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Nature of the Business and Basis of Presentation

1.	Nature of the Business and Basis of Presentation

Seres Therapeutics, Inc. (the “Company”) was incorporated under the laws of the State of Delaware in October 2010 under the name Newco LS21, Inc. In October 2011, the Company changed its name to Seres Health, Inc., and in May 2015, the Company changed its name to Seres Therapeutics, Inc. The Company is a microbiome therapeutics platform company developing a novel class of biological drugs, which are designed to restore health by repairing the function of a dysbiotic microbiome. The Company’s lead product candidate, SER-109, is designed to reduce recurrences of Clostridium difficile infection (“CDI”), a debilitating infection of the colon, and, if approved by the U.S. Food and Drug Administration (“FDA”), could be a first-in-field oral microbiome drug. The Company’s second product candidate, SER-287, is being developed to treat inflammatory bowel disease (“IBD”) including ulcerative colitis (“UC”). The Company is also developing SER-401, a microbiome therapeutic candidate for use with checkpoint inhibitors (“CPI’s”) in patients with solid tumors. In addition, using its microbiome therapeutics platform, the Company is developing product candidates to treat diseases where the microbiome is implicated, including SER-262, a rationally designed product candidate, to prevent an initial recurrence of primary CDI, SER-301, a rationally designed IBD product candidate, and SER-155, a rationally designed product candidate to prevent infections and improve gastrointestinal barrier function (including the consequences of graft versus host disease) in patients following allogeneic hematopoietic stem cell transplants or solid organ transplants. The Company is also using its microbiome therapeutics platform to conduct research on various indications, including: infectious diseases, metabolic diseases, and inflammatory and immune diseases, including immuno-oncology.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.

The Company’s product candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.

Under Accounting Standards Update, or ASU, 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), or ASC 205-40, the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.

As of September 30, 2018, the Company had an accumulated deficit of $368.1 million and cash, cash equivalents and short-term investments of $72.9 million. Management has assessed the Company’s ability to continue as a going concern in accordance with the requirements of ASC 205-40 and determined that the Company’s accumulated deficit, history of losses, and future expected losses meet the ASC 205-40 standard for raising substantial doubt about the Company’s ability to continue as a going concern within one year of the issuance date of these condensed consolidated financial statements.

The Company’s current financial resources and currently forecasted operating plan would allow the Company to operate into the second quarter of 2019 which is within one year from the issuance of these condensed consolidated financial statements. The Company has developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations and reducing cash expenditures.

If the Company is not able to secure adequate additional funding, the Company plans to make reductions in spending. In that event, the Company may have to delay, scale back, or eliminate some or all of the Company’s planned clinical trials and research stage programs. The actions necessary to reduce spending under this plan at a level that mitigates the factors described above is not considered probable, as defined in the accounting standards; as such, under the requirements of ASC 205-40, the full extent to which management may extend the Company’s funds through these actions may not be considered in management’s assessment of the Company’s ability to continue as a going concern for the next 12 months as defined by ASC-205-40.

As a result, in accordance with the requirements of ASC 205-40, management has concluded that it is required to disclose that substantial doubt exists about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued.

The Company is eligible to receive contingent milestone payments under its license and collaboration agreement with Nestec Ltd. (“NHS”), an affiliate of Nestlé Health Science US Holdings, Inc. (“Nestlé Health Science”), a significant stockholder of the Company, if certain development milestones are achieved. However, these milestones are uncertain and there is no assurance that the Company will receive any of them. Until such time, if ever, as the Company can generate substantial product revenue, the Company will finance its cash needs through a combination of public or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties. The Company may not be able to obtain funding on acceptable terms, or at all. If the Company is unable to raise additional funds as and when needed, it would have a negative impact on the Company’s financial condition, which may require the Company to delay, reduce or eliminate certain research and development activities and reduce or eliminate discretionary operating expenses, which could constrain the Company’s ability to pursue its business strategies.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2017 included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on March 8, 2018.

The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements. The condensed consolidated balance sheet at December 31, 2017 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments which are necessary for a fair presentation of the Company’s financial position as of September 30, 2018 and consolidated results of operations for the three and nine months ended September 30, 2018 and 2017 and its cash flows for the nine months ended September 30, 2018 and 2017. Such adjustments are of a normal and recurring nature. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2018.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

2.	Summary of Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the condensed consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2017, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2018 except for the adoption of the new revenue standard discussed in Note 8, Collaboration Revenue.

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 consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the accrual of research and development expenses and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.

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 and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants and unvested restricted stock.

The restricted stock units granted by the Company entitle the holder of such awards to dividends declared or paid by the board of directors, regardless of whether such awards are unvested, as if such shares were outstanding common shares at the time of the dividend. However, the unvested restricted stock units are not entitled to share in the residual net assets (deficit) of the Company. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three and Nine Months Ended September 30,
	2018		2017
Stock options to purchase common stock		7,444,040		6,133,596
Unvested restricted stock units		289,908		401,900
		7,733,948		6,535,496

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies how a company identifies promised goods or services and clarifies whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016 the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective dates and transition requirements as ASU 2014-09, all of which collectively are herein referred to as “ASC 606.” The Company has adopted this standard as of the required effective date of January 1, 2018, using the modified retrospective transition method. See Note 8, “Collaboration Revenue,” for discussion of the impact of adoption of this standard.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), (“ASU 2016-02”), which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The most notable change will be lessees recognizing an asset and liability on their balance sheet for operating leases. In 2018, the FASB issued ASU 2018-01, and ASU 2018-11, which collectively add two practical expedients, provide a second modified retrospective transition method which does not require retrospective adjustment of prior periods, and provide certain narrow scope improvements to the new lease guidance. ASU 2016-02 and the amending ASUs are effective for the Company for annual periods beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The Company will adopt the new guidance for its fiscal year beginning January 1, 2019 and expects to use the modified retrospective transition method that does not require restatement of prior periods. The Company is currently in the process of evaluating the impact of the guidance on its consolidated financial statements and is undertaking an assessment of its lease population that it expects to complete during the fourth quarter of 2018. The Company anticipates material adjustments to its balance sheet for the recognition of a lease liability and a right of use asset for its operating leases, which primarily include, but are not limited to, the lease of its corporate headquarters at 200 Sidney Street and additional research space at 215 First Street, both in Cambridge, Massachusetts. The Company does not expect a material impact in its income statement or statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This standard addresses specific cash flow issues with the objective of reducing existing diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. The standard was effective for the Company on January 1, 2018. The Company adopted this standard as of the required effective date of January 1, 2018. The adoption of this standard did not have any impact on the Company’s financial statements.

In November 2016, the FASB issued ASU 2016-18, Restricted Cash. The new standard requires restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The new standard was effective for the Company on January 1, 2018. The Company adopted the new standard as of the required effective date of January 1, 2018 and will reflect the adoption retrospectively to all periods presented. The Company’s statements of cash flows includes restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on such statements. A reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same amounts shown in the statement of cash flows is as follows:

	September 30,		December 31,		September 30,		December 31,
	2018		2017		2017		2016
Cash and cash equivalents	$	55,713	$	36,088	$	46,025	$	54,539
Restricted cash		1,513		1,513		1,513		1,400
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows	$	57,226	$	37,601	$	47,538	$	55,939

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718).” ASU 2018-07 simplifies the accounting for nonemployee share-based payment transactions. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company is currently in the process of evaluating the impact of the guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This standard eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2018-13 on our condensed consolidated financial statements.

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

3.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 (an exit price) 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 and investments are carried at fair value, determined according to the fair value hierarchy described above. The Company’s investments in certificates of deposit are carried at amortized cost, which approximates fair value. Certain cash equivalents or investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The carrying values of the Company’s accounts payable and accrued expenses approximate their fair value due to the short-term nature of these liabilities.

The following table presents information about the Company’s assets as of September 30, 2018 and December 31, 2017 that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (note there were no liabilities measured at fair value on a recurring basis in either of the periods presented):

	Fair Value Measurements as of September 30, 2018 Using:
	Level 1		Level 2		Level 3		Not Subject to Leveling ⁽¹⁾		Total
Assets:
Cash Equivalents	$	—	$	500	$	—	$	39,029	$	39,529
Investments:
Commercial Paper	$	—	$	1,397	$	—	$	—	$	1,397
Corporate Bonds		—		4,296		—		—		4,296
Treasury Bonds		—		11,484		—		—		11,484
	$	—	$	17,677	$	—	$	39,029	$	56,706
⁽¹⁾ Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

	Fair Value Measurements as of December 31, 2017 Using:
	Level 1		Level 2		Level 3		Not Subject to Leveling ⁽¹⁾		Total
Assets:
Cash Equivalents	$	—	$	—	$	—	$	25,964	$	25,964
Investments:
Commercial Paper	$	—	$	6,198	$	—	$	—	$	6,198
Certificates of Deposit		—		8,916						8,916
Corporate Bonds		—		58,865		—		—		58,865
Government Securities		—		22,954		—		—		22,954
Treasury Bonds		—		16,962		—		—		16,962
	$	—	$	113,895	$	—	$	25,964	$	139,859
⁽¹⁾ Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

As of September 30, 2018, the Company’s cash equivalents, which were invested in money market funds and corporate bonds with original maturities of less than 90 days from the date of purchase, were valued based on Level 2 inputs.

As of December 31, 2017, the Company’s cash equivalents consisted of money market funds and corporate bonds with original maturities of less than 90 days from the date of purchase and were valued based on Level 2 inputs.

The fair value of the Company’s investments, which consisted of commercial paper, certificates of deposit, corporate bonds, government securities and treasury bonds as of September 30, 2018 and December 31, 2017 were determined using Level 2 inputs. During the nine months ended September 30, 2018, there were no transfers between Level 1, Level 2 and Level 3.

- 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

Investments

9 Months Ended

Sep. 30, 2018

Investments Debt And Equity Securities [Abstract]

Property Plant And Equipment [Abstract]

4.	Investments

As of September 30, 2018 and December 31, 2017, the fair value of available-for-sale investments by type of security was as follows:

	September 30, 2018
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Investments:
Commercial Paper	$	1,397	$	—	$	—		$	1,397
Corporate Bonds		4,298		—		(2	)		4,296
Treasury Bonds		11,490		—		(6	)		11,484
	$	17,185	$	—		(8	)	$	17,177

	December 31, 2017
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Investments:
Commercial Paper	$	6,198	$	—	$	—		$	6,198
Certificates of Deposit		8,916		—		—			8,916
Corporate Bonds		58,937		—		(72	)		58,865
Government Securities		22,997		—		(43	)		22,954
Treasury Bonds		16,992		—		(30	)		16,962
	$	114,040	$	—	$	(145	)	$	113,895

Investments with original maturities of less than 90 days are included in cash and cash equivalents on the consolidated balance sheets and are not included in the table above. Investments with maturities of less than 12 months are considered current and those investments with maturities greater than 12 months are considered non-current.

All investments with unrealized losses at September 30, 2018 have been in a loss position for less than 12 months or the loss is not material and temporary in nature. The Company does not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis.

Property and Equipment, Net

9 Months Ended

Sep. 30, 2018

Property and Equipment, Net

5.	Property and Equipment, Net

Property and equipment, net consisted of the following:

	September 30, 2018			December 31, 2017
Laboratory equipment	$	14,367			13,181
Computer equipment		2,864			2,832
Furniture and office equipment		1,033			1,033
Leasehold improvements		27,977			27,963
Construction in progress		150			361
		46,391			45,370
Less: Accumulated depreciation and amortization	$	(18,308	)	$	(12,439	)
	$	28,083		$	32,931

Depreciation and amortization expense was $1,974, $ 5,869, $1,866 and $5,356 for the three and nine months ended September 30, 2018 and 2017, respectively.

Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2018

Payables And Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

6.	Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	September 30, 2018		December 31, 2017
Development and manufacturing costs	$	7,389	$	3,910
Payroll and payroll-related costs		3,982		4,962
Professional fees		462		344
Facility and other		2,801		3,297
	$	14,634	$	12,513

Stockholders' Equity Common Stock

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity Common Stock

7.	Stockholders’ Equity Common Stock

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2017:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding as of December 31, 2017		6,125,692		$	13.00		7.70	$	15,808
Granted		1,820,776			10.08
Exercised		(196,508	)		0.69
Forfeited		(305,920	)		16.96
Outstanding as of September 30, 2018		7,444,040		$	12.45		7.55	$	9,360,614
Options vested and expected to vest as of September 30, 2018		7,444,040			12.45		7.55		9,360,614
Options exercisable as of September 30, 2018		4,176,275		$	12.23		6.61	$	9,357,014

The weighted average grant-date fair value of stock options granted during the three and nine months ended September 30, 2018 and 2017 was $5.67, $6.83, $8.43 and $7.06 per share, respectively.

Restricted Stock Units

The Company has granted restricted stock units with time-based vesting conditions. The table below summarizes the Company’s restricted stock unit activity since December 31, 2017:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested restricted stock units as of December 31, 2017		356,778		$	10.01
Granted		2,000		$	7.43
Forfeited		(7,370	)	$	9.78
Vested		(61,500	)	$	10.12
Unvested restricted stock units as of September 30, 2018		289,908		$	9.98

Stock-based Compensation Expense

The Company recorded stock-based compensation expense related to stock options, restricted stock units and the Company’s Employee Stock purchase Plan (“ESPP”) in the following expense categories of its condensed consolidated statements of operations and comprehensive loss:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development expenses	$	2,246	$	2,158	$	6,436	$	6,124
General and administrative expenses		2,071		2,211		6,451		7,026
	$	4,317	$	4,369	$	12,887	$	13,150

Employee Stock Purchase Plan

The ESPP provides that eligible employees may contribute up to 15% of their eligible earnings toward the semi-annual purchase of the Company' common stock. The ESPP is qualified under Section 423 of the Internal Revenue Code. The employee's purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the date of purchase (or, if not a trading day, on the immediately preceding trading day). The offering period under the ESPP has a duration of six months, and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85% of the lesser of (i) the fair market value of the Company's common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of the Company's common stock on the purchase date. The Company estimates the fair value of common stock under the ESPP using a Black-Scholes valuation model. The fair value was estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following weighted-average assumptions: risk-free interest rate (2.30%); expected term (0.5 years); expected volatility (60.2%); and an expected dividend yield (0%). The Company recorded an immaterial amount of stock-based compensation expense under the ESPP for the three and nine months ended September 30, 2018.

The total number of available ESPP shares is increased annually, beginning in 2016 and ending in 2025. The ESPP allows for share replenishment equal to the lesser of (i) 400,000 shares and (ii) 1% of the number of shares of the Company’s common stock outstanding on the last day of the preceding calendar year, or an amount determined by the Company’s Board of Directors. As of September 30, 2018, a total of 1.6 million shares were reserved and available for issuance under the ESPP.

Collaboration Revenue

9 Months Ended

Sep. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaboration Revenue

8.	Collaboration Revenue

Adoption of ASC Topic 606, Revenue from Contracts with Customers

The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (“ASC 605”), which is also referred to herein as "legacy GAAP" or the "previous guidance". The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's services and will provide financial statement readers with enhanced disclosures.

Financial Statement Impact of Adopting ASC 606

The cumulative effect of applying the new guidance to all contracts with customers that were not completed as of January 1, 2018, was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:

	As Reported at			Adjustments Due to			Balance at
	December 31, 2017			ASC 606			January 1, 2018
Deferred revenue - related party		12,079			5,339			17,418
Deferred revenue, net of current portion - related party		84,847			21,518			106,365
Accumulated deficit		(263,571	)		(26,857	)		(290,428	)

Collaboration Revenue

The adoption of ASC 606 changed the pattern and timing of revenue recognition under the Company’s license and collaboration agreement with NHS. Under ASC 605, the upfront fee of $120,000 received by the Company in the first quarter of 2016 was deferred and recognized on a straight-line basis over the estimated performance period of 10 years. In addition, the Company recognized revenue associated with substantive development milestones not considered probable at the inception of the license and collaboration agreement with NHS in their entirety in the period in which the milestone was achieved, in accordance with FASB ASC Topic 605-28, Revenue Recognition-Milestone Method.

Under ASC 606, the Company recognizes revenue using the cost-to-cost method which best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Under this method, revenue will be recorded as a percentage of the estimated transaction price based on the extent of progress towards completion. The estimate of the Company’s measure of progress and estimate of transaction price will be updated at each reporting date, as a change in estimate, and will require judgement. The amount of consideration allocated to satisfied performance obligations, based on the Company’s measure of progress will be recognized immediately on a cumulative catch-up basis, resulting in an adjustment to revenue in the period of change. The amount related to the unsatisfied portion will be recognized as that portion is satisfied over time. In addition, substantive development milestones, which were previously recognized in the period when the milestone was achieved, will be recognized over the remaining performance period under ASC 606. As the adoption method does not result in a recast of the prior year consolidated financial statements, ASC 606 requires the Company to provide additional disclosures during the year of adoption of the amount by which each financial statement line item is affected by adoption of the new standard and explanations of the reasons for significant changes.

We do not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year, or less or the amount is immaterial. At September 30, 2018, we have not capitalized any costs to obtain any of our contracts.

Income Taxes

The adoption of ASC 606 resulted in an increase to deferred revenue, which in turn generated an additional deferred tax asset that increased the Company’s net deferred tax asset position. As the Company fully reserves its net deferred tax assets, the impact was offset by the valuation allowance.

Impact of New Revenue Guidance on Financial Statement Line Items

The following table compares the reported condensed consolidated balance sheet, statement of operations and cash flows, as of and for the three and nine months ended September 30, 2018 to the pro-forma amounts had the previous guidance (ASC 605) been in effect:

	As of September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Deferred revenue - related party		17,901			12,118
Deferred revenue, net of current portion - related party		89,554			76,034
Accumulated deficit		(368,083	)		(348,780	)

Total reported liabilities were $19,303 greater as reported under ASC 606 than would have been reported under ASC 605 as of September 30, 2018. This change consists of a $13,520 increase in deferred revenue, net of current portion, related party, and a $5,783 increase in deferred revenue - related parties.

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605			As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Collaboration revenue - related party	$	8,684		$	3,084		$	16,721		$	9,167
Loss from operations		(22,211	)		(27,811	)		(78,613	)		(86,167	)
Net loss	$	(21,949	)	$	(27,549	)	$	(77,655	)	$	(85,209	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.54	)	$	(0.68	)	$	(1.91	)	$	(2.09	)

Collaboration revenue – related party increased by approximately $5,600 and $7,554 as reported under ASC 606 when compared to what would have been reported under ASC 605 for the three and nine months ended September 30, 2018

	Nine Months Ended September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Net loss	$	(77,655	)	$	(85,209	)
Deferred revenue		(16,328	)		(8,774	)

The adoption of ASC 606 resulted in a $7,554 decrease in net loss, due to a corresponding increase in revenue and a decrease of $7,554 in the change in deferred revenue for the nine months ended September 30, 2018. The adoption of ASC 606 did not change net cash used in operating activities.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the 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) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Collaboration Revenue

The Company currently generates its revenue through a collaboration and license agreement for the development and commercialization of product candidates. The collaboration and license agreement is within the scope of ASC 606.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under the agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligation(s); and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for an arrangement that contains multiple performance obligations, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success.

Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments: At the inception of each arrangement that includes developmental and regulatory milestone payments, the Company evaluates whether the achievement of each milestone specifically relates to the Company’s efforts to satisfy a performance obligation or transfer a distinct good or service within a performance obligation. If the achievement of a milestone is considered a direct result of the Company’s efforts to satisfy a performance obligation or transfer a distinct good or service and the receipt of the payment is based upon the achievement of the milestone, the associate milestone value is allocated to that distinct good or service and revenue is recognized in the period in which the milestone is achieved. If the milestone payment is not specifically related to the Company’s effort to satisfy a performance obligation or transfer a distinct good or service, the Company evaluates the milestone to determine whether the milestone is considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price to be allocated. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall allocation. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Transaction Price Allocated to Future Performance Obligations

Remaining performance obligations represents the transaction price of contracts for which work has not been performed (or has been partially performed) and excludes unexercised contract options. In the third quarter of 2018, the Company increased the transaction price by $20,000 which represents the milestone the Company is entitled to receive from NHS for initiating the SER-287 phase 2b study planned for later this year. The Company estimated the $20,000 of variable consideration by using the most likely amount method which best predicts the amount of consideration to which the Company will be entitled. The Company included the $20,000 in the transaction price because it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation of the Company’s license agreement with NHS was approximately $171,200.

Contract Balances from Contracts with Customers

The following table presents changes in the Company’s contract liabilities during the nine months ended September 30, 2018 and 2017(in thousands):

	Balance as of January 1, 2018		Additions		Deductions			Balance as of September 30, 2018
Nine months ended September 30, 2018
Contract liabilities:
Deferred revenue		123,783		393		(16,721	)		107,455

	Balance as of January 1, 2017		Additions		Deductions			Balance as of September 30, 2017
Nine months ended September 30, 2017
Contract liabilities:
Deferred revenue		108,814		—		(9,044	)		99,770

During the three and nine months ended September 30, 2018 we recognized the following revenues as a result of changes in the the contract liability balances in the respective periods (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period		8,684		3,015		16,721		9,044

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities on the consolidated balance sheets.

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

License and Collaboration Arrangements

In January 2016, the Company entered into the Collaboration and License Agreement (“License Agreement”) with NHS for the development and commercialization of certain product candidates in development for the treatment and management of CDI and IBD, including UC and Crohn’s disease. The License Agreement supports the development of the Company’s portfolio of products for CDI and IBD in markets outside of the United States and Canada (the “Licensed Territory”). The Company has retained full commercial rights to its entire portfolio of product candidates with respect to the United States and Canada.

Under the License Agreement, the Company granted to NHS an exclusive, royalty-bearing license to develop and commercialize, in the Licensed Territory, certain products based on its microbiome technology that are being developed for the treatment of CDI and IBD, including SER-109, SER-262, SER-287 and SER-301 (collectively, the “NHS Collaboration Products”). The License Agreement sets forth the Company’s and NHS’ respective obligations for development, commercialization, regulatory and manufacturing and supply activities for the NHS Collaboration Products with respect to the licensed fields and the Licensed Territory.

In exchange for the license, NHS agreed to pay the Company an upfront cash payment of $120,000, which the Company received in February 2016. NHS also agreed to pay the Company tiered royalties, at percentages ranging from the high single digits to high teens, of net sales of NHS Collaboration Products in the Licensed Territory. The Company is eligible to receive up to $285,000 in development milestone payments, $375,000 in regulatory payments and up to an aggregate of $1,125,000 for the achievement of certain commercial milestones related to the sales of NHS Collaboration Products.

The Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty NHS, is a customer. The Company identified the following promises under the contract: (i) a license to develop and commercialize the NHS Collaboration Products in the Licensed Territory, (ii) obligation to perform research and development services, (iii) participation on a joint steering committee, and (iv) manufacturing services to provide clinical supply to complete future clinical trials. In addition, the Company identified a contingent obligation to perform manufacturing services to provide commercial supply if commercialization occurs, which is contingent upon regulatory approval. This contingent obligation has been excluded from allocation performed at the inception of the arrangement. The Company assessed the promised goods and services to determine if they are distinct. Based on this assessment, the Company determined that the promised goods and services do not have standalone value and are highly interrelated. Accordingly, the promised goods and services represent one performance obligation.

At contract inception, the Company determined that the $120,000 non-refundable upfront amount constituted the entirety of the consideration to be included in the transaction price as the development, regulatory, and commercial milestones were fully constrained. During the year ended December 31, 2016, the Company received $10,000 from NHS in connection with the initiation of the Phase 1b study for SER-262 in CDI. During the year ended December 31, 2017, the Company received $20,000 from NHS in connection with the initiation of the Phase 3 study for SER-109. In the third quarter of 2018, the Company increased the transaction price by $20,000 which represents the milestone the Company is entitled to receive from NHS for initiating the SER-287 phase 2b study planned for later this year. The Company estimated the $20,000 of variable consideration by using the most likely amount method which best predicts the amount of consideration to which the Company will be entitled. The Company included the $20,000 in the transaction price because it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price as of September 30, 2018 was approximately $171,200. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to NHS and therefore have also been excluded from the transaction price.

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

During the three and nine months ended September 30, 2018 and 2017 the Company recognized $8,684, $16,721, $23,015 and $29,044, respectively, of related party revenue (see Note 12 “Related Party Transactions”) associated with the License Agreement. As of September 30, 2018, there was $107,455 of deferred revenue related to the License Agreement, which is classified as current or non-current in the consolidated balance sheets based on the Company’s estimate of revenue that will be recognized within the next 12 months. All costs associated with the License Agreement are recorded in research and development expense in the condensed consolidated statements of operations and comprehensive loss.

Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

9.	Income Taxes

The Company did not provide for any income taxes for the nine months ended September 30, 2018 or 2017.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of September 30, 2018 and December 31, 2017. Management reevaluates the positive and negative evidence at each reporting period.

As of September 30, 2018 and December 31, 2017, the Company had no accrued interest or tax penalties recorded. The Company files income tax returns in the United States and various state jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2012. However, to the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated my still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent it is utilized in a future period. There are no currently ongoing or pending examinations in any jurisdictions.

As disclosed in the Company’s 2017 Form 10-K, the Company recorded the tax effects of the 2017 Tax Cuts and Jobs Act (TCJA) based on provisional amounts permitted in accordance with Staff Accounting Bulletin No. 118. The Company is still analyzing certain aspects of the TCJA and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts, but the Company does not expect there to be a material change in the estimates.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10.	Commitments and Contingencies

Leases

On November 11, 2015, the Company entered into a non-cancelable property lease with BMR-Sidney Research Campus LLC (“BMR”) for 83,396 square feet of office, laboratory and pilot manufacturing space at 200 Sidney Street, Cambridge, Massachusetts. The lease term commenced in March 2016 and ends in November 2023. The Company has the option to extend the lease twice, each for a five-year period. The Company moved its corporate headquarters to this location in April 2016. BMR has contributed a total of $12,509 toward the cost of tenant improvements. BMR’s contributions toward the cost of tenant improvements is recorded as a lease incentive obligation on the Company’s consolidated balance sheet. The lease incentive obligation is amortized to the Company’s consolidated statement of operations as reductions to rent expense over the lease term. As of September 30, 2018, the Company has recorded a lease incentive obligation of $8,986 . During the nine months ended September 30, 2018, the Company amortized $1,326 of this lease incentive obligation as a reduction to rent expense.

During the three and nine months ended September 30, 2018 and 2017, the Company recognized $1,093, $3,299, $1,100 and $3,345 respectively, of rental expense related to office and laboratory space.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2018 or December 31, 2017.

Legal Contingencies

The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that the Company can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determination is made.

In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, the Company will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, the Company will provide disclosure to that effect. The Company expenses legal costs as they are incurred.

The Company did not accrue any liabilities related to legal contingencies in its consolidated financial statements as of September 30, 2018 or December 31, 2017.

Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions

11.	Related Party Transactions

As described in Note 8, in January 2016 the Company entered into a License Agreement with NHS for the development and commercialization of certain product candidates in development for the treatment and management of CDI and IBD, including UC and Crohn’s disease. NHS is a related party since NHS is an affiliate of Nestlé Health Science, one of the Company’s significant stockholders. During the three and nine months ended September 30, 2018 and 2017, the Company recognized $8,684, $16,721, $23,015 and $29,044 of related party revenue associated with the License Agreement, respectively. As of September 30, 2018, there was $107,455 of deferred revenue related to the License Agreement, which is classified as current or non-current in the consolidated balance sheets. The Company has made no payments to NHS during the three and nine months ended September 30, 2018. There is $217 due from NHS as of September 30, 2018 for the reimbursement of development costs, which is recorded in prepaid expenses and other current assets in the Company’s consolidated balance sheet.

Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

12.	Subsequent Events

Under the terms of the collaboration and license agreement between the Company and NHS dated January 9, 2016, the Company is entitled to receive a $20,000 milestone payment from NHS following initiation of a SER-287 Phase 2 study and a $20,000 milestone payment from NHS following the initiation of a SER-287 Phase 3 study. On November 1, 2018 the Company entered into a letter agreement with NHS which modified the collaboration and license agreement to address the current clinical plans for SER-287. Through the letter agreement, the Company and NHS agreed that following initiation of the SER-287 Phase 2b study, the Company will receive $40,000 in milestone payments from NHS. The letter agreement also provides scenarios under which NHS’ reimbursement to the Company for certain Phase 3 development costs would be reduced or delayed depending on the outcomes of the SER-287 Phase 2b study.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Recently Issued Accounting Standards

Use of Estimates

Net Loss per Share

	Three and Nine Months Ended September 30,
	2018		2017
Stock options to purchase common stock		7,444,040		6,133,596
Unvested restricted stock units		289,908		401,900
		7,733,948		6,535,496

	September 30,		December 31,		September 30,		December 31,
	2018		2017		2017		2016
Cash and cash equivalents	$	55,713	$	36,088	$	46,025	$	54,539
Restricted cash		1,513		1,513		1,513		1,400
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows	$	57,226	$	37,601	$	47,538	$	55,939

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Potential Common Shares Excluded from Calculation of Diluted Net Loss per Share

	Three and Nine Months Ended September 30,
	2018		2017
Stock options to purchase common stock		7,444,040		6,133,596
Unvested restricted stock units		289,908		401,900
		7,733,948		6,535,496

Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash

A reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same amounts shown in the statement of cash flows is as follows:

	September 30,		December 31,		September 30,		December 31,
	2018		2017		2017		2016
Cash and cash equivalents	$	55,713	$	36,088	$	46,025	$	54,539
Restricted cash		1,513		1,513		1,513		1,400
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows	$	57,226	$	37,601	$	47,538	$	55,939

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements as of September 30, 2018 Using:
	Level 1		Level 2		Level 3		Not Subject to Leveling ⁽¹⁾		Total
Assets:
Cash Equivalents	$	—	$	500	$	—	$	39,029	$	39,529
Investments:
Commercial Paper	$	—	$	1,397	$	—	$	—	$	1,397
Corporate Bonds		—		4,296		—		—		4,296
Treasury Bonds		—		11,484		—		—		11,484
	$	—	$	17,677	$	—	$	39,029	$	56,706
⁽¹⁾ Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

	Fair Value Measurements as of December 31, 2017 Using:
	Level 1		Level 2		Level 3		Not Subject to Leveling ⁽¹⁾		Total
Assets:
Cash Equivalents	$	—	$	—	$	—	$	25,964	$	25,964
Investments:
Commercial Paper	$	—	$	6,198	$	—	$	—	$	6,198
Certificates of Deposit		—		8,916						8,916
Corporate Bonds		—		58,865		—		—		58,865
Government Securities		—		22,954		—		—		22,954
Treasury Bonds		—		16,962		—		—		16,962
	$	—	$	113,895	$	—	$	25,964	$	139,859
⁽¹⁾ Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

Investments (Tables)

9 Months Ended

Sep. 30, 2018

Investments Debt And Equity Securities [Abstract]

Schedule of Fair Value of Available-for-Sale Investments by Type of Security

As of September 30, 2018 and December 31, 2017, the fair value of available-for-sale investments by type of security was as follows:

	September 30, 2018
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Investments:
Commercial Paper	$	1,397	$	—	$	—		$	1,397
Corporate Bonds		4,298		—		(2	)		4,296
Treasury Bonds		11,490		—		(6	)		11,484
	$	17,185	$	—		(8	)	$	17,177

	December 31, 2017
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Investments:
Commercial Paper	$	6,198	$	—	$	—		$	6,198
Certificates of Deposit		8,916		—		—			8,916
Corporate Bonds		58,937		—		(72	)		58,865
Government Securities		22,997		—		(43	)		22,954
Treasury Bonds		16,992		—		(30	)		16,962
	$	114,040	$	—	$	(145	)	$	113,895

Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2018

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following:

	September 30, 2018			December 31, 2017
Laboratory equipment	$	14,367			13,181
Computer equipment		2,864			2,832
Furniture and office equipment		1,033			1,033
Leasehold improvements		27,977			27,963
Construction in progress		150			361
		46,391			45,370
Less: Accumulated depreciation and amortization	$	(18,308	)	$	(12,439	)
	$	28,083		$	32,931

Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Payables And Accruals [Abstract]

Summary of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	September 30, 2018		December 31, 2017
Development and manufacturing costs	$	7,389	$	3,910
Payroll and payroll-related costs		3,982		4,962
Professional fees		462		344
Facility and other		2,801		3,297
	$	14,634	$	12,513

Stockholders' Equity Common Stock (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Summary of Stock Option Activity

The following table summarizes the Company’s stock option activity since December 31, 2017:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding as of December 31, 2017		6,125,692		$	13.00		7.70	$	15,808
Granted		1,820,776			10.08
Exercised		(196,508	)		0.69
Forfeited		(305,920	)		16.96
Outstanding as of September 30, 2018		7,444,040		$	12.45		7.55	$	9,360,614
Options vested and expected to vest as of September 30, 2018		7,444,040			12.45		7.55		9,360,614
Options exercisable as of September 30, 2018		4,176,275		$	12.23		6.61	$	9,357,014

Summary of Restricted Stock Unit Activity

The Company has granted restricted stock units with time-based vesting conditions. The table below summarizes the Company’s restricted stock unit activity since December 31, 2017:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested restricted stock units as of December 31, 2017		356,778		$	10.01
Granted		2,000		$	7.43
Forfeited		(7,370	)	$	9.78
Vested		(61,500	)	$	10.12
Unvested restricted stock units as of September 30, 2018		289,908		$	9.98

Summary of Stock Based Compensation Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development expenses	$	2,246	$	2,158	$	6,436	$	6,124
General and administrative expenses		2,071		2,211		6,451		7,026
	$	4,317	$	4,369	$	12,887	$	13,150

Collaboration Revenue (Tables) - ASU 2014-09 [Member]

9 Months Ended

Sep. 30, 2018

Adjustments to Accounts on Condensed Consolidated Balance Sheet

	As Reported at			Adjustments Due to			Balance at
	December 31, 2017			ASC 606			January 1, 2018
Deferred revenue - related party		12,079			5,339			17,418
Deferred revenue, net of current portion - related party		84,847			21,518			106,365
Accumulated deficit		(263,571	)		(26,857	)		(290,428	)

Comparison of Reported Condensed Consolidated Balance Sheet, Statement of Operations and Cash Flows to Pro-forma Amounts

	As of September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Deferred revenue - related party		17,901			12,118
Deferred revenue, net of current portion - related party		89,554			76,034
Accumulated deficit		(368,083	)		(348,780	)

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605			As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Collaboration revenue - related party	$	8,684		$	3,084		$	16,721		$	9,167
Loss from operations		(22,211	)		(27,811	)		(78,613	)		(86,167	)
Net loss	$	(21,949	)	$	(27,549	)	$	(77,655	)	$	(85,209	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.54	)	$	(0.68	)	$	(1.91	)	$	(2.09	)

	Nine Months Ended September 30, 2018
	As Reported under ASC 606			Pro forma as if accounted for under ASC 605
Net loss	$	(77,655	)	$	(85,209	)
Deferred revenue		(16,328	)		(8,774	)

Changes in Contract Liabilities

The following table presents changes in the Company’s contract liabilities during the nine months ended September 30, 2018 and 2017(in thousands):

	Balance as of January 1, 2018		Additions		Deductions			Balance as of September 30, 2018
Nine months ended September 30, 2018
Contract liabilities:
Deferred revenue		123,783		393		(16,721	)		107,455

	Balance as of January 1, 2017		Additions		Deductions			Balance as of September 30, 2017
Nine months ended September 30, 2017
Contract liabilities:
Deferred revenue		108,814		—		(9,044	)		99,770

During the three and nine months ended September 30, 2018 we recognized the following revenues as a result of changes in the the contract liability balances in the respective periods (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period		8,684		3,015		16,721		9,044

Nature of the Business and Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Entity incorporated year	Oct. 31, 2010
Entity incorporated state name	State of Delaware
Accumulated deficit	$ 368,083	$ 263,571
Cash, cash equivalents and short-term investments	$ 72,900

Summary of Significant Accounting Policies - Summary of Potential Common Shares Excluded from Calculation of Diluted Net Loss per Share (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	7,733,948	6,535,496	7,733,948	6,535,496
Stock Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	7,444,040	6,133,596	7,444,040	6,133,596
Unvested Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	289,908	401,900	289,908	401,900

Summary of Significant Accounting Policies - Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 55,713	$ 36,088	$ 46,025	$ 54,539
Restricted cash	1,513	1,513	1,513	1,400
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows	$ 57,226	$ 37,601	$ 47,538	$ 55,939

Fair Value Measurements - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Fair Value Disclosures [Abstract]
Fair value of liabilities on recurring basis	$ 0	$ 0
Fair value, assets transfers from Level 1 to Level 2 measurement	0
Fair value, assets transfers from Level 2 to Level 1 measurement	0
Fair Value, assets transfers into (out of) Level 3 measurement	$ 0

Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($)
$ in Thousands

Sep. 30, 2018

Dec. 31, 2017

Assets:

Cash Equivalents

$ 39,529

$ 25,964

Fair Value, Inputs, Level 2 [Member]

Total assets

56,706

139,859

Assets:

Cash Equivalents

500

Not Subject to Leveling [Member]

Total assets

17,677

113,895

Assets:

Cash Equivalents

^[1]

39,029

25,964

Commercial Paper [Member]

Total assets

^[1]

39,029

25,964

Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member]

1,397

6,198

1,397

6,198

Corporate Bonds [Member]

Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]

4,296

58,865

4,296

58,865

Treasury Bonds [Member]

Treasury Bonds [Member] | Fair Value, Inputs, Level 2 [Member]

11,484

16,962

Certificates of Deposit [Member]

$ 11,484

16,962

Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]

8,916

Government Securities [Member]

8,916

Government Securities [Member] | Fair Value, Inputs, Level 2 [Member]

22,954