0001558370-22-001838 | 10-K | XBRL Viewer

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 27,349	$ 22,063
Short-term marketable securities	164,065	32,068
Accounts receivable, net	623	772
Prepaid expenses and other current assets	12,995	2,590
Total current assets	205,032	57,493
Marketable securities	34,242
Property and equipment, net	1,335	1,654
Intangible assets	7,048	7,123
Other assets	3,554	4,514
Total assets	251,211	70,784
Current liabilities:
Accounts payable	9,985	5,254
Accrued expenses	10,051	5,906
Current portion of lease liabilities	693	603
Discontinued operations - current liabilities	2,202	3,111
Total current liabilities	22,931	14,874
Other liabilities	2,172	3,179
Long-term debt, net		10,653
Contingent consideration	28,400	4,061
Deferred tax liability	367	367
Total liabilities	53,870	33,134
Commitments and contingencies (Note 20)
Stockholders' Equity:
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at December 31, 2021 and December 31, 2020
Common stock, $0.00001 par value; 100,000,000 shares authorized at December 31, 2021 and December 31, 2020; 61,228,446 and 45,109,314 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	1
Additional paid-in capital	792,971	542,286
Accumulated other comprehensive loss	(224)	(94)
Accumulated deficit	(595,407)	(504,542)
Total stockholders' equity	197,341	37,650
Total liabilities and stockholders' equity	$ 251,211	$ 70,784

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
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	61,228,446	45,109,314
Common stock, shares outstanding	61,228,446	45,109,314

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Total revenue	$ 6,761	$ 6,482	$ 4,227
Costs and expenses:
Cost of revenue	4,713	5,133	4,055
Research and development	43,813	29,338	64,165
General and administrative	23,619	20,530	27,827
Revaluation of contingent consideration	24,339	2,393	734
Goodwill impairment			18,504
Total costs and expenses	96,484	57,394	115,285
Loss from operations	(89,723)	(50,912)	(111,058)
Other expense, net	(1,142)	(424)	(2,484)
Loss from continuing operations before income taxes	(90,865)	(51,336)	(113,542)
Income tax benefit		(182)
Loss from continuing operations	(90,865)	(51,154)	(113,542)
Income (loss) from discontinued operations, net of tax		139	(47,812)
Net loss	$ (90,865)	$ (51,015)	$ (161,354)
Net loss per share, basic	$ (1.60)	$ (1.20)	$ (3.90)
Net loss per share, diluted	$ (1.60)	$ (1.20)	$ (3.90)
Weighted average common shares outstanding, basic	56,730,583	42,539,293	41,323,921
Weighted average common shares outstanding, diluted	56,730,583	42,539,293	41,323,921
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax of $0	$ (229)	$ (2)	$ 28
Foreign currency translation adjustment	99	(26)	(25)
Total other comprehensive income (loss)	(130)	(28)	3
Comprehensive loss	(90,995)	(51,043)	(161,351)
Contract research
Total revenue	5,830	5,786	$ 4,227
Other revenue
Total revenue	$ 931	$ 696

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Unrealized gain (loss) on marketable securities, tax	$ 0	$ 0	$ 0

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive 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 restricted stock units		(38)			(38)
Vesting of restricted stock units (in shares)	274,913
Unrealized gain (loss) on marketable securities			28		28
Foreign currency translation adjustment			(25)		(25)
Stock-based compensation expense		16,177			16,177
Net loss				(161,354)	(161,354)
Balance at end of period at Dec. 31, 2019		523,505	(66)	(453,527)	69,912
Balance at end of period (in shares) at Dec. 31, 2019	41,485,638
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock units		(669)			(669)
Vesting of restricted stock units (in shares)	1,390,922
Issuance of common stock in connection with public offering		7,865			7,865
Issuance of common stock in connection with public offering (in shares)	2,232,754
Unrealized gain (loss) on marketable securities		378	(2)		376
Foreign currency translation adjustment			(26)		(26)
Stock-based compensation expense		11,207			11,207
Net loss				(51,015)	(51,015)
Balance at end of period at Dec. 31, 2020		542,286	(94)	(504,542)	$ 37,650
Balance at end of period (in shares) at Dec. 31, 2020	45,109,314				45,109,314
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock units		(1,574)			$ (1,574)
Vesting of restricted stock units (in shares)	1,714,269
Issuance of common stock in connection with public offering	$ 1	238,199			238,200
Issuance of common stock in connection with public offering (in shares)	14,404,863
Unrealized gain (loss) on marketable securities			(229)		(229)
Foreign currency translation adjustment			99		99
Stock-based compensation expense		14,060			14,060
Net loss				(90,865)	(90,865)
Balance at end of period at Dec. 31, 2021	$ 1	$ 792,971	$ (224)	$ (595,407)	$ 197,341
Balance at end of period (in shares) at Dec. 31, 2021	61,228,446				61,228,446

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Equity Purchase Agreement
Offering costs netted against proceeds		$ 168
Public Offering
Offering costs netted against proceeds	$ 15,910

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss	$ (90,865)	$ (51,015)	$ (161,354)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	923	1,324	6,409
Stock-based compensation expense	14,060	11,207	16,177
Revaluation of contingent consideration	24,339	2,393	734
Goodwill impairment charge			18,504
Intangible asset impairment charge			27,638
Gain on sale of RHOFADE			(1,850)
Loss on extinguishment of debt	752
Deferred taxes		(182)
Changes in operating assets and liabilities:
Accounts receivable	149	4,898	(809)
Prepaid expenses and other assets	(5,617)	1,689	3,233
Accounts payable	3,655	(5,219)	(3,160)
Accrued expenses	470	(3,728)	(1,967)
Net cash used in operating activities	(52,134)	(38,633)	(96,445)
Cash flows from investing activities:
Purchases of property and equipment	(308)	(453)	(1,613)
Disposition of RHOFADE			34,186
Purchases of marketable securities	(235,153)	(47,714)	(137,385)
Proceeds from sales and maturities of marketable securities	67,829	54,554	210,491
Net cash provided by (used in) investing activities	(167,632)	6,387	105,679
Cash flows from financing activities:
Proceeds from debt financing (including warrants), net of issuance costs		10,913
Repayment of debt	(11,483)		(30,000)
Restricted stock unit employee tax withholdings	(3,124)
Finance lease payments		(137)	(523)
Deferred issuance costs		(211)
Proceeds from exercise of employee stock options and the issuance of stock	1,459	70	207
Net cash provided by (used in) financing activities	225,052	18,372	(30,316)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,286	(13,874)	(21,082)
Cash, cash equivalents and restricted cash at beginning of period	22,063	35,937	57,019
Cash, cash equivalents and restricted cash at end of period	27,349	22,063	35,937
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable	143		124
Fair value of warrants issued in connection with debt financing		378
Operating lease asset recorded as a result of new accounting standard			$ 2,132
Fair value of common stock issued in connection with an equity purchase agreement		263
Public Offering
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs	$ 238,200
Equity Purchase Agreement
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		$ 7,737

Organization and Nature of Business

12 Months Ended

Dec. 31, 2021

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 clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases. In addition to developing its novel drug candidates, 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 novel drug candidates.

Liquidity

The Company’s 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. As of December 31, 2021, the Company had cash, cash equivalents and marketable securities of $225.7 million and an accumulated deficit of $595.4 million. 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 will require additional capital to complete the clinical development of zunsemetinib (ATI-450), ATI-1777 and ATI-2138, 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 potential 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 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 does not believe that substantial doubt exists about its ability to continue as a going concern. 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 consolidated financial statements.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). The 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 intercompany transactions have been eliminated. Based upon the Company’s revenue, 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 consolidated statement of operations.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.

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 17).

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, 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 in 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.

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. 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 and as such, recognizes revenue in the amount which it has the right to invoice. ASC Topic 606 also provides an optional

exemption, which the Company has elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient.

Cash Equivalents

The Company considers all short-term, highly liquid investments with original maturities of three months or less at acquisition date to be cash equivalents. Cash equivalents, which have consisted of money market accounts and commercial paper, are stated at fair value.

Marketable Securities

Marketable securities with original maturities of greater than three months and remaining maturities of less than one year from the balance sheet date are classified as short-term. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term.

The Company classifies all of its marketable securities as available-for-sale securities. The Company’s marketable securities are measured and reported at fair value using either quoted prices in active markets for identical securities or quoted prices in markets that are not active for identical or similar securities. Unrealized gains and losses are reported as a separate component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses, if any, are included in other expense, net within the consolidated statement of operations and comprehensive loss. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers available evidence to evaluate the extent to which the decline is “other than temporary” and reduces the investment to fair value through a charge to the statement of operations and comprehensive loss.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the useful life of the asset. Computer equipment is depreciated over three years. Laboratory equipment is depreciated over five years. Furniture and fixtures are depreciated over five years. Leasehold improvements are depreciated over the shorter of the lease term or their useful life. Expenditures for repairs and maintenance of assets are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in loss from continuing operations.

Impairment of Long-Lived Assets

Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows.

Intangible Assets

Intangible assets include both definite-lived and indefinite-lived assets. Definite-lived intangible assets consist of a drug discovery platform the Company acquired through the acquisition of Confluence. 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. 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 or otherwise impaired.

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.

During the years ended December 31, 2021, 2020 and 2019, the Company did not record an IPR&D impairment.

Goodwill

Goodwill is not amortized, but rather is subject to testing for impairment at least annually, which the Company performed during the fourth quarter or when indicators of an impairment were present. The Company considered each of its operating segments, therapeutics and contract research, to be a reporting unit since that is the lowest level for which discrete financial information was available. The impairment test performed by the Company was a qualitative assessment based upon the then current facts and circumstances related to operations of the reporting unit. If the qualitative assessment indicated an impairment was present, the Company would perform the required quantitative analysis and an impairment charge would be recognized to the extent that the estimated fair value of the reporting unit is less than its carrying amount. However, any loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

During the year ended December 31, 2019, the Company performed an impairment analysis due to a decline in its stock price, which was considered a triggering event to evaluate goodwill for impairment. The Company’s impairment analysis, using a market approach, noted that its stock price, including a reasonable control premium, resulted in a fair value for the therapeutics reporting unit which was less than its carrying value. As a result, the Company recorded an impairment charge equal to the full balance of goodwill of $18.5 million.

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 consolidated balance sheet.

Right-of-use assets are included in other assets and property and equipment, net on the Company’s 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 consolidated balance sheet for both operating and finance leases.

Contingent Consideration

The Company initially recorded a contingent consideration liability at fair value on the date of acquisition related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of development, regulatory and commercial milestones, as well as estimated future sales levels

and the discount rates applied to calculate the present value of the potential payments. Significant judgement was involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of the contingent consideration liability can result from changes to one or more of these assumptions. The Company evaluates the fair value estimate of the contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in the consolidated statement of operations.

The fair value of contingent consideration is estimated using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for commercial milestone and royalty payments and then applying a risk-adjusted discount rate to calculate the present value of the potential payments. Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 10% and 40% at December 31, 2021. Additionally, estimated future sales levels and the risk-adjusted discount rate applied to the potential payments are also significant assumptions used in calculating the fair value. The discount rate ranged between 6.3% and 8.0% depending on the year of each potential payment.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses include salaries, stock-based compensation and benefits of employees, fees paid under licensing agreements, and other operational costs related to the Company’s research and development activities, including depreciation expenses and the cost of research and development contracts which the Company has entered into with outside vendors to conduct both preclinical studies and clinical trials. Significant judgment and estimates are made in determining the amount of research and development costs recognized in each reporting period. The Company analyzes the progress of its preclinical studies and clinical trials, completion of milestone events, invoices received and contracted costs when estimating research and development costs. Actual results could differ from the Company’s estimates. The Company’s historical estimates for research and development costs have not been materially different from the actual costs.

Stock-Based Compensation

The Company measures the compensation expense of stock-based awards granted to employees and directors using the grant date fair value of the award. The Company has issued stock options and restricted stock unit (“RSU”) awards with service-based vesting conditions, as well as with performance-based vesting conditions. The Company has not issued awards that include market-based conditions. For service-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For performance-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period beginning in the period that it becomes probable the performance conditions will occur. At each balance sheet date, the Company evaluates whether any performance conditions related to a performance-based award have changed. The effect of any change in performance conditions would be recognized as a cumulative catch-up adjustment in the period such change occurs, and any remaining unrecognized compensation expense would be recognized on a straight-line basis over the remaining requisite service period. The impact of forfeitures is recognized in the period in which they occur.

The Company measures the compensation expense of stock-based awards granted to consultants using the grant date fair value of the award. The Company recognizes compensation expense over the period during which services are rendered by the consultant.

The Company classifies stock-based compensation expense in its statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility based on the historical volatility of a set of peer companies, which are publicly traded, and expects to continue to do so until it has adequate historical data regarding the volatility of its own publicly-traded stock price. The expected term of the Company’s stock options has been determined using the “simplified” method for awards that qualify as “plain vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected

term of the award. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the future.

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

Patent Costs

All patent related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. Comprehensive loss is primarily comprised of net loss and unrealized gains (losses) on marketable securities.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period, plus the weighted average number of potential shares of common stock from the assumed exercise of stock options and warrants and the assumed vesting of RSUs, if dilutive. Since the Company was in a net loss position, basic and diluted net loss per share was the same for each of the periods presented.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial

assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1 — Quoted prices in active markets for identical assets or liabilities.

●

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents, marketable securities and contingent consideration are carried at fair value, determined according to the fair value hierarchy described above. The carrying value of the Company’s accounts payable and accrued expenses approximate fair value due to the short-term nature of these liabilities. The carrying value of the Company’s debt approximates fair value due to the debt bearing a variable interest rate which is reflective of current market rates.

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.

Segment Reporting

Operating segments are components of a company for which separate financial information is available and evaluated regularly by the chief operating decision maker in assessing performance and deciding how to allocate resources. 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. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. 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.

Recently Issued Accounting Pronouncements

In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 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 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 Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant.

RHOFADE Disposition

12 Months Ended

Dec. 31, 2021

RHOFADE Disposition

RHOFADE Disposition

3. RHOFADE Disposition

In October 2019, the Company entered into an asset purchase agreement with EPI Health, LLC (“EPI Health”) pursuant to which the Company sold the worldwide rights to RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”), which included the assignment of certain licenses for related intellectual property assets (the “Disposition”).

Pursuant to the asset purchase agreement, EPI Health paid the Company closing consideration of $35.2 million. In addition, EPI Health agreed to pay the Company (i) potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products as defined in the asset purchase agreement, (ii) a specified high single-digit royalty calculated as a percentage of net sales, on a product-by-product and country-by-country basis, until the date that the patent rights related to a particular product, such as RHOFADE, have expired, provided, that with respect to sales of RHOFADE in any territory outside of the United States, such royalty shall be paid until the date that the RHOFADE patent rights in the particular country have expired or, if later, 10 years from the date of the first commercial sale of RHOFADE in such country and (iii) 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. Finally, EPI Health agreed to assume the Company’s obligation to pay specified royalties and milestone payments under certain agreements with third parties.

Fair Value of Financial Assets and Liabilities

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

4. 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:


	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	21,678	$	—	$	—	$	21,678
Marketable securities		—		198,307		—		198,307
Total assets	$	21,678	$	198,307	$	—	$	219,985


Liabilities:
Contingent consideration	$	—	$	—	$	28,400	$	28,400
Total liabilities	$	—	$	—	$	28,400	$	28,400


	December 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	14,955	$	1,500	$	—	$	16,455
Marketable securities		—		32,068		—		32,068
Total assets	$	14,955	$	33,568	$	—	$	48,523


Liabilities:
Contingent consideration	$	—	$	—	$	4,061	$	4,061
Total liabilities	$	—	$	—	$	4,061	$	4,061

As of December 31, 2021 and 2020, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs. The Company’s cash equivalents as of December 31, 2020 also included commercial paper, which was valued based upon Level 2 inputs. The Company’s marketable securities as of December 31, 2021 and 2020 consisted of commercial paper and asset-backed and U.S. government agency debt securities, which were valued based upon Level 2 inputs. The Company’s marketable securities as of December 31, 2021 also included corporate debt securities and foreign government agency debt securities, 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 are necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service. During the years ended December 31, 2021 and 2020, there were no transfers into or out of Level 3.

The increase in contingent consideration of $24.3 million during the year ended December 31, 2021 primarily resulted from updates to the Company’s probability of achieving regulatory milestones and commencing commercialization and estimated future sales level assumptions as a result of the completion of a Phase 2a clinical trial of zunsemetinib in subjects with moderate to severe rheumatoid arthritis and the inclusion of estimated future sales of zunsemetinib for the potential treatment of moderate to severe psoriatic arthritis and moderate to severe hidradenitis suppurativa, which are additional planned indications for zunsemetinib, as well as a result of the completion of a Phase 2a clinical trial of ATI-1777 in subjects with moderate to severe atopic dermatitis.

As of December 31, 2021 and 2020, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities⁽¹⁾	$	40,993	$	6		(50)	$	40,949
Commercial paper		71,837		—		—		71,837
Asset-backed debt securities		36,166		—		(43)		36,123
Foreign government agency debt securities		4,073		—		(13)		4,060
U.S. government agency debt securities⁽²⁾		45,465		—		(127)		45,338
Total marketable securities	$	198,534	$	6	$	(233)	$	198,307
⁽¹⁾ Included in Corporate debt securities is $9.2 million with maturity dates between one and five years.
⁽²⁾ Included in US government agency debt securities is $25.0 million with maturity dates between one and five years.


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Commercial paper	$	20,483	$	—	$	—	$	20,483
Asset-backed debt securities		4,036		1		—		4,037
U.S. government agency debt securities		7,547		1		—		7,548
Total marketable securities	$	32,066	$	2	$	—	$	32,068

- 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

12 Months Ended

Dec. 31, 2021

Property and Equipment, Net

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment, net consisted of the following:


		December 31,		December 31,
(In thousands)	2021		2020
Computer equipment	$	1,380	$	1,197
Lab equipment		1,605		1,340
Furniture and fixtures		620		617
Leasehold improvements		1,123		1,123
Property and equipment, gross		4,728		4,277
Accumulated depreciation		(3,393)		(2,623)
Property and equipment, net	$	1,335	$	1,654

Depreciation expense was $0.8 million, $1.1 million and $1.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Intangible Assets

12 Months Ended

Dec. 31, 2021

Intangible Assets

Intangible Assets

6. Intangible Assets

Intangible assets consisted of the following:


		Gross Cost				Accumulated Amortization
	Remaining		December 31,		December 31,		December 31,		December 31,
(In thousands, except years)	Life (years)	2021		2020		2021		2020
Other intangible assets	5.6	$	751	$	751	$	332	$	257
In-process research and development	n/a		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	332	$	257

Amortization expense was $75 thousand for each of the years ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, estimated future amortization expense was as follows:


		Year Ending
(In thousands)		December 31,
2022	$	75
2023		75
2024		75
2025		75
2026		75
Thereafter		44
Total	$	419

Accrued Expenses

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Accrued Expenses

7. Accrued Expenses

Accrued expenses consisted of the following:


		December 31,		December 31,
(In thousands)	2021		2020
Employee compensation expenses	$	4,389	$	3,971
Research and development expenses		1,278		761
Litigation settlements (see Note 20)		2,650		—
Other		1,734		1,174
Total accrued expenses	$	10,051	$	5,906

Debt

12 Months Ended

Dec. 31, 2021

Debt

Debt

8. 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 provided for $11.0 million in term loans, of which the Company borrowed the entire amount on March 30, 2020. 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”) (see Note 9). The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach.

In July 2021, the Company repaid in full the $11.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees as of the payoff date, for a total payment of $11.7 million. Following this repayment, all of the Company’s obligations under the Loan and Security Agreement are deemed to be terminated, except as set forth in the agreement.

Loan and Security Agreement – Oxford Finance LLC

In October 2018, the Company entered into a Loan and Security Agreement with Oxford Finance LLC. The Loan and Security Agreement provided for up to $65.0 million in term loans, of which the Company borrowed $30.0 million in October 2018. In October 2019, the Company repaid in full the $30.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees as of the payoff date, for a total payment of $32.4 million.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity

Stockholders' Equity

9. Stockholders’ Equity

Preferred Stock

As of December 31, 2021 and 2020, 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 December 31, 2021 and 2020.

Common Stock

As of December 31, 2021 and 2020, 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. There were 61,228,446 and 45,109,314 shares of common stock issued and outstanding as of December 31, 2021 and 2020, respectively.

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 December 31, 2021.

Warrants

The Warrant issued to SVB in March 2020 had 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 Company assigned a fair value of $0.4 million 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. In January 2021, SVB net exercised the Warrant in full, and the Company issued to SVB 388,119 shares of common stock.

Equity Purchase Agreement with Lincoln Park Capital Fund, LLC

In August 2020, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to Lincoln Park, at its discretion, up to $15.0 million of shares of its common stock over the 36-month term of the Purchase Agreement. Upon execution of the Purchase Agreement, the Company issued 121,584 shares of its common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Purchase Agreement. The commitment shares were valued using the closing price of the Company’s common stock on the effective date of the Purchase Agreement resulting in an aggregate fair value of $0.3 million. Through December 31, 2020, the Company sold 2,111,170 shares of its common stock to Lincoln Park under the Purchase Agreement for net proceeds of $7.7 million. The Company terminated the Purchase Agreement in January 2021 in connection with the public offering of common stock described below. The Company did not sell any additional shares prior to terminating the Purchase Agreement.

January 2021 Public Offering

In January 2021, the Company closed a public offering in which it sold 6,306,271 shares of common stock at a price to the public of $17.50 per share, for aggregate gross proceeds of $110.4 million. The Company paid underwriting discounts and commissions of $6.6 million, and also incurred expenses of $0.4 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $103.3 million.

June 2021 Public Offering

In June 2021, the Company closed a public offering in which it sold 8,098,592 shares of common stock at a price to the public of $17.75 per share, for aggregate gross proceeds of $143.8 million. The Company paid underwriting discounts and commissions of $8.6 million, and also incurred expenses of $0.3 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $134.9 million.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Stock-Based Awards

12 Months Ended

Dec. 31, 2021

Stock-Based Awards

Stock-Based Awards

10. 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, 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 December 31, 2021, 2,708,469 shares remained available for grant under the 2015 Plan. As of January 1, 2022, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 2,449,137 shares. The Company had 2,897,705 stock options and 1,489,633 RSUs outstanding as of December 31, 2021 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-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Company had 410,600 stock options and 7,313 RSUs outstanding as of December 31, 2021 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 484,145 and 549,561 were outstanding as of December 31, 2021 and 2020, respectively. Stock options granted under the 2012 Plan 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 years ended December 31, 2021, 2020 and 2019 were as follows:


	Year Ended
	December 31,
	2021		2020		2019
Risk-free interest rate	0.92	%	0.87	%	2.27	%
Expected term (in years)	6.2		6.1		6.2
Expected volatility	76.60	%	85.19	%	99.36	%
Expected dividend yield	0	%	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 years ended December 31, 2021, 2020 and 2019:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
(In thousands, except share and per share data and years)	of Shares	Price		Term	Value
				(in years)
Outstanding as of December 31, 2018	4,282,081	$	20.53	7.9	$	2,404
Granted	44,500		5.75
Exercised	(142,779)		1.33			112
Forfeited and cancelled	(1,081,581)		23.01
Outstanding as of December 31, 2019	3,102,221	$	20.33	6.6	$	148
Granted	734,800		1.30
Exercised	(53,737)		1.30			145
Forfeited and cancelled	(911,786)		22.41
Outstanding as of December 31, 2020	2,871,498	$	15.16	6.8	$	4,890
Granted	1,068,100		23.44
Exercised	(115,548)		12.63			1,373
Forfeited and cancelled	(31,600)		23.26
Outstanding as of December 31, 2021	3,792,450	$	17.50	6.8	$	13,710
Options vested and expected to vest as of December 31, 2021	3,792,450	$	17.50	6.8	$	13,710
Options exercisable as of December 31, 2021	2,200,718	$	17.86	5.4	$	7,756

The weighted average grant date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $15.67, $0.93 and $4.63 per share, respectively.

Restricted Stock Units

The following table summarizes RSU activity for the years ended December 31, 2021, 2020 and 2019.


		Weighted
		Average
		Grant Date		Aggregate
	Number	Fair Value		Intrinsic
(In thousands, except share and per share data)	of Shares	Per Share		Value
Outstanding as of December 31, 2018	626,407	$	20.30
Granted	3,650,942		3.56
Vested	(173,444)		21.31	$	799
Forfeited and cancelled	(510,990)		10.63
Outstanding as of December 31, 2019	3,592,915	$	4.62
Granted	1,168,805		1.36
Vested	(1,804,429)		3.33	$	2,607
Forfeited and cancelled	(713,134)		4.77
Outstanding as of December 31, 2020	2,244,157	$	3.83
Granted	664,948		23.33
Vested	(1,340,042)		3.18	$	31,492
Forfeited and cancelled	(72,117)		10.36
Outstanding as of December 31, 2021	1,496,946	$	12.75

Stock-Based Compensation

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


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
Cost of revenue	$	981	$	946	$	703
Research and development		3,866		2,919		5,091
General and administrative		9,213		7,342		10,288
Total stock-based compensation expense	$	14,060	$	11,207	$	16,082

As of December 31, 2021, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $13.4 million and $13.8 million, respectively, which is expected to be recognized over weighted average periods of 3.0 years and 2.9 years, respectively.

Net Loss per Share

12 Months Ended

Dec. 31, 2021

Net Loss per Share

Net Loss per Share

11. Net Loss per Share

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


	Year Ended
	December 31,
(In thousands, except for share and per share data)	2021		2020		2019
Numerator:
Net loss	$	(90,865)	$	(51,015)	$	(161,354)
Denominator:
Weighted average shares of common stock outstanding, basic and diluted		56,730,583		42,539,293		41,323,921
Net loss per share, basic and diluted	$	(1.60)	$	(1.20)	$	(3.90)

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 is the same. The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the years ended December 31, 2021, 2020 and 2019. All share amounts presented in the table below represent the total number outstanding as of December 31 of each year.



	December 31,
	2021	2020	2019
Options to purchase common stock	3,792,450	2,871,498	3,102,221
Restricted stock unit awards	1,496,946	2,244,157	3,592,915
Warrants	—	460,251	—
Total potential shares of common stock	5,289,396	5,575,906	6,695,136

Leases

12 Months Ended

Dec. 31, 2021

Leases

Leases

12. Leases

The Company has operating leases for office space and laboratory facilities, and had finance leases for its laboratory equipment and vehicles. The components of lease expense were as follows:


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
Operating lease expense	$	1,013	$	1,013	$	808

Finance Leases:
Amortization of right-to-use assets	$	—	$	113	$	443
Interest expense		—		5		87
Total finance lease expenses	$	—	$	118	$	530

Rent expense was $1.0 million for each of the years ended December 31, 2021, 2020 and 2019, which was recognized on a straight-line basis over the term of the lease.

Operating Leases

Agreements for Office and Laboratory Space

The Company has 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 (“Landlord”) and Sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate. In December 2020, the Company entered into a sub-sublease agreement under which it sub-subleased 8,115 square feet to a third party. The sub-sublease term runs concurrently with the original sublease agreement.

In February 2019, the Company entered into a sublease agreement with a third party for 20,433 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:


		December 31,		December 31,
(In thousands)	2021		2020
Operating Leases:
Gross cost	$	5,240	$	5,240
Accumulated amortization		(1,803)		(1,111)
Other assets	$	3,437	$	4,129

Current portion of lease liabilities	$	693	$	603
Other liabilities		2,201		2,894
Total operating lease liabilities	$	2,894	$	3,497

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $1.0 million for each of the years ended December 31, 2021, 2020 and 2019.

Finance Leases

Laboratory Equipment

The Company leased laboratory equipment which it 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, for which terms ended in October 2020 and December 2020, respectively.

Fleet Vehicles

The Company leased automobiles for its sales force and other field-based employees under the terms of a master lease agreement with a third party. The lease term for each automobile began on the date the Company took delivery and continued for a period of four years. As a result of the Company’s decision to actively seek partners for its commercial products, the Company terminated the finance leases for its fleet vehicles and recognized a loss on lease termination of $0.2 million during the year ended December 31, 2019.

Supplemental information related to operating and finance leases is as follows:


	Year Ended
(In thousands, except for years and percentages)	December 31,
Supplemental Cash Flow Lease Information:	2021			2020			2019
Operating cash flows from operating leases	$	924		$	907		$	755
Operating cash flows from finance leases	$	—		$	5		$	87
Financing cash flows from finance leases	$	—		$	137		$	523

Leased assets obtained in exchange for new operating lease liabilities	$	—		$	—		$	3,060

Weighted-Average Remaining Lease Term (in years):
Operating leases		5.4			6.0			6.8

Weighted-Average Discount Rate:
Operating leases		10.1	%		10.1	%		10.1	%

Future minimum lease payments under operating lease agreements are as follows:


(In thousands)		Operating
Year Ending December 31,		Leases
2022	$	949
2023		866
2024		343
2025		352
2026		361
Thereafter		941
Total undiscounted lease payments		3,812
Less: unrecognized interest		(918)
Total lease liability	$	2,894

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

13. Income Taxes

During the years ended December 31, 2021, 2020 and 2019, the Company did not record an income tax benefit for net operating losses incurred in each year due to the uncertainty of realizing a benefit from those items.

Loss before income taxes is allocated as follows:


	Year Ended December 31,
(In thousands)	2021		2020		2019
U.S. operations	$	(90,865)	$	(51,215)	$	(161,192)
Foreign operations		—		18		(162)
Loss before income taxes	$	(90,865)	$	(51,197)	$	(161,354)

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended December 31,
	2021		2020		2019
Federal statutory income tax rate	(21.0)	%	(21.0)	%	(21.0)	%
State taxes, net of federal benefit	(7.7)		(7.5)		(6.6)
Research and development tax credits	(3.0)		(2.6)		(1.5)
Excess equity compensation tax benefit net of officer limitation	(3.9)		1.4		0.4
Revaluation of contingent consideration	5.6		1.0		—
Permanent differences	—		0.2		2.6
Change in deferred tax asset valuation allowance	30.0		28.1		26.2
Effective income tax rate	—	%	(0.4)	%	0.1	%

Deferred tax liabilities, net consisted of the following:


		December 31,
(In thousands)	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	123,583	$	101,277
Capitalized start-up costs		6,334		6,509
Research and development tax credit carryforwards		11,502		8,732
Capitalized research and development expense		4,046		4,611
Stock‑based compensation expense		17,728		14,526
Accrued compensation		825		745
Lease liabilities		721		888
Other		648		602
Total deferred tax assets		165,387		137,890
Deferred tax liabilities:
Property and equipment		(171)		(209)
Intangible asset		(1,567)		(2,033)
Right-to-use assets		(852)		(1,026)
Other		(1,340)		(430)
Total deferred tax liabilities		(3,930)		(3,698)
Valuation allowance		(161,824)		(134,559)
Deferred tax liabilities, net	$	(367)	$	(367)

As of December 31, 2021, the Company had federal and state net operating loss (“NOL”) carryforwards of $448.4 million and $404.9 million, respectively, which will begin to expire in 2032. As of December 31, 2021, the Company also had federal research and development tax credit carryforwards of $11.4 million which will begin to expire in 2032, and state research and development tax credit carryforwards of $0.1 million which will begin to expire in 2022. The Company also has $0.2 million of loss carryforwards in the United Kingdom which can be carried forward indefinitely. Utilization of the NOLs and research and development tax credit carryforwards in the United States may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that may have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has completed an analysis under Section 382 for NOLs generated from July 13, 2012 through December 31, 2021. Although the Company has experienced Section 382 ownership changes since 2012, the Company has concluded that it should have sufficient ability to utilize NOLs accumulated during the periods tested. The Company has not yet determined if a Section 382 ownership change has occurred after December 31, 2021. In addition, the Company may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of the Company’s control.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. The Company considered its history of cumulative net losses incurred since inception, its lack of substantial revenue generated to date, and its forecasted future operating losses and concluded that it is more likely than not that the

Company will not realize the benefits of its deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2021 and 2020. The Company evaluates positive and negative evidence of its ability to realize deferred tax assets at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2021, 2020 and 2019 related primarily to the increases in NOLs, capitalized start-up costs, and research and development tax credit carryforwards and were as follows:


		Year Ended December 31,
(In thousands)		2021		2020		2019
Valuation allowance at beginning of year	$	(134,559)	$	(120,966)	$	(80,985)
Decreases recorded as benefit to income tax provision		—		—		—
Decreases recorded to opening balance sheet		—		58		—
Increases recorded to income tax provision		(27,265)		(13,651)		(39,981)
Valuation allowance as of end of year	$	(161,824)	$	(134,559)	$	(120,966)

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations. The Company’s tax years are still open under statute from 2019 to the present. All open years may be examined to the extent that tax credit or NOLs are used in future periods. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions

Related Party Transactions

14. 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 of Mallinckrodt plc, pursuant to which Confluence provides laboratory services to a subsidiary (“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. During the years ended December 31, 2021 and 2020, the Company invoiced Mallinckrodt for $24 thousand and $0.3 million, respectively, under the master services agreement. As of December 31, 2021 and 2020, the Company had $0 and $24 thousand of outstanding accounts receivable balances from Mallinckrodt. Mr. Reasons had no financial interest in these transactions.

Agreements Related to Intellectual Property

12 Months Ended

Dec. 31, 2021

15. 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, ten 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 $0.8 million and $0.7 million during the years ended December 31, 2021 and 2020, respectively. Royalty income is included in other revenue on the consolidated statements of operations and comprehensive loss. EPI Health has also agreed to pay the Company potential sales milestone payments of up to $20.0 million 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.

Asset Purchase Agreement – Allergan Sales, LLC

In November 2018, the Company acquired RHOFADE from Allergan Sales, LLC (“Allergan”) pursuant to an asset purchase agreement. The Company agreed to pay Allergan specified royalties, ranging from a mid-single digit percentage to a mid-teen percentage of net sales, subject to specified reductions, limitations and other adjustments. The

Company incurred royalties earned by Allergan under the asset purchase agreement of $0, $0 and $1.4 million during the years ended December 31, 2021, 2020 and 2019, respectively.

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”). Under the Confluence Agreement, the Company agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million 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 to the payments described above, 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 consideration received from such sale, license or transfer in specified circumstances.

As of December 31, 2021 and December 31, 2020, the balance of the Company’s contingent consideration liability was $28.4 million and $4.1 million, respectively (see Note 4).

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. During the year ended December 31, 2019, the Company made a milestone payment of $4.0 million to Rigel upon the achievement of a specified development milestone which is included in research and development expenses on the Company’s consolidated statement of operations. In connection with an amendment of the agreement with Rigel in October 2019, the Company paid Rigel an amendment fee of $1.5 million during the year ended December 31, 2020. The Company terminated the license and collaboration with Rigel effective as of April 2021.

Retirement Savings Plan

12 Months Ended

Dec. 31, 2021

Retirement Savings Plan

Retirement Savings Plan

16. Retirement Savings Plan

The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Company’s board of directors. The Company has elected to match employee contributions to the 401(k) Plan up to 4% of the employee’s earnings, subject to certain limitations. Company contributions under the 401(k) Plan were $0.3 million, $0.4 million and $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Restructuring Charges

12 Months Ended

Dec. 31, 2021

Restructuring Charges

Restructuring Charges

17. 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 year ended December 31, 2020, the Company recognized aggregate expenses of $0.1 million and made payments of $0.3 million related to termination benefits for employees. During the year ended December 31, 2019, the Company recognized aggregate expenses of $2.7 million and made payments of $2.3 million related to termination benefits for employees.

Discontinued Operations

12 Months Ended

Dec. 31, 2021

Discontinued Operations.

Discontinued Operations

18. Discontinued Operations

Significant Accounting Policies

Revenue Recognition

Product Sales, net

The Company recognized revenue from product sales at the point the customer obtained control of the product, which generally occurred upon delivery. The Company also included estimates of variable consideration in the same period revenue was recognized. Components of variable consideration include trade discounts and allowances, product returns, government rebates, discounts and rebates, other incentives such as patient co-pay assistance, and other fee for service amounts. Variable consideration was recorded on the consolidated balance sheet as either a reduction of accounts receivable, if payable to a customer, or as a current liability, if payable to a third party other than a customer. The Company considered all relevant information when estimating variable consideration such as contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of net revenue that can be recognized is constrained by estimates of variable consideration which are included in the transaction price. Payment terms with customers did not exceed one year and, therefore, the Company did not account for a financing component in its arrangements. The Company expensed incremental costs of obtaining a contract with a customer, including sales commissions, when incurred as the period of benefit was less than one year.

Trade Discounts and Allowances - The Company provided customers with trade discounts, rebates, allowances and/or other incentives. The Company recorded estimates for these items as a reduction of revenue in the same period the revenue was recognized.

Government and Payor Rebates - The Company contracted with, or was subject to arrangements with, certain third-party payors, including pharmacy benefit managers and government agencies, for the payment of rebates with respect to utilization of its commercial products. The Company also entered into agreements with group purchasing organizations that provided for administrative fees and discounted pricing in the form of volume-based rebates. The Company was also subject to discount and rebate obligations under state Medicaid programs and Medicare. The Company recorded estimates for these discounts and rebates as a reduction of revenue in the same period the revenue was recognized.

Other Incentives - The Company maintained a co-pay assistance program which was intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by third-party payors. The Company estimated and recorded accruals for these incentives as a reduction of revenue in the period the revenue was recognized. The Company estimated amounts for co-pay assistance based upon the number of claims and the cost per claim that the Company expected to receive associated with product that had been sold to customers but remained in the distribution channel at the end of each reporting period.

Product Returns - Consistent with industry practice, the Company had a product returns policy for RHOFADE that provided customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The right of return lapses upon shipment of the product to a patient. The Company recorded an estimate for the amount of its products which may be returned as a reduction of revenue in the period the related revenue was recognized. The Company’s estimate for product returns was based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. There is no return liability associated with sales of ESKATA (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”), as the Company had a no returns policy for ESKATA when it was commercialized.

Intangible Assets

During the year ended December 31, 2019, the Company performed an impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company’s impairment analysis, which primarily utilized a market-participant’s indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27.6 million, which is included in discontinued operations on the consolidated statement of operations, to adjust the carrying value of the RHOFADE intangible asset to its net realizable value (see Note 3).

Financial Information

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


	Year Ended
	December 31,
(In thousands, except share and per share data)	2021		2020		2019
Revenues:
Product sales, net	$	—	$	424	$	13,896
Total revenue, net		—		424		13,896

Costs and expenses:
Cost of revenue (excludes amortization)		—		—		4,522
Research and development		—		1		503
Sales and marketing		—		283		23,112
General and administrative		—		1		2,929
Intangible asset impairment		—		—		27,638
Amortization of definite-lived intangible		—		—		4,426
Total costs and expenses		—		285		63,130
Income (loss) from operations		—		139		(49,234)

Other income, net		—		—		1,422
Income (loss) from discontinued operations	$	—	$	139	$	(47,812)

Net income (loss) from discontinued operations per share, basic and diluted	$	—	$	0.00	$	(1.16)
Weighted average common shares outstanding, basic and diluted		56,730,583		42,539,293		41,323,921

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


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
ESKATA	$	—	$	—	$	312
RHOFADE		—		424		13,584
Total product sales, net	$	—	$	424	$	13,896

The Company recorded $0.4 million of RHOFADE product sales, net during the year ended December 31, 2020 due to a reversal of previously accrued product sales-related reserves.

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


	December 31,		December 31,
(In thousands)	2021		2020
Accounts payable	$	—	$	1,175
Accrued expenses		2,202		1,936
Discontinued operations - current liabilities	$	2,202	$	3,111

Segment Information

12 Months Ended

Dec. 31, 2021

Segment Information

Segment Information

19. 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. 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 years ended December 31, 2021, 2020 and 2019 are summarized in the tables below:


(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2021	Therapeutics		Research		and Other		Company
Total revenue	$	932	$	13,447	$	(7,618)	$	6,761
Cost of revenue		—		11,885		(7,172)		4,713
Research and development		44,259		—		(446)		43,813
General and administrative		—		3,047		20,572		23,619
Revaluation of contingent consideration		24,339		—		—		24,339
Loss from operations	$	(67,666)	$	(1,485)	$	(20,572)	$	(89,723)

(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	696	$	13,319	$	(7,533)	$	6,482
Cost of revenue		—		12,228		(7,095)		5,133
Research and development		29,777		—		(439)		29,338
General and administrative		—		2,794		17,736		20,530
Revaluation of contingent consideration		2,393		—		—		2,393
Loss from operations	$	(31,474)	$	(1,703)	$	(17,735)	$	(50,912)
Income (loss) from discontinued operations	$	140	$	—	$	(1)	$	139

(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2019	Therapeutics		Research		and Other		Company
Revenue, net	$	—	$	16,824	$	(12,597)	$	4,227
Cost of revenue		—		16,253		(12,198)		4,055
Research and development		64,564		—		(399)		64,165
Revaluation of contingent consideration		734		—		—		734
Goodwill impairment		18,504		—		—		18,504
General and administrative		620		2,738		24,469		27,827
Loss from operations	$	(84,422)	$	(2,167)	$	(24,469)	$	(111,058)
Loss from discontinued operations	$	(46,305)	$	—	$	(1,507)	$	(47,812)

Intersegment Revenue

Revenue for the contract research segment included $7.6 million, $7.5 million and $12.6 million for services performed on behalf of the therapeutics segment for the years ended December 31, 2021, 2020 and 2019, respectively. All intersegment revenue has been eliminated in the Company’s consolidated statement of operations.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Legal Proceedings

12 Months Ended

Dec. 31, 2021

Legal Proceedings

Legal Proceedings

20. 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 alleged 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 sought 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 filed a motion to dismiss the consolidated amended complaint on April 17, 2020. Following briefing and oral argument on February 25, 2021, the motion was granted in part and denied in part on March 29, 2021, and the issues in dispute significantly narrowed. The defendants filed an answer to the remaining aspects of the consolidated amended complaint on April 19, 2021.

In June 2021, the defendants and the plaintiffs agreed to settle the Consolidated Securities Action. The parties signed and filed a settlement agreement in July 2021. On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the putative class and scheduled the final approval settlement hearing for November 30, 2021. Notice was subsequently given to the putative class. The court granted final approval of the settlement on December 9, 2021.

The Company had $2.65 million accrued as of December 31, 2021 for its financial obligation. The Company’s financial obligation was within the limits of its insurance coverage and accordingly a receivable for an insurance recovery equal to the settlement amount was recorded. The insurance recovery receivable and the litigation settlement liability are recorded in prepaid expenses and other current assets and accrued expenses, respectively, in the consolidated balance sheet.

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 alleged 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 sought, 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’ then-anticipated motion to dismiss the Consolidated Securities Action. On May 18, 2021, the court extended the stay – subject to certain conditions – until the resolution of a motion for summary judgment in the Consolidated Securities Action, which defendants in that action intended to file had the parties to the Consolidated Securities Action not reached an agreement to settle.

In June 2021, the defendants and the plaintiffs agreed to settle the Consolidated Derivative Action. The agreed terms require the Company to implement certain policies and for attorneys’ fees to be paid to plaintiff’s counsel. The parties signed and filed a settlement agreement in July 2021. On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the Company’s stockholders and scheduled the final approval settlement hearing for November 30, 2021. Notice was subsequently given to the Company’s stockholders. The court granted final approval of the settlement on December 9, 2021.

The Company’s financial obligation under the settlement was $425 thousand which was within the limits of its insurance coverage.

Product Liability Lawsuit

On December 18, 2020, plaintiff Daurie Mancini filed an amended complaint under the caption Daurie Mancini v. Aclaris Therapeutics, Inc. et al in the Superior Court of New Jersey Ocean County against the Company and certain third parties alleging injuries as a result of the plaintiff’s alleged treatment with ESKATA in 2019. The amended complaint sought unspecified compensatory and punitive damages. The Company filed a motion to dismiss the amended complaint on March 15, 2021. The Company’s motion to dismiss was granted on July 9, 2021. The Court dismissed the majority of claims against the Company with prejudice. All remaining claims against the Company were dismissed without prejudice.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Basis of Presentation

Basis of Presentation

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.

Discontinued Operations

Discontinued Operations

Use of Estimates

Use of Estimates

Revenue Recognition

Revenue Recognition

Contract Research

Cash Equivalents

Cash Equivalents

Marketable Securities

Marketable Securities

Property and Equipment

Property and Equipment

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Intangible Assets

Intangible Assets

beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned or otherwise impaired.

During the years ended December 31, 2021, 2020 and 2019, the Company did not record an IPR&D impairment.

Goodwill

Goodwill

Leases

Leases

Contingent Consideration

Contingent Consideration

Research and Development Costs

Research and Development Costs

Stock-Based Compensation

Stock-Based Compensation

term of the award. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the future.

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

Patent Costs

Patent Costs

Income Taxes

Income Taxes

Comprehensive Loss

Comprehensive Loss

Net Loss per Share

Net Loss per Share

Fair Value Measurements

Fair Value Measurements

●

Level 1 — Quoted prices in active markets for identical assets or liabilities.

●

Concentration of Credit Risk and of Significant Suppliers

Concentration of Credit Risk and of Significant Suppliers

Segment Reporting

Segment Reporting

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Discontinued Operations

Revenue Recognition

Revenue Recognition

Product Sales, net

Intangible Assets

Intangible Assets

Fair Value of Financial Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Assets and Liabilities

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


	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	21,678	$	—	$	—	$	21,678
Marketable securities		—		198,307		—		198,307
Total assets	$	21,678	$	198,307	$	—	$	219,985


Liabilities:
Contingent consideration	$	—	$	—	$	28,400	$	28,400
Total liabilities	$	—	$	—	$	28,400	$	28,400


	December 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	14,955	$	1,500	$	—	$	16,455
Marketable securities		—		32,068		—		32,068
Total assets	$	14,955	$	33,568	$	—	$	48,523


Liabilities:
Contingent consideration	$	—	$	—	$	4,061	$	4,061
Total liabilities	$	—	$	—	$	4,061	$	4,061

Schedule of the fair value of available for sale marketable securities


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities⁽¹⁾	$	40,993	$	6		(50)	$	40,949
Commercial paper		71,837		—		—		71,837
Asset-backed debt securities		36,166		—		(43)		36,123
Foreign government agency debt securities		4,073		—		(13)		4,060
U.S. government agency debt securities⁽²⁾		45,465		—		(127)		45,338
Total marketable securities	$	198,534	$	6	$	(233)	$	198,307
⁽¹⁾ Included in Corporate debt securities is $9.2 million with maturity dates between one and five years.
⁽²⁾ Included in US government agency debt securities is $25.0 million with maturity dates between one and five years.


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Commercial paper	$	20,483	$	—	$	—	$	20,483
Asset-backed debt securities		4,036		1		—		4,037
U.S. government agency debt securities		7,547		1		—		7,548
Total marketable securities	$	32,066	$	2	$	—	$	32,068

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2021

Property and Equipment, Net

Schedule of property and equipment, net


		December 31,		December 31,
(In thousands)	2021		2020
Computer equipment	$	1,380	$	1,197
Lab equipment		1,605		1,340
Furniture and fixtures		620		617
Leasehold improvements		1,123		1,123
Property and equipment, gross		4,728		4,277
Accumulated depreciation		(3,393)		(2,623)
Property and equipment, net	$	1,335	$	1,654

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2021

Intangible Assets

Schedule of intangible assets


		Gross Cost				Accumulated Amortization
	Remaining		December 31,		December 31,		December 31,		December 31,
(In thousands, except years)	Life (years)	2021		2020		2021		2020
Other intangible assets	5.6	$	751	$	751	$	332	$	257
In-process research and development	n/a		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	332	$	257

Schedule of estimated future amortization expenses


		Year Ending
(In thousands)		December 31,
2022	$	75
2023		75
2024		75
2025		75
2026		75
Thereafter		44
Total	$	419

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Schedule of accrued expenses


		December 31,		December 31,
(In thousands)	2021		2020
Employee compensation expenses	$	4,389	$	3,971
Research and development expenses		1,278		761
Litigation settlements (see Note 20)		2,650		—
Other		1,734		1,174
Total accrued expenses	$	10,051	$	5,906

Stock-Based Awards (Tables)

12 Months Ended

Dec. 31, 2021

Stock-Based Awards

Assumptions used to determine fair value of stock options granted


	Year Ended
	December 31,
	2021		2020		2019
Risk-free interest rate	0.92	%	0.87	%	2.27	%
Expected term (in years)	6.2		6.1		6.2
Expected volatility	76.60	%	85.19	%	99.36	%
Expected dividend yield	0	%	0	%	0	%

Summary of stock option activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
(In thousands, except share and per share data and years)	of Shares	Price		Term	Value
				(in years)
Outstanding as of December 31, 2018	4,282,081	$	20.53	7.9	$	2,404
Granted	44,500		5.75
Exercised	(142,779)		1.33			112
Forfeited and cancelled	(1,081,581)		23.01
Outstanding as of December 31, 2019	3,102,221	$	20.33	6.6	$	148
Granted	734,800		1.30
Exercised	(53,737)		1.30			145
Forfeited and cancelled	(911,786)		22.41
Outstanding as of December 31, 2020	2,871,498	$	15.16	6.8	$	4,890
Granted	1,068,100		23.44
Exercised	(115,548)		12.63			1,373
Forfeited and cancelled	(31,600)		23.26
Outstanding as of December 31, 2021	3,792,450	$	17.50	6.8	$	13,710
Options vested and expected to vest as of December 31, 2021	3,792,450	$	17.50	6.8	$	13,710
Options exercisable as of December 31, 2021	2,200,718	$	17.86	5.4	$	7,756

Summary of restricted stock units activity


		Weighted
		Average
		Grant Date		Aggregate
	Number	Fair Value		Intrinsic
(In thousands, except share and per share data)	of Shares	Per Share		Value
Outstanding as of December 31, 2018	626,407	$	20.30
Granted	3,650,942		3.56
Vested	(173,444)		21.31	$	799
Forfeited and cancelled	(510,990)		10.63
Outstanding as of December 31, 2019	3,592,915	$	4.62
Granted	1,168,805		1.36
Vested	(1,804,429)		3.33	$	2,607
Forfeited and cancelled	(713,134)		4.77
Outstanding as of December 31, 2020	2,244,157	$	3.83
Granted	664,948		23.33
Vested	(1,340,042)		3.18	$	31,492
Forfeited and cancelled	(72,117)		10.36
Outstanding as of December 31, 2021	1,496,946	$	12.75

Stock-based compensation expense


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
Cost of revenue	$	981	$	946	$	703
Research and development		3,866		2,919		5,091
General and administrative		9,213		7,342		10,288
Total stock-based compensation expense	$	14,060	$	11,207	$	16,082

Net Loss per Share (Tables)

12 Months Ended

Dec. 31, 2021

Net Loss per Share

Basic and diluted net loss per share


	Year Ended
	December 31,
(In thousands, except for share and per share data)	2021		2020		2019
Numerator:
Net loss	$	(90,865)	$	(51,015)	$	(161,354)
Denominator:
Weighted average shares of common stock outstanding, basic and diluted		56,730,583		42,539,293		41,323,921
Net loss per share, basic and diluted	$	(1.60)	$	(1.20)	$	(3.90)

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



	December 31,
	2021	2020	2019
Options to purchase common stock	3,792,450	2,871,498	3,102,221
Restricted stock unit awards	1,496,946	2,244,157	3,592,915
Warrants	—	460,251	—
Total potential shares of common stock	5,289,396	5,575,906	6,695,136

Leases (Tables)

12 Months Ended

Dec. 31, 2021

Leases

Schedule of lease expense


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
Operating lease expense	$	1,013	$	1,013	$	808

Finance Leases:
Amortization of right-to-use assets	$	—	$	113	$	443
Interest expense		—		5		87
Total finance lease expenses	$	—	$	118	$	530

Schedule of supplemental balance sheet information related to operating leases


		December 31,		December 31,
(In thousands)	2021		2020
Operating Leases:
Gross cost	$	5,240	$	5,240
Accumulated amortization		(1,803)		(1,111)
Other assets	$	3,437	$	4,129

Current portion of lease liabilities	$	693	$	603
Other liabilities		2,201		2,894
Total operating lease liabilities	$	2,894	$	3,497

Schedule of supplemental information related to operating and finance leases


	Year Ended
(In thousands, except for years and percentages)	December 31,
Supplemental Cash Flow Lease Information:	2021			2020			2019
Operating cash flows from operating leases	$	924		$	907		$	755
Operating cash flows from finance leases	$	—		$	5		$	87
Financing cash flows from finance leases	$	—		$	137		$	523

Leased assets obtained in exchange for new operating lease liabilities	$	—		$	—		$	3,060

Weighted-Average Remaining Lease Term (in years):
Operating leases		5.4			6.0			6.8

Weighted-Average Discount Rate:
Operating leases		10.1	%		10.1	%		10.1	%

Schedule of future maturities lease liabilities under operating leases


(In thousands)		Operating
Year Ending December 31,		Leases
2022	$	949
2023		866
2024		343
2025		352
2026		361
Thereafter		941
Total undiscounted lease payments		3,812
Less: unrecognized interest		(918)
Total lease liability	$	2,894

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

Schedule of loss before income taxes by jurisdiction


	Year Ended December 31,
(In thousands)	2021		2020		2019
U.S. operations	$	(90,865)	$	(51,215)	$	(161,192)
Foreign operations		—		18		(162)
Loss before income taxes	$	(90,865)	$	(51,197)	$	(161,354)

Reconciliation of statutory to effective rate


	Year Ended December 31,
	2021		2020		2019
Federal statutory income tax rate	(21.0)	%	(21.0)	%	(21.0)	%
State taxes, net of federal benefit	(7.7)		(7.5)		(6.6)
Research and development tax credits	(3.0)		(2.6)		(1.5)
Excess equity compensation tax benefit net of officer limitation	(3.9)		1.4		0.4
Revaluation of contingent consideration	5.6		1.0		—
Permanent differences	—		0.2		2.6
Change in deferred tax asset valuation allowance	30.0		28.1		26.2
Effective income tax rate	—	%	(0.4)	%	0.1	%

Schedule of deferred tax assets and liabilities


		December 31,
(In thousands)	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	123,583	$	101,277
Capitalized start-up costs		6,334		6,509
Research and development tax credit carryforwards		11,502		8,732
Capitalized research and development expense		4,046		4,611
Stock‑based compensation expense		17,728		14,526
Accrued compensation		825		745
Lease liabilities		721		888
Other		648		602
Total deferred tax assets		165,387		137,890
Deferred tax liabilities:
Property and equipment		(171)		(209)
Intangible asset		(1,567)		(2,033)
Right-to-use assets		(852)		(1,026)
Other		(1,340)		(430)
Total deferred tax liabilities		(3,930)		(3,698)
Valuation allowance		(161,824)		(134,559)
Deferred tax liabilities, net	$	(367)	$	(367)

Changes in deferred tax asset valuation allowance


		Year Ended December 31,
(In thousands)		2021		2020		2019
Valuation allowance at beginning of year	$	(134,559)	$	(120,966)	$	(80,985)
Decreases recorded as benefit to income tax provision		—		—		—
Decreases recorded to opening balance sheet		—		58		—
Increases recorded to income tax provision		(27,265)		(13,651)		(39,981)
Valuation allowance as of end of year	$	(161,824)	$	(134,559)	$	(120,966)

Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2021

Discontinued Operations.

Schedule of discontinued operations


	Year Ended
	December 31,
(In thousands, except share and per share data)	2021		2020		2019
Revenues:
Product sales, net	$	—	$	424	$	13,896
Total revenue, net		—		424		13,896

Costs and expenses:
Cost of revenue (excludes amortization)		—		—		4,522
Research and development		—		1		503
Sales and marketing		—		283		23,112
General and administrative		—		1		2,929
Intangible asset impairment		—		—		27,638
Amortization of definite-lived intangible		—		—		4,426
Total costs and expenses		—		285		63,130
Income (loss) from operations		—		139		(49,234)

Other income, net		—		—		1,422
Income (loss) from discontinued operations	$	—	$	139	$	(47,812)

Net income (loss) from discontinued operations per share, basic and diluted	$	—	$	0.00	$	(1.16)
Weighted average common shares outstanding, basic and diluted		56,730,583		42,539,293		41,323,921

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


	Year Ended
	December 31,
(In thousands)	2021		2020		2019
ESKATA	$	—	$	—	$	312
RHOFADE		—		424		13,584
Total product sales, net	$	—	$	424	$	13,896

The Company recorded $0.4 million of RHOFADE product sales, net during the year ended December 31, 2020 due to a reversal of previously accrued product sales-related reserves.

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


	December 31,		December 31,
(In thousands)	2021		2020
Accounts payable	$	—	$	1,175
Accrued expenses		2,202		1,936
Discontinued operations - current liabilities	$	2,202	$	3,111

- 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)

12 Months Ended

Dec. 31, 2021

Segment Information

Summary of results of operations by segment


(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2021	Therapeutics		Research		and Other		Company
Total revenue	$	932	$	13,447	$	(7,618)	$	6,761
Cost of revenue		—		11,885		(7,172)		4,713
Research and development		44,259		—		(446)		43,813
General and administrative		—		3,047		20,572		23,619
Revaluation of contingent consideration		24,339		—		—		24,339
Loss from operations	$	(67,666)	$	(1,485)	$	(20,572)	$	(89,723)

(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	696	$	13,319	$	(7,533)	$	6,482
Cost of revenue		—		12,228		(7,095)		5,133
Research and development		29,777		—		(439)		29,338
General and administrative		—		2,794		17,736		20,530
Revaluation of contingent consideration		2,393		—		—		2,393
Loss from operations	$	(31,474)	$	(1,703)	$	(17,735)	$	(50,912)
Income (loss) from discontinued operations	$	140	$	—	$	(1)	$	139

(In thousands)			Contract		Corporate		Total
Year Ended December 31, 2019	Therapeutics		Research		and Other		Company
Revenue, net	$	—	$	16,824	$	(12,597)	$	4,227
Cost of revenue		—		16,253		(12,198)		4,055
Research and development		64,564		—		(399)		64,165
Revaluation of contingent consideration		734		—		—		734
Goodwill impairment		18,504		—		—		18,504
General and administrative		620		2,738		24,469		27,827
Loss from operations	$	(84,422)	$	(2,167)	$	(24,469)	$	(111,058)
Loss from discontinued operations	$	(46,305)	$	—	$	(1,507)	$	(47,812)

Organization and Nature of Business (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Organization and Nature of Business
Cash, cash equivalents and marketable securities	$ 225,700
Accumulated deficit	$ 595,407	$ 504,542

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Summary of Significant Accounting Policies (Details) - employee	1 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2021
Summary Of Accounting Policies [Line Items]
Number of employees to be terminated	86
Revenue Recognition
Revenue, Practical Expedient, Financing Component [true false]		false
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]		true
Minimum
Contingent Consideration [Abstract]
Probability of success assumptions		10.00%
Discount range		6.30%
Maximum
Contingent Consideration [Abstract]
Probability of success assumptions		40.00%
Discount range		8.00%

Summary of Significant Accounting Policies - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2021
Computer equipment
Summary Of Accounting Policies [Line Items]
Depreciation period (in years)	3 years
Lab equipment
Summary Of Accounting Policies [Line Items]
Depreciation period (in years)	5 years
Furniture and fixtures
Summary Of Accounting Policies [Line Items]
Depreciation period (in years)	5 years

Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Summary of Significant Accounting Policies
Goodwill impairment charge	$ 18,504

Summary of Significant Accounting Policies - Stock-Based Compensation and Concentration of Credit Risk and of Significant Suppliers (Details) - item	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Summary of Significant Accounting Policies
Expected dividend yield (as a percent)	0.00%	0.00%	0.00%
Number of financial institutions holding entity funds	1

Summary of Significant Accounting Policies - Segments (Details)	12 Months Ended
	Dec. 31, 2021 segment
Summary of Significant Accounting Policies
Number of operating segments	2

RHOFADE Disposition - Amount Paid for Assets Acquired (Details) $ in Millions	1 Months Ended
	Oct. 31, 2019 USD ($)
Business Acquisition [Line Items]
Percentage of payments received in connection with license or sublicense of assets transferred	25.00%
EPI Health, LLC
Business Acquisition [Line Items]
Closing consideration	$ 35.2
Potential milestones payable	$ 20.0
Period of royalty payment from first commercial sale	10 years
APA \| EPI Health, LLC
Business Acquisition [Line Items]
Percentage rights given for usage of cream	1.00%

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Assets:
Marketable securities	$ 198,307	$ 32,068
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
Revaluation of contingent consideration	24,339	2,393	$ 734
Confluence
Liabilities:
Revaluation of contingent consideration	24,300
Recurring
Assets:
Cash equivalents	21,678	16,455
Marketable securities	198,307	32,068
Total assets measured at fair value	219,985	48,523
Liabilities:
Contingent consideration	28,400	4,061
Total liabilities measured at fair value	28,400	4,061
Recurring \| Level 1
Assets:
Cash equivalents	21,678	14,955
Total assets measured at fair value	21,678	14,955
Recurring \| Level 2
Assets:
Cash equivalents		1,500
Marketable securities	198,307	32,068
Total assets measured at fair value	198,307	33,568
Recurring \| Level 3
Liabilities:
Contingent consideration	28,400	4,061
Total liabilities measured at fair value	$ 28,400	$ 4,061

Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Marketable securities:
Amortized Cost	$ 198,534	$ 32,066
Gross Unrealized Gain	6	2
Gross Unrealized Loss	(233)
Fair Value	198,307	32,068
Corporate debt securities
Marketable securities:
Amortized Cost	40,993
Gross Unrealized Gain	6
Gross Unrealized Loss	(50)
Fair Value	40,949
Debt securities, maturity dates between one and five years	9,200
Commercial paper
Marketable securities:
Amortized Cost	71,837	20,483
Fair Value	71,837	20,483
Asset-backed securities
Marketable securities:
Amortized Cost	36,166	4,036
Gross Unrealized Gain		1
Gross Unrealized Loss	(43)
Fair Value	36,123	4,037
Foreign Government Agency Debt Securities
Marketable securities:
Amortized Cost	4,073
Gross Unrealized Loss	(13)
Fair Value	4,060
U.S. government agency debt securities
Marketable securities:
Amortized Cost	45,465	7,547
Gross Unrealized Gain		1
Gross Unrealized Loss	(127)
Fair Value	45,338	$ 7,548
Debt securities, maturity dates between one and five years	$ 25,000

Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property and Equipment, Net
Property and equipment, gross	$ 4,728	$ 4,277
Accumulated depreciation	(3,393)	(2,623)
Property and equipment, net	1,335	1,654
Depreciation expense	800	1,100	$ 1,500
Computer equipment
Property and Equipment, Net
Property and equipment, gross	1,380	1,197
Lab equipment
Property and Equipment, Net
Property and equipment, gross	1,605	1,340
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	620	617
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	$ 1,123	$ 1,123

Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Definite-lived intangible assets
Accumulated Amortization	$ 332	$ 257
Intangible assets, net
Gross cost	7,380	7,380
In-process research and development
Indefinite-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	5 years 7 months 6 days
Definite-lived intangible assets
Gross Cost	$ 751	751
Accumulated Amortization	$ 332	$ 257

Intangible Assets - Future Amortization Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 75	$ 75	$ 75
Future amortization expenses
2022	75
2023	75
2024	75
2025	75
2026	75
Thereafter	44
Total	$ 419

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accrued Expenses
Employee compensation expenses	$ 4,389	$ 3,971
Research and development expenses	1,278	761
Litigation settlements (see Note 20)	2,650
Other	1,734	1,174
Total accrued expenses	$ 10,051	$ 5,906

Debt (Details) - USD ($) $ in Millions	1 Months Ended
Debt (Details) - USD ($) $ in Millions	Jul. 31, 2021	Oct. 31, 2019	Jan. 31, 2021	Mar. 31, 2020	Oct. 31, 2018
SVB
Debt Instrument [Line Items]
Common stock warrants			388,119	460,251
Term Loan Facility
Debt Instrument [Line Items]
Loan borrowed				$ 11.0
Term Loan Facility \| Oxford Finance LLC
Debt Instrument [Line Items]
Loan borrowed		$ 30.0			$ 30.0
Loan, maximum borrowing capacity					$ 65.0
Loan repaid		$ 32.4
Term Loan Facility \| SVB
Debt Instrument [Line Items]
Loan borrowed	$ 11.0
Loan repaid	$ 11.7

- 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

Stockholders' Equity (Details) $ / shares in Units, $ in Thousands	1 Months Ended			12 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares	Jan. 31, 2021 USD ($) $ / shares shares	Aug. 31, 2020 USD ($) shares	Dec. 31, 2021 USD ($) Vote $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Mar. 31, 2020 USD ($) $ / shares shares
Class of Stock [Line Items]
Preferred stock, shares authorized \| shares				10,000,000	10,000,000
Preferred stock, shares outstanding \| shares				0	0
Common stock, shares authorized \| shares				100,000,000	100,000,000
Common stock, par value (in dollars per share) \| $ / shares				$ 0.00001	$ 0.00001
Common stock, shares issued \| shares				61,228,446	45,109,314
Common stock, shares outstanding \| shares				61,228,446	45,109,314
Number of votes per share \| Vote				1
Dividends declared				$ 0
Payments of stock offering costs					$ 211
January 2021 Public Offering
Class of Stock [Line Items]
Shares, issued \| shares		6,306,271
Shares issued, price per share \| $ / shares		$ 17.50
Aggregate gross proceeds		$ 110,400
Underwriting discounts and commissions		6,600
Payments of stock offering costs		400
Proceeds from common stock		$ 103,300
June 2021 Public Offering
Class of Stock [Line Items]
Shares, issued \| shares	8,098,592
Shares issued, price per share \| $ / shares	$ 17.75
Aggregate gross proceeds	$ 143,800
Underwriting discounts and commissions	8,600
Payments of stock offering costs	300
Proceeds from common stock	$ 134,900
Lincoln Park Capital Fund, LLC \| Purchase Agreement
Class of Stock [Line Items]
Common stock sell			$ 15,000
Purchase agreement term			36 months
Common stock shares issued \| shares			121,584
Aggregate fair value			$ 300
Common stock, sold \| shares					2,111,170
Proceeds from common stock					$ 7,700
SVB
Class of Stock [Line Items]
Common stock warrants \| shares		388,119				460,251
Initial exercise price \| $ / shares						$ 0.956
Fair value of warrants						$ 400

Stock-Based Awards (Details) - shares		12 Months Ended			44 Months Ended
Stock-Based Awards (Details) - shares	Jan. 01, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Sep. 14, 2015	Dec. 31, 2018	Sep. 30, 2015
Stock-based awards
Options granted (in shares)		1,068,100	734,800	44,500
Options outstanding		3,792,450	2,871,498	3,102,221		4,282,081
Stock Option Valuation
Risk-free interest rate (as a percent)		0.92%	0.87%	2.27%
Expected term (in years)		6 years 2 months 12 days	6 years 1 month 6 days	6 years 2 months 12 days
Expected volatility (as a percent)		76.60%	85.19%	99.36%
Expected dividend yield (as a percent)		0.00%	0.00%	0.00%
2017 Inducement Plan
Stock-based awards
Options outstanding		410,600
2017 Inducement Plan \| Restricted stock unit awards
Stock-based awards
Number of shares outstanding		7,313
2015 Equity Incentive Plan
Stock-based awards
Number of shares authorized							1,643,872
Number of shares available for grant		2,708,469
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent)		4.00%
Additional shares available	2,449,137
Options outstanding		2,897,705
2015 Equity Incentive Plan \| Restricted stock unit awards
Stock-based awards
Number of shares outstanding		1,489,633
2012 Equity Compensation Plan
Stock-based awards
Number of shares available for grant		0
Options granted (in shares)					1,140,524
Options outstanding		484,145	549,561
Term of award (in years)		10 years

Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Options, Number of Shares
Number of Shares, beginning balance	2,871,498	3,102,221	4,282,081
Number of Shares, Granted	1,068,100	734,800	44,500
Number of Shares, Exercised	(115,548)	(53,737)	(142,779)
Number of Shares, Forfeited and cancelled	(31,600)	(911,786)	(1,081,581)
Number of Shares, ending balance	3,792,450	2,871,498	3,102,221	4,282,081
Number of Shares, Options vested and expected to vest	3,792,450
Number of Shares, Options exercisable	2,200,718
Options, Weighted Average Exercise Price
Weighted Average Exercise Price, beginning balance (in dollars per share)	$ 15.16	$ 20.33	$ 20.53
Weighted Average Exercise Price, Granted (in dollars per share)	23.44	1.30	5.75
Weighted Average Exercise Price, Exercised (in dollars per share)	12.63	1.30	1.33
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share)	23.26	22.41	23.01
Weighted Average Exercise Price, ending balance (in dollars per share)	17.50	$ 15.16	$ 20.33	$ 20.53
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share)	17.50
Weighted Average Exercise Price, Options exercisable (in dollars per share)	$ 17.86
Options, Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (in years)	6 years 9 months 18 days	6 years 9 months 18 days	6 years 7 months 6 days	7 years 10 months 24 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years)	6 years 9 months 18 days
Weighted Average Remaining Contractual Term, Options exercisable (in years)	5 years 4 months 24 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 13,710	$ 4,890	$ 148	$ 2,404
Aggregate Intrinsic Value, Exercised	1,373	$ 145	$ 112
Aggregate Intrinsic Value, Options vested and expected to vest	13,710
Aggregate Intrinsic Value, Options exercisable	$ 7,756
Weighted average grant-date fair value of stock options granted (in dollars per share)	$ 15.67	$ 0.93	$ 4.63

Stock-Based Awards - RSUs (Details) - Restricted stock unit awards - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
RSU, Number of Units
Units outstanding, beginning of period	2,244,157	3,592,915	626,407
Granted	664,948	1,168,805	3,650,942
Vested	(1,340,042)	(1,804,429)	(173,444)
Forfeited and cancelled	(72,117)	(713,134)	(510,990)
Units outstanding, end of period	1,496,946	2,244,157	3,592,915
RSU, Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value, beginning balance (in dollars per share)	$ 3.83	$ 4.62	$ 20.30
Weighted average grant date fair value, granted (in dollars per share)	23.33	1.36	3.56
Weighted average grant date fair value, vested (in dollars per share)	3.18	3.33	21.31
Weighted average grant date fair value, forfeited and cancelled (in dollars per share)	10.36	4.77	10.63
Weighted average grant date fair value, ending balance (in dollars per share)	$ 12.75	$ 3.83	$ 4.62
Aggregate intrinsic value of awards that vested during the period	$ 31,492	$ 2,607	$ 799

Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock-based compensation expense
Stock-based compensation expense	$ 14,060	$ 11,207	$ 16,082
Unrecognized stock-based compensation expense, options	13,400
Unrecognized stock-based compensation expense, RSUs	13,800
Cost of revenue.
Stock-based compensation expense
Stock-based compensation expense	981	946	703
Research and development
Stock-based compensation expense
Stock-based compensation expense	3,866	2,919	5,091
General and administrative
Stock-based compensation expense
Stock-based compensation expense	$ 9,213	$ 7,342	$ 10,288
Options to purchase common stock
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)	3 years
Restricted stock unit awards
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)	2 years 10 months 24 days

Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Net loss	$ (90,865)	$ (51,015)	$ (161,354)
Denominator:
Weighted average common shares outstanding, basic	56,730,583	42,539,293	41,323,921
Weighted average common shares outstanding, diluted	56,730,583	42,539,293	41,323,921
Net loss per share, basic	$ (1.60)	$ (1.20)	$ (3.90)
Net loss per share, diluted	$ (1.60)	$ (1.20)	$ (3.90)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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-URI http://asc.fasb.org/extlink&oid=124509347&loc=SL7669625-108580

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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Reference 32: http://www.xbrl.org/2003/role/disclosureRef
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Reference 34: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 35: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

+ Details

Net Loss per Share - Anti-dilution (Details) - shares	12 Months Ended
Net Loss per Share - Anti-dilution (Details) - shares	Dec. 31, 2021	Dec. 31, 2020	Dec. 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	5,289,396	5,575,906	6,695,136
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	3,792,450	2,871,498	3,102,221
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	1,496,946	2,244,157	3,592,915
Warrants
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	12 Months Ended
Leases (Details) $ in Thousands	Dec. 31, 2021 USD ($) ft² lease	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Feb. 28, 2019 ft²
Lessee, Lease, Description [Line Items]
Loss on lease termination			$ 200
Area leased, sublease agreement \| ft²	33,019			20,433
Sub-subleased \| ft²	8,115
Rent expense	$ 1,000	$ 1,000	$ 1,000
Number of lease financing arrangements \| lease	2
Finance lease term			4 years
Amortization expense	$ 1,000	1,000	$ 1,000
Operating Leases:
Accumulated amortization	332	257
Other assets	7,048	7,123
Gross cost	4,728	4,277
Accumulated amortization	(3,393)	(2,623)
Property and equipment, net	1,335	1,654
Current portion of lease liabilities	$ 693	$ 603
Financial position	Current portion of lease liabilities	Current portion of lease liabilities
Other liabilities	$ 2,201	$ 2,894
Financial position	Other liabilities	Other liabilities
Total operating lease liabilities	$ 2,894	$ 3,497
Operating Leases
Operating Leases:
Gross cost	5,240	5,240
Accumulated amortization	1,803	1,111
Other assets	$ 3,437	$ 4,129

Leases - Lease Costs (Details) - USD ($) $ in Thousands	12 Months Ended
Leases - Lease Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Lease Costs
Operating lease expense	$ 1,013	$ 1,013	$ 808
Amortization of right-to-use assets		113	443
Interest expense		5	87
Total finance lease expenses		$ 118	$ 530

Leases - Supplemental Information Related to Operating and Finance Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Leases
Operating cash flows from operating leases	$ 924	$ 907	$ 755
Operating cash flows from finance leases		5	87
Financing cash flows from finance leases		$ 137	523
Leased assets obtained in exchange for new operating lease liabilities			$ 3,060
Weighted-Average Remaining Lease Term (in years):
Operating leases	5 years 4 months 24 days	6 years	6 years 9 months 18 days
Weighted-Average Discount Rate:
Operating leases	10.10%	10.10%	10.10%

Leases - Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Operating Leases
2022	$ 949
2023	866
2024	343
2025	352
2026	361
Thereafter	941
Total undiscounted lease payments	3,812
Less: unrecognized interest	(918)
Total lease liability	$ 2,894	$ 3,497

Income Taxes - Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Taxes
Federal income tax benefit	$ 0	$ 0	$ 0
State income tax benefit	0	0	0
Loss before income taxes
U.S. operations	(90,865)	(51,215)	(161,192)
Foreign operations		18	(162)
Loss before income taxes	$ (90,865)	$ (51,197)	$ (161,354)
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Federal statutory income tax rate	(21.00%)	(21.00%)	(21.00%)
State taxes, net of federal benefit	(7.70%)	(7.50%)	(6.60%)
Research and development tax credits	(3.00%)	(2.60%)	(1.50%)
Excess equity compensation tax benefit net of officer limitation	(3.90%)	1.40%	0.40%
Revaluation of contingent consideration	5.60%	1.00%
Permanent differences		0.20%	2.60%
Change in deferred tax asset valuation allowance	30.00%	28.10%	26.20%
Effective income tax rate		(0.40%)	0.10%

Income Taxes - Deferred Assets and Liabilities, CFDs (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Components of net deferred tax assets
Net operating loss carryforwards	$ 123,583	$ 101,277
Capitalized start-up costs	6,334	6,509
Research and development tax credit carryforwards	11,502	8,732
Capitalized research and development expense	4,046	4,611
Stockbased compensation expense	17,728	14,526
Accrued compensation	825	745
Lease liabilities	721	888
Other	648	602
Total deferred tax assets	165,387	137,890
Property and equipment	(171)	(209)
Intangible asset	(1,567)	(2,033)
Right-to-use assets	(852)	(1,026)
Other	(1,340)	(430)
Total deferred tax liabilities	(3,930)	(3,698)
Valuation allowance	(161,824)	(134,559)	$ (120,966)	$ (80,985)
Deferred tax liabilities, net	(367)	$ (367)
United Kingdom Tax Authority
Components of net deferred tax assets
Operating loss carryforwards	200
Federal
Components of net deferred tax assets
Operating loss carryforwards	448,400
Federal \| Research Tax Credit Carryforward [Member]
Components of net deferred tax assets
Tax credit carryforward	11,400
State
Components of net deferred tax assets
Operating loss carryforwards	404,900
State \| Research Tax Credit Carryforward [Member]
Components of net deferred tax assets
Tax credit carryforward	$ 100

Income Taxes - Valuation Allowance and Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Changes in valuation allowance for deferred tax assets
Valuation allowance at beginning of year	$ (134,559)	$ (120,966)	$ (80,985)
Decreases recorded to opening balance sheet		58
Increases recorded to income tax provision	(27,265)	(13,651)	(39,981)
Valuation allowance as of end of year	$ (161,824)	$ (134,559)	$ (120,966)

Related Party Transactions (Details) - Mallinckrodt PlC - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Related Party Transactions
Invoice amount	$ 24	$ 300
Outstanding accounts receivable	$ 0	$ 24

- Definition

For an unclassified balance sheet, amounts due from related parties including affiliates, employees, joint ventures, officers and stockholders, immediate families thereof, and pension funds.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(k)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.10(3))
-URI http://asc.fasb.org/extlink&oid=120398452&loc=d3e534808-122878

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.3)
-URI http://asc.fasb.org/extlink&oid=120400017&loc=d3e572229-122910

+ Details

Agreements Related to Intellectual Property (Details) - USD ($)	1 Months Ended	12 Months Ended
	Oct. 31, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Aug. 31, 2017
Agreements Related to Intellectual Property
Revenue, Net		$ 6,761,000	$ 6,482,000	$ 4,227,000
Potential milestone payments				20,000,000.0
Percentage of upfront and license fees	25.00%
Term of agreement	10 years
Contingent consideration		28,400,000	4,061,000
Royalty
Agreements Related to Intellectual Property
Revenue, Net		800,000	700,000
Rigel
Agreements Related to Intellectual Property
Milestone payment				4,000,000.0
Amendment fees payable			1,500,000
Agreement and Plan of Merger \| Confluence
Agreements Related to Intellectual Property
Additional contingent consideration based on milestones, maximum, per Agreement					$ 75,000,000.0
Contingent consideration		28,400,000	4,100,000
APA \| Allergan
Agreements Related to Intellectual Property
Aggregate royalty payments		$ 0	$ 0	$ 1,400,000

Retirement Savings Plan (Details) - USD ($) $ in Millions	12 Months Ended
Retirement Savings Plan (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Retirement Savings Plan
Employee earnings subject to employer match (as a percent)	4.00%
Company contributions	$ 0.3	$ 0.4	$ 0.7

Restructuring Charges (Details) $ in Millions	1 Months Ended	12 Months Ended
Restructuring Charges (Details) $ in Millions	Sep. 30, 2019 employee	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Accrued Expenses
Number of employees	86
Expenses recognized \| $		$ 0.1	$ 2.7
Payments made \| $		$ 0.3	$ 2.3
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
Noticed employees
Accrued Expenses
Number of employees	23

Discontinued Operations (Details) - USD ($) $ in Thousands	12 Months Ended
Discontinued Operations (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2019
Discontinued Operations.
Revenue, Practical Expedient, Financing Component [true false]	false
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]	true
Impairment charge		$ 27,638

Discontinued Operations - Loss (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 424	$ 13,896
Cost of revenue (excludes amortization)			4,522
Research and development		1	503
Sales and marketing		283	23,112
General and administrative		1	2,929
Intangible asset impairment			27,638
Amortization of definite-lived intangible			4,426
Total costs and expenses		285	63,130
Income (loss) from discontinued operations		139	(49,234)
Other income, net			1,422
Income (loss) from discontinued operations before income taxes		139	(47,812)
Income tax benefit		(182)
Income (loss) from discontinued operations		$ 139	$ (47,812)
Net Income (loss) from discontinued operations per share, basic and diluted		$ 0.00	$ (1.16)
Weighted average common shares outstanding, basic and diluted	56,730,583	42,539,293	41,323,921
Product sales, net
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 424	$ 13,896
ESKATA
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net			312
RHOFADE
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net		$ 424	$ 13,584

Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
Accounts payable		$ 1,175
Accrued expenses	$ 2,202	1,936
Discontinued operations - current liabilities	$ 2,202	$ 3,111

- Definition

Amount classified as liabilities attributable to disposal group held for sale or disposed of, expected to be disposed of within one year or the normal operating cycle, if longer.

+ References + Details

Segment Information (Details) $ in Thousands	12 Months Ended
Segment Information (Details) $ in Thousands	Dec. 31, 2021 USD ($) segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments \| segment	2
Total revenue	$ 6,761	$ 6,482	$ 4,227
Cost of revenue	4,713	5,133	4,055
Research and development	43,813	29,338	64,165
General and administrative	23,619	20,530	27,827
Revaluation of contingent consideration	24,339	2,393	734
Goodwill impairment			18,504
Amortization expense	75	75	75
Loss from operations	(89,723)	(50,912)	(111,058)
Loss from discontinued operations		139	(49,234)
Income (loss) from discontinued operations		139	(47,812)
Dermatology Therapeutics Segment
Segment Reporting Information [Line Items]
Total revenue	932	696
Research and development	44,259	29,777	64,564
General and administrative			620
Revaluation of contingent consideration	24,339	2,393	734
Goodwill impairment			18,504
Loss from operations	(67,666)	(31,474)	(84,422)
Income (loss) from discontinued operations		140	(46,305)
Contract Research Segment
Segment Reporting Information [Line Items]
Total revenue	13,447	13,319	16,824
Cost of revenue	11,885	12,228	16,253
General and administrative	3,047	2,794	2,738
Loss from operations	(1,485)	(1,703)	(2,167)
Corporate and Other
Segment Reporting Information [Line Items]
Total revenue	(7,618)	(7,533)	(12,597)
Cost of revenue	(7,172)	(7,095)	(12,198)
Research and development	(446)	(439)	(399)
General and administrative	20,572	17,736	24,469
Loss from operations	(20,572)	(17,735)	(24,469)
Income (loss) from discontinued operations		(1)	(1,507)
Intersegment Eliminations \| Contract Research Segment
Segment Reporting Information [Line Items]
Total revenue	$ 7,600	$ 7,500	$ 12,600

Legal Proceedings (Details) $ in Thousands	Jan. 24, 2020 item	Dec. 31, 2021 USD ($)
Other Commitments [Line Items]
Accrual for estimated financial obligation		$ 2,650
Consolidated Securities Action
Other Commitments [Line Items]
Accrual for estimated financial obligation		2,650
Consolidated Securities Action \| Executive officer
Other Commitments [Line Items]
Number of defendants \| item	2
Consolidated Derivative Action
Other Commitments [Line Items]
Accrual for estimated financial obligation		$ 425