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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2019	Oct. 31, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	Frequency Therapeutics, Inc.
Entity Central Index Key	0001703647
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Common Stock Shares Outstanding		30,784,936
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity File Number	001-39062
Entity Tax Identification Number	47-2324450
Entity Address Address Line	19 Presidential Way
Entity Address, Address Line Two	2nd Floor
Entity Address City Or Town	Woburn
Entity Address State Or Province	MA
Entity Address Postal Zip Code	01801
City Area Code	866
Local Phone Number	389-1970
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation State Country Code	DE
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	FREQ
Security Exchange Name	NASDAQ

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 142,274	$ 42,189
Short-term marketable securities	23,047
Prepaid expenses and other current assets	1,400	748
Total current assets	166,721	42,937
Property and equipment, net	1,566	1,511
Deferred financing costs	2,461
Other assets	101	100
Total assets	170,849	44,548
Current liabilities:
Accounts payable	3,574	1,863
Royalty payable	16,000
Accrued expenses	3,100	1,749
Current portion of deferred revenue	49,362
Other current liabilities	168	161
Total current liabilities	72,204	3,773
Deferred revenue - net of current portion	6,400
Long-term liabilities	222	349
Total liabilities	78,826	4,122
Convertible preferred stock	147,902
Non-controlling interest	3,773	3,773
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 100,000,000 and 165,000,000 shares authorized at September 30, 2019 and December 31, 2018, respectively; 2,382,309 and 2,084,710 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	2	2
Additional paid-in capital	3,585	804
Accumulated other comprehensive income	116
Accumulated deficit	(63,355)	(49,088)
Total stockholders’ deficit	(59,652)	(48,282)
Total liabilities, convertible preferred stock, non-controlling interest and stockholders’ deficit	170,849	44,548
Series C Convertible Preferred Stock
Current liabilities:
Convertible preferred stock	62,701
Series B Convertible Preferred Stock
Current liabilities:
Convertible preferred stock	38,490	38,224
Series B-1 Convertible Preferred Stock
Current liabilities:
Convertible preferred stock	9	9
Series A Convertible Preferred Stock
Current liabilities:
Convertible preferred stock	46,694	46,694
Series A-1 Convertible Preferred Stock
Current liabilities:
Convertible preferred stock	$ 8	$ 8

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Convertible preferred stock, authorized shares	148,724,922
Convertible preferred stock, issued shares	144,187,463
Convertible preferred stock, outstanding shares	144,187,463
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	165,000,000
Common stock, issued shares	2,382,309	2,084,710
Common stock, outstanding shares	2,382,309	2,084,710
Series C Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	39,493,348	0
Convertible preferred stock, issued shares	39,492,960	0
Convertible preferred stock, outstanding shares	39,492,960	0
Series B Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	44,319,839	44,319,839
Convertible preferred stock, issued shares	42,145,996	41,857,005
Convertible preferred stock, outstanding shares	42,145,996	41,857,005
Series B-1 Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	10,000	10,000
Convertible preferred stock, issued shares	10,000	10,000
Convertible preferred stock, outstanding shares	10,000	10,000
Series A Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	64,891,735	64,891,735
Convertible preferred stock, issued shares	62,528,507	62,528,507
Convertible preferred stock, outstanding shares	62,528,507	62,528,507
Series A-1 Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	10,000	10,000
Convertible preferred stock, issued shares	10,000	10,000
Convertible preferred stock, outstanding shares	10,000	10,000

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Revenue	$ 24,238		$ 24,238
Operating expenses:
Royalty	16,000		16,000
Research and development	5,221	$ 3,550	12,588	$ 8,959
General and administrative	4,269	1,507	9,837	4,660
Total operating expenses	25,490	5,057	38,425	13,619
Loss from operations	(1,252)	(5,057)	(14,187)	(13,619)
Interest income	624		842
Interest expense		(63)		(95)
Realized gain on investments	62		88
Foreign exchange gain (loss)	(9)	(16)	4	(7)
Net loss	(575)	(5,136)	(13,253)	(13,721)
Cumulative Series C convertible preferred stock dividends	(1,014)		(1,014)
Net loss attributable to common stockholders	$ (1,589)	$ (5,136)	$ (14,267)	$ (13,721)
Net loss per share attributable to common stockholders-basic and diluted	$ (0.73)	$ (3.26)	$ (7.17)	$ (9.29)
Weighted average shares outstanding-basic and diluted	2,163,289	1,575,728	1,990,106	1,476,678

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (575)	$ (5,136)	$ (13,253)	$ (13,721)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities	(34)		116
Total comprehensive gain (loss)	(34)		116
Comprehensive loss	$ (609)	$ (5,136)	$ (13,137)	$ (13,721)

- Definition

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

+ References + Details

Consolidated Statement of Convertible Preferred Stock, Non-controlling Interest and Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands	Total	Non-controlling Interest	Common Stock	Additional-paid in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Series C Convertible Preferred Stock	Series B Convertible Preferred Stock	Series B-1 Convertible Preferred Stock	Series A Convertible Preferred Stock	Series A-1 Convertible Preferred Stock
Beginning Balance at Dec. 31, 2017										$ 46,694
Beginning Balance (in shares) at Dec. 31, 2017										62,528,507
Beginning Balance at Dec. 31, 2017	$ (29,642)		$ 2	$ 276		$ (29,920)
Beginning Balance (in shares) at Dec. 31, 2017			1,954,235
Stock-based compensation expense	267			267
Issuance of common stock upon exercise of options	$ 70			70
Issuance of common stock upon exercise of options (in shares)	113,402		113,402
Non-controlling interest		$ 1,772
Net loss	$ (13,721)					(13,721)
Ending Balance at Sep. 30, 2018		1,772								$ 46,694
Ending Balance (in shares) at Sep. 30, 2018										62,528,507
Ending Balance at Sep. 30, 2018	(43,026)		$ 2	613		(43,641)
Ending Balance (in shares) at Sep. 30, 2018			2,067,637
Beginning Balance at Jun. 30, 2018		1,772								$ 46,694
Beginning Balance (in shares) at Jun. 30, 2018										62,528,507
Beginning Balance at Jun. 30, 2018	(38,023)		$ 2	480		(38,505)
Beginning Balance (in shares) at Jun. 30, 2018			2,016,966
Stock-based compensation expense	102			102
Issuance of common stock upon exercise of options	$ 31			31
Issuance of common stock upon exercise of options (in shares)	54,671		50,671
Net loss	$ (5,136)					(5,136)
Ending Balance at Sep. 30, 2018		1,772								$ 46,694
Ending Balance (in shares) at Sep. 30, 2018										62,528,507
Ending Balance at Sep. 30, 2018	(43,026)		$ 2	613		(43,641)
Ending Balance (in shares) at Sep. 30, 2018			2,067,637
Beginning Balance at Dec. 31, 2018		3,773						$ 38,224	$ 9	$ 46,694	$ 8
Beginning Balance (in shares) at Dec. 31, 2018							0	41,857,005	10,000	62,528,507	10,000
Beginning Balance at Dec. 31, 2018	$ (48,282)		$ 2	804		(49,088)
Beginning Balance (in shares) at Dec. 31, 2018	2,084,710		2,084,710
Stock-based compensation expense	$ 2,456			2,456
Issuance of common stock upon exercise of options	$ 325			325
Issuance of common stock upon exercise of options (in shares)	297,599		297,599
Issuance of convertible preferred stock							$ 61,687	$ 266
Issuance of convertible preferred stock (in shares)							39,492,960	288,991
Accretion of Series C preferred dividend	$ (1,014)					(1,014)
Accretion of Series C preferred dividend							$ 1,014
Accumulated other Comprehensive income	116				$ 116
Net loss	$ (13,253)					(13,253)
Ending Balance at Sep. 30, 2019		3,773					$ 62,701	$ 38,490	$ 9	$ 46,694	$ 8
Ending Balance (in shares) at Sep. 30, 2019	144,187,463						39,492,960	42,145,996	10,000	62,528,507	10,000
Ending Balance at Sep. 30, 2019	$ (59,652)		$ 2	3,585	116	(63,355)
Ending Balance (in shares) at Sep. 30, 2019	2,382,309		2,382,309
Beginning Balance at Jun. 30, 2019		3,773						$ 38,490	$ 9	$ 46,694	$ 8
Beginning Balance (in shares) at Jun. 30, 2019								42,145,996	10,000	62,528,507	10,000
Beginning Balance at Jun. 30, 2019	$ (59,115)		$ 2	2,499	150	(61,766)
Beginning Balance (in shares) at Jun. 30, 2019			2,304,268
Stock-based compensation expense	925			925
Issuance of common stock upon exercise of options	$ 161			161
Issuance of common stock upon exercise of options (in shares)	78,041		78,041
Issuance of convertible preferred stock							$ 61,687
Issuance of convertible preferred stock (in shares)							39,492,960
Accretion of Series C preferred dividend	$ (1,014)					(1,014)
Accretion of Series C preferred dividend							$ 1,014
Accumulated other Comprehensive income	(34)				(34)
Net loss	$ (575)					(575)
Ending Balance at Sep. 30, 2019		$ 3,773					$ 62,701	$ 38,490	$ 9	$ 46,694	$ 8
Ending Balance (in shares) at Sep. 30, 2019	144,187,463						39,492,960	42,145,996	10,000	62,528,507	10,000
Ending Balance at Sep. 30, 2019	$ (59,652)		$ 2	$ 3,585	$ 116	$ (63,355)
Ending Balance (in shares) at Sep. 30, 2019	2,382,309		2,382,309

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net loss	$ (13,253)	$ (13,721)
Adjustments to reconcile net loss to net cash provided in operating activities:
Stock based compensation	2,456	267
Depreciation expense	588	444
Deferred lease incentives	(120)	(121)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(652)	(629)
Deferred financing costs and other assets	(1)	3
Accounts payable	1,711	1,107
Royalty payable	16,000
Deferred revenue	55,762
Accrued expenses and other current liabilities	1,467	345
Net cash provided by (used in) operating activities	63,958	(12,305)
Cash flows from investing activities:
Purchases of property and equipment	(643)	(197)
Redemption of available for sale securities	245,771
Purchase of available for sale securities	(268,818)
Net cash used in investing activities	(23,690)	(197)
Cash flows from financing activities:
Proceeds from sale of non-controlling interest		1,772
Proceeds from notes payable		5,000
Proceeds from issuance of common stock	325	70
Deferred financing costs	(2,461)
Net cash provided by financing activities	59,817	6,842
Net increase (decrease) in cash and cash equivalents	100,085	(5,660)
Cash and cash equivalents at beginning of period	42,189	17,937
Cash and cash equivalents at end of period	142,274	$ 12,277
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	71
Series B Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs	266
Series C Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs	61,687
Supplemental disclosure of non-cash investing and financing activities:
Dividend on Series C convertible preferred stock	$ 1,014

Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

1. Organization and basis of presentation

Organization

Frequency Therapeutics, Inc., together with its wholly owned subsidiaries, Frequency Therapeutics PTY, LTD and Frequency Therapeutics Securities Corporation and its majority owned subsidiary, Frequency Therapeutics Japan KK (Frequency Japan) (the Company), headquartered in Woburn, Massachusetts, was incorporated in November 2014 as a Delaware corporation. The Company is a clinical-stage biotechnology company focused on harnessing the body’s innate biology to repair or reverse damage caused by a broad range of degenerative diseases.

On September 20, 2019, the Company effected a 1-for-6.7355 reverse stock split of its common stock. The par value of the common stock was not adjusted as a result of the reverse stock split and the authorized capital was amended to 100,000,000 shares of common stock and 148,724,922 shares of $0.001 par value preferred stock (the Preferred Stock). The reverse stock split resulted in an adjustment to the Series A Preferred Stock (Series A Preferred), Series B Preferred Stock (Series B Preferred) and Series C Preferred Stock (Series C Preferred) conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The accompanying unaudited consolidated financial statements and notes to the unaudited consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. Shares of common stock underlying outstanding stock options were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the appropriate securities agreements.

In October 2019, the Company completed the initial public offering of its common stock (the “IPO”). In the IPO, the Company issued and sold 6,325,000 shares of its common stock at a price to the public of $14.00 per share, inclusive of the underwriters exercise in part of their over-allotment option. The Company received approximately $79.2 million in net proceeds, after deducting underwriting discounts and commissions and other offering expenses. In connection with the IPO, on October 7, 2019 all Preferred Stock and the preferred stock of Frequency Japan converted into 22,077,629 shares of common stock and all outstanding shares of Series A-1 and B-1 Preferred were forfeited. The consolidated financial statements, including share and per share amounts, do not give effect to the IPO or the related conversion of securities into shares of common stock.

Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

Liquidity and capital resources

The Company has funded its operations primarily with proceeds from the sale of its capital stock, convertible notes and amounts received under a collaboration agreement. The Company has incurred recurring losses since its inception. In addition, as of September 30, 2019, the Company had an accumulated deficit of $63.4 million. The Company expects to continue to generate operating losses for the foreseeable future. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurances that additional funding will be available on terms acceptable to the Company, or at all. The Company believes that existing resources along with the proceeds from the IPO will be sufficient to fund planned operations for at least 12 months from the date the financial statements were available to be issued.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of significant accounting policies

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure its financial condition, results of operations, and cash flows are consistently reported. References to GAAP issued by the FASB in these notes to the consolidated financial statements are to the FASB Accounting Standards Codification (ASC).

Principles of consolidation

The consolidated financial statements include the accounts of Frequency Therapeutics, Inc. and its wholly owned subsidiaries Frequency Therapeutics PTY, LTD and Frequency Therapeutics Securities Corporation and its majority owned subsidiary Frequency Japan. All intercompany transactions and balances have been eliminated.

Unaudited interim financial information

The accompanying consolidated balance sheet as of September 30, 2019, the consolidated statements of operations, for the three and nine months ended September 30, 2019 and 2018 and the consolidated statements of convertible preferred stock, non-controlling interest and stockholders’ deficit and cash flows for the nine months ended September 30, 2019 and 2018 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019, the results of its operations for the three and nine months ended September 30, 2019 and 2018, and cash flows for the nine months ended September 30, 2019 and 2018 . The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2019 and 2018 are also unaudited. The results for the nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, any other interim periods, or any future year or period. The consolidated balance sheet as of December 31, 2018 included herein was derived from the audited consolidated financial statements as of that date. These unaudited 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, 2018 included in the Company’s final prospectus dated October 2, 2019 for the IPO filed with the SEC on October 4, 2019 pursuant to Rule 424(b)(4) relating to our Registration Statement on Form S-1 (File No. 333-233652).

Use of estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company’s management evaluates its estimates, which include but are not limited to management’s judgments of revenue, accrued expenses, fair value of common stock, valuation of share-based awards and income taxes. Actual results could differ from those estimates.

The Company utilizes significant estimates and assumptions in determining the fair value of its common stock. The Company has utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation (the Practice Aid), to estimate the fair value of its common stock. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to the Company’s common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale. Significant changes to the key assumptions used in the valuations could result in different fair values of common stock at each valuation date.

Comprehensive income (loss)

Components of comprehensive income or loss, including net income or loss, are reported in the financial statements in the period in which they are recognized. Other comprehensive income or loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net income (loss) and other comprehensive income (loss) are reported net of any related tax effect to arrive at comprehensive income (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. The Company’s comprehensive loss includes its net loss and unrealized gain on marketable securities.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision-maker, the Company’s chief executive officer, views the Company’s operations and manages its business as a single operating segment, which is the business of discovering and developing small molecule drugs that activate progenitor cells within the body to create healthy tissue.

Foreign currency

All periods presented are reported in US dollars. The functional currency for entities outside the United States is the US dollar. Realized and unrealized gains and losses from foreign currency transactions are reflected in the consolidated statements of operations as other expense. During the three and nine months ended September 30, 2019, the Company recorded ($9) and $4 of foreign currency exchange gains (losses), respectively. During the three and nine months ended September 30, 2018, the Company recorded ($16) and ($7) of foreign currency exchange losses, respectively.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of ninety days or less at acquisition to be cash equivalents which are stated at fair market value. Cash and cash equivalents at December 31, 2018 consists of cash held in banks. Cash and cash equivalents at September 30, 2019 consists of cash held in banks and money market funds.

Short-term marketable debt securities

Short-term marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy. Short-term marketable investments mature within one-year from the balance sheet date. Investments in marketable securities are recorded at fair value, with any unrealized gains and losses reported within accumulated other comprehensive income as a separate component of stockholders’ equity (deficit) until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, together with interest on securities, are included in interest income on the Company’s consolidated statements of operations. The cost of marketable securities sold is determined based on the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of other income (expense).

Short – term marketable securities at September 30, 2019 consist of investments in U.S. Treasury Securities.

Concentration of credit risk and off-balance sheet risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. The Company maintains its cash and cash equivalents at several accredited financial institutions, in amounts that exceed federally insured limits. Marketable securities consist of U.S. Treasury securities with maturities of less than twelve months. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which its money market accounts are maintained.

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Significant suppliers

The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including preclinical and clinical testing. In particular, the Company relies and expects to continue to rely on a single manufacturer of its product candidates for use in clinical trials. The Company would be adversely affected by a significant interruption in the supply of product for use in clinical programs.

Fair value measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820, Fair Value Measurement (ASC 820), establishes a three-level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy defines three levels of valuation inputs, 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	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3	Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Impairment of long-lived assets

The Company continually evaluates long-lived assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company did not recognize any impairment losses for the nine months ended September 30, 2019 and 2018.

Research and development costs and accruals

Research and development expenses include salaries and benefits, materials and supplies, preclinical and clinical trial expenses, stock-based compensation expense, depreciation of equipment, contract services and other outside expenses. The Company has entered into various research and development-related contracts with research institutions, contract research organizations, contract manufacturers and other companies. These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred. Costs of certain development activities, such as manufacturing, pre-clinical and clinical trial expenses, are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Costs incurred in obtaining technology licenses are charged to research and development expenses as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.

Deferred offering costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs will be expensed as a charge to operating expenses. As of September 30, 2019, $2,461 of deferred offering costs were included in the accompanying consolidated balance sheet related to the IPO. There were no deferred offering costs at December 31, 2018.

Patent costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

Stock-based compensation

The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all share-based payments to employees and directors to be recognized as expense in the consolidated statements of operations and comprehensive loss based on their grant date fair values. The Company adopted FASB Accounting Standards Update (ASU) 2016-09 which identifies areas for simplification of several areas of share-based payment transactions. The Company retroactively applied the mark to market approach on vesting to non-employee grants and the impact on the consolidated financial statements was not material. Going forward, the Company will treat non-employee grants the same as employee grants. The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees. The Company believes the fair value of the stock options granted to non-employees is more reliably determinable than the fair value of the services provided.

The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of a public market for the Company’s common stock prior to the IPO and a lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No.107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The expected term is applied to the stock option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among its employee population. For options granted to non-employees, the Company utilizes the contractual term of the share-based payment as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

There are significant judgments and estimates inherent in the determination of the fair value of the Company’s common stock. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to its common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale.

The Company expenses the fair value of its share-based compensation awards to employees and non-employees on a straight-line basis over the requisite service period, which is generally the vesting period.

Non-controlling interest

The Company accounts for shares of preferred stock issued in Frequency Japan as a non-controlling interest in the temporary equity section of the consolidated balance sheets. The value ascribed to the non-controlling interest is the liquidation preference of the preferred stock in Frequency Japan as the holders of such shares do not share in any profits or loses of the subsidiary.

Net loss per share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock. Diluted net loss per share is the same as basic net loss per share for the three and nine months ended September 30, 2019 and 2018 since all potential shares of common stock instruments are anti-dilutive as a result of the loss for such periods.

The Company’s Preferred Stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods where the Company reports a net loss attributable to common stockholders, diluted net loss per share is the same as basic net loss per share, since dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the three and nine months ended September 30, 2019 and 2018.

Collaborative arrangements

The Company analyzes its collaborative arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship (e.g., a licensing arrangement) where the contracted party has obtained goods or services that are an output of the Company’s ordinary activities in exchange for a consideration and therefore within the scope of Topic 606. For those elements of the arrangement that are accounted for pursuant to Topic 606, including those to which Topic 606 is applied by analogy, the Company applies the five-step model described in the Company’s revenue recognition policy. For elements of collaborative arrangements that are accounted for pursuant to ASC 808, an appropriate and rational recognition method is determined and applied consistently. Reimbursements from the counter-party that are the result of a collaborative relationship with the counter-party, instead of a customer relationship, such as co-development or clinical activities, are recorded as a reduction to research and development expense as the services are performed. Similarly, amounts that are owed to a collaboration partner related to the co-development clinical activities are recognized as research and development expense.

The Company enters into out-licensing agreements that are within the scope of Topic 606. The terms of such out-license agreements include licenses to functional intellectual property (IP), given the functionality of the intellectual property is not expected to change substantially as a result of the licensor’s ongoing activities. Such arrangements typically include payment of one or more of the following: non-refundable up-front license fees; reimbursement of certain costs; development and regulatory milestone payments and milestone payments based on the level of sales; and royalties on net sales of licensed products.

The Company considers the economic and regulatory characteristics of the licensed IP, research, development, manufacturing and commercialization capabilities of the licensee and the availability of the associated expertise in the general marketplace to determine if it has standalone value at the inception of the licensing arrangement, which would make the license distinct. In addition, the Company considers whether the licensee can benefit from a promise for its intended purpose without the receipt of any additional good or services promised in the contract, whether the value of the license is dependent on the remaining goods and services, whether there are other vendors that could provide the remaining promise, and whether the license is separately identifiable from the remaining good and services. For licenses that are combined with other goods and services, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of progress and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing agreement. Such a change could have a material impact on the amount of revenue the Company records in future periods.

Revenue is allocated to the licensed IP on a relative standalone selling price basis and, for functional IP, is recognized at a point when the licensed IP is made available for the customer’s use and benefit, which generally occurs at the inception of the arrangement. However, in cases, where the functionality of the IP is expected to substantively change as a result of activities of the Company that do not transfer additional promised goods or services, or in cases, where there is an expectation that the Company will undertake activities to change the standalone functionality of the IP and the customer is contractually or practically required to use the latest version of the IP, revenue for the license to functional IP is recognized over time.

Development and regulatory milestone fees, which are a type of variable consideration, are recognized as revenue to the extent that it is probable that a significant reversal will not occur. The Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

The Company has entered into a collaboration arrangement with Astellas Pharma Inc. (“Astellas”), as further described in Note 13 of notes to unaudited consolidated financial statements.

Revenue recognition

The Company accounts for contracts with customers in accordance with Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“Topic 606”), including all amendments thereto. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as collaborative arrangements and leases. The Company’s disclosure within the below sections or elsewhere within these unaudited consolidated financial statements reflects the Company’s accounting policies in compliance with this new standard.

Under Topic 606, an entity recognizes revenue when or as its 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 recognize revenue for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies its performance obligations. The Company only applies the five-step model to contracts when it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and identifies as a performance obligation each promise to transfer to the customer either (a) a good or service (or bundle of goods and services) that is distinct, or (b) a series of distinct goods and services that are substantially the same and have been the same pattern of transfer to the customer.

The Company assesses whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct, the Company considers factors such as the research, manufacturing and commercialization capabilities of the collaboration partner (the “customer” in this type of arrangement) and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. For each arrangement that results in revenues, the Company identifies all performance obligations, which may include, for example, a license to IP and know-how, research and development activities, and/or manufacturing services.

In addition to any upfront payment, if the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the estimated variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

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

For contracts that include sales-based royalties (including milestone payments based on the level of sales) promised in the exchange for licenses of intellectual property, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestone payments 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. In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments provides the Company or the Company’s customer with a significant benefit of financing the transfer of goods and services. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less. The Company assesses each of its revenue generating arrangements in order to determine whether a significant financing component exists. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. For performance obligations satisfied over time, the Company measures progress toward completion of its performance obligations using an input method based on the Company’s efforts and inputs to satisfy its performance obligations relative to total expected inputs to the satisfaction of that performance obligation.

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

Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (Jobs Act). The Jobs Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), as amended by various subsequently issued ASUs. The standard requires lessees to recognize an operating lease with a term greater than one year on their balance sheets as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. Lessees are required to classify leases as either finance or operating leases. If the lease is effectively a financed purchase by the lessee, it is classified as a financing lease, otherwise it is classified as an operating lease. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which permits entities to continue applying legacy guidance in ASC 840, Leases , including its disclosure requirements, in the comparative periods presented in the year that the entity adopts the new leasing standard. The new standard will be effective for the Company on January 1, 2021. The Company will apply the transition method permitted by ASU 2018-11. The Company is currently evaluating the effect that adoption of the standard is expected to have on the Company’s consolidated financial statements and related disclosures. The Company expects to take advantage of certain available expedients by electing the transition package of practical expedients permitted within ASU 2016-02, which allows the Company to not reassess previous accounting conclusions around whether arrangements are, or contain, leases, the classification of leases, and the treatment of initial direct costs. The Company also expects to make an accounting policy election to exclude leases with an initial term of twelve months or less from the balance sheet.

Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair value measurements

The Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at September 30, 2019 are summarized as follows:

	Fair Value Hierarchy	Amortization Cost		Unrealized Gain		Fair Market Value
Money market funds	Level 1	$	141,101	$	—	$	141,101
U.S. Government treasury securities	Level 1		22,931		116		23,047
		$	164,032	$	116	$	164,148

The Company had no financial assets subject to fair value reporting requirements at December 31, 2018.

The carrying amounts reflected in the consolidated unaudited balance sheets for prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities are shown at their historical values which approximate their fair values.

- 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

Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2019

Prepaid Expense And Other Assets Current [Abstract]

Prepaid Expenses and Other Current Assets

4. Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:

	September 30, 2019		December 31, 2018
Grants receivable	$	408	$	161
Research and development expenses		685		428
Other		307		159
Total	$	1,400	$	748

Property and Equipment

9 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Property and Equipment

5. Property and equipment

Property and equipment consisted of the following:

	September 30, 2019			December 31, 2018
Lab equipment	$	1,689		$	1,109
Computer equipment		12			12
Furniture and office equipment		240			204
Leasehold improvements		1,414			1,406
Construction in progress		52			33
Total		3,407			2,764
Accumulated depreciation		(1,841	)		(1,253	)
Property and equipment, net	$	1,566		$	1,511

Depreciation expense for the three months ended September 30, 2019 and 2018 was $215 and $148, respectively. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $588 and $444, respectively.

Accrued Expenses

9 Months Ended

Sep. 30, 2019

Payables And Accruals [Abstract]

Accrued Expenses

6. Accrued expenses

Accrued expenses consisted of the following:

	September 30, 2019		December 31, 2018
Payroll and employee related expenses	$	1,960	$	1,034
Professional fees		980		322
Third-party research and development expenses		160		393
Total	$	3,100	$	1,749

Convertible Preferred Stock

9 Months Ended

Sep. 30, 2019

Temporary Equity Disclosure [Abstract]

Convertible Preferred Stock

7. Convertible preferred stock

As of September 30, 2019, the Company had authorized 148,724,922 shares of Preferred Stock and has designated 64,891,735 shares as Series A Preferred, 10,000 shares as Series A-1 Preferred Stock (Series A-1 Preferred), 44,319,839 shares as Series B Preferred,10,000 shares as Series B-1 Preferred Stock (Series B-1 Preferred) and 39,493,348 shares as Series C Preferred. Since the Preferred Stock was redeemable upon a liquidation event, which was not considered to be within the Company’s control, it has been classified in temporary equity on the accompanying unaudited consolidated balance sheets. The carrying value of the Preferred Stock is the proceeds received less issuance costs. All shares of Series A, B and C Preferred Stock were converted into common stock in conjunction with the IPO. Shares of Series A-1 and B-1 Preferred were forfeited in conjunction with the IPO.

As of September 30, 2019, Preferred Stock consisted of the following (in thousands, except share amounts):

	Designated		Issued and Outstanding		Carrying Value		Liquidation Preference
Series A preferred stock		64,891,735		62,528,507	$	46,694	$	46,897
Series A-1 preferred stock		10,000		10,000		8		8
Series B preferred stock		44,319,839		42,145,996		38,490		38,793
Series B-1 preferred stock		10,000		10,000		9		9
Series C preferred stock		39,493,348		39,492,960		62,701		61,999
		148,724,922		144,187,463	$	147,902	$	147,706

Issuances of preferred stock

In January and February 2019, the Company issued 288,991 shares of Series B Preferred for net proceeds of $266.

On July 17, 2019, the Company issued 39,492,960 shares of Series C Preferred for net proceeds of $61,687. The rights and preferences of the Series C Preferred were similar to the Preferred Stock with the exception that the Series C Preferred has a cumulative 8% dividend, was senior in liquidation to the Series A Preferred, Series B Preferred and common stock and was automatically convertible into Common Stock upon the closing of a firm commitment underwritten public offering meeting certain minimum criteria. The Company has evaluated the rights, preferences and privileges of the Series C Preferred and has concluded that there are no freestanding derivative investments or any embedded derivatives requiring bifurcation.

Non-controlling Interest

9 Months Ended

Sep. 30, 2019

Noncontrolling Interest [Abstract]

Non-controlling Interest

8. Non-controlling interest

In 2018, the Company issued shares of preferred stock in its subsidiary, Frequency Japan, to a Japanese investor. The Company has consolidated Frequency Japan in the consolidated unaudited financial statements and has recorded the proceeds received for the sale of the preferred stock in Frequency Japan as a non-controlling interest in the temporary equity section of the unaudited consolidated balance sheets. The liquidation preference of the shares of preferred stock equals the purchase price of such shares.

The Frequency Japan preferred stock held by such investor was convertible, at the option of the holder, into 673,605 shares of Company common stock, adjustable for certain dilutive events, upon an initial public offering of Company common stock, a Company liquidation or upon a 70% vote of the holders of the Preferred Stock. The preferred shares also have a liquidation preference equal to the amount paid for the shares. The Company had the option to acquire the preferred shares of Frequency Japan under certain circumstances and the holder of such preferred shares had the right to require the Company to purchase such shares under certain circumstances, primarily a merger or liquidation.

In connection with this sale of the preferred stock in Frequency Japan, FT-FJ Investment, LLC (FT-FJ), a Delaware limited liability company controlled by the Company, purchased 10,000 shares of the Company’s Series A-1 Preferred and 10,000 shares of the Company’s Series B-1 Preferred. FT-FJ also granted to the Japanese investor an irrevocable proxy to vote the shares of Series A-1 and Series B-1 Preferred held by FT-FJ. Each share of Series A-1 Preferred had 236 times the voting power of one share of common stock and each share of Series B-1 Preferred has 217 times the voting power of one share of common stock.

On August 20, 2019, the Company, Frequency Japan, the Japanese investor, and FT-FJ entered into an agreement pursuant to which, contingent upon the closing of the initial public offering of the Company’s common stock: (i) the Japanese investor agreed to convert its shares of preferred stock held in Frequency Japan and to terminate its proxy over the shares of Series A-1 and B-1 Preferred Stock held by FT-FJ and (ii) FT-FJ agreed to forfeit its shares of Series A-1 and Series B-1 Preferred Stock. The shares were converted into common stock and the Series A-1 and B-1 preferred stock were forfeited in conjunction with the IPO.

Common Stock

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Common Stock

9. Common stock

The Company had authorized 100,000,000 shares of $0.001 par value common stock of which 2,382,309 were issued and outstanding as of September 30, 2019. Common shares are voting, and dividends may be paid when, as and if declared by the Board of Directors, subject to the limitations and preferences of the Preferred Stock.

The Company has reserved the following shares of common stock for future issuance as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Series A Preferred conversion		9,283,307		9,283,425
Conversion of Frequency Japan preferred stock		673,605		673,605
Series B Preferred conversion		6,257,256		6,214,387
Series C Preferred conversion		5,863,365		—
Stock options outstanding		4,787,897		2,089,334
Shares available for future grant under stock option plan		3,095,619		1,028,096
		29,961,049		19,288,847

Stock-based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

10. Stock-based compensation

On November 13, 2014, the Company adopted the 2014 Stock Incentive Plan (2014 Plan). All of the Company’s employees, officers, directors, and consultants are eligible to be granted options to purchase common shares and restricted stock under the terms of the 2014 Plan. The Company reserved an aggregate of 8,550,415 shares of common stock for issuance under the 2014 Plan. As of September 30, 2019, 3,095,619 shares of common stock were available for future grants under the 2014 Plan. These were canceled on the effective of the 2019 Plan.

On September 17, 2019, the Company’s board of directors and on September 19, 2019, its stockholders approved and adopted the 2019 Incentive Award Plan (the “2019 Plan”) which became effective on the day prior to the IPO. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company, and employees and consultants of the Company’s subsidiaries. A total of 3,100,000 shares of common stock were approved to be initially reserved for issuance under the 2019 Plan. The number of shares under the 2014 Plan subject to outstanding awards as of the effective date of the 2019 Plan that are subsequently canceled, forfeited or repurchased by the Company will be added to the shares reserved under the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2019 Plan, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 4% of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. In October 2019, 1,162,661 options were granted under the 2019 Plan at $14.00 per share.

All stock option grants are non-statutory stock options except option grants to employees (including officers and directors) intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended. Incentive stock options may not be granted at less than the fair market value of the Company’s common stock on the date of grant, as determined in good faith by the Board of Directors at its sole discretion. Nonqualified stock options may be granted at an exercise price established by the Board of Directors at its sole discretion (which has not been less than fair market value on the date of grant) and the vesting periods may vary. Vesting periods are generally four years and are determined by the Board of Directors. Stock options become exercisable as they vest. Options granted under the 2014 Plan and the 2019 Plans expire no more than ten years from the date of grant.

Stock options

A summary of the stock option activity under the 2014 Plan for the nine months ended September 30, 2019 is as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2018		2,089,334		$	0.61		—
Granted		3,015,381			4.17		—
Exercised		(297,599	)		1.09		—
Forfeited		(19,219	)		0.61		—
Outstanding as of September 30, 2019		4,787,897			2.83		9.14	$	37,374
Options exercisable as of September 30, 2019		1,441,449			1.81		8.84		12,715
Options unvested as of September 30, 2019		3,346,448							24,659

Stock option valuation

The fair value of stock options granted during the nine months ended September 30, 2019 and 2018 under the 2014 Plan has been calculated on the date of grant using the following weighted average assumptions:

	September 30, 2019			September 30, 2018
Risk-free interest rate		2.0	%		2.8	%
Expected term (in years)	5.8				5.7
Expected volatility		80.0	%		81.1	%
Expected dividend yield		0.0	%		0.0	%

The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2019 was $669 and $2,842, respectively. The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2018 was $2 and $3, respectively. During the three and nine months ended September 30, 2019, 78,041 and 297,599 stock options, respectively, were exercised. During the three and the nine months ended September 30, 2018, 54,671 and 113,402 stock options, respectively, were exercised.

The weighted average grant date fair value of stock options granted during the three and nine months ended September 30, 2019 was $5.66 per share and $2.86 per share, respectively. The weighted average grant date fair value of stock options granted during the three and nine months ended September 30, 2018 was nil per share and $0.42 per share, respectively.

The total grant date fair value of options vested during the three and nine months ended September 30, 2019 was $997 and $1,766, respectively. The total grant date fair value of options vested during the three and nine months ended September 30, 2018 was $78 and $182, respectively.

Restricted common stock

The Company issued common stock to founders, employees and advisors which was subject to vesting over four years. If any of these individuals ceased to be employed or to provide services to the Company prior to vesting, the Company had the right to repurchase any unvested common stock at the price paid by the holder.

A summary of the status of restricted common stock as of September 30, 2019 is presented below:

	Number of Shares		Weighted Average Fair Value
Outstanding as of December 31, 2018		1,657,345	$	0.27
Granted		—		—
Issued		37,112		2.23
Forfeited		—		—
Repurchased		—		—
Outstanding as of September 30, 2019		1,694,457		0.31
Vested during period		226,519		0.42
Unvested as of September 30, 2019		156,202		0.55

Stock-based compensation

The total compensation cost recognized in the statements of operations associated with all stock-based compensation awards granted by the Company is as follows (in thousands):

	Three Months Ended Sept. 30,				Nine Months Ended Sept. 30,
	2019		2018		2019		2018
Research and development	$	391	$	57	$	1,200	$	175
General and administrative		534		45		1,256		92
Total stock-based compensation expense	$	925	$	102	$	2,456	$	267

As of September 30, 2019, total unrecognized stock-based compensation expense relating to unvested stock options was $6,325. This amount is expected to be recognized over a weighted-average period of 2.38 years.

Employee Stock Purchase Plan

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Employee Stock Purchase Plan

11. Employee stock purchase plan

On September 20, 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Employee stock Purchase Plan (the “ESPP”) which became effective on the date of the IPO. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation. A total of 315,000 shares of common stock were approved to be initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be automatically increased on the first day of each calendar year during the first ten-years of the term of the ESPP, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 1% of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. No shares were issued under the ESPP at September 30, 2019.

Income Tax

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income tax

12. Income taxes

The company did not record an income tax benefit in its consolidated statement of operations for the nine months ended September 30, 2019 and 2018 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses. The Company had net deferred tax assets and liabilities of $12,229 at December 31, 2018. The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of December 31, 2018 and September 30, 2019 as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company has not recorded any amounts for unrecognized tax benefits as of December 31, 2018 or September 30, 2019.

Collaboration Agreement

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaboration Agreement

13. Collaboration agreement

In July 2019, the Company entered into a License and Collaboration Agreement with Astellas (the Astellas Agreement), under which the Company granted Astellas an exclusive, royalty-bearing, sub-licensable, nontransferable license to certain patent rights to research, develop, manufacture, have manufactured, use, seek and secure regulatory approval for, commercialize, offer for sale, sell, have sold and import, and otherwise exploit licensed products containing both a GSK-3 inhibitor and an HDAC inhibitor, (the Astellas Licensed Products), including the product candidate FX-322, outside of the United States. The Company also granted Astellas a right of first negotiation and a right of last refusal if it entered into any negotiation or agreement of any kind (other than an acquisition of all of the stock or assets of the Company) with any third party under which such third party would obtain the right to develop, manufacture, or commercialize Astellas Licensed Products in the United States.

The Company has agreed to conduct Phase 2a clinical studies in the United States. Upon the completion thereof, the Company and Astellas have agreed to jointly develop the Astellas Licensed Products, including carrying out joint studies. Each party has agreed to use commercially reasonable efforts to carry out development activities assigned to it under an agreed-upon development plan. Astellas has agreed to use commercially reasonable efforts to obtain regulatory approval for at least one Astellas Licensed Product in sensorineural hearing loss and in age-related hearing loss, in each case, in one major Asian country and one major European country. The Company has agreed to use commercially reasonable efforts to obtain regulatory approval for at least one Astellas Licensed Product in the United States. Astellas has the sole right to commercialize the Astellas Licensed Products outside of the United States, and the Company has the sole right to commercialize the Astellas Licensed Products in the United States. Astellas has agreed to use commercially reasonable efforts to commercialize Astellas Licensed Products in a major Asian country and a major European country following receipt of regulatory approval in such countries.

The collaboration is governed by a joint steering committee (“JSC”) established under the Astellas Agreement and shall be comprised of three representatives each from the Company and Astellas. The JSC shall oversee and coordinate the overall conduct of the development, manufacture and commercialization of the Astellas Licensed Products. All decisions of JSC shall be taken through a unanimous vote with each party’s representatives collectively having one vote. Both the parties shall be responsible for carrying out the development and manufacturing activities in their defined territory in accordance with the plan as reviewed and approved in the JSC.

As consideration for the licensed rights under the Astellas Agreement, Astellas paid the Company an upfront payment of $80.0 million, and agreed to pay potential development milestone payments up to $230.0 million. If the Astellas Licensed Products are successfully commercialized, the Company would be eligible for up to $315.0 million in potential commercial milestone payments and also tiered royalties at rates ranging from low- to mid-teen percentages. The parties shall share equally, on a 50/50 basis, all out-of-pocket costs and joint study costs for all the joint activities conducted pursuant to the development plans or the joint manufacturing plan.

The Astellas Agreement remains in effect until the expiration of all royalty obligations. Royalties are paid on a licensed product-by-licensed product and country-by-country basis until the latest of (i) the expiration of the last valid claim in the licensed patent rights with respect to such Astellas Licensed Product in such country or (ii) a set number of years from the first commercial sale of such Astellas Licensed Product in such country. Astellas may terminate the Astellas Agreement at will upon 60 days’ written notice. Each party has the right to terminate the Astellas Agreement due to the other party’s material breach if such breach remains uncured for 90 days (or 45 days in the case of nonpayment) or if the other party becomes bankrupt.

The Astellas Agreement is a collaborative agreement that is within the scope of ASC 808. The Company analyzed the joint research and development activities to assess whether they fall within the scope of ASC 808, and will reassess this throughout the life of the arrangement based on changes in the roles and responsibilities of the parties. Based on the terms of the arrangement as outlined above, both parties are deemed to be active participants in the collaboration. Both parties are performing research and development activities in their defined territory and will be performing joint clinical studies in accordance with the development plan and the study protocol approved by the JSC. Additionally, Astellas and the Company are exposed to significant risks and rewards dependent on the commercial success of any product candidates that may result from the collaboration. As such, the collaboration arrangement is deemed to be within the scope of ASC 808.

The arrangement consists of two components; the license of IP and the research and development activities, including committee participation, to support the co-development and research plan. Under the provisions of ASC 808, the Company has determined that it will apply the guidance in ASC 606 to recognize the revenue related to the license since that component of the arrangement is more reflective of a vendor-customer relationship. The Company determined that the license and the related research and development services associated with the Phase 2a clinical study were not distinct from one another, as the license has limited value to Astellas without the performance of the research and development activities and the Phase 2a study is essential to the use of the license. As such, the Company determined that these activities should be accounted for as a single combined performance obligation.

Revenue associated with this single performance obligation is being recognized as the research and development work is performed, using an input method on the basis of research and development costs incurred to date relative to total research and development costs expected to be incurred. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. The Company determined that the period of performance of the research and development services began upon the signing of the Astellas Agreement and is expected to be completed into the fourth quarter of 2020, therefore the transaction price of $80.0 million has been allocated to the single combined performance obligation and will be recognized over such period. The Company is required to pay MIT a royalty on sublicense revenues and as of September 30, 2019 has accrued $16.0 million related to the $80.0 million upfront payment received. The $16.0 million royalty was expensed in the three months ended September 30, 2019.

The $80.0 million upfront payment received from Astellas in July 2019 was initially recorded as deferred revenue and is being recognized as revenue according to the policy described above. In the quarter ended September 30, 2019, the company recorded $24.2 million of revenue under the Astellas Agreement which included $16.0 million related to the royalty payment to MIT and $8.2 million based upon the application of the input method to the remaining $64.0 million to be recognized over the estimated period to completion of the Phase 2a clinical trial for FX-322.

The potential development and regulatory milestone payments are fully constrained until the Company can conclude that achievement of the milestone is probable and that it is probable that recognition of revenue related to the milestone will not result in a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is ultimately resolved and as such these have been excluded from the transaction price. As part of its evaluation of the constraint, the Company considers numerous factors, including the fact that achievement of the milestones is outside the control of the Company and contingent upon the future success of clinical trials, the licensee’s efforts, and the receipt of regulatory approval. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to Astellas and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales of licensed products occur. The Company re-evaluates the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, at each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

The Astellas Agreement contains joint research and development activities that are not within the scope of ASC 606. The Company will recognize research and development expense related to the joint study costs for all the joint activities in future periods and reimbursements received from Astellas will be recognized as an offset to research and development expense on the consolidated statement of operations during the development period.

Net Loss per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Net Loss per Share

14. Net loss per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share amounts)	2019			2018			2019			2018
Numerator:
Net loss attributable to common stockholders	$	(1,589	)	$	(5,136	)	$	(14,267	)	$	(13,721	)
Denominator:
Weighted-average shares of common stock outstanding- basic and diluted		2,163,289			1,575,728			1,990,106			1,476,678
Net loss per share attributed to common stockholders-basic and diluted	$	(0.73	)	$	(3.26	)	$	(7.17	)	$	(9.29	)

The weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential shares of common stock from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Unvested Restricted Common Stock		156,202		409,099		156,202		409,099
Series C Preferred (as converted to common stock)		5,863,365		—		5,863,364		—
Series B Preferred (as converted to common stock)		9,257,256		—		6,257,256		—
Series A Preferred (as converted to common stock)		9,283,307		9,283,307		9,283,307		9,283,307
Conversion of Frequency Japan preferred stock		637,605		—		637,605		—
Outstanding stock options (as converted to common stock)		4,787,897		2,052,218		4,787,897		2,052,218
Total		29,985,632		11,744,624		26,985,631		11,744,624

Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent events

The Company has evaluated subsequent events for recognition and remeasurement purposes through November 15, 2019, the date that these interim unaudited consolidated financial statements were available to be issued and through November 18, 2019 for disclosure purposes. The identified subsequent events are discussed below:

In October 2019, the company completed the IPO, see discussion in Note 1.

In November 2019, the company signed a lease amendment for its Woburn, Massachusetts facility. The lease amendment increased the office space under lease by 7,550 square feet and extended the term of the lease for the facility to February 2025. The annual rent is approximately $545.0 with a provision for an annual increase of 3%.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation

Principles of Consolidation

Principles of consolidation

Unaudited Interim Financial Information

Unaudited interim financial information

Use of Estimates

Use of estimates

Comprehensive Income (loss)

Comprehensive income (loss)

Segment Information

Segment information

Foreign Currency

Foreign currency

Cash and Cash Equivalents

Cash and cash equivalents

Short-term Marketable Debt Securities

Short-term marketable debt securities

Short – term marketable securities at September 30, 2019 consist of investments in U.S. Treasury Securities.

Concentration of Credit Risk and Off-balance Sheet Risk

Concentration of credit risk and off-balance sheet risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Significant Suppliers

Significant suppliers

Fair Value Measurements

Fair value measurements


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

Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3	Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability.

The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Impairment of Long-Lived Assets

Impairment of long-lived assets

Research and Development Costs and Accruals

Research and development costs and accruals

Deferred Offering Costs

Deferred offering costs

Patent Costs

Patent costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

Stock-Based Compensation

Stock-based compensation

Non-Controlling Interest

Non-controlling interest

Net Loss Per Share

Net loss per share

Collaborative Arrangements

Collaborative arrangements

The Company has entered into a collaboration arrangement with Astellas Pharma Inc. (“Astellas”), as further described in Note 13 of notes to unaudited consolidated financial statements.

Revenue Recognition

Revenue recognition

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured at Fair Value on Recurring Basis

The Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at September 30, 2019 are summarized as follows:

Fair Value

Hierarchy

Amortization

Cost

Unrealized