2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates, assumptions and judgments reflected in these condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, the valuation of common stock prior to the IPO and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.

Fair Value Measurements

The following tables present information about the Company’s financial assets that have been measured at fair value at June 30, 2015 and December 31, 2014, and indicate the fair value of the hierarchy of the valuation inputs utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair value determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices, for similar assets or liabilities, quoted market prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

The following tables summarize the Company’s cash equivalents and marketable securities as of June 30, 2015 and December 31, 2014:


	June 30, 2015
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	61,133	$	61,133	$	—	$	—
Commercial paper		2,000		—		2,000		—

Total cash equivalents		63,133		61,133		2,000		—

Marketable securities:
Corporate bonds		60,831		—		60,831		—
U.S. government securities		49,239		—		49,239		—
Commercial paper		26,477		—		26,477		—

Total marketable securities		136,547		—		136,547		—

Total cash equivalents and marketable securities	$	199,680	$	61,133	$	138,547	$	—

During the three and six months ended June 30, 2015, there were no transfers between Level 1 and Level 2 financial assets. The carrying amounts reflected in the condensed consolidated balance sheets for tax incentive receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. The carrying value of the Company’s outstanding notes payable approximates fair value (a Level 2 fair value measurement), reflecting discount rates currently available to the Company.


	December 31, 2014
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	14,742	$	14,742	$	—	$	—
U.S. government securities		27,767		—		27,767		—

Total cash equivalents		42,509		14,742		27,767		—

Marketable securities:
U.S. government securities		34,191		—		34,191		—
Corporate bonds		22,168		—		22,168		—
Commercial paper		1,000		—		1,000		—

Total marketable securities		57,359		—		57,359		—

Total cash equivalents and marketable securities	$	99,868	$	14,742	$	85,126	$	—

Marketable Securities

The following table summarizes the Company’s marketable securities as of June 30, 2015 and December 31, 2014:


	June 30, 2015
Assets:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds (due within 1 year)	$	57,396	$	—	$	(48	)	$	57,348
Corporate bonds (due after 1 year through 2 years)		3,487				(4	)		3,483
U.S. government securities (due within 1 year)		49,240		—		(1	)		49,239
Commercial paper (due within 1 year)		26,484		—		(7	)		26,477

	$	136,607	$	—	$	(60	)	$	136,547


	December 31, 2014
Assets:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities (due within 1 year)	$	34,200	$	—	$	(9	)	$	34,191
Corporate bonds (due within 1 year)		18,716		—		(18	)		18,698
Corporate bonds (due after 1 year through 2 years)		3,478		—		(8	)		3,470
Commercial paper (due within 1 year)		1,000		—		—			1,000

	$	57,394	$	—	$	(35	)	$	57,359

Income (Loss) Per Share

Upon the closing of the Company’s IPO in June 2014, all of the Company’s outstanding redeemable convertible preferred shares were converted into shares of common stock. Prior to this conversion, the Company followed the two-class method when computing net income (loss) per share as the Company had issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred shares 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, the two-class method did not apply for periods in which the Company reported a net loss or a net loss attributable to common stockholders resulting from dividends or accretion related to its redeemable convertible preferred shares.

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares, including potential dilutive common shares assuming the dilutive effect of outstanding stock options and unvested restricted common shares, as determined using the treasury stock method. For periods in which the Company has reported net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is antidilutive.

The Company reported a net loss attributable to common stockholders for the three and six months ended June 30, 2015 and 2014.

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


	For the three months ended June 30,						For the six months ended June 30,
	2015			2014			2015			2014
Basic and diluted net loss per share attributable to common stockholders:
Numerator:
Net loss	$	(17,756	)	$	(6,400	)	$	(31,228	)	$	(10,858	)
Accretion of redeemable convertible preferred stock to redemption value		—			(43	)		—			(92	)

Net loss attributable to common stockholders	$	(17,756	)	$	(6,443	)	$	(31,228	)	$	(10,950	)

Denominator:
Weighted average of common shares outstanding, basic and diluted		27,011,960			2,178,465			26,316,619			1,457,931

Net loss per share attributable to common stockholders, basic and diluted	$	(0.66	)	$	(2.96	)	$	(1.19	)	$	(7.51	)

The following common stock equivalents outstanding (prior to consideration of the treasury stock method) as of June 30, 2015 and 2014, were excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2015 and 2014, because they had an anti-dilutive impact:


	As of June 30,
	2015		2014

Options to purchase common stock		2,500,741		1,839,895
Unvested restricted stock		2,903		—

		2,503,644		1,839,895

Recently Issued and Adopted Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40). The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the effect that this guidance will have on its condensed consolidated financial statements.