0001787306-22-000071 | 10-Q | XBRL Viewer | Arcutis Biotherapeutics INC

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2022	Nov. 04, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-39186
Entity Registrant Name	ARCUTIS BIOTHERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-2974255
Entity Address, Address Line One	3027 Townsgate Road
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Westlake Village
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91361
City Area Code	805
Local Phone Number	418-5006
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	ARQT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		60,927,824
Entity Central Index Key	0001787306
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 81,543,000	$ 96,449,000
Restricted cash	1,234,000	1,542,000
Trade receivables, net	2,431,000	0
Marketable securities	395,420,000	290,610,000
Inventories	4,307,000	0
Prepaid expenses and other current assets	11,784,000	14,172,000
Total current assets	496,719,000	402,773,000
Property, plant, and equipment, net	1,939,000	2,261,000
Intangible assets, net	7,375,000	0
Operating lease right-of-use asset	2,803,000	3,040,000
Other assets	78,000	78,000
Total assets	508,914,000	408,152,000
Current liabilities:
Accounts payable	8,666,000	7,353,000
Accrued liabilities	27,797,000	25,540,000
Operating lease liability	639,000	433,000
Total current liabilities	37,102,000	33,326,000
Operating lease liability, noncurrent	4,285,000	4,774,000
Long-term debt, net	196,753,000	72,350,000
Other long-term liabilities	0	25,000
Total liabilities	238,140,000	110,475,000
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021;	0	0
Common stock, $0.0001 par value; 300,000,000 shares authorized at September 30, 2022 and December 31, 2021; 60,927,208 and 50,345,755 shares issued at September 30, 2022 and December 31, 2021, respectively; 60,908,641 and 50,255,614 shares outstanding at September 30, 2022 and December 31, 2021, respectively	6,000	5,000
Additional paid-in capital	920,109,000	706,233,000
Accumulated other comprehensive loss	(1,596,000)	(255,000)
Accumulated deficit	(647,745,000)	(408,306,000)
Total stockholders’ equity	270,774,000	297,677,000
Total liabilities and stockholders’ equity	$ 508,914,000	$ 408,152,000

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares, issued (in shares)	60,927,208	50,345,755
Common stock, shares outstanding (in shares)	60,908,641	50,255,614

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Total revenues	$ 725	$ 0	$ 725	$ 0
Operating expenses:
Cost of sales	269	0	269	0
Research and development	69,731	40,604	148,558	93,000
Selling, general, and administrative	35,473	16,474	85,101	42,243
Total operating expenses	105,473	57,078	233,928	135,243
Loss from operations	(104,748)	(57,078)	(233,203)	(135,243)
Other income (expense):
Other income, net	1,938	98	2,501	213
Interest expense	(4,899)	0	(8,737)	0
Total other income (expense)	(2,961)	98	(6,236)	213
Net loss	(107,709)	(56,980)	(239,439)	(135,030)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities	(344)	18	(1,341)	(16)
Comprehensive loss	$ (108,053)	$ (56,962)	$ (240,780)	$ (135,046)
Per share information:
Net loss per share, basic (in USD per share)	$ (1.89)	$ (1.14)	$ (4.52)	$ (2.75)
Net loss per share, diluted (in USD per share)	$ (1.89)	$ (1.14)	$ (4.52)	$ (2.75)
Weighted-average shares used in computing net loss per share, basic (in shares)	57,091,743	50,097,851	53,028,962	49,136,768
Weighted-average shares used in computing net loss per share, diluted (in shares)	57,091,743	50,097,851	53,028,962	49,136,768
Product revenue, net
Revenues:
Total revenues	$ 725	$ 0	$ 725	$ 0

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) - USD ($) $ in Thousands	Total	IPO	At-The-Market	Common Stock	Common Stock IPO	Common Stock At-The-Market	Additional Paid-In Capital	Additional Paid-In Capital IPO	Additional Paid-In Capital At-The-Market	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance, convertible preferred stock (in shares) at Dec. 31, 2020	0
Beginning balance at Dec. 31, 2020	$ 0
Ending balance, convertible preferred stock (in shares) at Mar. 31, 2021	0
Ending balance at Mar. 31, 2021	$ 0
Beginning balance (in shares) at Dec. 31, 2020				43,338,438
Beginning balance at Dec. 31, 2020	270,621			$ 4			$ 472,569			$ (2)	$ (201,950)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock for public offering, net of issuance costs (in shares)					6,325,000
Issuance of shares of common stock, net of issuance costs		$ 207,490			$ 1			$ 207,489
Issuance of common stock upon the exercise of stock options (in shares)				111,282
Issuance of common stock upon the exercise of stock options	325						325
Issuance of common stock upon the vesting of restricted stock units (in shares)				32,362
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				79,925
Lapse of repurchase rights related to common stock issued pursuant to early exercises	53						53
Stock-based compensation expense	8,503						8,503
Unrealized gain (loss) on marketable securities	44									44
Net loss	(36,042)										(36,042)
Ending balance (in shares) at Mar. 31, 2021				49,887,007
Ending Balance at Mar. 31, 2021	$ 450,994			$ 5			688,939			42	(237,992)
Beginning balance, convertible preferred stock (in shares) at Dec. 31, 2020	0
Beginning balance at Dec. 31, 2020	$ 0
Ending balance, convertible preferred stock (in shares) at Sep. 30, 2021	0
Ending balance at Sep. 30, 2021	$ 0
Beginning balance (in shares) at Dec. 31, 2020				43,338,438
Beginning balance at Dec. 31, 2020	270,621			$ 4			472,569			(2)	(201,950)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain (loss) on marketable securities	(16)
Net loss	(135,030)
Ending balance (in shares) at Sep. 30, 2021				50,134,813
Ending Balance at Sep. 30, 2021	$ 362,995			$ 5			699,988			(18)	(336,980)
Beginning balance, convertible preferred stock (in shares) at Mar. 31, 2021	0
Beginning balance at Mar. 31, 2021	$ 0
Ending balance, convertible preferred stock (in shares) at Jun. 30, 2021	0
Ending balance at Jun. 30, 2021	$ 0
Beginning balance (in shares) at Mar. 31, 2021				49,887,007
Beginning balance at Mar. 31, 2021	450,994			$ 5			688,939			42	(237,992)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)				62,314
Issuance of common stock upon the exercise of stock options	710						710
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				73,623
Lapse of repurchase rights related to common stock issued pursuant to early exercises	52						52
Shares issued pursuant to the employee stock purchase plan (in shares)				22,658
Shares issued pursuant to the employee stock purchase plan	478						478
Stock-based compensation expense	4,340						4,340
Unrealized gain (loss) on marketable securities	(78)									(78)
Net loss	(42,008)										(42,008)
Ending balance (in shares) at Jun. 30, 2021				50,045,602
Ending Balance at Jun. 30, 2021	$ 414,488			$ 5			694,519			(36)	(280,000)
Ending balance, convertible preferred stock (in shares) at Sep. 30, 2021	0
Ending balance at Sep. 30, 2021	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)				30,297
Issuance of common stock upon the exercise of stock options	63						63
Issuance of common stock upon the vesting of restricted stock units (in shares)				5,000
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				53,914
Lapse of repurchase rights related to common stock issued pursuant to early exercises	43						43
Stock-based compensation expense	5,363						5,363
Unrealized gain (loss) on marketable securities	18									18
Net loss	(56,980)										(56,980)
Ending balance (in shares) at Sep. 30, 2021				50,134,813
Ending Balance at Sep. 30, 2021	$ 362,995			$ 5			699,988			(18)	(336,980)
Beginning balance, convertible preferred stock (in shares) at Dec. 31, 2021	0
Beginning balance at Dec. 31, 2021	$ 0
Ending balance, convertible preferred stock (in shares) at Mar. 31, 2022	0
Ending balance at Mar. 31, 2022	$ 0
Beginning balance (in shares) at Dec. 31, 2021				50,255,614
Beginning balance at Dec. 31, 2021	297,677			$ 5			706,233			(255)	(408,306)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock for public offering, net of issuance costs (in shares)						882,353
Issuance of shares of common stock, net of issuance costs			$ 14,366						$ 14,366
Issuance of common stock upon the exercise of stock options (in shares)				102,935
Issuance of common stock upon the exercise of stock options	260						260
Issuance of common stock upon the vesting of restricted stock units (in shares)				79,421
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				40,025
Lapse of repurchase rights related to common stock issued pursuant to early exercises	25						25
Stock-based compensation expense	6,533						6,533
Unrealized gain (loss) on marketable securities	(765)									(765)
Net loss	(64,324)										(64,324)
Ending balance (in shares) at Mar. 31, 2022				51,360,348
Ending Balance at Mar. 31, 2022	$ 253,772			$ 5			727,417			(1,020)	(472,630)
Beginning balance, convertible preferred stock (in shares) at Dec. 31, 2021	0
Beginning balance at Dec. 31, 2021	$ 0
Ending balance, convertible preferred stock (in shares) at Sep. 30, 2022	0
Ending balance at Sep. 30, 2022	$ 0
Beginning balance (in shares) at Dec. 31, 2021				50,255,614
Beginning balance at Dec. 31, 2021	$ 297,677			$ 5			706,233			(255)	(408,306)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)	290,865
Unrealized gain (loss) on marketable securities	$ (1,341)
Net loss	(239,439)
Ending balance (in shares) at Sep. 30, 2022				60,908,641
Ending Balance at Sep. 30, 2022	$ 270,774			$ 6			920,109			(1,596)	(647,745)
Beginning balance, convertible preferred stock (in shares) at Mar. 31, 2022	0
Beginning balance at Mar. 31, 2022	$ 0
Ending balance, convertible preferred stock (in shares) at Jun. 30, 2022	0
Ending balance at Jun. 30, 2022	$ 0
Beginning balance (in shares) at Mar. 31, 2022				51,360,348
Beginning balance at Mar. 31, 2022	253,772			$ 5			727,417			(1,020)	(472,630)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)				57,113
Issuance of common stock upon the exercise of stock options	156						156
Issuance of common stock upon the vesting of restricted stock units (in shares)				6,625
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				27,830
Lapse of repurchase rights related to common stock issued pursuant to early exercises	20						20
Shares issued pursuant to the employee stock purchase plan (in shares)				74,237
Shares issued pursuant to the employee stock purchase plan	976						976
Stock-based compensation expense	8,096						8,096
Unrealized gain (loss) on marketable securities	(232)									(232)
Net loss	(67,406)										(67,406)
Ending balance (in shares) at Jun. 30, 2022				51,526,153
Ending Balance at Jun. 30, 2022	$ 195,382			$ 5			736,665			(1,252)	(540,036)
Ending balance, convertible preferred stock (in shares) at Sep. 30, 2022	0
Ending balance at Sep. 30, 2022	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock for public offering, net of issuance costs (in shares)				8,625,000
Issuance of shares of common stock, net of issuance costs	161,657			$ 1			161,656
Issuance of shares of common stock related to acquisition of Ducentis (in shares)				610,258
Issuance of shares of common stock related to acquisition of Ducentis Biotherapeutics LTD	12,468						12,468
Issuance of common stock upon the exercise of stock options (in shares)				130,817
Issuance of common stock upon the exercise of stock options	494						494
Issuance of common stock upon the vesting of restricted stock units (in shares)				12,695
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)				3,718
Lapse of repurchase rights related to common stock issued pursuant to early exercises	37						37
Stock-based compensation expense	8,789						8,789
Unrealized gain (loss) on marketable securities	(344)									(344)
Net loss	(107,709)										(107,709)
Ending balance (in shares) at Sep. 30, 2022				60,908,641
Ending Balance at Sep. 30, 2022	$ 270,774			$ 6			$ 920,109			$ (1,596)	$ (647,745)

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Mar. 31, 2022	Mar. 31, 2021
Common Stock
Stock discount and issuance costs	$ 10,844	$ 634	$ 603

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (239,439)	$ (135,030)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	462	318
Non-cash lease expense	237	234
Amortization of intangible assets	125	0
Acquisition of in-process research and development	29,630	0
Net amortization/accretion on marketable securities	89	2,569
Non-cash interest expense	1,590	0
Stock-based compensation expense	23,418	18,206
Changes in operating assets and liabilities:
Accounts receivable, net	(2,431)	0
Inventories	(4,307)	0
Prepaid expenses and other current assets	2,299	(6,115)
Accounts payable	1,383	(2,146)
Accrued liabilities	577	(1,220)
Operating lease liabilities	(283)	266
Net cash used in operating activities	(186,650)	(122,918)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(377,301)	(244,268)
Proceeds from maturities of marketable securities	271,061	145,550
Purchases of property and equipment	(210)	(734)
Acquisition of in-process research and development	(15,450)	0
Milestone payment for intangible	(7,500)	0
Net cash used in investing activities	(129,400)	(99,452)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options	1,000	1,098
Proceeds from issuance of shares under ATM, net of issuance costs	14,455	0
Proceeds from issuance of common stock, net of issuance costs	161,592	207,490
Proceeds from issuance of common stock pursuant to employee stock purchase plan	976	478
Proceeds from long-term debt	125,000	0
Payment of debt issuance costs	(2,187)	0
Net cash provided by financing activities	300,836	209,066
Net decrease in cash, cash equivalents, and restricted cash	(15,214)	(13,304)
Cash, cash equivalents, and restricted cash at beginning of period	97,991	66,624
Cash, cash equivalents, and restricted cash at end of period	82,777	53,320
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Interest expense paid in cash	6,923	0
Acquired in-process research and development in exchange for the issuance of common stock	$ 12,468	$ 0

Organization and Description of Business	9 Months Ended
Organization and Description of Business	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Organization and Description of Business Arcutis Biotherapeutics, Inc., or the Company, is an early commercial-stage biopharmaceutical company focused on developing and commercializing treatments for dermatological diseases with high unmet medical needs. The Company received U.S. Food and Drug Administration (FDA) approval of its first product, ZORYVE® (roflumilast) cream 0.3%, on July 29, 2022, for the treatment of individuals with plaque psoriasis, including intertriginous psoriasis, in individuals 12 years of age and older, and began commercialization in August 2022. The Company's current portfolio is comprised of highly differentiated topical and systemic treatments with significant potential to treat immune-mediated dermatological diseases and conditions. The Company believes it has built the industry's leading platform for dermatologic product development. The Company’s strategy is to focus on validated biological targets and to use our drug development platform and deep dermatology expertise to develop differentiated products that have the potential to address the major shortcomings of existing therapies in its targeted indications. The Company believes this strategy uniquely positions it to rapidly advance its goal of bridging the treatment innovation gap in dermatology, while maximizing its probability of technical success. Initial Public Offering and Follow-On Financings On February 4, 2020, the Company closed an Initial public offering (IPO) issuing and selling 10,781,250 shares of common stock at a public offering price of $17.00 per share, including 1,406,250 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares. The aggregate net proceeds received by the Company from the offering were approximately $167.2 million, after deducting underwriting discounts, commissions, and offering related transaction costs. Upon the closing of the IPO, all of the outstanding shares of convertible preferred stock automatically converted into shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. On October 6, 2020, the Company completed a public offering of 4,000,000 shares of common stock at an offering price of $25.00 per share, receiving aggregate net proceeds of approximately $93.4 million after deducting the underwriting discounts, commissions, and offering related transaction costs. In addition, the Company concurrently sold 1,400,000 shares of common stock in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, at a price per share equal to the public offering price, receiving net proceeds of $35.0 million. On February 5, 2021, the Company completed a public offering of 6,325,000 shares of common stock at an offering price of $35.00 per share, including 825,000 shares sold pursuant to the underwriters full exercise of their option to purchase additional shares. The aggregate net proceeds received by the Company were approximately $207.5 million, after deducting underwriting discounts, commissions, and offering related transaction costs. On August 5, 2022, the Company completed a public offering of 8,625,000 shares of common stock at an offering price of $20.00 per share, including 1,125,000 shares sold pursuant to the underwriters full exercise of their option to purchase additional shares. The aggregate net proceeds received by the Company were approximately $161.6 million, after deducting underwriting discounts, commissions, and offering related transaction costs. At-the-Market Offerings On May 6, 2021, the Company entered into a sales agreement (Sales Agreement) with Cowen and Company, LLC (Cowen), under which the Company may from time to time issue and sell shares of its common stock through at-the-market (ATM) offerings for an aggregate offering price of up to $100.0 million. Cowen will act as the Company's sales agent for the ATM program and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold under the Sales Agreement. In March 2022, the Company sold 882,353 shares under the ATM for $17.00 per share and received $14.5 million in net proceeds. Liquidity The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $647.7 million and $408.3 million as of September 30, 2022 and December 31, 2021, respectively. The Company had cash, cash equivalents, restricted cash, and marketable securities of $478.2 million and $388.6 million as of September 30, 2022 and December 31, 2021, respectively. Upon FDA approval of ZORYVE, $125.0 million of additional funding became available under the Loan Agreement which the Company drew down and received on August 2, 2022. After this draw down, the Company has $200.0 million outstanding under the Loan Agreement as of September 30, 2022, with an additional $25.0 million in funding that may become available subject to the satisfaction of specified conditions. See Note 8. On August 5, 2022, the Company received net proceeds of approximately $161.6 million from a public offering of its common stock. Prior to selling common stock in its IPO, the Company had historically financed its operations primarily through the sale of its convertible preferred stock. Management expects operating losses to continue for the foreseeable future. The Company believes that its existing capital resources will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of its financial statements. If the Company's available cash balances, amounts available under the Loan Agreement and anticipated future cash flows from operations are insufficient to satisfy its liquidity requirements, the Company may need to raise additional capital to fund its operations. No assurance can be given as to whether additional needed financing will be available on terms acceptable to the Company, if at all. If sufficient funds on acceptable terms are not available when needed, the Company may be required to curtail certain planned activities. Failure to manage discretionary spending or raise additional financing, as needed, may adversely impact the Company’s ability to achieve its intended business objectives and have an adverse effect on its results of operations and future prospects. Coronavirus Outbreak In March 2020, the World Health Organization declared a pandemic related to the global novel coronavirus disease 2019 (COVID-19) outbreak. The Company is monitoring the impact COVID-19 may have on the clinical development of its product candidates, including potential delays or modifications to its ongoing and planned trials, as well as its planned commercial activities. The Company believes that the rapid spread of the Omicron variant in late 2021 and early 2022 likely had a minor impact on the enrollment of our clinical trials. Because of this likely impact along with the inherent challenges of enrolling young children in clinical trials, the Company has updated its expected timeline for providing topline data for the INTEGUMENT-PED trial, in atopic dermatitis subjects between two and five years of age, to 2023. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and operations, including ongoing and planned clinical trials and commercial activities.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements include our wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to revenue recognition, accruals for research and development activities, fair value of common stock and convertible preferred stock (prior to the IPO completed in January 2020), stock-based compensation expense, and income taxes. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.

Segments

To date, the Company has viewed its financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it operates in one segment.

Unaudited Interim Condensed Consolidated Financial Statements

The interim condensed consolidated balance sheet as of September 30, 2022, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for the three and nine months ended September 30, 2022 and 2021 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of money market funds, commercial paper, U.S. Treasury securities, and short-term corporate debt securities.

Restricted Cash

As of September 30, 2022 and December 31, 2021, the Company held $1.2 million and $1.5 million, respectively, of restricted cash as collateral for a letter of credit related to our amended office space lease. See Note 7.

Marketable Securities

Marketable securities consist of investment grade short to intermediate-term fixed income investments that have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase, including those that have maturity dates beyond one year from the balance sheet date, are classified as current assets on the condensed consolidated balance sheets due to their highly liquid nature and availability for use in current operations.

Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive income (loss). Realized gains and losses as well as credit losses, if any, on marketable securities are included in other income, net. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, no such credit losses have occurred or have been recorded. The cost of investments sold is based on the specific-identification method. Unrealized gains and losses on marketable securities are reported as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheets. Interest on marketable securities is included in other income, net.

Trade Receivables, net

The Company’s trade accounts receivable consists of amounts due primarily from pharmaceutical wholesalers in the U.S. (collectively, its "Customers") related to sales of ZORYVE and have standard payment terms. For certain Customers, the trade accounts receivable for the Customer is net of distribution service fees, prompt pay discounts, and other adjustments. The Company monitors the financial performance and creditworthiness of its Customers so that it can properly assess and respond to changes in their credit profile. The Company will reserve against trade accounts receivable for estimated credit losses that may arise and any amounts determined to be uncollectible will be written off against the reserve when it is probable that the receivable will not be collected. The reserve amount for estimated losses was not material as of September 30, 2022.

Inventory

The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes costs related to products held for sale in the ordinary course of business, products in process of production for such sale, and items to be currently consumed in the production of goods to be available for sale, on a first-in, first-out (FIFO) basis. Due to the nature of the Company’s supply chain process, inventory that is owned by the Company is physically stored at third-party warehouses, logistics providers, and contract manufacturers. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such impairment charges are recorded as a component of cost of sales in the consolidated statements of operations. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products which may be used in clinical development programs are excluded from inventory and their costs are charged to research and development expense in the consolidated statement of operations as incurred. Prior to the initial date regulatory approval is received, costs related to the production of inventory are recorded as research and development expense on the Company’s consolidated statements of operations in the period incurred. As of September 30, 2022, the Company had inventory, mostly at the raw materials stage, with a value of approximately $14.6 million which was previously expensed, which is expected to sell over the next two years. As a result, cost of sales will reflect a lower average per unit cost of materials over this time period.

Intangible Assets, net

The Company had no intangible assets as of December 31, 2021. The Company paid a milestone payment of $7.5 million to AstraZeneca in the third quarter of 2022 related to the FDA approval and launch of ZORYVE. This milestone payment was capitalized as an intangible asset and will be amortized to cost of sales over its useful life of 10 years from the date of first commercial sale, as this is the minimum amount of time that the related License Agreement will be in effect. See Note 6. Amortization expense for the three months ended September 30, 2022 was immaterial.

Estimated future amortization expense for the intangible assets subsequent to September 30, 2022 is as follows:


	Amounts
2022 (October through December)	$	188
2023	750
2024	750
2025	750
2026	750
Thereafter	4,187
Total amortization	$	7,375

The Company evaluates its long-lived assets, including intangibles, for impairment whenever events or changes in circumstance indicate that the carrying value of an asset might not be fully recoverable by comparing the fair value of the intangible asset based on the undiscounted net cash flows over the remaining useful life with its carrying value. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash to the extent recorded on the condensed consolidated balance sheets.

Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Fair Value Measurement

The Company’s financial instruments, in addition to those presented in Note 3, include cash equivalents, accounts payable, accrued liabilities, and long-term debt. The carrying amount of cash equivalents, accounts payable, and accrued liabilities approximate their fair values due to their short maturities. As the long-term debt is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the long-term debt approximates its fair value.

Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets which range from two to five years. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or lease terms. Maintenance and repairs are expensed as incurred. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairments recognized during the three and nine months ended September 30, 2022 and 2021.

Leases

The Company determines if an arrangement is or contains a lease at inception. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The classification of the Company’s leases as operating or finance leases, along with the initial measurement and recognition of the associated ROU assets and lease liabilities, is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, to determine the present value of lease payments when its leases do not provide an implicit rate. The Company uses the implicit rate when readily determinable. The ROU asset is based on the measurement of the lease liability, includes any lease payments made prior to or on lease commencement and is adjusted for lease incentives and initial direct costs incurred, as applicable. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option.

The Company’s lease agreements includes lease and non-lease components and the Company has elected to not separate such components for all classes of assets. Further, the Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to leases with terms of 12 months or less (short-term leases) for all classes of assets.

Nonclinical and Clinical Accruals and Costs

The Company records accrued liabilities for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of nonclinical studies, clinical trials, and contract manufacturing activities. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. For the three and nine months ended September 30, 2022 and 2021, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Convertible Preferred Stock

Prior to its IPO, the Company classified its outstanding convertible preferred stock outside of stockholders’ equity (deficit) on its condensed consolidated balance sheets as the requirements of triggering a deemed liquidation event, as defined within its amended and restated certificate of incorporation, were not entirely within the Company’s control. In the event of such a deemed liquidation event, the proceeds from the event were to be distributed in accordance with the liquidation preferences, provided that the holders of convertible preferred stock had not converted their shares into common stock. The Company recorded the issuance of convertible preferred stock at the issuance price less related issuance costs. The Company did not adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty as to whether or when a deemed liquidation event may have occurred. In connection with the IPO in February 2020, the Company’s outstanding shares of convertible preferred stock were automatically converted into 24,385,388 shares of common stock.

Revenues

Pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised goods or services. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

Product Revenue, Net

The Company sells its product to its Customers in the United States. The Company’s Customers subsequently resell the products to pharmacies and health care providers. In accordance with ASC 606, the Company recognizes net product revenues from sales when the Customers obtain control of the Company’s products, which typically occurs upon delivery to the Customer. The Company’s payment terms are generally between 31 - 65 days.

Revenues from product sales are recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from (a) invoice discounts for prompt payment and distribution service fees, (b) government and private payor rebates, chargebacks, discounts and fees, (c) product returns and (d) costs of co-pay assistance programs for patients, as well as other incentives. Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to trade receivables, net if payable to a Customer or accrued liabilities if payable to a third-party. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Distribution Service Fees: The Company engages with wholesalers to distribute its products to end customers. The Company pays the wholesalers a fee for services such as: data reporting, inventory management, chargeback administration, and service level commitment. The Company estimates the amount of distribution services fees to be paid to the Customers and adjusts the transaction price with the amount of such estimate at the time of sale to the Customer.

Prompt Pay Discounts: The Company provides its Customers with a percentage discount on their invoice if the Customers pay within the agreed upon timeframe. The Company estimates the probability of Customers paying promptly based on the percentage of discount outlined in the agreement, and deducts the full amount of these discounts from its gross product revenues and accounts receivable at the time such revenues are recognized.

Product Returns: The Company provides Customers a return credit in the amount of the purchase price paid by Customers for all products returned in accordance with the Company’s returned goods policy. In the initial sales period, the Company estimates its provision for sales returns based on industry data and adjusts the transaction price with such estimate at the time of sale to the Customer. Once sufficient history has been collected for product returns, the Company will utilize that history to inform its returns estimate. Once the product is returned, it is destroyed. The Company does not record a right-of-return asset.

Chargeback: A chargeback is the difference between the manufacturer's invoice price to the wholesaler and the wholesaler’s customer's contract price. The wholesaler tracks these sales and "charges back" the manufacturer for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. The Company estimates the percentage of goods sold that are eligible for chargeback and adjusts the transaction price for such discount at the time of sale to the Customer.

Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Cost of Sales

Cost of sales includes direct and indirect costs related to the manufacturing and distribution of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on the Company’s net product revenues, and amortization of certain intangible assets associated with ZORYVE. Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. The Company began capitalizing inventory costs upon FDA approval of ZORYVE on July 29, 2022. As a result, manufacturing and other inventory costs incurred prior to FDA approval of ZORYVE were expensed and, therefore, are not included in cost of sales.

Research and Development

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, license fees, stock-based compensation expense, materials, supplies, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or services are rendered. Such payments are evaluated for current or long-term classification based on when they will be realized.

The Company has entered into, and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates if the license agreement results in the acquisition of an asset or a business. To date, none of the Company’s license agreements have been considered an acquisition of a business. For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments made before product approval that do not meet the definition of a derivative, are immediately recognized as research and development expense when paid or become payable, provided there is no alternative future use of the rights in other research and development projects.

Stock-Based Compensation

The Company accounts for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for such awards is the date of grant and the expense is recognized on a straight-line basis, over the expected vesting period. For share-based awards that vest subject to a performance condition, the Company will recognize compensation cost for awards if and when the Company concludes that it is probable that the awards with a performance condition will be achieved on an accelerated attribution method. The Company accounts for forfeitures as they occur.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance.

The Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties incurred in relation to the unrecognized tax benefits.

Variable Interest Entities

The Company reviews agreements it enters into with third-party entities, pursuant to which the Company may have a variable interest in the entity, in order to determine if the entity is a variable interest entity (VIE). If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that entity. In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. If the Company determines it is the primary beneficiary of a VIE, it consolidates that VIE into the Company’s financial statements. The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation or deconsolidation event. The Company currently does not consolidate any VIEs.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Shares of common stock subject to repurchase are excluded from the weighted-average shares.

Recently Adopted Accounting Pronouncements

There have been no new accounting pronouncements issued or effective that are expected to have a material impact on the Company's condensed consolidated financial statements.

Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	81,543	$	—	$	—	$	81,543
Commercial paper	—		187,363		—		187,363
Corporate debt securities	—		21,806		—		21,806
U.S. Treasury securities	186,251		—		—		186,251
Total assets	$	267,794	$	209,169	$	—	$	476,963

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	95,145	$	—	$	—	$	95,145
Commercial paper	—		119,413		—		119,413
Corporate debt securities	—		114,324		—		114,324
U.S. Treasury securities	58,177		—		—		58,177
Total assets	$	153,322	$	233,737	$	—	$	387,059

______________

(1)This balance includes cash requirements settled on a nightly basis.

Money market funds and U.S. Treasury securities are valued based on quoted market prices in active markets, with no valuation adjustment.

Commercial paper and corporate debt securities are valued taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs.

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	81,543	$	—	$	—	$	81,543

Total cash and cash equivalents	$	81,543	$	—	$	—	$	81,543
Marketable securities:
Commercial paper	$	187,363	$	—	$	—	$	187,363
Corporate debt securities	21,941		—		(135)		21,806
U.S. Treasury securities	187,712		—		(1,461)		186,251
Total marketable securities	$	397,016	$	—	$	(1,596)	$	395,420

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2021
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	95,145	$	—	$	—	$	95,145
Corporate debt securities	1,304		—		—		1,304
Total cash and cash equivalents	$	96,449	$	—	$	—	$	96,449
Marketable securities:
Commercial paper	$	119,413	$	—	$	—	$	119,413
Corporate debt securities	113,145		—		(125)		113,020
U.S. Treasury securities	58,307		—		(130)		58,177
Total marketable securities	$	290,865	$	—	$	(255)	$	290,610

______________

(1)This balance includes cash requirements settled on a nightly basis.

Realized gains or losses on investments for the three and nine months ended September 30, 2022 and 2021 were not material. As of September 30, 2022 and December 31, 2021, unrealized credit losses on marketable securities were not material, and accordingly, no allowance for credit losses were recorded. As of September 30, 2022 and December 31, 2021, all securities have a maturity of 18 months or less and all securities with gross unrealized losses have been in a continuous loss position for less than one year.

- 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

Balance Sheet Components

9 Months Ended

Sep. 30, 2022

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Inventories

The components of inventory are summarized as follows (in thousands):


	September 30, 2022		December 31, 2021
Raw materials	$	3,493	$	—
Work in progress	116		—
Finished goods	698		—
Total inventories	$	4,307	$	—

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Prepaid co-pay assistance program	$	1,967	$	—
Prepaid insurance	1,846		518
Prepaid clinical trial costs	454		5,629

Other prepaid expenses and current assets	7,517		8,025
Total prepaid expenses and other current assets	$	11,784	$	14,172

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Accrued compensation	$	11,538	$	9,130
Clinical trial accruals	9,766		13,217
Accrued sales deductions	853		—

Accrued expenses and other current liabilities	5,640		3,193
Total accrued liabilities	$	27,797	$	25,540

Property and Equipment, net

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):


	September 30, 2022		December 31, 2021
Computer hardware	$	881	$	775
Furniture and fixtures	379		346
Software	104		104

Leasehold improvements	1,568		1,568
Property and equipment, gross	2,932		2,793
Less accumulated depreciation	(993)		(532)
Property and equipment, net	$	1,939	$	2,261

Depreciation expense was $157,000 and $462,000 for the three and nine months ended September 30, 2022, respectively, and $116,000 and $318,000 for the three and nine months ended September 30, 2021, respectively. Leasehold improvements are depreciated over the term of the lease, which is the shorter of the improvements' expected useful lives and the lease term. All other fixed asset depreciation is recorded using the straight-line method over the estimated useful lives of the assets (two to five years).

License Agreements & Acquisition	9 Months Ended
License Agreements & Acquisition	Sep. 30, 2022
License Agreements And Acquisition Disclosure [Abstract]
License Agreements & Acquisition	License Agreements & Acquisition AstraZeneca License Agreement In July 2018, the Company entered into an exclusive license agreement, or the AstraZeneca License Agreement, with AstraZeneca AB (AstraZeneca), granting the Company a worldwide exclusive license, with the right to sublicense through multiple tiers, under certain AstraZeneca-controlled patent rights, know-how and regulatory documentation, to research, develop, manufacture, commercialize, and otherwise exploit products containing roflumilast in topical forms, as well as delivery systems sold with or for the administration of roflumilast, or collectively, the AZ-Licensed Products, for all diagnostic, prophylactic, and therapeutic uses for human dermatological indications, or the Dermatology Field. Under this agreement, the Company has sole responsibility for development, regulatory, and commercialization activities for the AZ-Licensed Products in the Dermatology Field, at its expense, and it shall use commercially reasonable efforts to develop, obtain, and maintain regulatory approvals for, and commercialize the AZ-Licensed Products in the Dermatology Field in each of the United States, Italy, Spain, Germany, the United Kingdom, France, China, and Japan. The Company paid AstraZeneca an upfront non-refundable cash payment of $1.0 million and issued 484,388 shares of Series B convertible preferred stock, valued at $3.0 million on the date of the AstraZeneca License Agreement, which were both recorded in research and development expense. The Company subsequently paid AstraZeneca the first milestone cash payment of $2.0 million upon the completion of a Phase 2b study of roflumilast cream in plaque psoriasis in August 2019 for the achievement of positive Phase 2 data for an AZ-Licensed Product, which was recorded in research and development expense. In the third quarter of 2022, we paid $7.5 million to AstraZeneca as a result of the approval of ZORYVE, which was recorded as an intangible asset. The Company is amortizing the intangible asset to cost of sales over its useful life of 10 years from the date of first commercial sale as this is the minimum amount of time that the related License Agreement will be in effect. Amortization expense during the three months ended September 30, 2022 was not material. The Company has agreed to make additional cash payments to AstraZeneca of up to an aggregate of $5.0 million upon the achievement of specified regulatory approval milestones with respect to the AZ-Licensed Products, and payments up to an additional aggregate amount of $15.0 million upon the achievement of certain aggregate worldwide net sales milestones, of which $5.0 million will become payable when the Company achieves $100.0 million in worldwide sales. With respect to any AZ-Licensed Products the Company commercializes under the AstraZeneca License Agreement, it will pay AstraZeneca a low to high single-digit percentage royalty rate on the Company’s, its affiliates’ and its sublicensees’ net sales of such AZ-Licensed Products, subject to specified reductions, until, as determined on an AZ-Licensed Product-by-AZ-Licensed Product and country-by-country basis, the later of the date of the expiration of the last-to-expire AstraZeneca-licensed patent right containing a valid claim in such country and ten years from the first commercial sale of such AZ-Licensed Product in such country. As a result of the commercialization of ZORYVE in August 2022, the Company began accruing royalties payable to AstraZeneca, which are recorded in cost of sales and accrued liabilities. Royalty expense during the three months ended September 30, 2022 was not material. There were no payments made or payable in connection with AZ-Licensed Products for the three and nine months ended September 30, 2021. Hengrui Exclusive Option and License Agreement In January 2018, the Company entered into an exclusive option and license agreement, or the Hengrui License Agreement, with Jiangsu Hengrui Medicine Co., Ltd. (Hengrui), whereby Hengrui granted the Company an exclusive option to obtain certain exclusive rights to research, develop, and commercialize products containing the compound designated by Hengrui as SHR0302, a Janus kinase (JAK) type 1 inhibitor, in topical formulations for the treatment of skin diseases, disorders, and conditions in the United States, Japan, Canada, and the European Union (including for clarity the United Kingdom). The Company made a $0.4 million upfront non-refundable cash payment to Hengrui upon execution of the Hengrui Option and License Agreement, which was recorded as research and development expense. In December 2019, the Company exercised its exclusive option under the agreement, for which it made a $1.5 million cash payment, which was recorded in research and development expense, and also contemporaneously amended the agreement to expand the territory to additionally include Canada. In addition, the Company has agreed to make cash payments of up to an aggregate of $20.5 million upon achievement of specified clinical development and regulatory approval milestones with respect to the licensed products and cash payments of up to an additional aggregate of $200.0 million in sales-based milestones based on certain aggregate annual net sales volumes with respect to a licensed product. With respect to any products the Company commercializes under the Hengrui License Agreement, it will pay tiered royalties to Hengrui on net sales of each licensed product by the Company, or its affiliates, or its sublicensees, ranging from mid single-digit to sub-teen percentage rates based on tiered annual net sales bands subject to specified reductions. The Company is obligated to pay royalties until the later of (1) expiration of the last valid claim of the licensed patent rights covering such licensed product in such country and (2) expiration of regulatory exclusivity for the relevant licensed product in the relevant country, on a licensed product-by-licensed product and country-by-country basis. Additionally, the Company is obligated to pay Hengrui a specified percentage, ranging from the low-thirties to the sub-teens, of certain non-royalty sublicensing income it receives from sublicensees of its rights to the licensed products, such percentage decreasing as the development stage of the licensed products advance. In June 2022, the Company entered into a side letter agreement with Hengrui and one of its subsidiaries to extend certain rights and obligations under the Hengrui License Agreement to the subsidiary under specified circumstances, including a change of control of such subsidiary. There were no payments made or due in connection with Hengrui for the three and nine months ended September 30, 2022 and 2021. Hawkeye (Iolyx Therapeutics) Collaboration Agreement In June 2019, the Company entered into a collaboration agreement, or Hawkeye Agreement, with Hawkeye Therapeutics, Inc. (Hawkeye), a related party with common ownership, for the development of one or more new applications of roflumilast. The Hawkeye Agreement grants Hawkeye an exclusive license to certain intellectual property developed under the agreement as it relates to the applications. Contemporaneously with the execution of the Hawkeye Agreement, the Company entered into a stock purchase agreement, purchasing 995,000 shares of Hawkeye’s common stock at $0.0001 per share, representing 19.9% of the outstanding common stock of Hawkeye at the time of the purchase. In the event that Hawkeye issues shares of Series A convertible preferred stock with proceeds over $5.0 million, Hawkeye is required to issue to the Company a number of fully-paid fully-vested shares of common stock determined by dividing (i) $2,000,000 by (ii) an amount equal to the cash price per share for Series A convertible preferred stock. Other than the potential issuance of this common stock, there are no upfront payments, milestones, or royalties pursuant to the Hawkeye Agreement. The Company determined that Hawkeye is a VIE for which consolidation is not required as it is not the primary beneficiary. Ducentis Biotherapeutics LTD Acquisition On September 7, 2022, the Company entered into a Share Purchase Agreement with Ducentis Biotherapeutics LTD (Ducentis), pursuant to which the Company acquired (the “Acquisition”) all of the outstanding equity interests in Ducentis for (i) 610,258 shares of the Company common stock valued at approximately $12.5 million and $15.9 million in cash, inclusive of liabilities acquired, and (ii) contingent payments, the amount of which is indeterminable until achieved, which may become payable upon the achievement of certain development, regulatory, and commercial milestones. The Company currently estimates that these contingent payments may be up to an aggregate of approximately $400 million (although the actual amount may differ depending on whether the applicable milestones are achieved). In addition, if applicable, the Company will make payments amounting to a mid-single-digit percentage of any annual net sales of Ducentis’s products exceeding $1.5 billion. As of September 30, 2022, none of the milestones were probable of achievement and, accordingly, no amounts have been recognized in the accompanying unaudited condensed consolidated financial statements with respect to these contingent payments. Under the terms of the Share Purchase Agreement, the Company will develop and seek FDA approval of a therapeutic product containing Ducentis’s DS-234 product candidate, now ARQ-234, for an atopic dermatitis indication, and if FDA approval of ARQ-234 is obtained by the Company, to launch it in the United States. The Company accounted for this purchase as an asset acquisition as substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, in-process research and development (“IPR&D”). The IPR&D asset has no alternative future use and relates to intellectual property rights related to ARQ-234. In addition to the $12.5 million value of stock issued and cash paid of $15.9 million, including $1.2 million allocated to to liabilities acquired, the Company also incurred $1.2 million in transaction costs related to the Acquisition. As such, during the third quarter of 2022, the Company recorded a charge to research and development expense in the amount of $29.6 million.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Operating Lease

The Company leases a facility in Westlake Village, California under an operating lease that commenced in February 2019 and was amended in April 2020 in order to relocate to a new expanded space comprising 22,643 square feet.

The Company recognized the ROU asset and lease liability for the new space on May 1, 2020. The lease payment term for the new space began on December 30, 2020. The lease payments terminate 91 months thereafter, with a renewal option for a term of five years. The Company will have a one-time option to cancel the lease after month 67. The renewal and one-time cancellation options have not been considered in the determination of the ROU asset or lease liability as the Company did not consider it reasonably certain it would exercise these options.

The lease is subject to fixed rate escalation increases with an initial base rent of $76,000 per month, and includes rent free periods aggregating approximately one year. As a result, the Company recognizes rent expense on a straight-line basis for the full amount of the commitment including the minimum rent increases over the life of the lease and the free rent period. The amended lease agreement provided for a leasehold improvement allowance up to $1.25 million, which the Company fully utilized by incurring related costs. This amount, along with $320,000 of additional costs incurred for leasehold improvements beyond the allowance, were capitalized and included in property and equipment as of December 31, 2020.

The amended lease agreement also required the Company to have an available letter of credit of $1.5 million upon occupying the space, which is allowed to be reduced throughout the lease period as rent obligations are met. Accordingly, in November 2020, the Company entered into a letter of credit for $1.5 million, which it secured with a restricted cash account in the same amount. In March 2022, the Company reduced the line of credit and related restricted cash account to $1.2 million.

All leasehold improvements will be depreciated over the remaining term of the lease.

The minimum annual rental payments of the Company’s operating lease liability as of September 30, 2022 are as follows (in thousands):


	Amounts
2022 (October through December)	$	234
2023	965
2024	994
2025	1,025
2026	1,054
Thereafter	1,740
Total minimum lease payments	$	6,012
Less: Amounts representing interest	(1,088)

Present value of future minimum lease payments	$	4,924
Current portion operating lease liability	639
Operating lease liability, noncurrent	4,285
Total operating lease liability	$	4,924

Straight-line rent expense recognized for operating leases was $186,000 and $530,000 for the three and nine months ended September 30, 2022, respectively, and $171,000 and $516,000 for the three and nine months ended September 30, 2021, respectively. There were no significant variable lease payments, including non-lease components such as common area maintenance fees, recognized as rent expense for operating leases for the three and nine months ended September 30, 2022 and 2021.

The following information represents supplemental disclosure for the condensed consolidated statements of cash flows related to the Company’s operating lease (in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Cash paid for amounts included in the measurement of lease liabilities	$	547	$	—

The following summarizes additional information related to the operating lease:


	September 30, 2022
Weighted-average remaining lease term (in years)	5.8
Weighted-average discount rate	7.0	%

Manufacturing Agreements

The Company has entered into manufacturing supply agreements for the commercial supply of topical roflumilast cream which include certain minimum purchase commitments. Firm future purchase commitments under these agreements are approximately $2.9 million within the next three months, and then approximately $2.1 million for 2023, and approximately $0.6 million per year for 2024 and 2025. This amount does not represent all of the Company’s anticipated purchases, but instead represents only the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by the provisions of the Company's Bylaws and the Delaware General Corporation Law. The Company currently has directors’ and officers’ insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid. The Company believes any potential loss exposure under these indemnification agreements in excess of applicable insurance coverage is minimal. The terms of certain of our license agreements require us to pay potential future milestone payments based on product development success. The amount and timing of such obligations are unknown or uncertain.

Long-term debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Long-term debt

On December 22, 2021, the Company entered into a Loan Agreement with SLR Investment Corp. (SLR) and the lenders party thereto. The lenders agreed to extend term loans to the Company in an aggregate principal amount of up to $225.0 million, comprised of (i) a tranche A term loan of $75.0 million, (ii) a tranche B-1 term loan of $50.0 million, (iii) a tranche B-2 term loan of up to $75.0 million, available in minimum increments of $15.0 million, and (iv) a tranche C term loan of up to $25.0 million (Term Loans). As security for the obligations under the Loan Agreement, the Company granted SLR, for the benefit of the lenders, a continuing security interest in substantially all of the Company's assets, including its intellectual property, subject to certain exceptions.

The tranche A term loan under the Loan Agreement was funded on December 22, 2021 in the amount of $75.0 million. With the approval of ZORYVE on July 29, 2022, the tranche B term loans were funded and the Company received $125.0 million on August 2, 2022. The tranche C term loan is available following the achievement of a net product revenue milestone of $110.0 million, calculated on a trailing six month basis. The tranche C term loan will remain available for funding until September 30, 2024.

Principal amounts outstanding under the Term Loans will accrue interest at a floating rate equal to the applicable rate in effect from time to time, as determined by SLR on the third business day prior to the funding date of the applicable Term Loan and on the first business day of the month prior to each payment date of each Term Loan. The applicable rate is a per annum interest rate equal to 7.45% plus the greater of (a) 0.10% and (b) the per annum rate published by the Intercontinental Exchange Benchmark Administration Ltd. (or on any successor or substitute published rate) for a term of one month, subject to a replacement with an alternate benchmark rate and spread in certain circumstances. On September 30, 2022, the rate was 10.08%. The maturity date for each term loan is January 1, 2027.

Commencing on February 1, 2022, interest payments are payable monthly following the funding of any Term Loan. Any principal amounts outstanding under the Term Loans, if not repaid sooner, are due and payable on January 1, 2027, or the Maturity Date. The Company may voluntarily prepay principal amounts outstanding under the Term Loans in minimum increments of $5.0 million, subject to a prepayment premium of (i) 3.0% of the principal amount of such Term Loan so prepaid prior to December 22, 2022, (ii) 2.0% of the principal amount of such Term Loan so prepaid after December 22, 2022 and prior to December 22, 2023, or (iii) 1.0% of the principal amount of such Term Loan so prepaid after December 22, 2023 and prior to December 22, 2025.

If the Term Loans are accelerated due to, among others, the occurrence of a bankruptcy or insolvency event, the Company is required to make mandatory prepayments of (i) all principal amounts outstanding under the Term Loans, plus accrued and unpaid interest thereon through the prepayment date, (ii) any fees applicable by reason of such prepayment, (iii) the prepayment premiums set forth in the paragraph above, plus (iv) all other obligations that are due and payable, including expenses and interest at the Default Rate (as defined below) with respect to any past due amounts.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, requirements as to financial reporting and insurance and restrictions on the Company’s ability to dispose of its business or property, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on its property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock. The Company has also agreed to a financial covenant whereby, beginning with the month ending December 31, 2023, the Company must generate net product revenue in excess of specified amounts for applicable measuring periods; provided, however, that such financial covenant shall not apply if the Company’s average market capitalization over the trailing five day period prior to the last day of any measurement month is equal to or in excess of $400.0 million. The Company was in compliance with all covenants under the Loan Agreement as of September 30, 2022.

In addition, the Loan Agreement contains customary events of default that entitle the lenders to cause any indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against us and the collateral securing the Term Loans. Under the Loan Agreement, an event of default will occur if, among other things, the Company fails to make payments under the Loan Agreement, the Company breaches any of our covenants under the Loan Agreement, subject to specified cure periods with respect to certain breaches, the lenders determine that a material adverse change has occurred, or the Company or the Company's assets become subject to certain legal proceedings, such as bankruptcy proceedings. Upon the occurrence and for the duration of an event of default, an additional default interest rate, or the Default Rate, equal to 4.0% per annum will apply to all obligations owed under the Loan Agreement. The prepayment upon default and other potential additional interest provisions under the Loan Agreement were determined to be a compound embedded derivative instrument to be bifurcated from the loan and accounted for as a separate liability for accounting purposes under the guidance in ASC 815, Derivatives and Hedging. At the inception of the Loan Agreement and through September 30, 2022, the fair value of the embedded derivative was determined to be immaterial and will be remeasured at fair value each reporting period with any future changes in fair value reported in earnings.

In connection with the Loan Agreement, the Company paid a closing fee of $1.0 million on December 22, 2021, and is further obligated to pay (i) a final fee equal to 6.95% of the aggregate original principal amount of the Term Loans funded upon the earliest to occur of the Maturity Date, the acceleration of any Term Loan and the prepayment, refinancing, substitution, or replacement of any Term Loan and (ii) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement. Additionally, in connection with the Loan Agreement, the Company entered into an Exit Fee Agreement, whereby the Company agreed to pay an exit fee in the amount of 3.0% of each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a trailing six month basis. Notwithstanding the prepayment or termination of the Term Loan, the exit fee will expire 10 years from the date of the Loan Agreement.

The debt issuance costs have been recorded as a debt discount which are being accreted to interest expense through the maturity date of the term loan. Interest expense is calculated using the effective interest method, and is inclusive of non-cash amortization of debt issuance costs. The final maturity payment of $13.7 million is recognized over the life of the term loan through interest expense. At September 30, 2022, the effective interest rate was 12.59%. Interest expense relating to the term loan for the three and nine months ended September 30, 2022 was $4.9 million and $8.7 million, respectively.

The carrying value of the Term Loans consists of the following (in thousands):


	September 30, 2022		December 31, 2021
Principal loan balance	$	200,000	$	75,000
Accrued final fee	1,113		—
Unamortized debt issuance costs	(4,360)		(2,650)
Long-term debt, net	$	196,753	$	72,350

Convertible Preferred Stock and Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Convertible Preferred Stock and Stockholders' Equity

Convertible Preferred Stock and Stockholders’ Equity

Convertible Preferred Stock

In connection with the Company's IPO in February 2020, all of the Company’s outstanding shares of convertible preferred stock were automatically converted into 24,385,388 shares of common stock.

Common Stock

The holders of the Company’s common stock have one vote for each share of common stock. Common stockholders are entitled to dividends when, as, and if declared by the board of directors. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. As of September 30, 2022, no dividends had been declared by the board of directors.

The Company reserved the following shares of common stock for issuance as follows:


	September 30, 2022	December 31, 2021

Options issued and outstanding	7,480,040	5,757,957
Common stock awards available for grant under employee incentive plans	2,413,578	2,068,004
Restricted stock units outstanding	1,567,946	335,196
Total common stock reserved	11,461,564	8,161,157

Authorized Share Capital

On February 4, 2020, the Company’s certificate of incorporation was amended and restated to provide for 300,000,000 authorized shares of common stock with a par value of $0.0001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.0001 per share. There were no shares of preferred stock outstanding as of September 30, 2022 and December 31, 2021.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

In January 2020, the Company’s board of directors approved the 2020 Equity Incentive Plan (2020 Plan), which became effective January 30, 2020 in connection with the IPO. The 2020 Plan serves as the successor incentive award plan to the Company’s 2017 Equity Incentive Plan (2017 Plan) and has 2,134,000 shares of common stock available for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit (RSU) awards, and other stock-based awards, plus 1,550,150 shares of common stock that were reserved for issuance pursuant to future awards under the 2017 Plan at the time the 2020 Plan became effective, plus shares represented by awards outstanding under the 2017 Plan that are forfeited or lapsed unexercised and which following the effective date of the 2020 Plan are not issued under the 2017 Plan. In addition, the 2020 Plan reserve will increase on January 1 of each year beginning in 2021 through 2030, by an amount equal to the lesser of (a) four percent of the shares of stock outstanding (on an as converted basis) on the day immediately prior to the date of increase and (b) such smaller number of shares of stock as determined by our board of directors; provided, however, that no more than 11,000,000 shares of stock may be issued upon the exercise of incentive stock options. Accordingly, on January 1, 2022 and 2021, the plan reserve increased by 2,013,830 and 1,747,112 shares, respectively. As of September 30, 2022, the Company had 1,061,783 shares available for future grant under the 2020 Plan.

The 2020 Plan provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors, and consultants of the Company under terms and provisions established by the board of directors. Under the terms of the 2020 Plan, options may be granted at an exercise price not less than fair market value. The Company generally grants stock-based awards with service conditions. Options granted typically vest over a four-year period but may be granted with different vesting terms.

Following the Company’s IPO and in connection with the effectiveness of the Company’s 2020 Plan, the 2017 Plan terminated and no further awards will be granted under that plan. However, all outstanding awards under the 2017 Plan will continue to be governed by their existing terms.

In December 2021, the Company’s board of directors approved the 2022 Employment Inducement Incentive Plan (2022 Plan). The 2022 Plan has 1,250,000 shares of common stock available for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, RSU awards, and other stock-based awards. The Company began granting out of the 2022 Plan in the first quarter of 2022 and has 257,500 shares available for future grant under the plan as of September 30, 2022.

Stock Option Activity

The following summarizes option activity (in thousands, except share amounts):


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance—December 31, 2021	5,757,957	$	19.06	8.37	$	34,887
Granted	2,133,150	$	20.20
Exercised	(290,865)	$	3.13
Forfeited	(115,789)	$	25.52
Expired	(4,413)	$	26.93
Balance—September 30, 2022	7,480,040	$	19.90	8.22	$	28,324
Exercisable—September 30, 2022(1)	3,323,627	$	15.87	7.33	$	24,854

______________

(1)Options exercisable includes early exercisable options.

The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of September 30, 2022. The intrinsic value of options exercised for the nine months ended September 30, 2022 was $5.1 million.

The total grant-date fair value of the options vested during the nine months ended September 30, 2022 was $20.2 million. The weighted-average grant-date fair value of employee options granted during the nine months ended September 30, 2022 was $14.13.

Restricted Stock Unit Activity

The following table summarizes information regarding our RSUs:


	Number of Units	Weighted-Average Grant Date Fair Value
Balance—December 31, 2021	335,196	$	29.26
Granted	1,371,828	$	19.27
Vested	(101,778)	$	28.80
Forfeited	(37,300)	$	18.47
Unvested Balance—September 30, 2022	1,567,946	$	20.81

The grant date fair value of an RSU equals the closing price of our common stock on the grant date. RSUs generally vest equally over four years. There were no RSU grants prior to January 1, 2020.

Stock-Based Compensation Expense

Stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Research and development	$	3,448	$	2,266	$	9,437	$	5,898
Selling, general, and administrative	5,341		3,097		13,981		12,308
Total stock-based compensation expense	$	8,789	$	5,363	$	23,418	$	18,206

As of September 30, 2022, there was $64.6 million of total unrecognized compensation cost related to unvested options that are expected to vest, which is expected to be recognized over a weighted-average period of 2.8 years. As of September 30, 2022, there was $27.6 million of total unrecognized compensation cost related to RSUs that is expected to vest, which is expected to be recognized over a weighted-average period of 3.3 years.

In March 2021, in connection with the retirement of the former Chief Financial Officer, the Company modified the terms of this individual’s historical stock awards. As a result of the modifications, the Company recognized approximately $5.3 million of incremental stock-based compensation expense during the period, which is included in selling, general, and administrative expenses.

In determining the fair value of the stock options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Fair value of common stock — The Company uses its closing stock price as reported on Nasdaq on the grant date for the fair value of its stock.

Expected Term — The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company uses the simplified method (based on the mid-point between the vesting date and the end of the contractual term) to determine the expected term.

Expected Volatility — Prior to 2022, the Company did not have sufficient trading history for its common stock to solely use its own historical volatility. Therefore, the expected volatility was estimated based on a combination of its own historical common stock volatility as well as the average historical volatilities for comparable publicly traded pharmaceutical companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, and area of specialty. The Company applied that process until a sufficient amount of historical information regarding the volatility of its own stock price became available. Beginning in 2022, having over two years of trading history, the Company began using solely its own historical stock price for expected volatility.

Risk-Free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Dividend Yield —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended September 30, 2022	Year Ended December 31, 2021
Expected term (in years)	5.5 – 6.1	5.5 – 6.2
Expected volatility	79.1 – 82.1%	80.6 – 85.2%
Risk-free interest rate	1.4 – 3.6%	0.6 – 1.3%
Dividend yield	—%	—%

Early Exercise of Employee Options

The terms of the 2017 and 2020 Plans permit certain option holders to exercise options before their options are vested, subject to certain limitations. Upon early exercise, the awards become subject to a restricted stock agreement. The shares of restricted stock granted upon early exercise of the options are subject to the same vesting provisions in the original stock option awards. Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment, at the price paid by the purchaser. While such shares have been issued, they are not considered outstanding for accounting purposes until they vest and are therefore excluded from shares used in determining loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature. Prior to September 30, 2022, the liability was reclassified into common stock and additional paid-in capital as the shares vested and the repurchase right lapsed. Accordingly, the Company recorded the unvested portion of the exercise proceeds of $82,000 as a liability from the early exercise in the accompanying condensed consolidated balance sheets as of December 31, 2021. As of December 31, 2021, there were $57,000 recorded in accrued liabilities and $25,000 recorded in other long-term liabilities, respectively related to shares that were subject to repurchase. No amounts were recorded as a liability as of September 30, 2022 as the amounts were immaterial.

2020 Employee Stock Purchase Plan

The Company adopted the 2020 Employee Stock Purchase Plan, or the ESPP, which became effective on January 30, 2020 in connection with the IPO. The ESPP is designed to allow the Company’s eligible employees to purchase shares of the Company’s common stock, at semi-annual intervals, with their accumulated payroll deductions. Under the ESPP, participants are offered the option to purchase shares of the Company’s common stock at a discount during a series of successive offering periods. The option purchase price will be the lower of 85% of the closing trading price per share of the Company’s common stock on the first trading date of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date, which will occur on the last trading day of each offering period.

The ESPP is intended to qualify under Section 423 of the U.S. Internal Revenue Service Code of 1986, as amended. The maximum number of the Company’s common stock which will be authorized for sale under the ESPP is equal to the sum of (a) 351,000 shares of common stock and (b) an annual increase on the first day of each year beginning in 2021 and ending in 2030, equal to the lesser of (i) 1% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares of common stock as determined by the Company’s board of directors; provided, however, no more than 5,265,000 shares of the Company’s common stock may be issued under the ESPP. Accordingly, on January 1, 2022 and 2021, the ESPP reserve increased by 503,457 and 436,778 shares, respectively. As of September 30, 2022, the Company had 1,134,295 shares available for future grant under the ESPP.

Stock-based compensation expense related to the ESPP was $216,000 and $637,000 for the three and nine months ended September 30, 2022, respectively, and $88,000 and $304,000 for the three and nine months ended September 30, 2021, respectively.

Net Loss Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per ShareThe following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:


	As of September 30,
	2022	2021
Stock options to purchase common stock	7,480,040	5,715,147
Early exercised options subject to future vesting	18,573	131,923
RSUs subject to future vesting	1,567,946	337,868
ESPP shares subject to future issuance	55,735	22,634

Total	9,122,294	6,207,572

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2022
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements include our wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to revenue recognition, accruals for research and development activities, fair value of common stock and convertible preferred stock (prior to the IPO completed in January 2020), stock-based compensation expense, and income taxes. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.
Segments	Segments To date, the Company has viewed its financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it operates in one segment.
Unaudited Interim Condensed Consolidated Financial Statements	Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheet as of September 30, 2022, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for the three and nine months ended September 30, 2022 and 2021 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021.
Cash and Cash Equivalents and Restricted Cash	Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of money market funds, commercial paper, U.S. Treasury securities, and short-term corporate debt securities. Restricted Cash As of September 30, 2022 and December 31, 2021, the Company held $1.2 million and $1.5 million, respectively, of restricted cash as collateral for a letter of credit related to our amended office space lease.
Marketable Securities	Marketable Securities Marketable securities consist of investment grade short to intermediate-term fixed income investments that have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase, including those that have maturity dates beyond one year from the balance sheet date, are classified as current assets on the condensed consolidated balance sheets due to their highly liquid nature and availability for use in current operations. Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive income (loss). Realized gains and losses as well as credit losses, if any, on marketable securities are included in other income, net. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period.The cost of investments sold is based on the specific-identification method. Unrealized gains and losses on marketable securities are reported as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheets. Interest on marketable securities is included in other income, net.
Trade Receivables, net	Trade Receivables, net The Company’s trade accounts receivable consists of amounts due primarily from pharmaceutical wholesalers in the U.S. (collectively, its "Customers") related to sales of ZORYVE and have standard payment terms. For certain Customers, the trade accounts receivable for the Customer is net of distribution service fees, prompt pay discounts, and other adjustments. The Company monitors the financial performance and creditworthiness of its Customers so that it can properly assess and respond to changes in their credit profile. The Company will reserve against trade accounts receivable for estimated credit losses that may arise and any amounts determined to be uncollectible will be written off against the reserve when it is probable that the receivable will not be collected. The reserve amount for estimated losses was not material as of September 30, 2022.
Inventory	Inventory The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes costs related to products held for sale in the ordinary course of business, products in process of production for such sale, and items to be currently consumed in the production of goods to be available for sale, on a first-in, first-out (FIFO) basis. Due to the nature of the Company’s supply chain process, inventory that is owned by the Company is physically stored at third-party warehouses, logistics providers, and contract manufacturers. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such impairment charges are recorded as a component of cost of sales in the consolidated statements of operations. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products which may be used in clinical development programs are excluded from inventory and their costs are charged to research and development expense in the consolidated statement of operations as incurred. Prior to the initial date regulatory approval is received, costs related to the production of inventory are recorded as research and development expense on the Company’s consolidated statements of operations in the period incurred. As of September 30, 2022, the Company had inventory, mostly at the raw materials stage, with a value of approximately $14.6 million which was previously expensed, which is expected to sell over the next two years. As a result, cost of sales will reflect a lower average per unit cost of materials over this time period.
Intangible Assets, net	Intangible Assets, netThe Company had no intangible assets as of December 31, 2021. The Company paid a milestone payment of $7.5 million to AstraZeneca in the third quarter of 2022 related to the FDA approval and launch of ZORYVE. This milestone payment was capitalized as an intangible asset and will be amortized to cost of sales over its useful life of 10 years from the date of first commercial sale, as this is the minimum amount of time that the related License Agreement will be in effect.The Company evaluates its long-lived assets, including intangibles, for impairment whenever events or changes in circumstance indicate that the carrying value of an asset might not be fully recoverable by comparing the fair value of the intangible asset based on the undiscounted net cash flows over the remaining useful life with its carrying value. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.
Concentration of Credit Risk and Other Risks and Uncertainties	Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash to the extent recorded on the condensed consolidated balance sheets. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
Fair Value Measurement	Fair Value Measurement The Company’s financial instruments, in addition to those presented in Note 3, include cash equivalents, accounts payable, accrued liabilities, and long-term debt. The carrying amount of cash equivalents, accounts payable, and accrued liabilities approximate their fair values due to their short maturities. As the long-term debt is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the long-term debt approximates its fair value. Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Property and Equipment	Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets which range from two to five years. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or lease terms. Maintenance and repairs are expensed as incurred. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Leases	Leases The Company determines if an arrangement is or contains a lease at inception. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The classification of the Company’s leases as operating or finance leases, along with the initial measurement and recognition of the associated ROU assets and lease liabilities, is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, to determine the present value of lease payments when its leases do not provide an implicit rate. The Company uses the implicit rate when readily determinable. The ROU asset is based on the measurement of the lease liability, includes any lease payments made prior to or on lease commencement and is adjusted for lease incentives and initial direct costs incurred, as applicable. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option. The Company’s lease agreements includes lease and non-lease components and the Company has elected to not separate such components for all classes of assets. Further, the Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to leases with terms of 12 months or less (short-term leases) for all classes of assets.
Nonclinical and Clinical Accruals and Costs	Nonclinical and Clinical Accruals and CostsThe Company records accrued liabilities for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of nonclinical studies, clinical trials, and contract manufacturing activities. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.
Convertible Preferred Stock	Convertible Preferred StockPrior to its IPO, the Company classified its outstanding convertible preferred stock outside of stockholders’ equity (deficit) on its condensed consolidated balance sheets as the requirements of triggering a deemed liquidation event, as defined within its amended and restated certificate of incorporation, were not entirely within the Company’s control. In the event of such a deemed liquidation event, the proceeds from the event were to be distributed in accordance with the liquidation preferences, provided that the holders of convertible preferred stock had not converted their shares into common stock. The Company recorded the issuance of convertible preferred stock at the issuance price less related issuance costs. The Company did not adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty as to whether or when a deemed liquidation event may have occurred.
Revenue from Contract with Customer	Revenues Pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised goods or services. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. Product Revenue, Net The Company sells its product to its Customers in the United States. The Company’s Customers subsequently resell the products to pharmacies and health care providers. In accordance with ASC 606, the Company recognizes net product revenues from sales when the Customers obtain control of the Company’s products, which typically occurs upon delivery to the Customer. The Company’s payment terms are generally between 31 - 65 days. Revenues from product sales are recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from (a) invoice discounts for prompt payment and distribution service fees, (b) government and private payor rebates, chargebacks, discounts and fees, (c) product returns and (d) costs of co-pay assistance programs for patients, as well as other incentives. Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to trade receivables, net if payable to a Customer or accrued liabilities if payable to a third-party. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Distribution Service Fees: The Company engages with wholesalers to distribute its products to end customers. The Company pays the wholesalers a fee for services such as: data reporting, inventory management, chargeback administration, and service level commitment. The Company estimates the amount of distribution services fees to be paid to the Customers and adjusts the transaction price with the amount of such estimate at the time of sale to the Customer. Prompt Pay Discounts: The Company provides its Customers with a percentage discount on their invoice if the Customers pay within the agreed upon timeframe. The Company estimates the probability of Customers paying promptly based on the percentage of discount outlined in the agreement, and deducts the full amount of these discounts from its gross product revenues and accounts receivable at the time such revenues are recognized. Product Returns: The Company provides Customers a return credit in the amount of the purchase price paid by Customers for all products returned in accordance with the Company’s returned goods policy. In the initial sales period, the Company estimates its provision for sales returns based on industry data and adjusts the transaction price with such estimate at the time of sale to the Customer. Once sufficient history has been collected for product returns, the Company will utilize that history to inform its returns estimate. Once the product is returned, it is destroyed. The Company does not record a right-of-return asset. Chargeback: A chargeback is the difference between the manufacturer's invoice price to the wholesaler and the wholesaler’s customer's contract price. The wholesaler tracks these sales and "charges back" the manufacturer for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. The Company estimates the percentage of goods sold that are eligible for chargeback and adjusts the transaction price for such discount at the time of sale to the Customer. Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.
Cost of Sales	Cost of Sales Cost of sales includes direct and indirect costs related to the manufacturing and distribution of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on the Company’s net product revenues, and amortization of certain intangible assets associated with ZORYVE. Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. The Company began capitalizing inventory costs upon FDA approval of ZORYVE on July 29, 2022. As a result, manufacturing and other inventory costs incurred prior to FDA approval of ZORYVE were expensed and, therefore, are not included in cost of sales.
Research and Development	Research and Development Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, license fees, stock-based compensation expense, materials, supplies, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or services are rendered. Such payments are evaluated for current or long-term classification based on when they will be realized. The Company has entered into, and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates if the license agreement results in the acquisition of an asset or a business. To date, none of the Company’s license agreements have been considered an acquisition of a business. For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments made before product approval that do not meet the definition of a derivative, are immediately recognized as research and development expense when paid or become payable, provided there is no alternative future use of the rights in other research and development projects.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for such awards is the date of grant and the expense is recognized on a straight-line basis, over the expected vesting period. For share-based awards that vest subject to a performance condition, the Company will recognize compensation cost for awards if and when the Company concludes that it is probable that the awards with a performance condition will be achieved on an accelerated attribution method. The Company accounts for forfeitures as they occur.
Income Taxes	Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance. The Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties incurred in relation to the unrecognized tax benefits.
Variable Interest Entities	Variable Interest Entities The Company reviews agreements it enters into with third-party entities, pursuant to which the Company may have a variable interest in the entity, in order to determine if the entity is a variable interest entity (VIE). If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that entity. In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. If the Company determines it is the primary beneficiary of a VIE, it consolidates that VIE into the Company’s financial statements. The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation or deconsolidation event. The Company currently does not consolidate any VIEs.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Shares of common stock subject to repurchase are excluded from the weighted-average shares.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements There have been no new accounting pronouncements issued or effective that are expected to have a material impact on the Company's condensed consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated future amortization expense for the intangible assets subsequent to September 30, 2022 is as follows:


	Amounts
2022 (October through December)	$	188
2023	750
2024	750
2025	750
2026	750
Thereafter	4,187
Total amortization	$	7,375

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Assets Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	81,543	$	—	$	—	$	81,543
Commercial paper	—		187,363		—		187,363
Corporate debt securities	—		21,806		—		21,806
U.S. Treasury securities	186,251		—		—		186,251
Total assets	$	267,794	$	209,169	$	—	$	476,963

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	95,145	$	—	$	—	$	95,145
Commercial paper	—		119,413		—		119,413
Corporate debt securities	—		114,324		—		114,324
U.S. Treasury securities	58,177		—		—		58,177
Total assets	$	153,322	$	233,737	$	—	$	387,059

______________

(1)This balance includes cash requirements settled on a nightly basis.

Summary of Cash and Cash Equivalents

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	81,543	$	—	$	—	$	81,543

Total cash and cash equivalents	$	81,543	$	—	$	—	$	81,543
Marketable securities:
Commercial paper	$	187,363	$	—	$	—	$	187,363
Corporate debt securities	21,941		—		(135)		21,806
U.S. Treasury securities	187,712		—		(1,461)		186,251
Total marketable securities	$	397,016	$	—	$	(1,596)	$	395,420

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2021
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	95,145	$	—	$	—	$	95,145
Corporate debt securities	1,304		—		—		1,304
Total cash and cash equivalents	$	96,449	$	—	$	—	$	96,449
Marketable securities:
Commercial paper	$	119,413	$	—	$	—	$	119,413
Corporate debt securities	113,145		—		(125)		113,020
U.S. Treasury securities	58,307		—		(130)		58,177
Total marketable securities	$	290,865	$	—	$	(255)	$	290,610

______________

(1)This balance includes cash requirements settled on a nightly basis.

Summary of Marketable Securities

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	81,543	$	—	$	—	$	81,543

Total cash and cash equivalents	$	81,543	$	—	$	—	$	81,543
Marketable securities:
Commercial paper	$	187,363	$	—	$	—	$	187,363
Corporate debt securities	21,941		—		(135)		21,806
U.S. Treasury securities	187,712		—		(1,461)		186,251
Total marketable securities	$	397,016	$	—	$	(1,596)	$	395,420

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2021
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	95,145	$	—	$	—	$	95,145
Corporate debt securities	1,304		—		—		1,304
Total cash and cash equivalents	$	96,449	$	—	$	—	$	96,449
Marketable securities:
Commercial paper	$	119,413	$	—	$	—	$	119,413
Corporate debt securities	113,145		—		(125)		113,020
U.S. Treasury securities	58,307		—		(130)		58,177
Total marketable securities	$	290,865	$	—	$	(255)	$	290,610

______________

(1)This balance includes cash requirements settled on a nightly basis.

Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2022

Balance Sheet Related Disclosures [Abstract]

Summary of Inventories

The components of inventory are summarized as follows (in thousands):


	September 30, 2022		December 31, 2021
Raw materials	$	3,493	$	—
Work in progress	116		—
Finished goods	698		—
Total inventories	$	4,307	$	—

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Prepaid co-pay assistance program	$	1,967	$	—
Prepaid insurance	1,846		518
Prepaid clinical trial costs	454		5,629

Other prepaid expenses and current assets	7,517		8,025
Total prepaid expenses and other current assets	$	11,784	$	14,172

Summary of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Accrued compensation	$	11,538	$	9,130
Clinical trial accruals	9,766		13,217
Accrued sales deductions	853		—

Accrued expenses and other current liabilities	5,640		3,193
Total accrued liabilities	$	27,797	$	25,540

Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment, net consists of the following (in thousands):


	September 30, 2022		December 31, 2021
Computer hardware	$	881	$	775
Furniture and fixtures	379		346
Software	104		104

Leasehold improvements	1,568		1,568
Property and equipment, gross	2,932		2,793
Less accumulated depreciation	(993)		(532)
Property and equipment, net	$	1,939	$	2,261

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Operating Lease Payments

The minimum annual rental payments of the Company’s operating lease liability as of September 30, 2022 are as follows (in thousands):


	Amounts
2022 (October through December)	$	234
2023	965
2024	994
2025	1,025
2026	1,054
Thereafter	1,740
Total minimum lease payments	$	6,012
Less: Amounts representing interest	(1,088)

Present value of future minimum lease payments	$	4,924
Current portion operating lease liability	639
Operating lease liability, noncurrent	4,285
Total operating lease liability	$	4,924

Operating Lease Supplemental Cash Flow Information

The following information represents supplemental disclosure for the condensed consolidated statements of cash flows related to the Company’s operating lease (in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Cash paid for amounts included in the measurement of lease liabilities	$	547	$	—

The following summarizes additional information related to the operating lease:


	September 30, 2022
Weighted-average remaining lease term (in years)	5.8
Weighted-average discount rate	7.0	%

Long-term debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Summary of Long-Term Debt

The carrying value of the Term Loans consists of the following (in thousands):


	September 30, 2022		December 31, 2021
Principal loan balance	$	200,000	$	75,000
Accrued final fee	1,113		—
Unamortized debt issuance costs	(4,360)		(2,650)
Long-term debt, net	$	196,753	$	72,350

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

Convertible Preferred Stock and Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Components of Shares of Stock for Issuance

The Company reserved the following shares of common stock for issuance as follows:


	September 30, 2022	December 31, 2021

Options issued and outstanding	7,480,040	5,757,957
Common stock awards available for grant under employee incentive plans	2,413,578	2,068,004
Restricted stock units outstanding	1,567,946	335,196
Total common stock reserved	11,461,564	8,161,157

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

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+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock Option Activity

The following summarizes option activity (in thousands, except share amounts):


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance—December 31, 2021	5,757,957	$	19.06	8.37	$	34,887
Granted	2,133,150	$	20.20
Exercised	(290,865)	$	3.13
Forfeited	(115,789)	$	25.52
Expired	(4,413)	$	26.93
Balance—September 30, 2022	7,480,040	$	19.90	8.22	$	28,324
Exercisable—September 30, 2022(1)	3,323,627	$	15.87	7.33	$	24,854

______________

(1)Options exercisable includes early exercisable options.

Restricted Stock Unit Activity

The following table summarizes information regarding our RSUs:


	Number of Units	Weighted-Average Grant Date Fair Value
Balance—December 31, 2021	335,196	$	29.26
Granted	1,371,828	$	19.27
Vested	(101,778)	$	28.80
Forfeited	(37,300)	$	18.47
Unvested Balance—September 30, 2022	1,567,946	$	20.81

Stock-Based Compensation Expense

Stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Research and development	$	3,448	$	2,266	$	9,437	$	5,898
Selling, general, and administrative	5,341		3,097		13,981		12,308
Total stock-based compensation expense	$	8,789	$	5,363	$	23,418	$	18,206

Assumptions in Calculating Stock Option Awards

The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended September 30, 2022	Year Ended December 31, 2021
Expected term (in years)	5.5 – 6.1	5.5 – 6.2
Expected volatility	79.1 – 82.1%	80.6 – 85.2%
Risk-free interest rate	1.4 – 3.6%	0.6 – 1.3%
Dividend yield	—%	—%

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Summary of Potentially Antidilutive Shares Excluded from the Calculation of Diluted Net Loss Per Share

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:


	As of September 30,
	2022	2021
Stock options to purchase common stock	7,480,040	5,715,147
Early exercised options subject to future vesting	18,573	131,923
RSUs subject to future vesting	1,567,946	337,868
ESPP shares subject to future issuance	55,735	22,634

Total	9,122,294	6,207,572

Organization and Description of Business (Details) $ / shares in Units, $ in Thousands							1 Months Ended	9 Months Ended
	Aug. 05, 2022 USD ($) $ / shares shares	Aug. 02, 2022 USD ($)	May 06, 2021 USD ($)	Feb. 05, 2021 USD ($) $ / shares shares	Oct. 06, 2020 USD ($) $ / shares shares	Feb. 04, 2020 USD ($) $ / shares shares	Mar. 31, 2022 USD ($) shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) shares	Jun. 30, 2022 shares	Dec. 31, 2021 USD ($) shares	Jun. 30, 2021 shares	Mar. 31, 2021 shares	Dec. 31, 2020 shares	Feb. 05, 2020 shares
Subsidiary, Sale of Stock [Line Items]
Convertible preferred stock, shares outstanding (in shares) \| shares							0	0	0	0	0	0	0	0	0
Proceeds from issuance of common stock								$ 161,592	$ 207,490
Accumulated deficit								(647,745)			$ (408,306)
Cash, cash equivalents, restricted cash and marketable securities								478,200			388,600
Long-term debt								196,753			$ 72,350
Loan agreement \| Secured debt
Subsidiary, Sale of Stock [Line Items]
Long-term debt		$ 200,000
Remaining borrowing capacity								$ 25,000
Loan agreement \| Secured debt \| Tranche B term loan
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of debt		$ 125,000
IPO
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of shares under ATM, net of issuance costs						$ 167,200
IPO \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares						10,781,250
Stock price (in USD per share) \| $ / shares						$ 17.00
Underwriters' option
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock	$ 161,600
Underwriters' option \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares	1,125,000			825,000		1,406,250
Secondary Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock					$ 93,400
Secondary Equity Public Offering \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares					4,000,000
Stock price (in USD per share) \| $ / shares					$ 25.00
Private placement
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock					$ 35,000
Private placement \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares					1,400,000
Third Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock				$ 207,500
Third Equity Public Offering \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares				6,325,000
Stock price (in USD per share) \| $ / shares				$ 35.00
Fourth Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock	$ 161,600
Fourth Equity Public Offering \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares	8,625,000
Stock price (in USD per share) \| $ / shares	$ 20.00
At-The-Market \| Cowen \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares							882,353
Stock price (in USD per share) \| $ / shares								$ 17.00
Proceeds from issuance of common stock							$ 14,500
Issuance of shares of common stock for sales agreement			$ 100,000
Share sales agreement, percentage of gross sales price			0.03

Summary of Significant Accounting Policies - Narrative (Details)	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 29, 2020 shares	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) segment	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Property, Plant and Equipment [Line Items]
Number of operating segments (segment) \| segment				1
Restricted cash		$ 1,234,000		$ 1,234,000		$ 1,542,000
Allowance for credit loss		0		0		0
Inventory, noncurrent		14,600,000		14,600,000
Intangible assets, net		7,375,000		7,375,000		$ 0
Intangible assets, milestone payment		7,500,000
Tangible asset impairment charges		$ 0	$ 0	0	$ 0
Unrecognized tax benefits, income tax penalties and interest expense				$ 0
Patents
Property, Plant and Equipment [Line Items]
Intangible asset, useful life				10 years
Common Stock
Property, Plant and Equipment [Line Items]
Shares issued as a result of conversion of promissory notes (in shares) \| shares	24,385,388
Minimum
Property, Plant and Equipment [Line Items]
Useful life				2 years
Payment terms (in days)				31 days
Maximum
Property, Plant and Equipment [Line Items]
Useful life				5 years
Payment terms (in days)				65 days

Summary of Significant Accounting Policies - Finite-Lived Intangible Assets, Future Amortization Expense (Details) - Subsequent Event $ in Thousands	Oct. 01, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
2022 (October through December)	$ 188
2023	750
2024	750
2025	750
2026	750
Thereafter	4,187
Total amortization	$ 7,375

Fair Value Measurements - Fair Value of Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 81,543	$ 96,449
Total assets	476,963	387,059
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	187,363	119,413
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	21,806	114,324
U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	186,251	58,177
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	81,543	95,145
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	267,794	153,322
Level 1 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 1 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 1 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	186,251	58,177
Level 1 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	81,543	95,145
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	209,169	233,737
Level 2 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	187,363	119,413
Level 2 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	21,806	114,324
Level 2 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 2 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Level 3 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 3 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 3 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 3 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 0	$ 0

Fair Value Measurements - Estimated Value of Cash and Cash Equivalents and Marketable Securities (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 81,543,000		$ 81,543,000		$ 96,449,000
Cash and cash equivalents, estimated fair value	81,543,000		81,543,000		96,449,000
Debt Securities, Available-for-sale [Line Items]
Amortized cost	397,016,000		397,016,000		290,865,000
Unrealized gains	0		0		0
Unrealized losses	(1,596,000)		(1,596,000)		(255,000)
Estimated fair value	395,420,000		395,420,000		290,610,000
Realized gains (losses) on investments	0	$ 0	0	$ 0
Unrealized loss on marketable securities			0		0
Allowance for credit loss	0		0		0
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized cost	187,363,000		187,363,000		119,413,000
Unrealized gains	0		0		0
Unrealized losses	0		0		0
Estimated fair value	187,363,000		187,363,000		119,413,000
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized cost	21,941,000		21,941,000		113,145,000
Unrealized gains	0		0		0
Unrealized losses	(135,000)		(135,000)		(125,000)
Estimated fair value	21,806,000		21,806,000		113,020,000
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized cost	187,712,000		187,712,000		58,307,000
Unrealized gains	0		0		0
Unrealized losses	(1,461,000)		(1,461,000)		(130,000)
Estimated fair value	186,251,000		186,251,000		58,177,000
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	81,543,000		81,543,000		95,145,000
Cash and cash equivalents, estimated fair value	$ 81,543,000		$ 81,543,000		95,145,000
Corporate debt securities
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents					1,304,000
Cash and cash equivalents, estimated fair value					$ 1,304,000

Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Raw materials	$ 3,493	$ 0
Work in progress	116	0
Finished goods	698	0
Total inventories	$ 4,307	$ 0

Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Prepaid co-pay assistance program	$ 1,967	$ 0
Prepaid insurance	1,846	518
Prepaid clinical trial costs	454	5,629
Other prepaid expenses and current assets	7,517	8,025
Total prepaid expenses and other current assets	$ 11,784	$ 14,172

Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Accrued compensation	$ 11,538	$ 9,130
Clinical trial accruals	9,766	13,217
Accrued sales deductions	853	0
Accrued expenses and other current liabilities	5,640	3,193
Total accrued liabilities	$ 27,797	$ 25,540

Property and Equipment, net - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,932	$ 2,793
Less accumulated depreciation	(993)	(532)
Property and equipment, net	1,939	2,261
Computer hardware
Property, Plant and Equipment [Line Items]
Property and equipment, gross	881	775
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	379	346
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	104	104
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,568	$ 1,568

Property and Equipment, net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation	$ 157	$ 116	$ 462	$ 318
Minimum
Property, Plant and Equipment [Line Items]
Useful life			2 years
Minimum \| Property, plant and equipment, excluding leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life			2 years
Maximum
Property, Plant and Equipment [Line Items]
Useful life			5 years
Maximum \| Property, plant and equipment, excluding leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life			5 years

License Agreements & Acquisition - AstraZeneca (Details) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended
	Aug. 31, 2022	Aug. 31, 2019	Jul. 31, 2018	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment						$ 0	$ 0
Patents
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Intangible asset, useful life						10 years
AstraZeneca
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment		$ 2,000,000	$ 1,000,000		$ 0
Product milestone payment for first product approval				$ 7,500,000
Maximum milestone payments for licensed products						$ 5,000,000
Maximum milestone payments for net worldwide sales						15,000,000
Future payable milestone payment				$ 5,000,000		5,000,000
Annual net sales						$ 100,000,000
AstraZeneca \| Patents
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Intangible asset, useful life	10 years
AstraZeneca \| Series B Preferred Stock
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Preferred stock issued (in shares)			484,388
Preferred stock issued			$ 3,000,000

License Agreements & Acquisition - Hengrui (Details) - USD ($)	1 Months Ended		3 Months Ended		9 Months Ended
	Dec. 31, 2019	Jan. 31, 2018	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment					$ 0	$ 0
Hengrui
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment	$ 1,500,000	$ 400,000	$ 0	$ 0
Maximum milestone payments for licensed products					20,500,000
Maximum milestone payments for net worldwide sales					$ 200,000,000

License Agreements & Acquisition - Hawkeye (Details) - USD ($)	1 Months Ended	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2022	Dec. 31, 2021	Feb. 04, 2020
Variable Interest Entity [Line Items]
Common stock, par value (in USD per share)		$ 0.0001	$ 0.0001	$ 0.0001
Hawkeye
Variable Interest Entity [Line Items]
Number of shares held in VIE (in shares)	995,000
Ownership percentage of VIE	19.90%
Collaboration agreement, threshold of proceeds from stock issuance for additional consideration	$ 5,000,000
Collaborative arrangement, numerator for determining additional consideration	$ 2,000,000
Payments, milestones or royalties		$ 0
Hawkeye
Variable Interest Entity [Line Items]
Common stock, par value (in USD per share)	$ 0.0001

License Agreements & Acquisition - Ducentis Acquisition (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 07, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Asset Acquisition [Line Items]
Acquisition of in-process research and development				$ 15,450	$ 0
Research and development		$ 69,731	$ 40,604	$ 148,558	$ 93,000
Ducentis Biotherapeutics LTD Equity Interests
Asset Acquisition [Line Items]
Equity interest issued or issuable, number of shares (in shares)	610,258
Acquisition of in-process research and development	$ 15,900
Future payable milestone payment	400,000
Annual net sales	1,500,000
Liabilities acquired	1,200
Asset acquisition, transaction costs	1,200
Research and development		$ 29,600
Ducentis Biotherapeutics LTD Equity Interests \| Common Stock
Asset Acquisition [Line Items]
Consideration transferred, equity interest issued and issuable	$ 12,500

Commitments and Contingencies - Narrative (Details)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
Commitments and Contingencies - Narrative (Details)	Apr. 30, 2020 USD ($) ft²	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)	Nov. 30, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Restricted cash		$ 1,234,000		$ 1,234,000			$ 1,542,000
Straight-line rent expense		186,000	$ 171,000	530,000	$ 516,000
Variable lease cost		0	$ 0	0	$ 0
Purchase obligation, remainder of current year		2,900,000		2,900,000
Purchase obligation, next year		2,100,000		2,100,000
Purchase obligation, year two		600,000		600,000
Purchase obligation, year three		600,000		600,000
Westlake Village, California Lease Arrangement
Lessee, Lease, Description [Line Items]
Square footage of leased space (in square feet) \| ft²	22,643
Lease term (in months)	91 months
Renewal term	5 years
Lease term prior to termination option	67 months
Initial base rent	$ 76,000
Free rent period	1 year
Tenant improvement allowance	$ 1,250,000
Capitalization of leasehold improvements						$ 320,000
Available letter of credit	$ 1,500,000
Restricted cash		$ 1,200,000		$ 1,200,000				$ 1,500,000

Commitments and Contingencies - Operating Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
2022 (October through December)	$ 234
2023	965
2024	994
2025	1,025
2026	1,054
Thereafter	1,740
Total minimum lease payments	6,012
Less: Amounts representing interest	(1,088)
Present value of future minimum lease payments	4,924
Current portion operating lease liability	639	$ 433
Operating lease liability, noncurrent	4,285	$ 4,774
Total operating lease liability	$ 4,924

Commitments and Contingencies - Operating Lease Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 547	$ 0

Commitments and Contingencies - Operating Lease Additional Information (Details)	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease term (in years)	5 years 9 months 18 days
Weighted-average discount rate	7.00%

Long-term debt - Narrative (Details) - USD ($) $ in Thousands			3 Months Ended	9 Months Ended
	Aug. 02, 2022	Dec. 22, 2021	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Payment of debt issuance costs				$ 2,187	$ 0
Secured debt \| Loan agreement
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 225,000
Milestone period		6 months
Stated interest rate		7.45%
Basis spread on variable rate		0.10%
Interest rate at end of period			10.08%	10.08%
Market capitalization		$ 400,000
Default rate		4.00%
Payment of debt issuance costs		$ 1,000
Final fee		6.95%
Exit fee		3.00%
Exit fee expiration period		10 years
Deferred final fee		$ 13,700
Effective interest rate			12.59%	12.59%
Interest expense			$ 4,900	$ 8,700
Secured debt \| Loan agreement \| Tranche A term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		75,000
Proceeds from issuance of debt		75,000
Secured debt \| Loan agreement \| Tranche B-1 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		50,000
Secured debt \| Loan agreement \| Tranche B-2 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		75,000
Incremental amount available for borrowing		15,000
Secured debt \| Loan agreement \| Tranche C term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		25,000
Net product revenue milestone		$ 110,000
Milestone period		6 months
Secured debt \| Loan agreement \| Tranche B term loan
Debt Instrument [Line Items]
Proceeds from issuance of debt	$ 125,000
Secured debt \| Loan agreement \| Prior to December 22, 2022
Debt Instrument [Line Items]
Prepayment premium		3.00%
Secured debt \| Loan agreement \| After December 22, 2002 and prior to December 22, 2023
Debt Instrument [Line Items]
Prepayment premium		2.00%
Secured debt \| Loan agreement \| After December 22, 2023 and prior to December 22, 2025
Debt Instrument [Line Items]
Prepayment premium		1.00%
Secured debt \| Loan agreement \| Minimum
Debt Instrument [Line Items]
Periodic principal payment		$ 5,000

Long-term debt - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Principal loan balance	$ 200,000	$ 75,000
Accrued final fee	1,113	0
Unamortized debt issuance costs	(4,360)	(2,650)
Long-term debt, net	$ 196,753	$ 72,350

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Convertible Preferred Stock and Stockholders' Equity - Narrative (Details)	1 Months Ended
	Feb. 29, 2020 shares	Sep. 30, 2022 USD ($) vote $ / shares shares	Dec. 31, 2021 $ / shares shares	Feb. 04, 2020 $ / shares shares
Class of Stock [Line Items]
Votes per share of common stock (in votes) \| vote		1
Dividends declared \| $		$ 0
Common stock, shares authorized (in shares)		300,000,000	300,000,000	300,000,000
Common stock, par value (in USD per share) \| $ / shares		$ 0.0001	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized (in shares)				10,000,000
Convertible preferred stock, par value (In USD per share) \| $ / shares				$ 0.0001
Preferred stock, shares outstanding (in shares)		0	0
Common Stock
Class of Stock [Line Items]
Conversion of preferred stock into common stock upon initial public offering (in shares)	24,385,388

Convertible Preferred Stock and Stockholders' Equity - Shares of Common Stock for Issuance (Details) - shares	Sep. 30, 2022	Dec. 31, 2021
Class of Stock [Line Items]
Common stock reserved (in shares)	11,461,564	8,161,157
Options issued and outstanding
Class of Stock [Line Items]
Common stock reserved (in shares)	7,480,040	5,757,957
Common stock awards available for grant under employee incentive plans
Class of Stock [Line Items]
Common stock reserved (in shares)	2,413,578	2,068,004
Restricted stock units outstanding
Class of Stock [Line Items]
Common stock reserved (in shares)	1,567,946	335,196

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 01, 2022	Jan. 01, 2021	Jan. 30, 2020	Mar. 31, 2021	Aug. 31, 2016	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)						11,461,564		11,461,564		8,161,157
Intrinsic value of options exercised during the period								$ 5,100
Grant date fair value of options vested during the period								$ 20,200
Grant date fair value of options vested during the period (in USD per share)								$ 14.13
Stock-based compensation expense						$ 8,789	$ 5,363	$ 23,418	$ 18,206
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost						$ 64,600		$ 64,600
Recognition period for unrecognized compensation costs related to unvested options expected to vest								2 years 9 months 18 days
Expected dividend yield								0.00%		0.00%
RSUs subject to future vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)						1,567,946		1,567,946		335,196
Vesting period of stock-based awards granted								4 years
Granted (in shares)								1,371,828			0
Unrecognized compensation cost						$ 27,600		$ 27,600
Recognition period for unrecognized compensation costs related to unvested options expected to vest								3 years 3 months 18 days
Restricted stock \| First anniversary date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rights, percentage					25.00%
Stock options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental cost of plan modification				$ 5,300
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in shares available for grant, percentage of shares outstanding			1.00%
Purchase price of common stock, as a percentage of closing trading price per share			85.00%
Stock-based compensation expense						$ 216	$ 88	$ 637	$ 304
Employee Stock Purchase Plan \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares authorized (in shares)	503,457	436,778
Shares available for grant (in shares)						1,134,295		1,134,295
Number of shares authorized for sale under the ESPP (in shares)			351,000
Maximum shares to be issued			5,265,000
2020 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)			2,134,000
Increase in shares available for grant, percentage of shares outstanding			4.00%
Based number of options issuable (in shares)			11,000,000
Number of additional shares authorized (in shares)	2,013,830	1,747,112
Shares available for grant (in shares)						1,061,783		1,061,783
Expected dividend yield								0.00%
2020 Equity Incentive Plan \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of stock-based awards granted								4 years
2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)			1,550,150
Early exercise liability										$ 82
Early exercise liability, current										57
Early exercise liability, noncurrent										$ 25
2022 Employment Inducement Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)										1,250,000
Shares available for grant (in shares)						257,500		257,500

Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares
Number of Options
Beginning balance, number of options (in shares) \| shares	5,757,957
Granted (in shares) \| shares	2,133,150
Exercised (in shares) \| shares	(290,865)
Forfeited (in shares) \| shares	(115,789)
Expired (in shares) \| shares	(4,413)
Ending balance, number of options (in shares) \| shares	7,480,040	5,757,957
Weighted- Average Exercise Price
Beginning balance, weighted-average exercise price (in USD per share) \| $ / shares	$ 19.06
Granted (in USD per share) \| $ / shares	20.20
Exercised (in USD per share) \| $ / shares	3.13
Forfeited (in USD per share) \| $ / shares	25.52
Expired (in USD per share) \| $ / shares	26.93
Ending balance, weighted-average exercise price (in USD per share) \| $ / shares	$ 19.90	$ 19.06
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Exercisable (in shares) \| shares	3,323,627
Exercisable, Weighted-Average Exercise Price (in USD per share) \| $ / shares	$ 15.87
Remaining Contractual Term (Years)	8 years 2 months 19 days	8 years 4 months 13 days
Remaining contractual term, exercisable (years)	7 years 3 months 29 days
Aggregate Intrinsic Value \| $	$ 28,324	$ 34,887
Intrinsic value, exercisable \| $	$ 24,854

Stock-Based Compensation - Restricted Stock Unit Activity (Details) - RSUs subject to future vesting - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2019
Number of Units
Beginning balance (in shares)	335,196
Granted (in shares)	1,371,828	0
Vested (in shares)	(101,778)
Forfeited (in shares)	(37,300)
Ending balance (in shares)	1,567,946
Weighted-Average Grant Date Fair Value
Beginning balance (in USD per share)	$ 29.26
Granted (in USD per share)	19.27
Vested (in USD per share)	28.80
Forfeited (in USD per share)	18.47
Ending balance (in USD per share)	$ 20.81

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 8,789	$ 5,363	$ 23,418	$ 18,206
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	3,448	2,266	9,437	5,898
Selling, general, and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 5,341	$ 3,097	$ 13,981	$ 12,308

Stock-Based Compensation - Assumptions in Calculating Stock Option Awards (Details) - Stock Options	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	79.10%	80.60%
Expected volatility, maximum	82.10%	85.20%
Risk-free interest rate, minimum	1.40%	0.60%
Risk-free interest rate, maximum	3.60%	1.30%
Dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 6 months	5 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 1 month 6 days	6 years 2 months 12 days

Net Loss Per Share (Details) - shares	9 Months Ended
Net Loss Per Share (Details) - shares	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	9,122,294	6,207,572
Stock options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	7,480,040	5,715,147
Early exercised options subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	18,573	131,923
RSUs subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	1,567,946	337,868
ESPP shares subject to future issuance
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	55,735	22,634