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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2019	Nov. 13, 2019
Document and Entity Information
Entity Registrant Name	Aprea Therapeutics, Inc.
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,990,502
Entity Central Index Key	0001781983
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 52,334,102	$ 65,675,931
Deferred offering costs	4,070,690
Prepaid expenses and other current assets	339,814	322,146
Total current assets	56,744,606	65,998,077
Property and equipment, net	31,032	24,450
Right of use lease asset	560,318
Other noncurrent assets	102	111
Total assets	57,336,058	66,022,638
Current liabilities:
Accounts payable	3,510,105	1,739,337
Accrued expenses	5,847,364	3,128,772
Lease liability-current	226,852
Total current liabilities	9,584,321	4,868,109
Lease liability-noncurrent	358,404
Total liabilities	9,942,725	4,868,109
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Common stock, par value $0.001 at September 30, 2019 and $0.11 at December 31, 2018; 1,181,733 and 1,155,366, shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively.	1,182	127,091
Additional paid-in capital	20,346,849	19,666,588
Accumulated other comprehensive loss	(13,688,166)	(8,761,325)
Accumulated deficit	(77,455,525)	(62,468,456)
Total stockholders' deficit	(70,795,660)	(51,436,102)
Total liabilities, convertible preferred stock and stockholders' deficit	57,336,058	66,022,638
Convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock	118,188,993	112,590,631
Series A convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock	6,483,044	6,483,044
Series B convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock	49,742,942	49,742,942
Series C convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock	$ 61,963,007	$ 56,364,645

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Common stock, par value	$ 0.001	$ 0.11
Common stock, shares issued	1,181,733	1,155,366
Common stock, outstanding	1,181,733	1,155,366
Series A convertible preferred stock
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, issued	612,446	612,446
Convertible preferred stock, outstanding	612,446	612,446
Convertible preferred stock, liquidation preference	$ 6,483,044
Series B convertible preferred stock
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, issued	7,235,969	7,235,969
Convertible preferred stock, outstanding	7,235,969	7,235,969
Convertible preferred stock, liquidation preference	$ 62,288,856
Series C convertible preferred stock
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, issued	5,179,877	4,712,698
Convertible preferred stock, outstanding	5,179,877	4,712,698
Convertible preferred stock, liquidation preference	$ 66,451,815

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating expenses:
Research and development	$ 4,910,409	$ 2,307,022	$ 12,908,679	$ 9,799,811
General and administrative	2,307,946	623,702	4,655,861	1,790,222
Total operating expenses	7,218,355	2,930,724	17,564,540	11,590,033
Other income (expense):
Interest expense	(6,098)	4	(13,537)	(184)
Foreign currency gain (loss)	975,034	(207,542)	2,591,008	741,616
Total other income (expense)	968,936	(207,538)	2,577,471	741,432
Net loss	(6,249,419)	(3,138,262)	(14,987,069)	(10,848,601)
Other comprehensive loss:
Foreign currency translation	(2,940,174)	65,800	(4,926,841)	(1,110,408)
Total comprehensive loss	$ (9,189,593)	$ (3,072,462)	$ (19,913,910)	$ (11,959,009)
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share)	$ (5.29)	$ (2.72)	$ (12.72)	$ (9.40)
Weighted average basic and diluted shares of common stock outstanding (in shares)	1,181,726	1,154,573	1,178,206	1,154,264

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Series A convertible preferred stock	Series B convertible preferred stock	Series C convertible preferred stock	Total
Temporary Equity, Beginning Balance at Dec. 31, 2017					$ 6,483,044	$ 49,742,942
Temporary Equity, Beginning Balance (in shares) at Dec. 31, 2017					612,446	7,235,969
Temporary Equity, Ending Balance at Jun. 30, 2018					$ 6,483,044	$ 49,742,942
Temporary Equity, Ending Balance (in shares) at Jun. 30, 2018					612,446	7,235,969
Equity, Beginning Balance at Dec. 31, 2017	$ 126,838	$ 19,335,560	$ (8,287,406)	$ (46,940,187)				$ (35,765,195)
Equity, Beginning Balance (in shares) at Dec. 31, 2017	1,153,061
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	$ 165	1,250						1,415
Exercise of stock options (in shares)	1,503
Stock based compensation		169,854						169,854
Foreign currency translation			(1,176,208)					(1,176,208)
Net loss				(7,710,338)				(7,710,338)
Equity, Ending Balance at Jun. 30, 2018	$ 127,003	19,506,664	(9,463,614)	(54,650,525)				(44,480,472)
Equity, Ending Balance (in shares) at Jun. 30, 2018	1,154,564
Temporary Equity, Beginning Balance at Dec. 31, 2017					$ 6,483,044	$ 49,742,942
Temporary Equity, Beginning Balance (in shares) at Dec. 31, 2017					612,446	7,235,969
Temporary Equity, Ending Balance at Sep. 30, 2018					$ 6,483,044	$ 49,742,942
Temporary Equity, Ending Balance (in shares) at Sep. 30, 2018					612,446	7,235,969
Equity, Beginning Balance at Dec. 31, 2017	$ 126,838	19,335,560	(8,287,406)	(46,940,187)				(35,765,195)
Equity, Beginning Balance (in shares) at Dec. 31, 2017	1,153,061
Increase (Decrease) in Stockholders' Equity
Foreign currency translation								(1,110,408)
Net loss								(10,848,601)
Equity, Ending Balance at Sep. 30, 2018	$ 127,003	19,586,455	(9,397,814)	(57,788,787)				(47,473,143)
Equity, Ending Balance (in shares) at Sep. 30, 2018	1,154,564
Temporary Equity, Beginning Balance at Jun. 30, 2018					$ 6,483,044	$ 49,742,942
Temporary Equity, Beginning Balance (in shares) at Jun. 30, 2018					612,446	7,235,969
Temporary Equity, Ending Balance at Sep. 30, 2018					$ 6,483,044	$ 49,742,942
Temporary Equity, Ending Balance (in shares) at Sep. 30, 2018					612,446	7,235,969
Equity, Beginning Balance at Jun. 30, 2018	$ 127,003	19,506,664	(9,463,614)	(54,650,525)				(44,480,472)
Equity, Beginning Balance (in shares) at Jun. 30, 2018	1,154,564
Increase (Decrease) in Stockholders' Equity
Stock based compensation		79,791						79,791
Foreign currency translation			65,800					65,800
Net loss				(3,138,262)				(3,138,262)
Equity, Ending Balance at Sep. 30, 2018	$ 127,003	19,586,455	(9,397,814)	(57,788,787)				(47,473,143)
Equity, Ending Balance (in shares) at Sep. 30, 2018	1,154,564
Temporary Equity, Beginning Balance at Dec. 31, 2018					$ 6,483,044	$ 49,742,942	$ 56,364,645
Temporary Equity, Beginning Balance (in shares) at Dec. 31, 2018					612,446	7,235,969	4,712,698
Increase (Decrease) in Temporary Equity
Issuance of Series C convertible preferred stock, net of issuance costs of $53,509							$ 5,598,362
Issuance of Series C convertible preferred stock (in shares)							467,179
Temporary Equity, Ending Balance at Jun. 30, 2019					$ 6,483,044	$ 49,742,942	$ 61,963,007
Temporary Equity, Ending Balance (in shares) at Jun. 30, 2019					612,446	7,235,969	5,179,877
Equity, Beginning Balance at Dec. 31, 2018	$ 127,091	19,666,588	(8,761,325)	(62,468,456)				(51,436,102)
Equity, Beginning Balance (in shares) at Dec. 31, 2018	1,155,366
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	$ 2,883	20,235						23,118
Exercise of stock options (in shares)	26,207
Stock based compensation		284,909						284,909
Foreign currency translation			(1,986,667)					(1,986,667)
Net loss				(8,737,650)				(8,737,650)
Equity, Ending Balance at Jun. 30, 2019	$ 129,974	19,971,732	(10,747,992)	(71,206,106)				(61,852,392)
Equity, Ending Balance (in shares) at Jun. 30, 2019	1,181,573
Temporary Equity, Beginning Balance at Dec. 31, 2018					$ 6,483,044	$ 49,742,942	$ 56,364,645
Temporary Equity, Beginning Balance (in shares) at Dec. 31, 2018					612,446	7,235,969	4,712,698
Temporary Equity, Ending Balance at Sep. 30, 2019					$ 6,483,044	$ 49,742,942	$ 61,963,007
Temporary Equity, Ending Balance (in shares) at Sep. 30, 2019					612,446	7,235,969	5,179,877
Equity, Beginning Balance at Dec. 31, 2018	$ 127,091	19,666,588	(8,761,325)	(62,468,456)				(51,436,102)
Equity, Beginning Balance (in shares) at Dec. 31, 2018	1,155,366
Increase (Decrease) in Stockholders' Equity
Foreign currency translation								(4,926,841)
Net loss								(14,987,069)
Equity, Ending Balance at Sep. 30, 2019	$ 1,182	20,346,849	(13,688,166)	(77,455,525)				(70,795,660)
Equity, Ending Balance (in shares) at Sep. 30, 2019	1,181,733
Temporary Equity, Beginning Balance at Jun. 30, 2019					$ 6,483,044	$ 49,742,942	$ 61,963,007
Temporary Equity, Beginning Balance (in shares) at Jun. 30, 2019					612,446	7,235,969	5,179,877
Temporary Equity, Ending Balance at Sep. 30, 2019					$ 6,483,044	$ 49,742,942	$ 61,963,007
Temporary Equity, Ending Balance (in shares) at Sep. 30, 2019					612,446	7,235,969	5,179,877
Equity, Beginning Balance at Jun. 30, 2019	$ 129,974	19,971,732	(10,747,992)	(71,206,106)				(61,852,392)
Equity, Beginning Balance (in shares) at Jun. 30, 2019	1,181,573
Increase (Decrease) in Stockholders' Equity
Issuance of common stock	$ 100							100
Issuance of common stock (in shares)	160
Stock based compensation		246,225						246,225
Foreign currency translation			(2,940,174)					(2,940,174)
Exchange and conversion of preferred stock and common stock of Aprea Therapeutics AB into common stock of Aprea Therapeutics Inc	$ (128,892)	128,892
Net loss				(6,249,419)				(6,249,419)
Equity, Ending Balance at Sep. 30, 2019	$ 1,182	$ 20,346,849	$ (13,688,166)	$ (77,455,525)				$ (70,795,660)
Equity, Ending Balance (in shares) at Sep. 30, 2019	1,181,733

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net loss	$ (14,987,069)	$ (10,848,601)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	8,853	6,521
Stock-based compensation	531,134	249,645
Amortization of right of use lease asset	109,546
Foreign currency gain	(2,591,008)	(741,616)
Changes in operating assets and liabilities:
Deferred offering costs	(4,244,276)
Prepaid expense and other current assets	(46,981)	84,080
Accounts payable	2,000,482	(216,116)
Accrued expenses and other liabilities	3,111,906	67,122
Lease liability	(102,996)
Net cash used in operating activities	(16,210,409)	(11,398,965)
Cash flows from investing activities:
Purchases of property and equipment	(16,435)	(4,506)
Net cash used in investing activities	(16,435)	(4,506)
Cash flows from financing activities:
Proceeds from the exercise of stock options	23,118	1,415
Proceeds from issuance of Series C preferred stock, net	5,598,362
Net cash provided by financing activities	5,621,480	1,415
Decrease in cash	(10,605,364)	(11,402,056)
Effect of exchange rate changes on cash and cash equivalents	(2,736,465)	(645,333)
Cash and cash equivalents-beginning of period	65,675,931	24,401,488
Cash and cash equivalents-end of period	52,334,102	$ 12,354,099
Non-cash activities:
Cumulative effect of change in accounting principle-ASC 842 adoption	$ 329,384

Summary of significant accounting policies

9 Months Ended

Sep. 30, 2019

Summary of significant accounting policies

Summary of significant accounting policies

2. Summary of significant accounting policies

The Company's complete listing of significant accounting policies are described in Note 2 to the Company's audited consolidated financial statements as of December 31, 2018 included in the prospectus that forms a part of the Company's Registration Statement on Form S-1 (File No. 333-233662) dated October 2, 2019.

Principles of consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Aprea Therapeutics AB, Aprea Personal AB, which was incorporated in May 2009, and Aprea US, Inc., which was incorporated in June 2016. Management has concluded it has a single reporting segment for purposes of reporting financial condition and results of operations. All intercompany transactions and balances have been eliminated.

Unaudited interim consolidated financial statements—The accompanying unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with U.S. GAAP for interim information and pursuant to the rules and regulations of the Securities and Exchange commission (or the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and related notes that appear in the Company’s final prospectus filed with the SEC on October 2, 2019, relating to the Company’s Registration Statements on Form S-1 (File No. 333-233662) for the Company’s IPO.

The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the financial information for the interim periods have been made. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year or any future period.

Use of estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as of and during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates. Significant items subject to such estimates and assumptions include fair value of common stock and stock-based compensation expense.

Foreign currency and currency translation—The functional currency for Aprea Therapeutics AB and Aprea Personal AB, is the Swedish Krona. Assets and liabilities of Aprea Therapeutics AB and Aprea Personal AB are translated into United States dollars at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of convertible preferred stock and stockholders’ deficit as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income and expense in the condensed consolidated statements of operations and comprehensive loss as incurred.

Deferred offering costs—The Company capitalizes deferred IPO costs, which primarily consist of direct, incremental legal, professional, accounting and other third-party fees relating to the Company’s IPO. The deferred IPO costs will be offset against IPO proceeds upon the completion of an offering (see Note 9). There were $0 and $4,070,690 of deferred IPO costs as of December 31, 2018 and September 30, 2019, respectively.

Fair value of financial instruments—The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding 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 inputs: Quoted prices in active markets for identical assets or liabilities.

Level 2 inputs: 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 inputs: 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 Company’s financial instruments consist of accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short‑term maturity.

Convertible preferred stock—The Company has classified convertible preferred stock as temporary equity in the accompanying balance sheets due to certain change in control events that are outside of the Company’s control, including sale or transfer of control of the Company, as holders of the Preferred Stock could cause redemption of the shares in these situations. The Company does not accrete the carrying values of the Preferred Stock to the redemption values since a liquidation event was not considered probable as of September 30, 2019. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only if it becomes probable that such a liquidation event will occur.

Accounting for leases—In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016 02, “Leases” (“ASC 842”) to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right‑of‑use assets and lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. Prior to January 1, 2019, GAAP did not require lessees to recognize assets and liabilities related to operating leases on the balance sheet. The new standard establishes a right‑of‑use (“ROU”) model that requires a lessee to recognize a ROU asset and corresponding lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement as well as the reduction of the right of use asset.

The Company has adopted the standard effective January 1, 2019, using the modified retrospective method. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply (i) the practical expedient which allows us to not separate lease and non‑lease components, for new leases entered into after adoption and (ii) the short‑term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. For the impact to the Company’s consolidated financial statement upon adoption of the new leasing standard, see Note 3 to our unaudited condensed consolidated financial statements.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding right‑of‑use assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. As of the ASC 842 effective date, the Company’s incremental borrowing rate ranged from approximately 3.0% to 4.3% based on the remaining lease term of the applicable leases.

The Company has elected not to separate lease and non‑lease components as a single component. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non‑current. Fixed rents are included in the calculation of the lease balances while variable costs paid for certain operating and pass‑through costs are excluded. Lease expense is recognized over the expected term on a straight‑line basis.

Stock‑based compensation—The Company measures stock options and other stock-based awards granted to employees and directors based on their fair value on the date of the grant and recognize compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company applies the straight‑line method of expense recognition to all awards with only service based vesting conditions.

For stock-based awards granted to non‑employees, compensation expense is recognized over the period during which services are rendered by such non‑employees until completed in accordance with the FASB issued ASU No. 2018‑07, Compensation Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting. The new standard largely aligns the accounting for share based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share based transactions, as long as the transaction is not effectively a form of financing.

The Company estimates the fair value of each stock option grant on the date of grant using the Black Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock and assumptions the Company makes for the volatility of its common stock, the expected term of its stock options, the risk free interest rate for a period that approximates the expected term of its stock options and its expected dividend yield.

Determination of Fair Value of Common Stock

As there has been no public market for the Company’s common stock to date, the estimated fair value of its common stock has been determined by its board of directors as of the date of each option grant, with input from management, considering the Company’s most recently available third party valuations of common stock and its board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation.

The Company’s common stock valuations were prepared using a hybrid method, which used market approaches to estimate its enterprise value. The hybrid method is a probability weighed expected return method, or PWERM, where the equity value in one or more scenarios is calculated using an option pricing method, or OPM. The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preference at the time of the liquidity event, such as a strategic sale or a merger. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. These third party valuations were performed at various dates, which resulted in valuations of the Company’s common stock of $0.92 per share as of May 31, 2016, $1.01 per share as of October 2, 2017, $3.18 per share as of December 31, 2018 and $10.95 per share as of July 15, 2019.

In addition to considering the results of these third‑party valuations, the Company’s board of directors considered various objective and subjective factors to determine the fair value of its common stock as of each grant date, including:

the prices at which the Company sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to its common stock at the time of each grant;

the progress of the Company’s research and development programs, including the status and results of preclinical studies and clinical trials for its product candidates;

the Company’s stage of development and commercialization and its business strategy;

external market conditions affecting the biopharmaceutical industry and trends within the biopharmaceutical industry;

the Company’s financial position, including cash on hand, and its historical and forecasted performance and operating results;

the lack of an active public market for the Company’s common stock and its preferred stock;

the likelihood of achieving a liquidity event, such as an IPO, or sale of the Company in light of prevailing market conditions; and

the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry.

The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of its common stock and its stock‑based compensation expense could have been materially different.

Net loss per share—The Company has reported losses since inception and has computed basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted‑average number of common shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per common share after giving consideration to all potentially dilutive common shares, including options to purchase common stock and convertible preferred stock, outstanding during the period determined using the treasury‑stock and if‑converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential common shares have been anti‑dilutive and basic and diluted loss per share have been the same.

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti‑dilutive (in common stock equivalent shares):


	Nine Months Ended
	September 30,
	2019	2018
Series A convertible preferred stock	612,446	612,446
Series B convertible preferred stock	7,235,969	7,235,969
Series C convertible preferred stock	5,179,877	—
Options to purchase common stock	2,970,234	1,844,990
Total shares of common stock equivalents	15,998,526	9,693,405

Recently issued accounting pronouncements—not yet adopted

In June 2018, the FASB issued ASU No. 2018‑07, “Compensation—Stock Compensation”, which expands the scope of Topic 718 to include share‑based payment transactions for acquiring goods and services from nonemployees, except for specific exceptions. This ASU is effective for annual or any interim periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this authoritative guidance on its financial statements.

Leases

9 Months Ended

Sep. 30, 2019

Leases

Leases

3. Leases

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition approach allowed under ASU 2018‑11 which releases companies from presenting comparative periods and related disclosures under ASC 842 and requires a cumulative‑effect adjustment to the opening balance of retained earnings in the period of adoption (Note 2). The Company is party to two operating leases for office or laboratory space. The Company’s finance leases are immaterial both individually and in the aggregate. The Company has elected to apply the short‑term lease exception to all leases of one year or less. Rent expense for three and nine months ended September 30, 2019 was $38,734 and $166,518, respectively, which are included in operating expenses.

Further, the Company has applied the guidance in ASC 842 to its corporate office and laboratory leases and has determined that these should be classified as operating leases. Consequently, as a result of the adoption of ASC 842, the Company recognized a ROU lease asset of approximately $329,384 with a corresponding lease liability of approximately $348,040 based on the present value of the minimum rental payments of such leases. In accordance with ASC 842, the beginning balance of the ROU lease asset was reduced by the existing deferred rent liability at inception of approximately $18,656. In the consolidated balance sheets at September 30, 2019, the Company has a ROU asset balance of $251,168 and a current and non‑current lease liability of $114,102 and $152,779, respectively, relating to the ROU lease asset. The balance of both the ROU lease asset and the lease liabilities primarily consists of future payments under the Company’s office lease in Boston, Massachusetts.

The Company is party to an operating lease in Boston, Massachusetts for office and laboratory space. The lease commenced in November 2016 with the initial term set to expire in December 2021. This office lease does not have any renewal options.

The Company was party to an operating lease in Solna, Sweden that had month‑to‑month payments and expired on June 30, 2019. Additionally, the Company entered into a new operating lease for office and laboratory space in Solna, Sweden that is effective July 1, 2019 and expires in June 2022. Base rent for this lease is approximately $128,000 annually. The Company recognized a ROU lease asset of approximately $355,330 with a corresponding lease liability of the same amount based on the present value of the minimum rental payments of such leases. As of September 30, 2019, the Company has a ROU asset balance of $309,150 and a current and non-current lease liability of $112,749 and $205,625, respectively, relating to the ROU lease asset relating to its lease in Solna, Sweden.

Quantitative information regarding the Company’s leases for the three and nine months ended September 30, 2019 is as follows:


	Three Months		Nine Months
	Ended		Ended
Lease Cost	September 30, 2019		September 30, 2019
Operating lease cost	$	54,358	$	106,210
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	$	51,394	$	112,211
Operating lease liabilities arising from obtaining right‑of‑use assets	$	585,256	$	585,256
Weighted average remaining lease term (years)		2.3 - 2.8		2.3 - 2.8
Weighted average discount rate		3.0% - 4.3%		3.0% - 4.3%

Future lease payments under noncancelable leases are as follows at September 30, 2019:


	Operating
Future Lease Payments	Leases
Remainder of 2019	$	60,598
2020		244,688
2021		246,983
2022		60,380
Total Lease Payments	$	612,649
Less: Imputed Interest		(27,393)
Total Lease Liabilities	$	585,256

As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.

Convertible preferred stock

9 Months Ended

Sep. 30, 2019

Convertible preferred stock

Convertible preferred stock

5. Convertible preferred stock

The Company has 440,000,000 shares authorized for all classes of equity combined.

Series A Preferred

In June 2011, the Company issued 145,472 shares of Series A Preferred for gross proceeds of $3,233,417. In March 2016, the Company issued 466,974 shares of Series A Preferred as settlement of its outstanding bridge loans totaling $3,249,627. All 612,446 shares of Series A Preferred were issued to related parties.

As of September 30, 2019, the rights and preferences of the Series A Preferred are as follows:

Conversion—Each share of Series A Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series A Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of September 30, 2019) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000.

Dividends—Holders of Series A Preferred do not accrue dividends.

Voting rights—Preferred Stock and common stock vote together as one class on an as converted basis. Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock. Holders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible.

Series B Preferred

In March 2016, the Company issued 3,322,764 shares of Series B Preferred for gross proceeds of $22,609,485. The Company also issued 590,446 shares of Series B Preferred in settlement of its outstanding bridge loans totaling $4,108,818. In October 2017, the Company issued 3,322,759 Series B preferred shares at a price per share of $7.02, for an aggregate purchase price of $23,349,617. All 7,235,969 shares of Series B Preferred were issued to related parties.

As of September 30, 2019, the rights and preferences of the Series B Preferred are as follows:

Conversion—Each share of Series B Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series B Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of September 30, 2019) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000.

Dividends—Holders are entitled to dividends of 8%, compounded annually if not paid. No dividends have been declared or paid as of September 30, 2019. The company has not accrued dividends on the Series B Preferred since dividends are only payable upon the occurrence of a liquidation event, including the transfer of more than fifty percent of the Company’s outstanding shares or the transfer of substantially all of the Company’s intellectual property. Approximately $12,220,935 of accrued dividends that were payable through September 30, 2019 was added to the stated liquidation preference amount of the Series B Preferred, which totaled $62,288,856 at September 30, 2019.

Series C Preferred

In November 2018, the Company issued 4,712,704 shares of Series C Preferred for gross proceeds of $56,725,342. In February 2019, the Company issued 467,173 shares of Series C Preferred for gross proceeds of $5,651,872. A total of 4,219,854 shares of Series C Preferred were issued to related parties.

As of September 30, 2019, the rights and preferences of the Series C Preferred are as follows:

Conversion—Each share of Series C Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series C Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of September 30, 2019) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000.

Dividends—Holders are entitled to dividends of 8%, compounded annually if not paid. No dividends have been declared or paid as of September 30, 2019. The company has not accrued dividends on the Series C Preferred since dividends are only payable upon the occurrence of a liquidation event, including the transfer of more than fifty percent of the Company’s outstanding shares or the transfer of substantially all of the Company’s intellectual property. Approximately $4,074,601 of accrued dividends that were payable through September 30, 2019 was added to the stated liquidation preference amount of the Series C Preferred, which totaled $66,451,815 at September 30, 2019.

Liquidation preference

Upon liquidation, dissolution, or winding up of business, the Preferred Stock holders are entitled to receive a liquidation preference in priority to holders of common stock at the original issue price plus, in the case of Series B and Series C Preferred, any unpaid accumulated dividends as follows:

If a liquidation event occurs prior to the Company achieving a certain clinical milestone, Series C Preferred shareholders shall receive an amount per Series C Preferred share equal to the original subscription price per Series C Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Secondly, after the Series C Preferred shareholders have received full payment, the Series B Preferred shareholders shall receive an amount per Series B preferred share equal to the original subscription price per Series B Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Thirdly, after the Series B and C Preferred shareholders have received full payment, the Series A Preferred shareholders shall receive an amount per Series A preferred share equal to the original subscription price per Series A Preferred share (as adjusted for share splits and similar). When the Preferred A, B and C shareholders are satisfied in full, any excess assets available for distribution will be allocated ratably among holders of common stock and preferred stock based on their pro rata shareholdings on an as‑if‑converted basis.

If a liquidation event occurs after the Company achieves a certain clinical milestone, Series B and C Preferred shareholders, based on their pro rata shareholdings, shall receive an amount per Series B and C Preferred share equal to the original subscription price per Series B and C Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Secondly, after the Series B and C Preferred shareholders have received full payment, the Series A Preferred shareholders shall receive an amount per Series A preferred share equal to the original subscription price per Series A Preferred share (as adjusted for share splits and similar). When the Preferred A, B and C shareholders are satisfied in full, any excess assets available for distribution will be allocated ratably among holders of common stock and preferred stock based on their pro rata shareholdings on an as‑if‑converted basis.

The liquidation preferences apply to each series of preferred stock only to the extent the holders would receive less than three times their respective original purchase prices.

Summary of significant accounting policies (Policies)

9 Months Ended

Sep. 30, 2019

Summary of significant accounting policies

Principles of consolidation

Unaudited interim condensed consolidated financial statements

Use of estimates

Foreign currency and currency translation

Deferred offering costs

Fair value of financial instruments

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

Level 2 inputs: 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 inputs: 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 Company’s financial instruments consist of accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short‑term maturity.

Convertible preferred stock

Accounting for leases

Stock based compensation