derivative Action On November 15, 2019, plaintiff Keith Allred (“Allred”) filed a derivative stockholder complaint captioned Allred v. Walker et al. in the U.S. District Court for the Southern District of New York against certain of the Company’s directors and executive officers. The complaint alleges that the defendants, among other things, breached their fiduciary duties as directors and/or officers in connection with the claims alleged in the Consolidated Securities Action. The complaint seeks, among other things, unspecified compensatory damages on behalf of the Company. On November 25, 2019, an additional plaintiff, Bruce Brown (“Brown”), filed a substantially identical complaint captioned Brown v. Walker et al. in the same court against the same defendants. On December 12, 2019, the court consolidated the Allred and Brown actions under the caption In re Aclaris Therapeutics, Inc. Derivative Litigation (the “Consolidated Derivative Action”) and directed that future derivative cases filed in or transferred to the court arising out of substantially the same transactions or events be similarly consolidated. Thereafter, on January 11, 2020, the court stayed – subject to certain conditions – all deadlines in the Consolidated Derivative Action pending resolution of the defendants’ anticipated motion to dismiss the Consolidated Securities Action. The defendants dispute plaintiffs’ claims in the Consolidated Derivative Action and intend to defend the matter vigorously.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2020
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All significant intercompany transactions have been eliminated. Based upon the revenue from contract research services, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations.
Discontinued Operations	Discontinued Operations In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 6). The accompanying condensed consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to the Company’s commercial products as discontinued operations (see Note 15).
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown of economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates.
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2020 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2020, the results of its operations and comprehensive loss for the three months ended March 31, 2020 and 2019, its changes in stockholders’ equity for the three months ended March 31, 2020 and 2019 and its cash flows for the three months ended March 31, 2020 and 2019. The condensed consolidated balance sheet data as of December 31, 2019 was derived from audited financial statements but does not include all disclosures required by GAAP. The financial data and other information disclosed in these notes related to the three months ended March 31, 2020 and 2019 are unaudited. The results for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2020.
Significant Accounting Policies	Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2020.
Revenue Recognition	Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company 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) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue. The Company recognizes contract research revenue in the amount to which it has the right to invoice. Other Revenue Licenses of Intellectual Property – The Company recognizes revenue received from non-refundable, upfront fees related to the licensing of intellectual property when the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the license has been transferred to the customer, and the customer is able to use and benefit from the license. Milestone Payments – At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached 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 amount allocated to the license of intellectual property. Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which have consisted of money market accounts, commercial paper and corporate debt securities with original maturities of less than three months, are stated at fair value. Restricted cash as of March 31, 2020 consisted of $1,750 placed in escrow pursuant to the asset purchase agreement with EPI Health, LLC.
Intangible Assets	Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Definite-lived intangible assets consist of a research technology platform the Company acquired through the acquisition of Confluence. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D is either amortized over its estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value.
Leases	Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its condensed consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s condensed consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s condensed consolidated balance sheet for both operating and finance leases.
Contingent Consideration	Contingent Consideration The Company initially recorded a contingent consideration liability related to future potential payments based upon the achievement of certain development, regulatory and commercial milestones, as well as future projected sales performance, resulting from the acquisition of Confluence, at its estimated fair value on the date of acquisition. The ultimate amount of future payments, if any, is based on criteria such as sales performance and the achievement of certain regulatory and sales milestones. The Company estimates the fair value of the contingent consideration liability related to the achievement of regulatory milestones by assigning an achievement probability to each potential milestone and discounting the associated cash payment to its present value using a risk-adjusted rate of return. The Company estimates the fair value of the contingent consideration liability associated with sales milestones and royalties by estimating future sales levels, assigning an achievement probability and discounting the associated cash payment amounts to their present values using a credit-risk-adjusted interest rate. Significant assumptions used in the Company’s estimates include the probability of success of achieving regulatory and sales milestones, which are based upon an asset’s current stage of development and ranged between 4% and 15%. The Company evaluates fair value estimates of contingent consideration liabilities on a periodic basis. Any change in fair value reflects new information about the likelihood of the payment of the contingent consideration and the passage of time. For example, if the timing of the development of an acquired drug candidate, or the size of potential commercial opportunities related to an acquired drug, differ from the Company’s assumptions, then the fair value of contingent consideration would be adjusted accordingly. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s condensed consolidated statement of operations.
Concentration of Credit Risk and of Significant Suppliers	Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant.

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value of Financial Assets and Liabilities

Schedule of assets and liabilities measured at fair value on a recurring basis


	March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	27,210	$	—	$	—	$	27,210
Marketable securities		—		25,013		—		25,013
Total assets	$	27,210	$	25,013	$	—	$	52,223


Liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	3,435	$	3,435
Total liabilities	$	—	$	—	$	3,435	$	3,435


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	21,277	$	—	$	—	$	21,277
Marketable securities		—		39,078		—		39,078
Total assets	$	21,277	$	39,078	$	—	$	60,355


Liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	1,668	$	1,668
Total liabilities	$	—	$	—	$	1,668	$	1,668

Schedule of the fair value of available for sale marketable securities


	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	3,835	$	—	$	(3)	$	3,832
Commercial paper		9,061		—		—		9,061
Asset-backed securities		2,002		—		—		2,002
U.S. government agency debt securities		10,051		67		—		10,118
Total marketable securities	$	24,949	$	67	$	(3)	$	25,013


	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	7,815	$	2	$	—	$	7,817
Commercial paper		15,129		—		—		15,129
Asset-backed securities		8,004		4		—		8,008
U.S. government agency debt securities		8,126		1		(3)		8,124
Total marketable securities	$	39,074	$	7	$	(3)	$	39,078

Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2020

Property and Equipment, Net

Schedule of property and equipment, net


		March 31,		December 31,
	2020		2019
Computer equipment	$	1,315	$	1,315
Finance lease right-of-use assets		435		435
Lab equipment		1,265		1,250
Furniture and fixtures		647		647
Leasehold improvements		889		889
Property and equipment, gross		4,551		4,536
Accumulated depreciation		(2,364)		(2,066)
Property and equipment, net	$	2,187	$	2,470

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Intangible Assets

Schedule of intangible assets


		Gross Cost				Accumulated Amortization
	Remaining		March 31,		December 31,		March 31,		December 31,
	Life (years)	2020		2019		2020		2019
Other intangible assets	7.3		751		751		200		181
Total definite-lived intangible assets			751		751		200		181
IPR&D	na		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	200	$	181

Schedule of estimated future amortization expenses


Year Ending December 31,
2020	$	56
2021		75
2022		75
2023		75
2024		75
Thereafter		195
Total	$	551

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Accrued Expenses

Schedule of accrued expenses


		March 31,		December 31,
	2020		2019
Employee compensation expenses	$	1,419	$	3,321
Research and development expenses		2,322		2,857
Professional fees		166		168
Payable to EPI Health		5,241		—
Other		1,226		1,375
Total accrued expenses	$	10,374	$	7,721

Stock-Based Awards (Tables)

3 Months Ended

Mar. 31, 2020

Stock-Based Awards

Assumptions used to determine fair value of stock options granted


	Three Months Ended
	March 31,
	2020		2019
Risk-free interest rate	0.97	%	2.53	%
Expected term (in years)	6.2		6.3
Expected volatility	85.28	%	101.70	%
Expected dividend yield	0	%	0	%

Summary of stock option activity


					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number		Exercise		Contractual	Intrinsic
	of Shares		Price		Term	Value
					(in years)
Outstanding as of December 31, 2019	3,102,221		$	20.33	6.55	$	148
Granted	602,800			1.28
Exercised	—			—
Forfeited and cancelled	(275,088)			21.36
Outstanding as of March 31, 2020	3,429,933		$	16.90	6.70	$	21
Options vested and expected to vest as of March 31, 2020	3,429,933		$	16.90	6.70	$	21
Options exercisable as of March 31, 2020	2,121,161	(1)	$	19.47	5.46	$	21

(1)

Summary of restricted stock units activity


		Weighted
		Average
		Grant Date
	Number	Fair Value
	of Shares	Per Share

Outstanding as of December 31, 2019	3,592,915	$	4.62
Granted	977,385		1.26
Vested	(430,896)		6.62
Forfeited and cancelled	(269,345)		4.96
Outstanding as of March 31, 2020	3,870,059	$	3.52

Stock-based compensation expense


	Three Months Ended
	March 31,
	2020		2019
Cost of revenue	$	260	$	206
Research and development		816		1,594
General and administrative		2,377		2,472
Total stock-based compensation expense	$	3,453	$	4,272

Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2020

Net Loss per Share

Basic and diluted net loss per share


	Three Months Ended
	March 31,
	2020		2019
Numerator:
Net loss	$	(15,586)	$	(37,565)
Denominator:
Weighted average shares of common stock outstanding		41,618,429		41,248,663
Net loss per share, basic and diluted	$	(0.37)	$	(0.91)

Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders



	March 31,
	2020	2019
Options to purchase common stock	3,429,933	4,182,584
Restricted stock unit awards	3,870,059	1,968,023
Warrants issued to SVB	460,251	—
Total potential shares of common stock	7,760,243	6,150,607

Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases

Schedule of supplemental balance sheet information related to operating leases


		March 31,		December 31,
Operating Leases:	2020		2019
Gross cost	$	5,213	$	5,213
Accumulated amortization		(633)		(480)
Other Assets	$	4,580	$	4,733

Other current liabilities	$	547		526
Other liabilities		3,404		3,548
Total operating lease liabilities	$	3,951	$	4,074

Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2020

Discontinued Operations

Schedule of discontinued operations

The components of loss from discontinued operations as reported in the Company’s condensed consolidated statement of operations were as follows:


	Three Months Ended
	March 31,
	2020		2019
Revenues:
Product sales, net	$	—	$	3,778
Total revenue, net		—		3,778

Costs and expenses:
Cost of revenue		—		1,570
Research and development		—		276
Sales and marketing		257		9,688
General and administrative		1		869
Amortization of definite-lived intangible		—		1,659
Total costs and expenses		258		14,062
Loss from discontinued operations	$	(258)	$	(10,284)

Net loss from discontinued operations per share, basic and diluted	$	(0.01)	$	(0.25)
Weighted average common shares outstanding, basic and diluted		41,618,429		41,248,663

The following table presents the details of product sales, net included in discontinued operations:


	Three Months Ended
	March 31,
	2020		2019
ESKATA	$	—	$	72
RHOFADE		—		3,706
Total product sales, net	$	—	$	3,778

The following table presents information related to assets and liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet:


	March 31,		December 31,
	2020		2019
Accounts receivable, net	$	—	$	4,966
Discontinued operations - current assets	$	—	$	4,966


Accounts payable	$	306	$	1,705
Accrued expenses		2,353		2,452
Discontinued operations - current liabilities	$	2,659	$	4,157

The following table presents certain non-cash items related to discontinued operations, which are included in the Company’s condensed consolidated statement of cash flows:


	Three Months Ended
	March 31,
	2020		2019
Depreciation and amortization	$	—	$	125
Stock-based compensation expense		—		590
Total non-cash items	$	—	$	715

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

Segment Information (Tables)

3 Months Ended

Mar. 31, 2020

Segment Information

Summary of results of operations by segment


			Contract		Corporate		Total
Three Months Ended March 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	218	$	3,407	$	(2,218)	$	1,407
Cost of revenue		—		3,386		(2,117)		1,269
Research and development		9,545		—		(101)		9,444
General and administrative		—		753		5,447		6,200
Loss from operations	$	(9,327)	$	(732)	$	(5,447)	$	(15,506)
Loss from discontinued operations	$	(257)	$	—	$	(1)	$	(258)


			Contract		Corporate		Total
Three Months Ended March 31, 2019	Therapeutics		Research		and Other		Company
Total revenue	$	—	$	5,190	$	(3,927)	$	1,263
Cost of revenue		—		5,037		(3,830)		1,207
Research and development		19,740		—		(97)		19,643
General and administrative		—		531		6,933		7,464
Loss from operations	$	(19,740)	$	(378)	$	(6,933)	$	(27,051)
Loss from discontinued operations	$	(9,415)	$	—	$	(869)	$	(10,284)

Organization and Nature of Business (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Production information
Cash, cash equivalents and marketable securities	$ 79,005
Accumulated deficit	469,113	$ 453,527
Term Loan Facility
Production information
Loan borrowed	$ 11,000

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Summary of Significant Accounting Policies (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Sep. 30, 2019 employee	Mar. 31, 2020 USD ($)
Summary Of Accounting Policies [Line Items]
Number of employees to be terminated \| employee	86
Maximum
Cash, Cash Equivalents and Restricted Cash
Probability of success of achieving regulatory and sales milestones		15.00%
Minimum
Cash, Cash Equivalents and Restricted Cash
Probability of success of achieving regulatory and sales milestones		4.00%
EPI Health, LLC
Cash, Cash Equivalents and Restricted Cash
Cash deposited in escrow \| $		$ 1,750

Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - item	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Summary of Significant Accounting Policies
Expected dividend yield (as a percent)	0.00%	0.00%
Number of financial institutions holding entity funds	1

Summary of Significant Accounting Policies - Recent Pronouncements (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Summary of Significant Accounting Policies
Lease liability	$ 3,951	$ 4,074

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Assets:
Marketable securities	$ 25,013		$ 39,078
Liabilities:
Transfers from Level 1 to Level 2	0	$ 0
Transfers from Level 2 to Level 1	0	0
Transfers into or out of Level 3	0	$ 0
Change in fair value of contingent consideration	1,767
Confluence
Liabilities:
Change in fair value of contingent consideration	1,767
Recurring
Assets:
Cash equivalents	27,210		21,277
Marketable securities	25,013		39,078
Total assets measured at fair value	52,223		60,355
Liabilities:
Acquisition-related contingent consideration	3,435		1,668
Total liabilities measured at fair value	3,435		1,668
Recurring \| Level 1
Assets:
Cash equivalents	27,210		21,277
Total assets measured at fair value	27,210		21,277
Recurring \| Level 2
Assets:
Marketable securities	25,013		39,078
Total assets measured at fair value	25,013		39,078
Recurring \| Level 3
Liabilities:
Acquisition-related contingent consideration	3,435		1,668
Total liabilities measured at fair value	$ 3,435		$ 1,668

Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Marketable securities:
Amortized Cost	$ 24,949	$ 39,074
Gross Unrealized Gain	67	7
Gross Unrealized Loss	(3)	(3)
Fair Value	25,013	39,078
Corporate debt securities
Marketable securities:
Amortized Cost	3,835	7,815
Gross Unrealized Gain		2
Gross Unrealized Loss	(3)
Fair Value	3,832	7,817
Commercial paper
Marketable securities:
Amortized Cost	9,061	15,129
Fair Value	9,061	15,129
Asset-backed securities
Marketable securities:
Amortized Cost	2,002	8,004
Gross Unrealized Gain		4
Fair Value	2,002	8,008
U.S. government agency debt securities
Marketable securities:
Amortized Cost	10,051	8,126
Gross Unrealized Gain	67	1
Gross Unrealized Loss		(3)
Fair Value	$ 10,118	$ 8,124

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property and Equipment, Net
Finance lease right-of-use assets	$ 435		$ 435
Property and equipment, gross	4,551		4,536
Accumulated depreciation	(2,364)		(2,066)
Property and equipment, net	2,187		2,470
Depreciation	298	$ 402
Computer equipment
Property and Equipment, Net
Property and equipment, gross	1,315		1,315
Lab equipment
Property and Equipment, Net
Property and equipment, gross	1,265		1,250
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	647		647
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	$ 889		$ 889

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Definite-lived intangible assets
Gross Cost	$ 751	$ 751
Accumulated Amortization	200	181
Intangible assets, net
Gross cost	7,380	7,380
IPR&D
Definite-lived intangible assets
Gross Cost	$ 6,629	6,629
Other intangible assets
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items]
Remaining life	7 years 3 months 18 days
Definite-lived intangible assets
Gross Cost	$ 751	751
Accumulated Amortization	$ 200	$ 181

Intangible Assets - Future Amortization Expenses (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Future amortization expenses
2020	$ 56
2021	75
2022	75
2023	75
2024	75
Thereafter	195
Total	$ 551

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued Expenses
Employee compensation expenses	$ 1,419	$ 3,321
Research and development expenses	2,322	2,857
Professional fees	166	168
Payable to EPI Health	5,241
Other	1,226	1,375
Total accrued expenses	$ 10,374	$ 7,721

Accrued Expenses - Restructuring Charges (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Sep. 30, 2019 employee	Mar. 31, 2020 USD ($)
Accrued Expenses
Number of employees	86
Minimum
Accrued Expenses
Period for which transition services is provided by noticed employees	4 months
Maximum
Accrued Expenses
Period for which transition services is provided by noticed employees	10 months
Terminated employees
Accrued Expenses
Number of employees	63
Expenses recognized \| $		$ 79
Noticed employees
Accrued Expenses
Number of employees	23
Expenses recognized \| $		$ 343

Debt (Details) $ in Thousands		1 Months Ended
Debt (Details) $ in Thousands	Mar. 30, 2020	Mar. 31, 2020 USD ($) installment shares
SVB
Debt Instrument [Line Items]
Common stock warrants \| shares		460,251
Term Loan Facility
Debt Instrument [Line Items]
Loan borrowed \| $		$ 11,000
Number of consecutive monthly installments \| installment		24
Annual interest rate		6.75%
Final payment fee percentage		5.00%
Term Loan Facility \| Prepayment prior to the first anniversary of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage	3.00%
Term Loan Facility \| Prepayment between the first and second anniversaries of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage	2.00%
Term Loan Facility \| Prepayment after the second anniversary of the Funding Date but before October 1, 2023
Debt Instrument [Line Items]
Prepayment fee percentage	1.00%
Term Loan Facility \| Prime Rate
Debt Instrument [Line Items]
Basis spread over LIBOR		2.00%

Stockholders' Equity (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) Vote $ / shares shares	Dec. 31, 2019 $ / shares shares
Stockholders' Equity
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.00001	$ 0.00001
Dividend declared \| $	$ 0
Initial exercise price \| $ / shares	$ 0.956
Number of votes per share \| Vote	1
Fair value of warrants \| $	$ 378

Stock-Based Awards (Details) - shares		3 Months Ended		44 Months Ended
Stock-Based Awards (Details) - shares	Jan. 01, 2020	Mar. 31, 2020	Mar. 31, 2019	Sep. 14, 2015	Dec. 31, 2019	Sep. 30, 2015
Stock-based awards
Options granted (in shares)		602,800
Options outstanding		3,429,933			3,102,221
Stock Option Valuation
Risk-free interest rate (as a percent)		0.97%	2.53%
Expected term (in years)		6 years 2 months 12 days	6 years 3 months 18 days
Expected volatility (as a percent)		85.28%	101.70%
Expected dividend yield (as a percent)		0.00%	0.00%
2017 Inducement Plan
Stock-based awards
Options outstanding		451,850
2017 Inducement Plan \| Restricted stock unit awards
Stock-based awards
Number of shares outstanding		47,590
2015 Equity Incentive Plan
Stock-based awards
Number of shares authorized						1,643,872
Number of shares available for grant		1,299,002
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent)		4.00%
Additional shares available	1,451,997
2012 Equity Compensation Plan
Stock-based awards
Number of shares available for grant		0
Options granted (in shares)				1,140,524
Options outstanding		679,264			745,735
Vesting period (in years)		4 years
Term of award (in years)		10 years

Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Options, Number of Shares
Number of Shares, beginning balance	3,102,221
Number of Shares, Granted	602,800
Number of Shares, Forfeited and cancelled	(275,088)
Number of Shares, ending balance	3,429,933	3,102,221
Number of Shares, Options vested and expected to vest	3,429,933
Number of Shares, Options exercisable	2,121,161
Options, Weighted Average Exercise Price
Weighted Average Exercise Price, beginning balance (in dollars per share)	$ 20.33
Weighted Average Exercise Price, Granted (in dollars per share)	1.28
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share)	21.36
Weighted Average Exercise Price, ending balance (in dollars per share)	16.90	$ 20.33
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share)	16.90
Weighted Average Exercise Price, Options exercisable (in dollars per share)	$ 19.47
Options, Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (in years)	6 years 8 months 12 days	6 years 6 months 18 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years)	6 years 8 months 12 days
Weighted Average Remaining Contractual Term, Options exercisable (in years)	5 years 5 months 16 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 21	$ 148
Aggregate Intrinsic Value, Options vested and expected to vest	21
Aggregate Intrinsic Value, Options exercisable	$ 21
Weighted average grant-date fair value of stock options granted (in dollars per share)	$ 0.93

Stock-Based Awards - RSUs (Details) - Restricted stock unit awards	3 Months Ended
	Mar. 31, 2020 $ / shares shares
RSU, Number of Units
Units outstanding, beginning of period \| shares	3,592,915
Granted \| shares	977,385
Vested \| shares	(430,896)
Forfeited and cancelled \| shares	(269,345)
Units outstanding, end of period \| shares	3,870,059
RSU, Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value, beginning balance (in dollars per share) \| $ / shares	$ 4.62
Granted, estimated grant-date fair value (in dollars per share) \| $ / shares	1.26
Weighted average grant date fair value, vested (in dollars per share) \| $ / shares	6.62
Forfeited and cancelled, estimated grant date fair value (in dollars per share) \| $ / shares	4.96
Weighted average grant date fair value, ending balance (in dollars per share) \| $ / shares	$ 3.52

Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock-based compensation expense
Stock-based compensation expense	$ 3,453	$ 4,272
Unrecognized stock-based compensation cost, options	10,292
Unrecognized compensation, RSUs	10,689
Cost of revenue.
Stock-based compensation expense
Stock-based compensation expense	260	206
Research and development
Stock-based compensation expense
Stock-based compensation expense	816	1,594
General and administrative
Stock-based compensation expense
Stock-based compensation expense	$ 2,377	$ 2,472
Options to purchase common stock
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)	1 year 8 months 19 days
Restricted stock unit awards
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)	2 years 3 months 7 days

Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net loss	$ (15,586)	$ (37,565)
Denominator:
Weighted average shares of common stock outstanding (in shares)	41,618,429	41,248,663
Net loss per share, basic and diluted	$ (0.37)	$ (0.91)

- Definition

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

+ References + Details

Net Loss per Share - Anti-dilution (Details) - shares	3 Months Ended
Net Loss per Share - Anti-dilution (Details) - shares	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	7,760,243	6,150,607
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	3,429,933	4,182,584
Restricted stock unit awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	3,870,059	1,968,023
Warrants issued to SVB
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	460,251

Leases (Details) $ in Thousands	3 Months Ended
Leases (Details) $ in Thousands	Mar. 31, 2020 USD ($) item	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Feb. 28, 2019 ft²	Nov. 30, 2017 ft²
Lessee, Lease, Description [Line Items]
Area leased, sublease agreement \| ft²				21,056	33,019
Number of lease financing arrangements \| item	2
Amortization expense	$ 257	$ 143
Operating Leases:
Gross cost	4,551		$ 4,536
Accumulated amortization	(2,364)		(2,066)
Property and equipment, net	2,187		2,470
Other current liabilities	547		526
Other liabilities	3,404		3,548
Total operating lease liabilities	3,951		4,074
Operating Leases
Operating Leases:
Gross cost	5,213		5,213
Accumulated amortization	(633)		(480)
Property and equipment, net	$ 4,580		$ 4,733
Financial position	us-gaap:OtherLiabilitiesCurrent
Financial position	us-gaap:OtherLiabilitiesNoncurrent

Related Party Transactions (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Mallinckrodt plc.
Related Party Transactions
Invoice amount	$ 228	$ 57

Agreements Related to Intellectual Property (Details)	1 Months Ended				3 Months Ended
Agreements Related to Intellectual Property (Details)	Oct. 31, 2019 USD ($) installment	Nov. 30, 2018 USD ($) shares	Aug. 31, 2017 USD ($)	Aug. 31, 2015	Mar. 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)
Agreements Related to Intellectual Property
Revenue, Net					$ 1,407,000		$ 1,263,000
EPI Health LLC
Agreements Related to Intellectual Property
Potential milestone payments					20,000
Percentage of Upfront and License Fees	25.00%
Term of agreement	10 years
EPI Health LLC \| Royalty
Agreements Related to Intellectual Property
Revenue, Net					218,000		$ 0
Rigel
Agreements Related to Intellectual Property
Potential milestones payable	$ 10,500,000					$ 10,000,000
Milestone payment						$ 4,000,000
Aggregate milestone payments					$ 80,000,000
Amendment fees payable	$ 1,500,000
Number of installments \| installment	3
Amendment fees payable, per installment	$ 500,000
License and Collaboration Agreement
Agreements Related to Intellectual Property
Term of agreement				10 years
Agreement and Plan of Merger \| Confluence
Agreements Related to Intellectual Property
Payment in cash		$ 2,500,000
Number of shares \| shares		253,208
Fair value of common stock		$ 2,200,000
Additional contingent consideration based on milestones, maximum, per Agreement			$ 75,000,000
Royalty term			10 years

Income Taxes - Rate Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Taxes
Federal income tax benefit	$ 0	$ 0
State income tax benefit	$ 0	$ 0

Discontinued Operations - Loss (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 3,778
Cost of revenue (excludes amortization)		1,570
Research and development		276
Sales and marketing	$ 257	9,688
General and administrative	1	869
Amortization of definite-lived intangible		1,659
Total costs and expenses	258	14,062
Loss from discontinued operations	(258)	(10,284)
Net loss from discontinued operations	$ (258)	$ (10,284)
Net loss from discontinued operations per share, basic and diluted	$ (0.01)	$ (0.25)
Weighted average common shares outstanding, basic and diluted (in shares)	41,618,429	41,248,663
Product sales
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 3,778
ESKATA
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		72
RHOFADE
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 3,706

Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
Accounts receivable, net		$ 4,966
Discontinued operations - current assets		4,966
Accounts payable	$ 306	1,705
Accrued expenses	2,353	2,452
Discontinued operations - current liabilities	$ 2,659	$ 4,157

Discontinued Operations - Cash Flow (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Net Cash Provided by (Used in) Discontinued Operations [Abstract]
Depreciation and amortization	$ 125
Stock-based compensation expense	590
Cash flows from operating activities	$ 715

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
Discontinued Operations (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net		$ 4,966
Payable to EPI Health	$ 5,241
RHOFADE
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net	0	$ 4,966
Milestone payment revenue	5,241
Payable to EPI Health	$ 5,241

Segment Information (Details) $ in Thousands	3 Months Ended
Segment Information (Details) $ in Thousands	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments \| segment	2
Revenue, net	$ 1,407	$ 1,263
Cost of revenue		1,207
Cost of revenue	1,269
Research and development	9,444	19,643
General and administrative	6,200	7,464
Loss from operations	(15,506)	(27,051)
Loss from discontinued operations	(258)	(10,284)
Dermatology Therapeutics Segment
Segment Reporting Information [Line Items]
Revenue, net	218
Research and development	9,545	19,740
Loss from operations	(9,327)	(19,740)
Loss from discontinued operations	(257)	(9,415)
Contract Research Segment
Segment Reporting Information [Line Items]
Revenue, net	3,407	5,190
Cost of revenue		5,037
Cost of revenue	3,386
General and administrative	753	531
Loss from operations	(732)	(378)
Corporate and Other
Segment Reporting Information [Line Items]
Revenue, net	(2,218)	(3,927)
Cost of revenue		(3,830)
Cost of revenue	(2,117)
Research and development	(101)	(97)
General and administrative	5,447	6,933
Loss from operations	(5,447)	(6,933)
Loss from discontinued operations	(1)	(869)
Intersegment Eliminations \| Contract Research Segment
Segment Reporting Information [Line Items]
Revenue, net	$ (2,218)	$ (3,927)

Legal Proceedings (Details)	Jan. 24, 2020 item
Executive officer
Other Commitments [Line Items]
Number Of Defendants	2