View Filing Data

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Mar. 20, 2020	Jun. 30, 2019
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Document Fiscal Year Focus	2019
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Entity Central Index Key	0001703647
Entity File Number	001-39062
Entity Registrant Name	Frequency Therapeutics, Inc.
Entity Incorporation State Country Code	DE
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
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	FREQ
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Public Float			$ 0
Entity Common Stock, Shares Outstanding		30,946,354
Documents Incorporated by Reference	Portions of the Proxy Statement for the registrant’s 2020 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 200,158	$ 42,189
Short-term marketable securities	17,197
Prepaid expenses and other current assets	4,000	748
Total current assets	221,355	42,937
Property and equipment, net	1,762	1,511
Other assets	101	100
Total assets	223,218	44,548
Current liabilities:
Accounts payable	1,219	1,863
Accrued expenses	3,239	1,749
Deferred revenue	48,152
Other current liabilities	170	161
Total current liabilities	52,780	3,773
Deferred revenue, net of current portion	2,900
Long-term liabilities	180	349
Total liabilities	55,860	4,122
Non-controlling interest		3,773
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 100,000,000 and 165,000,000 shares authorized at December 31, 2019 and December 31, 2018, respectively; 30,844,507 and 2,084,710 shares issued and outstanding at December 31, 2019 and 2018, respectively	31	2
Additional paid-in capital	236,161	804
Accumulated other comprehensive income	54
Accumulated deficit	(68,888)	(49,088)
Total stockholders’ equity (deficit)	167,358	(48,282)
Total liabilities, convertible preferred stock, non-controlling interest and stockholders’ equity (deficit)	$ 223,218	44,548
Series B Convertible Preferred Stock
Current liabilities:
Convertible preferred stock		38,224
Series B-1 Convertible Preferred Stock
Current liabilities:
Convertible preferred stock		9
Series A Convertible Preferred Stock
Current liabilities:
Convertible preferred stock		46,694
Series A-1 Convertible Preferred Stock
Current liabilities:
Convertible preferred stock		$ 8

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Convertible preferred stock, authorized shares		114,208,722
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	165,000,000
Common stock, issued shares	30,844,507	2,084,710
Common stock, outstanding shares	30,844,507	2,084,710
Series B Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	0	49,296,987
Convertible preferred stock, issued shares	0	41,857,005
Convertible preferred stock, outstanding shares	0	41,857,005
Series B-1 Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	0	10,000
Convertible preferred stock, issued shares	0	10,000
Convertible preferred stock, outstanding shares	0	10,000
Series A Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	0	64,891,735
Convertible preferred stock, issued shares	0	62,528,507
Convertible preferred stock, outstanding shares	0	62,528,507
Series A-1 Convertible Preferred Stock
Convertible preferred stock , par value	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	0	10,000
Convertible preferred stock, issued shares	0	10,000
Convertible preferred stock, outstanding shares	0	10,000

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Revenue	$ 28,947
Operating expenses:
Royalty	16,000
Research and development	18,784	$ 11,880	$ 11,966
General and administrative	14,838	7,064	4,340
Total operating expenses	49,622	18,944	16,306
Loss from operations	(20,675)	(18,944)	(16,306)
Interest income (expense)	1,784	(106)	(174)
Loss on extinguishment of debt		(269)	(3,749)
Realized gain on investments	138
Foreign exchange gain (loss)	7	151	(8)
Net loss	(18,746)	(19,168)	(20,237)
Cumulative Series C preferred stock dividends	(1,054)
Net loss attributable to common shareholders	$ (19,800)	$ (19,168)	$ (20,237)
Net loss per share attributable to common stockholders-basic and diluted	$ (2.29)	$ (12.53)	$ (28.79)
Weighted-average shares of common stock outstanding-basic and diluted	8,649,245	1,530,218	702,918

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (18,746)	$ (19,168)	$ (20,237)
Other comprehensive gain:
Unrealized gain on marketable securities	54
Total comprehensive gain	54
Comprehensive loss	$ (18,692)	$ (19,168)	$ (20,237)

- 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 Stockholder's Equity (Deficit) - 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, 2016	$ (9,663)		$ 2	$ 18		$ (9,683)
Beginning Balance (in shares) at Dec. 31, 2016			1,658,459
Stock-based compensation expense	91			91
Stock-based compensation expense (in shares)			230,974
Issuance of common stock for exclusive patent license	140			140
Issuance of common stock for exclusive patent license (in shares)			64,802
Issuance of common stock upon exercise of stock options	27			27
Issuance of convertible preferred stock, net of issuance costs										$ 27,951
Issuance of convertible preferred stock, net of issuance costs (in shares)										37,538,421
Issuance of convertible preferred stock related to the conversion of convertible notes payable										$ 18,743
Issuance of convertible preferred stock related to the conversion of convertible notes payable (in shares)										24,990,086
Net loss	(20,237)					(20,237)
Ending Balance at Dec. 31, 2017										$ 46,694
Ending Balance (in shares) at Dec. 31, 2017										62,528,507
Ending Balance at Dec. 31, 2017	(29,642)		$ 2	276		(29,920)
Ending Balance (in shares) at Dec. 31, 2017			1,954,235
Stock-based compensation expense	455			455
Issuance of common stock upon exercise of stock options	$ 73			73
Issuance of common stock upon exercise of options (in shares)	126,253		126,253
Issuance of restricted stock (in shares)			7,423
Repurchase of restricted stock (in shares)			(3,201)
Issuance of convertible preferred stock									$ 9		$ 8
Issuance of convertible preferred stock (in shares)									10,000		10,000
Issuance of convertible preferred stock, net of issuance costs								$ 32,849
Issuance of convertible preferred stock, net of issuance costs (in shares)								36,017,542
Issuance of convertible preferred stock related to the conversion of convertible notes payable								$ 5,375
Issuance of convertible preferred stock related to the conversion of convertible notes payable (in shares)								5,839,463
Non-controlling interest		$ 3,773
Net loss	$ (19,168)					(19,168)
Ending Balance at Dec. 31, 2018		3,773						$ 38,224	$ 9	$ 46,694	$ 8
Ending Balance (in shares) at Dec. 31, 2018								41,857,005	10,000	62,528,507	10,000
Ending Balance at Dec. 31, 2018	$ (48,282)		$ 2	804		(49,088)
Ending Balance (in shares) at Dec. 31, 2018	2,084,710		2,084,710
Stock-based compensation expense	$ 3,609			3,609
Issuance of common stock upon exercise of stock options	$ 366		$ 1	365
Issuance of common stock upon exercise of options (in shares)	357,170		357,170
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	$ (1,054)					(1,054)
Accretion of Series C preferred dividend							$ 1,054
Initial public offering of common stock	79,696		$ 6	79,690
Initial public offering of common stock (in shares)			6,325,000
Conversion of preferred stock and non-controlling interest into common stock in connection with the IPO	151,715		$ 22	151,693
Conversion of preferred stock and non-controlling interest into common stock in connection with the IPO (in shares)							(39,492,960)	(42,145,996)	(10,000)	(62,528,507)	(10,000)
Conversion of preferred stock and non-controlling interest into common stock in connection with the IPO		$ (3,773)					$ (62,741)	$ (38,490)	$ (9)	$ (46,694)	$ (8)
Conversion of preferred stock and non-controlling interest into common stock in connection with the IPO (in shares)			22,077,627
Other comprehensive income	54				$ 54
Net loss	(18,746)					(18,746)
Ending Balance (in shares) at Dec. 31, 2019								0	0	0	0
Ending Balance at Dec. 31, 2019	$ 167,358		$ 31	$ 236,161	$ 54	$ (68,888)
Ending Balance (in shares) at Dec. 31, 2019	30,844,507		30,844,507

Consolidated Statement of Convertible Preferred Stock, Non-controlling Interest and Stockholder's Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Series A Convertible Preferred Stock
Issuance of convertible preferred stock, issuance costs		$ 203
Series B Convertible Preferred Stock
Issuance of convertible preferred stock, issuance costs	$ 302

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (18,746)	$ (19,168)	$ (20,237)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock based compensation	3,609	455	91
Depreciation	813	654	531
Non-cash interest		106	174
Loss on extinguishment of convertible notes payable		269	3,749
Issuance of common stock for license agreement	54		140
Deferred lease incentives	(160)	(159)	662
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(3,253)	(727)	142
Accounts payable	(644)	869	(231)
Deferred revenue	51,052
Accrued expenses	1,490	677	365
Net cash provided by (used in) operating activities	34,215	(17,024)	(14,614)
Cash flows from investing activities:
Purchases of property and equipment	(1,064)	(436)	(1,863)
Redemption of available for sale securities	(282,618)
Purchase of available for sale securities	265,421
Net cash used in investing activities	(18,261)	(436)	(1,863)
Cash flows from financing activities:
Proceeds from sale of non-controlling interest		3,773
Proceeds from issuance of convertible notes payable		5,000
Proceeds from issuance of common stock	80,062	73	27
Net cash provided by financing activities	142,015	41,712	27,978
Net increase in cash and cash equivalents	157,969	24,252	11,501
Cash at beginning of year	42,189	17,937	6,436
Cash at end of year	200,158	42,189	17,937
Cash paid during the year for:
Taxes	94
Non-cash items
Conversion of convertible notes payable and accrued interest into convertible preferred stock		5,375	18,743
Cumulative Series C convertible preferred stock dividends	1,054
Conversion of preferred stock and non-controlling interest into common stock	151,715
Series A Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs			$ 27,951
Series A-1 Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs		8
Series B Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs	266	32,849
Series B-1 Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs		$ 9
Series C Convertible Preferred Stock
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs	$ 61,687

Organization and Basis of Presentation

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

1. Organization and basis of presentation

Frequency Therapeutics, Inc., together with its wholly owned subsidiaries, Frequency Therapeutics, PTY, LTD, Frequency Therapeutics Securities Corporation and 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 Convertible Preferred Stock (Series A Preferred), Series B Convertible Preferred Stock (Series B Preferred) and Series C Convertible 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 consolidated financial statements and notes to the 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 $79.7 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 22,077,627 shares of common stock and all outstanding shares of Series A-1 Preferred Stock and B-1 Preferred Stock were forfeited.

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 December 31, 2019, the Company had an accumulated deficit of ($68,888). 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 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

12 Months Ended

Dec. 31, 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 Japan (majority owned at December 31, 2018). All intercompany transactions and balances have been eliminated.

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 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 accrued expenses, revenue, 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 in periods prior to the IPO. The Company had 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 included 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 have resulted 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 which for the year ended December 31, 2019 consists of unrealized gain on marketable securities. There were no elements of comprehensive loss for the years ended December 31, 2018 and 2017.

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 in 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 years ended December 31, 2019, 2018 and 2017 the Company recorded $7, $151 and ($8) of foreign currency exchange gains (losses), respectively.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of six months or less at acquisition to be cash equivalents which are stated at fair market value. Cash and cash equivalents at December 31, 2019 and 2018 consists entirely 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 investment 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 sold is determined based on the specific identification method and any realized gains or losses on the sale of investment are reflected as a component of other income (expense).

Short-term marketable securities at December 31, 2019 consist of investment in U.S. Treasury Securities.

Concentration of credit risk and off-balance sheet risk

Financial instrument 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 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.

Property and equipment

Property and equipment consist of lab equipment, computer equipment, furniture and office equipment and leasehold improvements recorded at cost. These amounts are depreciated using the straight-line method over the estimated useful lives of the assets as follows:

		Estimated useful life
Lab equipment		3 years
Computer equipment		3 years
Furniture and office equipment		3 years
Leasehold improvements		Shorter of the estimated useful life or lease term

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the balance sheet and related gains or losses are reflected in the consolidated statements of operations.

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 years ended December 31, 2019, 2018 and 2017.

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 expense as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.

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 counterparty that are the result of a collaborative relationship with the counterparty, 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 15 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 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 re-evaluates 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 a current liability in the accompanying consolidated balance sheets.

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 and as such, 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 sufficient 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 prior to the IPO. 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

As of December 31, 2018, the Company accounted for shares of preferred stock issued in Frequency Japan as a non-controlling interest in the mezzanine section of the consolidated balance sheets. The value ascribed to the non-controlling interest was the liquidation preference of the preferred stock in Frequency Japan as the holders of such shares do not share in any profits or losses of the subsidiary. In connection with the IPO, all preferred stock of Frequency Japan converted into shares of the Company’s common stock, see Note 1.

Income taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic 740, Income Taxes (ASC 740) which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. At December 31, 2019 and 2018, the Company has concluded that a full valuation allowance is necessary for its deferred tax assets (see Note 13).

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 years ended December 31, 2019, 2018 and 2017 since all potential shares of common stock instruments are anti-dilutive as a result of the loss for such periods.

The Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reported a net loss, such losses are not allocated to such participating securities. In periods where the Company reported 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 years ended December 31, 2019, 2018 and 2017.

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

	Year ended December 31
(in thousands, except share and per share amounts)	2019			2018			2017
Numerator:
Net loss attributable to common stockholders	$	(19,800	)	$	(19,168	)	$	(20,237	)
Denominator:
Weighted-average shares of common stock outstanding-basic and diluted		8,649,245			1,530,218			702,918
Net loss per share attributed to common stockholders-basic and diluted	$	(2.29	)	$	(12.53	)	$	(28.79	)

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.

	Year ended December 31
	2019		2018		2017
Unvested restricted Common Stock		70,366		345,608		637,746
Series C Preferred (as converted to common stock)		1,172,676		—		—
Series B Preferred (as converted to common stock)		4,759,079		6,214,387		—
Series A Preferred (as converted to common stock)		7,070,574		9,283,425		9,283,425
Conversion of Frequency Japan preferred stock		513,047		673,605		—
Outstanding stock options (as converted to common stock)		5,968,672		2,089,334		985,521
Total		19,554,414		18,606,359		10,906,692

Recently adopted accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The standard will apply one comprehensive revenue recognition model across all contracts, entities, and sectors. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Once effective, ASU 2014-09 will replace most of the existing revenue recognition requirements in U.S. GAAP. The FASB also issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of the standard one year. As a result, the new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within the reporting period. Early adoption is permitted. The Company early adopted ASU 2014-09 effective January 1, 2018, and its adoption had no impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU No. 2016-15). This guidance addresses the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. Early adoption is permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU No. 2016-15 did not have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (ASU No. 2017-09). This update clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. ASU No. 2017-09 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted, and prospective application is required. The Company adopted this standard effective January 1, 2018. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

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 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. The Company elected to avail itself 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, which is intended to increase transparency and comparability among companies that enter into leasing arrangements. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, with targeted improvements to the guidance including an additional transition method, which allows companies to apply the provisions of the new leasing standard as of January 1, 2020, without adjusting the comparative periods presented by recognizing a cumulative-effect adjustment to the opening balance of retained earnings.

The Company plans to elect early adoption of this standard effective January 1, 2020 and elect the new transition method approved by the FASB. The Company also plans to elect the package of practical expedients intended to ease transition whereby the Company need not assess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. Furthermore, the Company will elect the practical expedient to combine non-lease components and lease components. As the Company finalizes its adoption processes, it estimates the adoption of the ASU in the first quarter of 2020 will result in the recognition of a right-of-use asset and related lease liability related to the lease for our Woburn Massachusetts facility in the range of approximately $1,000 to $2,000 with an estimated immaterial effect to the retained earnings and the consolidated statement of operations. As disclosed in Note 16, the Company has entered into a lease for a facility in Lexington Massachusetts which has an estimated commencement date of December 1, 2020. In accordance with ASU No. 2016-02, the Company will recognize a right-of-use asset and related lease liability at such time.

Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair value measurements

The Company’s financial assets measures at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2019 are summarized as follows:

	Fair Value	Amortization		Unrealized			Fair Market
	Hierarchy	Cost		Gain			Value
Money market funds	Level 1	$	200,131	$	(12	)	$	200,119
U.S. Government treasury securities	Level 1		17,131		66			17,197
		$	217,262	$	54		$	217,316

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

The carrying amounts reflected in the consolidated balance sheet 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

12 Months Ended

Dec. 31, 2019

Prepaid Expense And Other Assets Current [Abstract]

Prepaid Expenses

4. Prepaid expenses

Prepaid expenses and other current assets consisted of the following:

	December 31,
	2019		2018
Rent and deposits	$	63	$	—
Research and development expenses	801			428
Grant receivable	805			161
Insurance		2,132		—
Other		199		159
Total	$	4,000	$	748

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Property and Equipment

5. Property and equipment

Property and equipment include the following:

	December 31,
	2019			2018
Lab equipment	$	1,846		$	1,109
Computer equipment		12			12
Furniture and office equipment		245			204
Leasehold improvements		1,419			1,406
Construction in progress		306			33
Total		3,828			2,764
Accumulated depreciation		(2,066	)		(1,253	)
Property and equipment, net	$	1,762		$	1,511

The Company recognized $813 and $654 of depreciation expense for the years ended December 31, 2019 and 2018, respectively.

Accrued Expenses

12 Months Ended

Dec. 31, 2019

Payables And Accruals [Abstract]

Accrued Expenses

6. Accrued expenses

Accrued expenses consist of the following:

	December 31,
	2019		2018
Payroll and employee related expenses	$	2,686	$	1,034
Professional fees		435		322
Third-party research and development expenses		118		393
Total	$	3,239	$	1,749

Convertible Notes

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Convertible Notes

7. Convertible notes

In 2018, the Company entered into $5,000 of convertible notes with existing shareholders and investors (Series B Notes) with a maturity date of May 31, 2019. The Series B Notes bore interest at a rate of 5% per annum and were automatically convertible into the security issued in the next financing of at least $5,000, excluding the proceeds of the Series B Notes (Qualified Series B Financing) at a conversion price equal to 95% of the per share price paid by investors in such financing. In the event of a sale of the Company, prior to the conversion or repayment of the Series B Notes at maturity, the Series B Notes would have been repaid at an amount equal to one and one-half times the outstanding principal and interest.

On October 17, 2018, the Company closed a Qualified Series B Financing and the Series B Notes converted pursuant to their contractual terms. The $5,000 of principal plus $106 of accrued interest were converted into Series B Preferred shares at a 5% discount to the offering price of $0.92 per share resulting in the issuance of 5,839,463 Series B shares and the recognition of a loss on conversion of $269 (see Note 8). For the year ended December 31, 2018, the Company recorded $106 in interest expense on the Series B Notes.

In 2015 and 2016, the Company entered into $14,285 of convertible notes with investors (Series A Notes) with a maturity date of January 21, 2017, which was extended to April 30, 2017. The Series A Notes bore interest at a rate of 5% per annum and were automatically convertible into the security issued in the next financing in excess of $4,000 (Qualified Series A Financing) at a conversion price equal to 80% of the per share price paid by investors in such financing. If, prior to the Company completing a Qualified Series A Financing, the Company received funds in excess of $15,000 pursuant to a non-equity financing, grant or other similar event, then the Company would have obtained an outside valuation and thereafter the Series A Notes would have automatically converted into shares of common stock of the Company, at a 20% discount to such valuation. In the event of a sale of the Company, prior to conversion or repayment of the Series A Notes at maturity, the Series A Notes would have been repaid at an amount equal to three times the outstanding principal and interest.

On March 30, 2017, the Company closed a Qualified Series A Financing and the Series A Notes converted pursuant to their contractual terms. The $14,285 of principal plus $709 of accrued interest were converted into Series A Preferred shares at a 20% discount to the offering price of $0.75 per share resulting in the issuance of 24,990,086 Series A Preferred shares and the recognition of a loss on conversion of $3,749 (see Note 8). For the year ended December 31, 2017, the Company recorded $174 in interest expense on the Series A Notes.

The Series A Notes and Series B Notes did not contain an optional conversion feature.

The Company evaluated all the settlement features included within the Series A Notes and Series B Notes, noting that none of the features was considered to be predominant or met the definition of a derivative under FASB ASC Topic 815, Derivatives and Hedging with the exception of the repayment premium in the event of a Company sale. In such event the noteholders were entitled to receive an amount equal to three times the outstanding principal, in the case of Series A Notes, and one and one half and three times the outstanding principal, in the case of the Series B Notes, plus all accrued and unpaid interest. Based on the qualitative and quantitative considerations, management determined that the fair value of the derivative was de minimis as of December 31, 2017.

Convertible Preferred Stock

12 Months Ended

Dec. 31, 2019

Temporary Equity Disclosure [Abstract]

Convertible Preferred Stock

8. Convertible preferred stock

As of December 31, 2018, the Company had authorized 114,208,722 shares of Preferred Stock and had designated 64,891,735 shares as Series A Preferred, 10,000 shares as Series A-1 Preferred Stock, 49,296,987 shares as Series B Preferred and 10,000 shares as Series B-1 Preferred Stock. Since the Preferred Stock was redeemable upon a liquidation event, which is not considered to be within the Company’s control, it has been classified in temporary equity on the accompanying consolidated balance sheet as of December 31, 2018. The carrying value of the Preferred Stock was the proceeds received less issuance costs. In October 2019, in connection with the IPO, all shares of Preferred Stock were automatically converted into common stock.

Issuances of preferred stock

On March 30, 2017, the Company converted $14,285 of Series A Notes plus accrued interest of $709 into 24,990,086 shares of Series A Preferred at a 20% discount to the offering price of $0.75 per share. The Company also issued 9,783,522 shares of Series A Preferred for proceeds of $7,338 on the same date. Additional issuances of Series A Preferred took place in April, May, August and December of 2017 for an additional aggregate issuance of 27,754,899 shares of Series A Preferred shares for proceeds of $20,816.

The Company incurred $203 of share issuance costs in connection with the issuance of the Series A Preferred described above which was recorded as a reduction in the proceeds received and the carrying value.

On October 17, 2018, the Company converted $5,000 of Series B Notes plus accrued interest of $106 into 5,839,463 shares of Series B Preferred at a 5% discount to the offering price of $0.92 per share. The Company also issued 7,544,029 shares of Series B Preferred for proceeds of $6,944 on the same date. Additional issuances of Series B Preferred took place in November and December of 2018 for an additional aggregate issuance of 28,473,513 shares of Series B Preferred shares for proceeds of $26,208. The Company also issued 288,991 shares of Series B Preferred in January and February 2019 for proceeds of $266.

The Company incurred $302 of share issuance costs in connection with Series B Preferred described above which was recorded as a reduction in the proceeds received and the carrying value.

On October 17, 2018, the Company issued 10,000 shares of Series A-1 Preferred Stock (Series A-1 Preferred) at a price of $0.75 per share for proceeds of $8. The Company also issued 10,000 shares of Series B-1 Preferred Stock (Series B-1 Preferred) at a price of $0.92 per share for proceeds of $9 on the same date.

The Company has evaluated the tranched nature of the issuance of Series A Preferred and Series B Preferred as well as the rights, preferences, and privileges of such shares and has concluded that there were no freestanding derivative instruments or any embedded derivatives requiring bifurcation.

On July 17, 2019, the Company authorized and issued 39,492,960 shares of Series C Preferred for net proceeds of $61,687. The Company has evaluated the rights, preferences and privileges of the Series C Preferred and has concluded that there were no freestanding derivative investments or any embedded derivatives requiring bifurcation.

Non-controlling Interest

12 Months Ended

Dec. 31, 2019

Noncontrolling Interest [Abstract]

Non-controlling Interest

9. 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 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 consolidated balance sheets as of December 31, 2018. The liquidation preference of the shares of preferred stock equaled 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 had 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 Stock and 10,000 shares of the Company’s Series B-1 Preferred Stock. FT-FJ also granted to the Japanese investor an irrevocable proxy to vote the shares of Series A-1 and Series B-1 Preferred Stock 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 Stock 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 an 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 shares were forfeited in conjunction with the IPO.

Stockholders' Deficit

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stockholders' Deficit

10. Stockholders’ deficit

Common stock

The Company has authorized 100,000,000 shares of $0.001 par value common stock of which 30,844,507 were issued and outstanding as of December 31, 2019. Common shares are voting, and dividends may be paid when, as and if declared by the Board of Directors.

The Company has reserved the following shares of common stock for future issuance as of December 31, 2019, 2018 and 2017:

	December 31,
	2019		2018		2017
Series A Preferred conversion		—		9,283,425		9,283,425
Conversion of Frequency Japan preferred stock		—		673,605		—
Series B Preferred conversion		—		6,214,387		—
Stock options outstanding		5,968,672		2,089,334		985,521
Shares available for future grant under stock option plan		1,859,654		1,028,096		646,871
		7,828,326		19,288,847		10,915,817

Stock-based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

11. 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 December 31, 2019, there were no shares of common stock available for future grants under the 2014 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 and 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 the 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.

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 Plan expire no more than ten years from the date of grant.

Stock options

A summary of the stock option activity under the 2014 Plan and the 2019 Plan are as follows:

	Number of shares		Weighted average exercise		Weighted average remaining contractual term		Aggregate intrinsic		Number of shares			Weighted average exercise		Weighted average remaining contractual term		Aggregate intrinsic
	2019 Plan		price		(in years)		value		2014 Plan			price		(in years)		value
Outstanding as of December 31, 2017		—	$	—		—				985,520		$	0.54		—		—
Granted		—		—		—				1,436,734			0.67		—		—
Exercised		—		—		—				(126,253	)		0.54		—		—
Forfeited		—		—		—				(206,667	)		0.54		—		—
Outstanding as of December 31, 2018		—		—		—				2,089,334			0.61		—		—
Granted		1,247,338		14.09		—				3,015,381			4.17		—		—
Exercised		—		—		—				(357,170	)		1.02		—		—
Forfeited		—		—		—				(26,211	)		1.09		—		—
Outstanding as of December 31, 2019		1,247,338	$	14.09		9.76	$	4,287		4,721,334		$	2.85		8.89	$	65,051
Options exercisable as of December 31, 2019		49,433	$	14.01		9.75	$	174		1,866,700		$	2.07		8.71	$	26,034
Options unvested as of December 31, 2019		1,197,905					$	4,113		2,854,634						$	39,017

Stock option valuation

The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors were as follows, presented on a weighted average basis:

	December 31,
	2019			2018			2017
Risk-free interest rate		2.0	%		2.8	%	2.1%-2.2		%
Expected term (in years)		5.9			5.7		6.0-7.0
Expected volatility		79.4	%		81.1	%		79.0	%
Expected dividend yield		0.0	%		0.0	%		0.0	%

Risk-Fee Interest Rate: The Company based the risk-free interest rate over the expected term of the options based on the constant maturity of U.S. Treasury securities with similar maturities as of the date of the grant.

Expected Term: The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term.

Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding volatility of its own stock price options becomes available.

Expected Dividend Yield: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. During the years ended December 31, 2019 and 2018, 357,170 and 126,253 shares were exercised, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2019 and 2018 was $5,896 and $149 respectively.

The weighted-average grant date fair value of options granted to employees during the years ended December 31, 2019, 2018 and 2017 was $4.05, $0.47 and $.041, respectively.

The total grant date fair value of options vested during the years ended December 31, 2019 and 2018 was $2,990 and $244, 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 December 31, 2019 and 2018 is presented below:

	Number of shares			Weighted average fair value
Outstanding as of December 31, 2017		1,658,459		$	0.27
Granted		7,423			1.75
Issued		(5,336	)		0.07
Repurchased		(3,201	)		0.07
Outstanding as of December 31, 2018		1,657,345			0.28
Granted		—			—
Issued		—			—
Repurchased		—			—
Outstanding as of December 31, 2019		1,657,345			0.28
Vested during period		275,243			0.26
Unvested as of December 31, 2019		70,366		$	0.36

The Company repurchased 3,201 shares of restricted stock forfeited by a former employee in 2018. The total value of restricted stock awards that vested during the years ended December 31, 2019 and 2018, based on estimated fair values of the stock underlying the restricted stock awards on the day of vesting was $73 and $81, respectively.

Stock-based compensation

Stock-based compensation expense of $3,609 and $455 for the years ended December 31, 2019 and 2018 respectively, is included in research and development and general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss.

As of December 31, 2019 and 2018, total unrecognized stock-based compensation expense relating to unvested stock options was $13,820 and $717, respectively. This amount is expected to be recognized over a weighted-average period of 2.76 years and 2.76 years, respectively.

Employee Stock Purchase Plan

12 Months Ended

Dec. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Employee Stock Purchase Plan

12. 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 December 31, 2019.

Income Tax

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income tax

13. Income taxes

Since inception in 2014, the Company has generated cumulative federal and state net operating loss and research and development credit carryforwards for which we have not recorded any net tax benefit due to uncertainty around utilizing these tax attributes within the respective carryforward periods.

As of December 31, 2019, the Company had federal net operating loss carryforwards of approximately $50,199 and Massachusetts state operating loss carryforwards of approximately $41,242 which may be available to offset future taxable income. The U.S. federal net operating loss carryforwards include $22,400 available to reduce future taxable income through 2037 and approximately $27,779 which do not expire and are available to reduce future taxable income indefinitely. The state net operating loss carryforwards are available to offset future taxable income through 2039. As of December 31, 2019, the Company also had federal and Massachusetts research and development tax credit carryforwards of $701 and $533, respectively, which are available to offset federal and state tax liabilities through 2039 and 2034, respectively.

Realization of future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as provided under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, respectively, as well as similar state provisions. These ownership changes may limit the number of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has completed several financings and has conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception and has determined that an ownership change did occur in March 2017. Accordingly, utilization of $12,400 of the U.S. net operating loss carryforwards which were incurred prior to March 2017 (pre-ownership change) is limited under Section 382. After the Section 382 limitations, the Company may utilize approximately $10,800 of its pre-ownership change net operating loss carryforwards based upon an annual usage of approximately $1,600 for each of the next five years after the ownership change and approximately $180 for each of the 15 years thereafter. The remaining pre-ownership change net operating losses of approximately $1,600 were written off due to expiration under limitation. The limitation has been determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate. These carryforwards may be subject to further annual limitations under Section 382 in the event of future changes in ownership. Additionally, the Company has determined an ownership changed occurred in October of 2019 as a result of the IPO. Accordingly, utilization of approximately $46,123 of the U.S. net operating loss carryforwards incurred prior to October 2019 is also limited under Section 382. The Company has determined it will be able to utilize the entire $46,123 of its pre-ownership change net operating loss carryforwards based upon the limitations calculated from the October 2019 ownership change. These carryforwards may be subject to further annual limitations under Section 382 in the event of future changes in ownership.

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a valuation allowance against its deferred tax assets at December 31, 2019 and 2018 because the Company’s management has determined that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets primarily due to its cumulative loss position and, as a result, a valuation allowance of approximately $16,204 and $12,229 as of December 31, 2019 and 2018 has been established.

The Company has no unrecognized tax benefits. The Company has not, as yet, conducted a study of its research and development credit carryforwards. Such a study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed, and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment were required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheet or consolidated statements of operations if an adjustment were required. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2019 and 2018.

The Company files income tax returns in the U.S. and Massachusetts. The statute of limitations for assessment by the Internal Revenue Service and Massachusetts tax authorities remains open for all years since 2014. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state authorities to the extent utilized in a future period. No federal or state tax audits are currently in process.

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2019, 2018 and 2017 is as follows:

	2019			2018			2017
U.S federal statutory income tax rate		21.0	%		21.0	%		34.0	%
Impact of federal rate change		—			—