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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Oct. 30, 2018
Document and Entity Information
Entity Registrant Name	Liquidia Technologies Inc
Entity Central Index Key	0001330436
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		15,478,286
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true

Condensed Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 47,515,790	$ 3,418,979
Accounts receivable, less allowance of $0 and $48,108, respectively	81,926	1,622,179
Prepaid expenses and other current assets	240,883	443,460
Total current assets	47,838,599	5,484,618
Property, plant and equipment, net	8,230,945	8,243,012
Prepaid expenses and other assets	1,160,839	1,115,972
Total assets	57,230,383	14,843,602
Current liabilities:
Accounts payable	2,907,757	4,424,948
Accrued expenses	1,439,602	2,785,618
Accrued compensation	1,866,872	1,952,505
Accrued interest	59,505	1,408,869
Deferred rent	268,599	268,628
Current portion of capital lease obligations	471,981	469,798
Current portion of deferred revenue	326,700	3,605,199
Current portion of long-term debt	293,274	15,608,349
Total current liabilities	7,634,290	30,523,914
Long-term capital lease obligations	484,017	510,625
Long-term deferred rent	2,458,186	2,612,552
Long-term deferred revenue	8,071,921	5,527,296
Long-term debt	10,726,433	5,556,782
Deferred financing obligation		1,341,810
Warrant liabilities		2,462,859
Total liabilities	29,374,847	48,535,838
Commitments and contingencies (Note 9)
Stockholders’ equity (deficit):
Additional paid-in capital	185,208,219	79,677,540
Accumulated deficit	(157,368,161)	(113,413,311)
Total stockholders’ equity (deficit)	27,855,536	(33,692,236)
Total liabilities and stockholders’ equity (deficit)	57,230,383	14,843,602
Preferred stock - Series A
Stockholders’ equity (deficit):
Preferred stock		1,974
Preferred stock - Series A-1
Stockholders’ equity (deficit):
Preferred stock		1,835
Preferred stock - Series B
Stockholders’ equity (deficit):
Preferred stock		4,497
Preferred stock - Series C
Stockholders’ equity (deficit):
Preferred stock		17,103
Preferred stock - Series C-1
Stockholders’ equity (deficit):
Preferred stock		17,556
Preferred stock - Series D
Stockholders’ equity (deficit):
Preferred stock
Common stock - Class B- Non-voting
Stockholders’ equity (deficit):
Common stock		20
Common stock - Voting
Stockholders’ equity (deficit):
Common stock	$ 15,478	$ 550

Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Allowance for accounts receivable	$ 0	$ 48,108
Preferred stock, shares authorized (in shares)	10,000,000
Common stock, shares authorized (in shares)	40,000,000
Preferred stock - Series A
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	0	1,974,430
Preferred stock, shares issued (in shares)	0	1,974,430
Preferred stock, shares outstanding (in shares)	0	1,974,430
Preferred stock - Series A-1
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	0	1,834,862
Preferred stock, shares issued (in shares)	0	1,834,862
Preferred stock, shares outstanding (in shares)	0	1,834,862
Preferred stock - Series B
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	0	4,620,123
Preferred stock, shares issued (in shares)	0	4,496,908
Preferred stock, shares outstanding (in shares)	0	4,496,908
Preferred stock - Series C
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	0	17,102,578
Preferred stock, shares issued (in shares)	0	17,102,578
Preferred stock, shares outstanding (in shares)	0	17,102,578
Preferred stock - Series C-1
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	0	91,000,000
Preferred stock, shares issued (in shares)	0	17,556,178
Preferred stock, shares outstanding (in shares)	0	17,556,178
Preferred stock - Series D
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized (in shares)	0	0
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock - Voting
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	175,000,000
Common stock, shares issued (in shares)	15,478,286	549,952
Common stock, shares outstanding (in shares)	15,478,286	549,952
Common stock - Class B- Non-voting
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	0	330,664
Common stock, shares issued (in shares)	0	19,645
Common stock, shares outstanding (in shares)	0	19,645

Condensed Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Statements of Operations and Comprehensive Loss
Revenues	$ 169,730	$ 1,820,848	$ 2,138,579	$ 5,442,020
Costs and expenses:
Cost of sales		79,940	121,391	239,819
Research and development	7,156,618	6,532,940	20,701,022	17,966,244
General and administrative	2,283,936	3,004,612	6,424,892	8,079,304
Total costs and expenses	9,440,554	9,617,492	27,247,305	26,285,367
Loss from operations	(9,270,824)	(7,796,644)	(25,108,726)	(20,843,347)
Other income (expense):
Interest income	128,120		139,965	268
Interest expense	(636,573)	(4,155,714)	(18,759,078)	(8,323,924)
Derivative and warrant fair value adjustments	106,265	(7,284,256)	277,715	(8,197,356)
Total other income (expense), net	(402,188)	(11,439,970)	(18,341,398)	(16,521,012)
Net loss	(9,673,012)	(19,236,614)	(43,450,124)	(37,364,359)
Comprehensive loss	$ (9,673,012)	$ (19,236,614)	$ (43,450,124)	$ (37,364,359)
Net loss per common share:
Basic (in dollars per share)	$ (0.83)	$ (34.91)	$ (10.16)	$ (68.54)
Diluted (in dollars per share)	$ (0.84)	$ (34.91)	$ (10.27)	$ (68.54)
Weighted average common shares outstanding:
Basic (in shares)	11,606,489	551,097	4,277,554	545,132
Diluted (in shares)	11,464,459	551,097	4,229,691	545,132

Condensed Statement of Stockholders' Deficit - USD ($)	Preferred stock - Series A Preferred stock	Preferred stock - Series A-1 Preferred stock	Preferred stock - Series B Preferred stock	Preferred stock - Series C Preferred stock	Preferred stock - Series C-1 Preferred stock	Preferred stock - Series D Preferred stock	Common stock - Voting Common stock	Common stock - Voting	Common stock - Class B- Non-voting Common stock	Additional Paid-in Capital	Related Party Note Receivable from Shareholder	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2016	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 534		$ 20	$ 66,025,349	$ (55,000)	$ (84,259,071)	$ (18,245,203)
Balance at beginning of period (in shares) at Dec. 31, 2016	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		533,593		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 1			5,432			5,433
Exercise of stock options (in shares)							1,190
Stock-based compensation										127,199			127,199
Beneficial conversion feature on Convertible Notes										2,956,166			2,956,166
Net loss												(9,836,746)	(9,836,746)
Balance at end of period at Mar. 31, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 535		$ 20	69,114,146	(55,000)	(94,095,817)	(24,993,151)
Balance at end of period (in shares) at Mar. 31, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		534,783		19,645
Balance at beginning of period at Dec. 31, 2016	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 534		$ 20	66,025,349	(55,000)	(84,259,071)	(18,245,203)
Balance at beginning of period (in shares) at Dec. 31, 2016	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		533,593		19,645
Increase (Decrease) in Stockholders' Equity
Net loss													(37,364,359)
Balance at end of period at Sep. 30, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 548		$ 20	74,438,355		(121,623,430)	(47,141,542)
Balance at end of period (in shares) at Sep. 30, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		547,552		19,645
Balance at beginning of period at Mar. 31, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 535		$ 20	69,114,146	(55,000)	(94,095,817)	(24,993,151)
Balance at beginning of period (in shares) at Mar. 31, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		534,783		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 11			72,641			72,652
Exercise of stock options (in shares)							11,261
Stock-based compensation										86,153			86,153
Repayment of note to related party shareholder											$ 55,000		55,000
Net loss												(8,290,999)	(8,290,999)
Balance at end of period at Jun. 30, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 546		$ 20	69,272,940		(102,386,816)	(33,070,345)
Balance at end of period (in shares) at Jun. 30, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		546,044		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 1			1,509			1,510
Exercise of stock options (in shares)							320
Exercise of common stock warrants							$ 1			9,999			10,000
Exercise of common stock warrants (in shares)							1,188
Stock-based compensation										218,661			218,661
Beneficial conversion feature on Convertible Notes										4,935,246			4,935,246
Net loss												(19,236,614)	(19,236,614)
Balance at end of period at Sep. 30, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 548		$ 20	74,438,355		(121,623,430)	(47,141,542)
Balance at end of period (in shares) at Sep. 30, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		547,552		19,645
Balance at beginning of period at Dec. 31, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 550		$ 20	79,677,540		(113,413,311)	(33,692,236)
Balance at beginning of period (in shares) at Dec. 31, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		549,952		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 52			152,352			152,404
Exercise of stock options (in shares)							51,543
Stock-based compensation										341,314			341,314
Issuance of Series D preferred stock, net						$ 91,147				53,893,361			53,984,508
Issuance of Series D preferred stock, net (in shares)						91,147,482
Net loss												(27,508,187)	(27,508,187)
Balance at end of period at Mar. 31, 2018	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556	$ 91,147	$ 602		$ 20	134,064,567		(141,426,225)	(7,226,924)
Balance at end of period (in shares) at Mar. 31, 2018	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178	91,147,482	601,495		19,645
Balance at beginning of period at Dec. 31, 2017	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556		$ 550		$ 20	79,677,540		(113,413,311)	$ (33,692,236)
Balance at beginning of period (in shares) at Dec. 31, 2017	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178		549,952		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)													106,155
Net loss													$ (43,450,124)
Balance at end of period at Sep. 30, 2018							$ 15,478			185,208,219		(157,368,161)	27,855,536
Balance at end of period (in shares) at Sep. 30, 2018							15,478,286
Increase (Decrease) in Stockholders' Equity
Cumulative adjustment - adoption of ASC 606 \| ASU 2014-09												(504,727)	(504,727)
Balance at beginning of period at Mar. 31, 2018	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556	$ 91,147	$ 602		$ 20	134,064,567		(141,426,225)	(7,226,924)
Balance at beginning of period (in shares) at Mar. 31, 2018	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178	91,147,482	601,495		19,645
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 26			62,378			62,404
Exercise of stock options (in shares)							26,635
Stock-based compensation										519,835			519,835
Net loss												(6,268,924)	(6,268,924)
Balance at end of period at Jun. 30, 2018	$ 1,974	$ 1,835	$ 4,497	$ 17,103	$ 17,556	$ 91,147	$ 628		$ 20	134,646,780		(147,695,149)	(12,913,609)
Balance at end of period (in shares) at Jun. 30, 2018	1,974,430	1,834,862	4,496,908	17,102,578	17,556,178	91,147,482	628,130		19,645
Increase (Decrease) in Stockholders' Equity
Initial public offering							$ 4,833			53,159,256			53,164,089
Initial public offering (in shares)							4,833,099
Automatic conversion preferred stock and Class B common stock	$ (1,974)	$ (1,835)	$ (4,497)	$ (17,103)	$ (17,556)	$ (91,147)	$ 9,968		$ (20)	124,164
Automatic conversion preferred stock and Class B common stock (in shares)	(1,974,430)	(1,834,862)	(4,496,908)	(17,102,578)	(17,556,178)	(91,147,482)	9,967,852		(19,645)
Exercise of stock options							$ 28			71,810			71,838
Exercise of stock options (in shares)							28,314
Exercise of common stock warrants							$ 21			331			352
Exercise of common stock warrants (in shares)							20,891	20,891
Stock-based compensation										864,352			864,352
Reclassification of warrant liabilities										2,185,144			2,185,144
IPO financing costs										(5,843,618)			(5,843,618)
Net loss												(9,673,012)	(9,673,012)
Balance at end of period at Sep. 30, 2018							$ 15,478			$ 185,208,219		$ (157,368,161)	$ 27,855,536
Balance at end of period (in shares) at Sep. 30, 2018							15,478,286

Condensed Statements of Cash Flows - USD ($)	9 Months Ended
Condensed Statements of Cash Flows - USD ($)	Sep. 30, 2018	Sep. 30, 2017
Operating activities
Net loss	$ (43,450,124)	$ (37,364,359)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,725,501	432,013
Depreciation	1,135,550	674,243
Amortization of discount on long-term debt and convertible notes	17,550,541	6,232,841
Non-cash interest expense	339,504	1,832,323
Derivative fair value adjustment		6,613,369
Warrant fair value adjustment	(277,715)	1,583,987
Non-cash rent (income) expense	(154,395)	673,578
Lease incentive		1,094,358
Changes in operating assets and liabilities:
Accounts receivable	1,540,253	(233,518)
Prepaid expenses and other current assets	(88,979)	(10,336)
Other non-current assets	2,270,929	1,176,134
Accounts payable	(1,711,787)	(46,647)
Accrued expenses	(1,000,939)	558,461
Accrued compensation	(85,633)	(517,448)
Deferred revenue	(1,294,682)	(2,327,427)
Net cash used in operating activities	(23,501,976)	(19,628,428)
Investing activities
Purchases of property, plant and equipment	(769,870)	(1,249,952)
Net cash used in investing activities	(769,870)	(1,249,952)
Financing activities
Principal payments on capital lease obligations	(480,940)	(274,617)
Proceeds from issuance of convertible notes		21,796,168
Proceeds from issuance of long-term debt		4,000,000
Refund of principal payments on long-term debt	588,889
Principal payments on long-term debt	(2,433,680)	(200,000)
Payments for debt issuance costs	(392,000)	(460,892)
Proceeds from issuance of Series D preferred stock, net of issuance costs	25,106,896
Proceeds from initial public offering, net of underwriting fees and commissions	47,320,584
Payments for deferred offering costs	(1,628,090)	(76,129)
Proceeds from exercise of stock options and warrants	286,998	144,595
Net cash provided by financing activities	68,368,657	24,929,125
Net increase in cash	44,096,811	4,050,745
Cash, beginning of period	3,418,979	1,438,712
Cash, end of period	47,515,790	5,489,457
Supplemental disclosure of cash flow information
Cash paid for interest	869,033	183,761
Purchase of equipment with capital leases	456,517	182,151
Changes in purchases of equipment in accounts payable	145,473	999,796
Purchase of build-to-suit asset with deferred financing obligation	272,656	973,585
Reclassification of deferred financing obligation to long-term debt	277,009
Reclassification of financing costs on deferred financing obligation to discount on long-term debt	1,614,466
Conversion of accrued interest to long‑term debt	106,558	92,504
Recording of warrant liabilities with corresponding discount on convertible notes		4,474,122
Recording of derivative liabilities with corresponding discount on convertible notes		9,872,990
Conversion of convertible notes and accrued interest into Series D preferred stock	28,877,498
Recording of discount on convertible notes as paid-in capital for beneficial conversion feature		7,891,412
Debt issuance costs incurred but not paid		75,000
Deferred offering costs incurred but not paid	340,069	1,090,384
Exercise of stock options through forfeiture of vested stock options	$ 162,156
Issuance of convertible note for debt issuance costs		$ 442,356

Organization and Description of the Business	9 Months Ended
Organization and Description of the Business	Sep. 30, 2018
Organization and Description of the Business
Organization and Description of the Business	1. Organization and Description of the Business Liquidia Technologies, Inc. (“Liquidia” or the “Company”) is a late‑stage clinical biopharmaceutical company focused on the development and commercialization of human therapeutics using the Company’s proprietary PRINT technology to transform the lives of patients. PRINT is a particle engineering platform that enables precise production of uniform drug particles designed to improve the safety, efficacy and performance of a wide range of therapies. The Company is currently focused on the development of two product candidates for which it holds worldwide commercial rights: LIQ861 for the treatment of pulmonary arterial hypertension and LIQ865 for the treatment of local post‑operative pain. The development and commercialization activities are conducted at the Company’s headquarters located in Morrisville, North Carolina. The Company was incorporated under the laws of the state of Delaware in 2004.

Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

Basis of Presentation

The unaudited interim financial statements as of September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary for a fair statement of the balance sheets, operating results and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2018. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars.

The accompanying unaudited financial statements and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2017, which are included in the Company’s Registration Statement on Form S-1, as amended (File No. 333-225960).

The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU 2014-09”), Revenue from Contracts with Customers (“Topic 606”) on January 1, 2018. There have been no other material changes to the Company’s significant accounting policies during the nine months ended September 30, 2018, as compared to the significant accounting policies disclosed in Note 2 of the financial statements for the years ended December 31, 2017 and 2016.

Reverse Stock Split

On July 12, 2018 and July 19, 2018, the Company’s Board of Directors and stockholders, respectively, approved an amendment to the Company’s amended and restated certificate of incorporation effecting a 1-for-16.8273325471348 reverse stock split of the Company’s issued and outstanding shares of common stock and convertible preferred stock. The reverse stock split was effective on July 19, 2018. The par value of the common and redeemable convertible preferred stock was not adjusted as a result of the reverse stock split. All issued and outstanding share and per share amounts included in the accompanying financial statements have been adjusted to reflect this reverse stock split for all periods presented.

Variable Interest Entities

The Company identifies entities (i) that do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support or (ii) in which the equity investors lack an essential characteristic of a controlling financial interest as variable interest entities (“VIE” or “VIEs”). The Company performs an initial and ongoing evaluation of the entities with which the Company has variable interests to determine if any of these entities are VIEs. If an entity is identified as a VIE, the Company performs an assessment to determine whether the Company has both (i) the power to direct activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE. If both of these criteria are satisfied, the Company is identified as the primary beneficiary of the VIE and the entity must be consolidated. As of September 30, 2018 and December 31, 2017, the Company determined that Envisia Therapeutics Inc. (“Envisia”) was a variable interest entity (“VIE”), although the Company does not consolidate it as the Company is not the primary beneficiary for Envisia. Envisia is accounted for under the equity method. There have been no activities between Envisia and the Company in 2018.

Going Concern

The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company closed its initial public offering (“IPO”) in July and August 2018 resulting in total net proceeds of $49.4 million, after underwriting discounts but prior to payment of other offering expenses.

The Company's operations have consisted primarily of developing its technology, developing products, prosecuting its intellectual property and securing financing. The Company has incurred recurring losses and cash outflows from operations, has an accumulated deficit, and has debt maturing within twelve months. The Company expects to continue to incur losses in the foreseeable future and will require additional financial resources to continue to advance its products and intellectual property, in addition to repaying its maturing debt and other obligations.

These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to this matter include continuing attempts to obtain additional financing to sustain its operations. However, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company, and the failure of the Company to obtain sufficient funds on acceptable terms, when needed, could have a material adverse effect on the Company’s business, results of operations and financial condition. If sufficient financings are not obtained, this may necessitate other actions by the Company. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash to the extent of amounts recorded on the Balance Sheet. With regards to cash, 100% of the Company’s cash is held on deposit with Pacific Western Bank. With regards to revenues and accounts receivable, GlaxoSmithKline plc (“GSK” and “GSK Inhaled”) accounted for 0% and 84% of the Company’s revenues for the three months ended September 30, 2018 and 2017, respectively, 20% and 81% of the Company’s revenues for the nine months ended September 30, 2018 and 2017, respectively, and $0 or 0% and $1.1 million or 69% of the Company’s accounts receivable as of September 30, 2018 and December 31, 2017, respectively.

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers (“Topic 606”). The FASB issued Topic 606 to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer and certain contract fulfillment costs. The Company adopted this standard and all the related amendments (“new revenue standard”) on January 1, 2018, applying the modified retrospective method. The modified retrospective transition method is applied on a prospective basis from the adoption date and does not recast historical financial statement periods. Any contracts with customers that were not complete as of the adoption date are reviewed and the Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit as of January 1, 2018. Financial information in comparative periods have not been restated and continue to be reported under the accounting methods in effect for that period.

This adoption primarily affected the recognition of non-refundable up-front fees and milestone payments. The Company previously recognized non-refundable up-front fees as deferred revenue which was recognized into revenue on a straight-line basis over the estimated period of the Company’s substantive performance obligations, as a component of a multiple element arrangement. Milestone payments were previously accounted for under Accounting Standards Codification (“ASC”) 605-28-50-2(e), which had required recognition of a milestone payment when the applicable event was considered to be both substantive and achieved. The adoption of the new revenue standard generally requires licenses that are not considered distinct performance obligations from other goods or services within a contract to be bundled with those goods or services as a combined performance obligation. Revenue associated with the combined performance obligation is recognized over time as those goods or services are delivered.

The adoption of the new revenue standard also impacted the deferral of sublicense payments related to the milestone payments, which were previously expensed when the milestone payments were recognized, and the timing of recognition of deferred sublicense payments related to up-front license payments. Under the new revenue standard, the incremental sublicense payments related to milestone payments will be deferred as contract fulfillment costs and amortized over time, consistent with the method of recognition for the related revenues.

The cumulative effect of the changes made to the January 1, 2018 balance of accumulated deficit on the Balance Sheet for the adoption of Topic 606 was $0.5 million as follows:


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2017		Topic 606		2018
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	443,460	$	10,551	$	454,011
Prepaid expenses and other assets		1,115,972		45,529		1,161,501

Liabilities
Current portion of deferred revenue		3,605,199		105,512		3,710,711
Long-term deferred revenue		5,527,296		455,295		5,982,591

Stockholders’ equity (deficit)
Accumulated deficit		(113,413,311)		(504,727)		(113,918,038)

In accordance with the new revenue standard requirements, the impact of adoption on the Statement of Operations and Comprehensive Loss and Balance Sheet was as follows:


	For the Three Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	169,730	$	919,730	$	(750,000)

Costs and expenses
Cost of sales		—		75,000		(75,000)

Net loss		(9,673,012)		(8,998,012)		675,000


	For the Nine Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	2,138,579	$	4,118,228	$	(1,979,649)

Costs and expenses
Cost of sales		121,391		319,356		(197,965)

Net loss		(43,450,124)		(41,668,440)		1,781,684


	September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	240,883	$	540,883	$	(300,000)
Prepaid expenses and other assets		1,160,839		631,980		528,859

Liabilities
Current portion of deferred revenue		326,700		3,326,700		(3,000,000)
Long-term deferred revenue		8,071,921		2,783,334		5,288,587

Stockholders’ equity (deficit)
Accumulated deficit		(157,368,161)		(155,308,433)		2,059,728

Segment Data

The Company manages, reports and evaluates its business in the following two segments: Pharmaceutical Products and Partnering and Licensing. The Company’s reportable operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities, the manner in which the Company organizes segments for making operating decisions and assessing performance and the availability of separate financial results. Unallocated operations and corporate expenses, such as depreciation, facilities costs, corporate management costs and interest expense, are represented within Corporate / Operations.

In the fourth quarter of 2018, the Company determined that it will change the way it manages and operates the reporting entity and is in the process of modifying the Company’s information system to produce financial information to support the new structure. The changes will require the Company to revise its segment reporting. It is anticipated that the modification to the system will be completed in the fourth quarter of 2018, at which point management will reorganize its operations and reporting structure and begin to manage its operations under its new segment structure.

The segment data is reflected below for three and nine months ended September 30, 2018 and 2017, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenues:
Pharmaceutical Products	$	—	$	—	$	—	$	—
Partnering and Licensing		169,730		1,820,848		2,138,579		5,442,020
Total		169,730		1,820,848		2,138,579		5,442,020
Operating (loss) income:
Pharmaceutical Products		(5,481,289)		(3,832,268)		(14,427,982)		(10,058,345)
Partnering and Licensing		57,399		564,841		1,342,359		1,637,588
Corporate / Operations		(3,846,934)		(4,529,217)		(12,023,103)		(12,422,590)
Total		(9,270,824)		(7,796,644)		(25,108,726)		(20,843,347)
Interest income		128,120		—		139,965		268
Interest expense		(636,573)		(4,155,714)		(18,759,078)		(8,323,924)
Derivative and warrant fair value adjustments		106,265		(7,284,256)		277,715		(8,197,356)
Net loss	$	(9,673,012)	$	(19,236,614)	$	(43,450,124)	$	(37,364,359)

Segment information by asset is not disclosed as it is not reviewed by the Chief Operating Decision Maker or used to allocate resources or to assess the Company’s operating results and financial performance. All long‑lived assets are domiciled within the United States and all revenues were earned within the United States.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares adjusted for the dilutive effect of common equivalent shares outstanding during the period. Common stock equivalents consist of preferred stock, stock options and stock warrants. Net loss per share attributable to common stockholders is calculated using the two‑class method, which is an earnings allocation formula that determines net loss per share for the holders of the Company’s common shares and participating securities. The Company’s convertible preferred stock contains participating rights in any dividend paid by the Company and are deemed to be participating securities. Net loss attributable to common stockholders and participating preferred shares are allocated to each share on an as‑converted basis as if all of the earnings for the period had been distributed. The participating securities do not include a contractual obligation to share in the losses of the Company and are not included in the calculation of net loss per share in the periods that have a net loss. Common equivalent shares are excluded from the computation in periods in which they have an anti‑dilutive effect on net loss per share.

Diluted net loss per share is computed using the more dilutive of (a) the two‑class method or (b) the if‑converted method. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti‑dilutive. Diluted net loss per share is equivalent to basic net loss per share for all years presented herein because common stock equivalent shares from unexercised stock options, outstanding warrants, preferred stock and common shares expected to be issued under the Company’s employee stock purchase plan were anti‑dilutive. Due to their dilutive effect, the calculation of diluted net loss per share for the three and nine months ended September 30, 2018 and 2017 does not include the following common stock equivalent shares:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Preferred Stock	—	4,172,437	—	4,172,437
Stock Options	1,642,004	673,684	1,642,004	673,684
Warrants	198,870	235,805	198,870	235,805
Total	1,840,874	5,081,926	1,840,874	5,081,926

For the three and nine months ended September 30, 2018 the only reconciling item between basic and diluted net loss per share is the impact of the common stock warrants that are included in the calculation of basic net loss per share since their exercise price is de minimis, but excluded from the calculation of diluted net loss per share since the impact of such warrants is antidilutive. For all other periods presented, there were no reconciling items between basic and diluted net loss per share.

Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, and accounts payable at September 30, 2018 and December 31, 2017 approximated fair value due to the short maturity of these instruments.

The Company’s valuation of financial instruments is based on a three‑tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. The fair value hierarchy defines a three‑level valuation hierarchy for disclosure of fair value measurements as follows:

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

Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value as of September 30, 2018 and December 31, 2017:


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
September 30, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,136,320	$	—	$	2,126,422
Pacific Western Bank Tranche II note		—		2,536,270		—		2,538,047
Pacific Western Bank Tranche III note		—		3,381,693		—		3,384,063
CSC build-to-suit equipment financing		—		1,406,093		—		1,206,932
UNC Promissory Note		—		1,764,243		—		1,764,243
Total	$	—	$	11,224,619	$	—	$	11,019,707


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2017	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,512,301	$	—	$	2,488,572
Pacific Western Bank Tranche II note		—		2,845,194		—		2,820,382
Pacific Western Bank Tranche III note		—		3,793,644		—		3,760,509
UNC Promissory Note		—		2,257,684		—		2,257,684
Convertible notes		—		—		28,702,268		9,837,984
Warrant liabilities		—		—		2,462,859		2,462,859
Total	$	—	$	11,408,823	$	31,165,127	$	23,627,990

The fair value of debt was measured as the present value of the respective future cash outflows discounted at a current interest rate as of the year‑end date, taking into account the remaining term of liabilities.

Warrant Liabilities

The Company has classified warrants to purchase shares of preferred stock as a liability on its Balance Sheets as these warrants were free-standing financial instruments that will require the Company to issue convertible securities upon exercise. The warrants were initially recorded at fair value on date of grant, and were subsequently remeasured to fair value at each reporting period. Changes in fair value of the warrants are recognized as a component of other income (expense) in the Statements of Operations and Comprehensive Loss. In conjunction with the Company’s IPO, the warrants were converted to warrants for common stock. Following that conversion, these warrants no longer meet the criteria to be presented as a liability and have been reclassified to additional paid-in capital. The Company will no longer include the warrants as liabilities or recognize changes in their fair value on the Statements of Operations and Comprehensive Loss.

The Company used the Black Scholes option pricing model, which incorporates assumptions and estimates, to value the preferred stock warrants. The Company assessed these assumptions and estimates on a quarterly basis as additional information impacting the assumptions was obtained. Estimates and assumptions impacting the fair value measurement included the fair value per share of the underlying preferred stock, the remaining contractual term of the warrant, the risk-free interest rate, the expected dividend yield and the expected volatility of the price of the underlying preferred stock. The Company determined the fair value per share of the underlying preferred stock by taking into consideration the most recent sales of its convertible preferred stock, results obtained from third party valuations and additional factors that were deemed relevant. The Company estimated its expected stock volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrant. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrant. Expected dividend yield was based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Embedded Derivatives

Embedded derivatives that are required to be bifurcated from the underlying instrument are accounted for and valued as a separate financial instrument. In conjunction with the Company’s convertible notes (see Note 10), embedded derivatives exist associated with the future consummation of a qualified financing event, as defined in the notes, and a subsequent discounted conversion of the instrument to capital stock. The embedded derivatives were bifurcated and classified as derivative liabilities on the Balance Sheets and separately adjusted to their fair values at the end of each reporting period. Changes in fair values of the derivative liabilities are recognized as a component of other income (expense) in the Statements of Operations and Comprehensive Loss. These embedded derivatives were eliminated upon conversion of the underlying convertible notes into Series D preferred stock, $0.001 par value per share (“Series D”) (see Note 3).

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such equity financings are consummated. After consummation of the equity financing, these costs were recorded in stockholders’ equity (deficit) as a reduction of proceeds generated as a result of the offering. As of December 31, 2017, the Company recorded deferred offering costs relating to its IPO of $125,000, which is included in Prepaid Expenses and Other Assets in the accompanying Balance Sheets.

Income Taxes

The Company did not record a federal or state income tax benefit for the three and nine months ended September 30, 2018 and 2017, as a result of the establishment of a full valuation allowance being required against the Company’s net deferred tax assets.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted into law. This new law includes significant changes to the U.S. corporate income tax system, including a permanent reduction in the corporate income tax rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. The TCJA also limits interest expense deductions to 30% of taxable income before interest, depreciation and amortization from 2018 to 2021 and then taxable income before interest thereafter. The TCJA permits disallowed interest expense to be carried forward for five years. The Company has calculated its best estimate of the impact of the TCJA in its income tax provision in accordance with its understanding of the TCJA and guidance available. Using the guidance issued by the SEC staff in Staff Accounting Bulletin No. 118, the Company completed the accounting for the TCJA with the filing of the 2017 U.S. federal income tax return, which had no material impact. The legislative changes effective for the tax year 2018 did not have a material impact on the Company’s financial statements.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016‑01, Financial Instruments — Overall (Subtopic 825‑10) — Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”). The provisions of ASU 2016‑01 make targeted improvements to enhance the reporting model for financial instruments to provide users of financial statements with more useful information, including certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance was effective for public companies with annual periods and interim periods within those annual periods beginning after December 15, 2017, and will be effective for the Company for the year ending December 31, 2018. The Company adopted this standard effective January 1, 2018 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) (“ASU 2016‑02”). The provisions of ASU 2016‑02 set out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight‑line basis over the term of the lease. A lessee is also required to record a right‑of‑use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a similar manner as under existing guidance for operating leases. ASU 2016‑02 supersedes the previous lease standard, Topic 840, Leases. The guidance is effective for public companies with annual periods and interim periods within those annual periods beginning after December 15, 2018, and will be effective for the Company for the year ending December 31, 2019. The Company is currently evaluating the impact that the implementation of this standard will have on the Company’s financial statements.

In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). The provisions of ASU 2016‑15 address eight specific cash flow issues and how those certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The guidance is effective for public companies with annual periods and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017‑09, Compensation‑Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share‑based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018 and the adoption of this standard did not have a material impact on the Company’s financial statements.

In July 2017, the FASB issued ASU 2017‑11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with “down round” features. Down round features are features of certain equity‑linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is evaluating the effect that ASU 2017‑11 will have on its financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018‑13, Fair Value Measurement (Topic 820) (“ASU 2018‑13”). The provisions of ASU 2018‑13 set out modifications to the disclosure requirements regarding fair value measurements. The modifications removed certain disclosure requirements regarding transfers between levels of the fair value hierarchy and valuation processes for Level 3 fair value measurements. In addition, the modifications added requirements to disclose changes in unrealized gains and losses for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance is effective for public companies with annual periods and interim periods within those annual periods beginning after December 15, 2019, and will be effective for the Company for the year ending December 31, 2020. The Company is currently evaluating the impact that the implementation of this standard will have on the Company’s financial statements.

Common and Preferred Stock	9 Months Ended
Common and Preferred Stock	Sep. 30, 2018
Common and Preferred Stock
Common and Preferred Stock	3. Common and Preferred Stock Authorized Capital As of September 30, 2018, in conjunction with the IPO and the reverse stock split, the authorized capital of the Company was decreased to consist of 50,000,000 shares of capital stock, $0.001 par value per share, of which 40,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock. As of September 30, 2018 the Company had reserved a total of 1,004,297 shares of common stock for issuance under the Liquidia Technologies, Inc. Stock Option Plan, as amended (the “2004 Plan”), 1,355,610 shares of common stock for issuance under the Liquidia Technologies, Inc. 2016 Equity Incentive Plan, as amended (the “2016 Plan”), and 1,600,000 shares of common stock for issuance under the Liquidia Technologies, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”). During 2017, the Company issued an aggregate of $27.4 million in principal of convertible promissory notes (see Note 10). The convertible notes had an original maturity date of December 31, 2018, as amended, and bore interest at eight percent (8%) per annum. Interest was earned daily and computed on the actual number of days elapsed until all the amounts under the notes have been paid in full. The convertible notes carried multiple conversion scenarios into equity with various discounts. In February 2018, the Company received proceeds of $25.6 million in exchange for the corresponding sale of Series D and related rights offering to new and existing investors. The applicable issue price per share for the Series D was $0.59808, subject to adjustment as provided in the certificate of incorporation. In addition, all outstanding convertible notes, plus accrued interest, totaling $28.9 million were converted into Series D at the same price per share without a discount. Outstanding warrants to purchase shares of Series C-1 preferred stock, $0.001 par value per share (“Series C-1”), were converted to warrants to purchase the equivalent number of shares of Series D. All references herein to these warrants refer to them as warrants to purchase Series D. In total, 91,147,482 shares of Series D were issued. Each share of Series D was voting and was convertible at any time into a share of common stock with such conversion ratio subject to future adjustment. Conversion was automatic upon a qualified financing, as defined in the certificate of incorporation. Each series of preferred stock had anti‑dilution protection in the event of a dilutive issuance, as defined in the certificate of incorporation. The Series D bore an 8% per annum noncumulative dividend ($0.0478 per share of Series D) when and if declared. The Series D had a liquidation preference equal to the aggregate of the proceeds and the note conversions, or $54.5 million plus accrued but unpaid dividends, after which holders of Series D participate with all other stockholders in the remainder of liquidation proceeds on an as converted basis. The Series D was senior to all other series of preferred stock. On July 30, 2018, the Company closed its IPO in which it issued 4,545,455 shares of common stock for net proceeds of $46.5 million, after underwriting discounts but prior to payment of other offering expenses. On August 14, 2018, the underwriters partially exercised the over-allotment option in connection with the IPO, and, as a result, the Company issued an additional 287,644 shares for net proceeds of $2.9 million, after underwriting discounts but prior to payment of other offering expenses. In conjunction with the Company’s IPO, all outstanding shares of convertible preferred stock were converted into an aggregate of 9,948,207 shares of common stock. Common Stock Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of the common stock shall be entitled to receive that portion of the remaining funds to be distributed to the stockholders, subject to the liquidation preferences of any outstanding preferred stock, if any. Such funds shall be paid to the holders of common stock on the basis of the number of shares so held by each of them. The Class B non-voting common stock, $0.001 par value per share, was converted into shares of voting common stock in conjunction with the Company’s IPO. Warrants In connection with historical private placement offerings, the Company issued warrants to purchase its preferred stock with an exercise term of ten years from the date of issuance. Pursuant to the terms of the warrants, upon the conversion of the preferred stock underlying the warrant into common stock, the warrants automatically become exercisable for common stock based upon the conversion ratio of the underlying preferred stock. Upon closing of the Series D financing, the Company had warrants outstanding to purchase 3,698,128 shares of Series D. In conjunction with the IPO, these warrants were automatically converted into warrants to purchase 219,761 shares of common stock. During the three months ended September 30, 2018, 20,891 warrants were exercised resulting in 198,870 warrants outstanding as of September 30, 2018. The exercise price of these warrants is $0.0168 per share. As of December 31, 2017, there were outstanding warrants for 123,215 shares of Series B that were convertible into warrants for 14,663 shares of common stock at the same time as all outstanding shares of Series B were converted to common stock. These Series B warrants had an exercise price of $3.56 per share and expired on March 28, 2018.

Stock Options

9 Months Ended

Sep. 30, 2018

Stock Options

Stock Options

4. Stock Options

In November 2004, the Board of Directors adopted, and the stockholders approved, the 2004 Plan to create an additional incentive for employees, directors, consultants and advisors. The 2004 Plan authorized the issuance of stock options to be granted as incentive stock options along with nonqualified stock options, restricted stock and other stock‑based awards. The Board of Directors determines the exercise price of all options granted. The options vest based on terms provided for in the individual stock option agreements issued pursuant to the 2004 Plan. Options generally vest on a monthly basis over a period of up to 4 years and have a contractual life of ten years. The 2016 Plan is the successor to the 2004 Plan. The terms of the 2016 Plan are similar to the 2004 Plan. The 2016 Plan provides for accelerated vesting under certain change of control transactions.

On July 19, 2018, in conjunction with the Company’s IPO, the stockholders approved the 2018 Plan. A total of 1,600,000 shares of the Company’s common stock was initially authorized and reserved for issuance under the 2018 Plan. This reserve will automatically increase on January 1, 2019 and each subsequent anniversary through 2028, by an amount equal to the smaller of (a) 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board of Directors. In addition to stock options, the 2018 Plan provides for the granting of stock appreciation rights, stock awards, stock units, and other stock-based awards. The 2018 Plan provides for accelerated vesting under certain change of control transactions.

Determining the appropriate fair value model and the related assumptions requires judgment. The fair value of each option grant is estimated using a Black‑Scholes option pricing model. The following table summarizes the assumptions used for estimating the fair value of stock options granted during:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		2.91% - 3.01	%		1.81	%		2.67% - 3.01	%		1.34% - 1.92	%
Volatility		79	%		78	%		78% - 79	%		77% - 78	%
Expected life		6.25	years		6.25	years		6.25	years		6.25	years
Weighted-average fair value per share	$	8.33		$	4.53		$	8.33		$	4.53

The following table summarizes stock option activity under the 2004 Plan, the 2016 Plan, and the 2018 Plan:


			Weighted
	Shares		Average
	Available	Options	Exercise
	for Issuance	Outstanding	Price
Balance at December 31, 2017	31,192	667,592	$	4.56
Shares reserved for future issuance	2,579,446	—
Options granted	(1,196,023)	1,196,023	$	9.82
RSU's granted	(185,768)	—	$	10.19
Exercised	—	(106,155)	$	4.30
Cancelled/expired from 2004 Plan	—	(70,477)	$	7.37
Cancelled/expired from 2016 Plan	—	(44,979)	$	9.26
Balance at September 30, 2018	1,228,847	1,642,004	$	8.33

The following summarizes certain information about stock options vested and expected to vest as of September 30, 2018:


		Weighted
		Average
		Remaining	Weighted
	Number	Contractual	Average
	of	Life	Exercise
	Options	(In Years)	Price
Outstanding and expected to vest	1,461,885	9.02	$	8.28
Vested and exercisable	394,713	6.37	$	4.41

The weighted‑average grant date price per share was $9.82 and $20.36 per share for the shares issued during the nine months ended September 30, 2018 and 2017, respectively.

During the nine months ended September 30, 2018, 106,155 stock options were exercised for the purchase of common stock for total cash proceeds of $286,646. The intrinsic value for the options exercised was $1,156,152.

As of September 30, 2018, the intrinsic value of options outstanding and exercisable was $31,178,309. The weighted average remaining contractual term of options outstanding and exercisable is 9.02 years as of September 30, 2018.

During the nine months ended September 30, 2018 and 2017, stock based compensation expense for employee stock option awards totaled $1,725,501 and $432,013, respectively. As of September 30, 2018, there was $7,567,560 of total unrecognized compensation cost related to non-vested stock option grants, which is expected to be recognized over a weighted average period of 2.0 years.

In March 2018, the Board of Directors approved a grant of 127,576 non-performance based restricted stock units (“RSUs”) under the 2016 Plan. The weighted average fair value of such RSUs was $9.31 per share for the nine months ended September 30, 2018. RSUs represent the right to receive shares of common stock of the Company at the end of a specified time period. The RSUs vest over a four-year period similar to stock options. RSUs can only be settled in shares of the Company’s common stock. RSUs are valued at the date of grant and recognized in compensation expense over the vesting period.

In connection with the IPO, on July 25, 2018, the Compensation Committee of the Board of Directors approved, under the 2018 Plan, the grants of an aggregate of 310,432 stock options with an exercise price of $11.00 per share and 41,084 RSUs.

License Agreements	9 Months Ended
License Agreements	Sep. 30, 2018
License Agreements
License Agreements	5. License Agreements Liquidia performs research under a license agreement with The University of North Carolina at Chapel Hill (“UNC”) as amended (the “UNC Letter Agreement”). As part of the UNC Letter Agreement, Liquidia holds an exclusive license to certain research and development technologies and processes in various stages of patent pursuit, for use in its research and development and commercial activities, with a term until the expiration date of the last to expire patent subject to the UNC Letter Agreement, subject to industry standard contractual compliance. Under the UNC Letter Agreement, Liquidia is obligated to pay UNC royalties equal to a low single‑digit percentage of all net sales of Liquidia drug products whose manufacture, use or sale includes any use of the technology or patent rights covered by the UNC Letter Agreement. Liquidia may grant sublicenses of UNC licensed intellectual property in return for specified payments based on a percentage of any fee, royalty or other consideration received.

Revenue From Contracts With Customers

9 Months Ended

Sep. 30, 2018

Revenue From Contracts With Customers

Revenue From Contracts With Customers

6. Revenue From Contracts With Customers

The Company derives revenues primarily from licensing its proprietary PRINT technology and from performing research and development services. Revenues are recognized as services are performed in an amount that reflects the consideration we expect to be entitled to in exchange for those services and technology.

In September 2015, GSK Inhaled exercised the option to permanently license the technology for a non‑refundable payment to the Company of $15.0 million. Pursuant to the license provisions of the collaboration agreement, GSK Inhaled is potentially required to pay Liquidia for certain milestones reached in addition to tiered royalties on the worldwide sales of the licensed products at percentages ranging from the mid‑single digits to low-single digits depending on the total number of products developed and other royalty step-down events with a fixed low-single digit royalty floor. On July 20, 2018, GSK notified the Company of its plans to discontinue development of the inhaled antiviral for viral exacerbations in chronic obstructive pulmonary disease under the GSK Inhaled collaboration agreement after completion of the related Phase 1 clinical trial. The result of this change will likely be a delay in resumption of research services from when previously estimated. Therefore, there was no impact on the financial statements for the nine months ended September 30, 2018.

In June 2016, the Company entered into a development and license agreement with G&W Laboratories (“G&W”) to develop multiple products for topical delivery in dermatology using the Company’s PRINT technology (the “G&W Agreement”). The first non-refundable up-front fee of $1.0 million was received in June 2016. Research and development services commenced in July 2016 on the first program pursuant to this agreement. In April 2018, the Company and G&W mutually agreed to terminate the G&W Agreement. As a result, during the second quarter of 2018, the remaining unamortized balances in the related deferred revenue and deferred sublicense payments of $0.9 million and $0.1 million, respectively, were fully recorded as Revenues and Cost of Sales, respectively, in the accompanying Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2018.

The Company’s research, development and licensing agreements provide for multiple promised goods and services to be satisfied by the Company and include a license to the Company’s technology in a particular field of study, participation in collaboration committees, performance of certain research and development services and obligations for certain manufacturing services. The transaction price for these contracts includes non-refundable fees and fees for research and development services. Non-refundable up-front fees which may include, for example, an initial payment upon effectiveness of the contractual relationship or payment to secure a right for a future license, are recorded as deferred revenue and recognized into revenue over time as the Company provides the research services under the contract required to advance the products to the point where the Company is able to transfer control of the licensed technology to the customer (‘‘Technology Transfer’’). The contract consideration may also include additional non-refundable payments due to the Company based on the achievement of research, development, regulatory or commercialization milestone events. In agreements involving multiple goods or services promised to be transferred to customers, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation. As these goods and services are considered to be highly interrelated, they were considered to represent a single, combined performance obligation. The Company includes an estimate of the probable amount of milestone payments to which it will be entitled in the transaction price. The estimate requires evaluation of factors which are outside of the Company’s control and significantly limit the Company’s ability to achieve the remaining milestone payments. Therefore, the Company has not included any future milestone payments in the transaction price allocated to research, development and licensing agreements as of September 30, 2018. The Company revises the transaction price to include milestone payments once the specific milestone achievement is not considered to be subject to a significant reversal of revenue. At that time, the estimated transaction price is adjusted and a cumulative catch-up adjustment is recorded to adjust the amount of revenue to be recognized from the license inception to the date the milestone was deemed probable of achievement. The milestone is included with other non-refundable up-front fees and recognized into revenue over time as the Company continues to provide services under the contract prior to the Company’s Technology Transfer. The amount of revenue recognized is based on the proportion of total research services performed to date to the expected services to be provided until Technology Transfer is expected to occur.

The estimate of the research services to be provided prior to the Technology Transfer requires significant judgment to evaluate assumptions regarding the level of effort required for the Company to have performed sufficient obligations for the customer to be able to utilize the licensed technology without requiring further services from the Company. If the estimated level of effort changes, the remaining deferred revenue is recognized over the revised period in which the expected research services required to achieve Technology Transfer. Changes in estimates occur for a variety of reasons, including but not limited to (i) research and development acceleration or delays, (ii) customer prioritization of research projects, or (iii) results of research and development activities. The Company recognizes the consideration expected to be received for research and development services, which are primarily billed quarterly in arrears on a time and materials basis, as the services are performed and collection is reasonably assured.

Royalties related to product sales will be recognized as revenue when the sale occurs since payments relate directly to products that will have been fully developed and for which the Company will have satisfied all of its performance obligations.

The following tables represent a disaggregation of revenue by each significant research, development and licensing agreement and payment type for the three and nine months ended September 30, 2018 and 2017:


	Revenue for the Three Months Ended
	September 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 606	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	—	$	—	$	—
Other		—		—		169,730		169,730
Total	$	—	$	—	$	169,730	$	169,730


	Revenue for the Three Months Ended
	September 30, 2017 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 605	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	750,000	$	775,618	$	1,525,618
Gates Foundation		—		36,408		—		36,408
Other		—		49,396		209,426		258,822
Total	$	—	$	835,804	$	985,044	$	1,820,848


	Revenue for the Nine Months Ended
	September 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 606	Milestones		Payments		Services		Total
GSK Inhaled	$	45,058	$	225,293	$	168,000	$	438,351
Other		—		943,419		756,809		1,700,228
Total	$	45,058	$	1,168,712	$	924,809	$	2,138,579


	Revenue for the Nine Months Ended
	September 30, 2017 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 605	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	2,250,000	$	2,160,577	$	4,410,577
Gates Foundation		—		109,223		—		109,223
Other		—		148,203		774,017		922,220
Total	$	—	$	2,507,426	$	2,934,594	$	5,442,020

Transaction Price Allocated to the Remaining Performance Obligations

In December 2017, the Company was made aware of delays and reduced requirements and budget for support for its GSK and G&W Laboratories collaborators and revised its estimate of the remaining estimated period of the performance obligations. As a result, approximately $3.0 million of deferred revenue previously considered current was reclassified to long-term deferred revenue as it was not expected to be recognized within 12 months. As of September 30, 2018, approximately $8.0 million of revenue is expected to be recognized from remaining performance obligations for non-refundable payments. The Company expects to recognize revenue on approximately 0%, 3% and 11% of these remaining performance obligations in 2019, 2020 and 2021 respectively, with the balance recognized thereafter. Revenue from remaining performance obligations for research and development services as of September 30, 2018 was not material.

Deferred Sublicense Payments

Sublicense payments to UNC are considered direct and incremental fulfillment costs of the Company’s research, development and licensing agreements as the PRINT technology resources used by the Company are continually researched by UNC. These costs are deferred and then amortized into Cost of Sales over the same estimated period of benefit as the period of the underlying revenue recognition. As of September 30, 2018, the balances of these unamortized payments included in current and long-term prepaid expenses and other assets was $0 and $807,192, respectively. As of December 31, 2017, the balances of these unamortized payments under ASC 605 included in current and long-term prepaid expenses and other assets was $319,758 and $552,730, respectively.

Property, Plant and Equipment

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment

Property, Plant and Equipment

7. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	September 30,		December 31,
	2018		2017
Lab and build-to-suit equipment	$	6,103,074	$	3,847,546
Grant equipment		1,143,701		1,143,701
Office equipment		123,655		123,655
Furniture and fixtures		205,051		205,051
Computer equipment		709,266		677,569
Leasehold improvements		8,757,291		7,218,687
Construction-in-progress		128,061		2,830,407
Total property, plant and equipment		17,170,099		16,046,616
Accumulated depreciation		(8,939,154)		(7,803,604)
Property, plant and equipment, net	$	8,230,945	$	8,243,012

The Company recorded depreciation expense of $409,617 and $226,647 for the three months ended September 30, 2018 and 2017, respectively, and $1,135,550 and $674,243 for the nine months ended September 30, 2018 and 2017, respectively.

In December 2016, the Company executed an agreement with a commercial manufacturer to build a PRINT particle fabrication line for the production in support of Pharmaceutical Products. The ultimate cost was approximately $1.6 million. The Company financed this transaction with a third party vendor, CSC Leasing Company (“CSC”). CSC made payments to the manufacturer per the payment schedule in the agreement as the asset was fabricated. CSC charged the Company a monthly lease rate on the scheduled payments made to the manufacturer as interim financing costs until the asset was completed and placed in service. Upon completion of fabrication, the lease commenced on March 1, 2018.

In accordance with ASC 840, Leases, for build‑to‑suit arrangements where the Company is involved in the fabrication of an asset prior to the commencement of the ultimate financing or takes some level of construction risk, the Company is considered the accounting owner of the assets during the fabrication period. Accordingly, during the fabrication phase, the Company recorded a construction-in-progress asset within Property, Plant and Equipment and a corresponding deferred financing obligation liability for contributions by CSC toward fabrication. Upon completion of the fabrication in March 2018, since the Company maintained substantially all of the risk and rewards of ownership of the asset, the Company recorded the transaction as a financing, continuing to record the asset and reclassifying the deferred financing obligation to debt. As of September 30, 2018, the net book value of the build-to-suit asset was $1,479,927 and $1,206,932 was also recorded as long-term debt (see Note 10). As of December 31, 2017, $1,341,810 was recorded in construction-in-progress with an equal deferred financing obligation.

Related Party Transactions	9 Months Ended
Related Party Transactions	Sep. 30, 2018
Related Party Transactions
Related Party Transactions	8. Related‑Party Transactions Envisia For shared services provided by Liquidia to Envisia, Liquidia recorded $0 and $2,080, respectively, for sharing of patent costs as a reduction of Research and Development Expenses in the accompanying Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2018 and 2017, respectively. CEO Loan In September 2016, the Company’s Chief Executive Officer entered into a loan agreement with the Company to finance the exercise of stock options to purchase 29,713 shares of common stock for $94,271. Interest accrued at 1.00% per annum. This loan receivable was recorded in the Company’s 2016 Balance Sheet at that date as a $55,000 offset to stockholders’ equity (deficit). The note receivable was repaid in full in 2017.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	9. Commitments and Contingencies Operating Leases The Company conducts its operations from leased facilities in Morrisville, North Carolina, the leases for which expire in 2026. The leases are for general office, laboratory, research and development and light manufacturing space. The lease agreements require the Company to pay property taxes, insurance, common area expenses and maintenance costs. In November 2014 and November 2015, the Company executed the first and second extension period clauses, respectively, resulting in additional months to the lease for the related premises extending until October 2022. As part of these extensions, the Company received tenant allowances of $228,973 and $392,020, respectively, for expansion of laboratory and office space. In January 2017, the Company signed a second extension to the lease of its primary building for an additional 48 months and expiring October 31, 2026. A tenant allowance of approximately $2,000,000 was also made available for use to help fund the expansion and build out of the primary building. This allowance was fully utilized as of September 30, 2018. These allowance amounts were recorded as a long‑term deferred rent liability and amortized as a reduction in rent expense over the remaining term of the lease. The balance of all unamortized deferred rent and allowances totaled $2,726,785 and $2,881,180 as of September 30, 2018 and December 31, 2017, respectively. In October 2018, the Company signed a non-binding letter of intent to expand the lease of its primary building by 8,264 additional square footage expiring October 31, 2026 in exchange for terminating the Company’s other lease with the same landlord for 4,400 noncontiguous square feet. A tenant allowance of approximately $1.0 million was also made available for use to help fund the build out related to the expansion of the primary building lease. The incremental rent over the terminated lease for the first 12 months of this lease expansion amounts to $0.1 million, subject to lease escalation in subsequent periods. The Company also leases copier equipment under an operating lease, which expires in 2019. Capital Leases The Company leases specialized lab equipment under leases classified as capital leases. The related capitalized assets are amortized on a straight‑line basis over the estimated useful life of the asset. The interest rates related to these lease obligations range from 0.2% to 12.2%. Other In March 2012, the Company entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to the Company’s manufacturing capabilities during the term of the agreement. As future contingent consideration under the agreement, the Company agreed to pay $400,000 related to the timing of the Company’s first Phase 3 clinical trial which commenced site initiation in December 2017. The consideration of $400,000 is comprised of initial consideration of $20,000 paid in 2017, $80,000 to be paid upon first dosing of the first patient in the Phase 3 clinical trial, and $300,000 due no later than December 31, 2018. In addition, the Company also agreed to pay future contingent royalties on net sales totaling no more than $1,500,000. As of September 30, 2018 and December 31, 2017, $300,000 and $380,000 was recorded as Current Liabilities in the accompanying Balance Sheets, respectively. In December 2017, GSK Inhaled made the Company aware of its modified plans under the GSK Inhaled Collaboration and Option Agreement, and the reduced requirement and budget for Liquidia support, commensurate with its research and development plans related to PRINT effective March 31, 2018. As a result, in December 2017, the Company committed to a plan to reduce its workforce which was communicated to the workforce and completed the plan in January 2018. The total employee severance expense resulting from this plan is $404,407, which was recorded in March to Research and Development Expense in the accompanying Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2018. No further employee severance expense is planned related to this matter.

Long Term Debt

9 Months Ended

Sep. 30, 2018

Long Term Debt

Long Term Debt

10. Long‑Term Debt

Long‑term debt consisted of the following as of:


		September 30,		December 31,
	Maturity Date	2018		2017
Pacific Western Bank Tranche I note	December 8, 2019	$	2,126,422	$	2,488,572
Pacific Western Bank Tranche II note	October 10, 2020		2,538,047		2,820,382
Pacific Western Bank Tranche III note	October 10, 2020		3,384,063		3,760,509
UNC Promissory Note	December 31, 2018		1,764,243		2,257,684
Convertible notes, net of discounts	December 31, 2018		—		9,837,984
CSC build-to-suit equipment financing, net of discount	February 28, 2021		1,206,932		—
Less current portion			(293,274)		(15,608,349)
Long-term debt, less current portion		$	10,726,433	$	5,556,782

Pacific Western Bank

In January 2016 and October 2016, the Company entered into a Loan and Security Agreement (“LSA”) and an amendment, respectively, with Pacific Western Bank (“Pacific Western”). The LSA provided that the Company may borrow up to $10.0 million three tranches of a term loan (“Term Loan”) to supplement working capital and finance facility expansion and capital equipment purchases. The Term Loan was collateralized by a lien on all assets of the Company that are not otherwise encumbered, including a negative pledge on intellectual property prohibiting its sale without Pacific Western’s consent. Amounts borrowed under the Term Loan could be repaid at any time without penalty or premium. The Term Loan was interest‑only through July 6, 2017, followed by an amortization period of 30 months of equal monthly payments of principal plus interest, beginning on August 6, 2017 and continuing on the same day of each month thereafter until paid in full. Any amounts borrowed under the Term Loan bore interest at 3.75% during the initial 18‑month interest‑only period. Following the interest‑only period, the interest rate increased to 5.00%, which was to be fixed for the duration of the Term Loan. Subsequent to the Company closing its IPO, on August 6, 2018 the Company paid Pacific Western a liquidity event success fee of $400,000, which was recorded as Interest Expense in the accompanying Statement of Operations and Comprehensive Loss.

In early 2017, the Company breached a covenant in the LSA with Pacific Western Bank by failing to set mutually agreeable financial or milestone covenants on or before January 30, 2017. On March 30, 2017, pursuant to a Fourth Amendment to the LSA entered into between the Company and Pacific Western, Pacific Western waived the breach of this covenant and the covenant remains in effect.

In October 2017, the Company breached a covenant in its LSA with Pacific Western by failing to maintain minimum levels of cash. On November 30, 2017, pursuant to the Eighth Amendment to the LSA, Pacific Western waived the breach of this covenant and amended the LSA to require the Company to maintain a cash balance of at least $2.5 million monitored daily, from November 30, 2017 until the Company receives at least $12.0 million from the issuance of equity instruments by December 31, 2017. The Company was in breach of this covenant as of December 31, 2017. In February 2018, Pacific Western waived the breach of this covenant as a result of the Company receiving equity financing in excess of the requirement.

On March 29, 2018, the Company and Pacific Western executed the Ninth Amendment to the LSA (the “Ninth Amendment”). With the Ninth Amendment, new covenants were enacted requiring the Company to (1) at all times maintain a balance of cash at Pacific Western of at least $8.0 million, an increase of $5.5 million from its prior cash balance covenant, and (2) not observe any materially adverse data from its LIQ861 Phase 3 study on or before December 31, 2018. Pursuant to this Ninth Amendment, the interest-only period for the Tranche I loan was amended to include the period from January 7, 2018 to July 6, 2018, and the interest-only period for the Tranche II and Tranche III loans was amended to include the period from January 13, 2018 to July 12, 2018. Prior to executing the amendment, the Company had made principal payments of $0.6 million inside of the defined interest-only period, which were subsequently refunded on the same day. All amendments to the Pacific Western LSA were accounted for as a modification.

On October 26, 2018, the Company and Pacific Western entered into an Amended and Restated Loan and Security Agreement (the “A&R LSA”) in which the Company received an initial tranche of $11.0 million to extinguish its existing debt of $8.0 million under the LSA, repay in full the $1.8 million in outstanding indebtedness under the UNC Promissory Note (as defined below) and for general corporate purposes. The indebtedness under the A&R LSA bears interest at the greater of the Prime rate or 5% and has a four-year term and maturity. The A&R LSA provides for access to a second tranche of up to $5.0 million upon the full enrollment of the LIQ861 Phase 3 clinical trial, provided that we have not observed any materially adverse data through the two week endpoint. Both tranches require payments of interest-only through December 31, 2019, which interest-only period can be extended by six months if the Company closes on at least $40.0 million in new financing from either equity sales or licensing activities by October 31, 2019 (the “Financing Condition”). As the existing current debt was refinanced with long-term debt subsequent to the balance sheet date but prior to the issuance of this report on Form 10-Q, the Company moved the current portion of the existing long-term debt to long-term debt.

The A&R LSA carries a one-time success fee tiered by tranche totaling between $187,000 and $375,000 depending upon whether the Financing Condition is met, and a prepayment penalty of 1% to 2% for the first 24 months of the drawn tranche. The minimum cash covenant is $8.5 million, which can be reduced to $6 million in the event the Financing Condition is met and the Company has publicly disclosed its safety data analysis for LIQ861 with no materially adverse data observed. Pacific Western maintains a blanket lien on all assets excluding intellectual property, for which it has been provided a negative pledge. Pursuant to the A&R LSA, the Company is also obligated to comply with various other customary covenants, including, among other things, restrictions on its ability to dispose of assets, replace or suffer the departure of the CEO or CFO without delivering ten days’ prior written notification to Pacific Western, suffer a change on the Board of Directors which would result in the failure of at least one partner of either New Enterprise Associates or Canaan Partners or their respective affiliates to serve as a voting member in each case without having used best efforts to deliver at least 15 days’ prior written notification to Pacific Western, make acquisitions, be acquired, incur indebtedness, grant liens, make distributions to its stockholders, make investments, enter into certain transactions with affiliates or pay down subordinated debt, subject to specified exceptions.

CSC Build-To-Suit Equipment Financing

See Note 7 for further discussion of the background of the equipment financing (“CSC Financing”). The CSC Financing has a term of three years with equal monthly payments that by themselves imply an interest rate equal to approximately 5.4% per annum. The effective interest rate is 14.9%. The CSC Financing is secured by a lien on the related build-to-suit equipment and includes an option to purchase the build-to-suit equipment at maturity at an amount equal to the lesser of fair market value or 23% of the initial financed amount.

UNC Promissory Note

In September 2012, the Company issued an unsecured promissory note with principal amount of $0.6 million as a sublicense fee to UNC, with principal and interest due in full on September 1, 2016, bearing an interest rate equal to the one‑year LIBOR plus 2%, compounding annually or the UNC Promissory Note. In June 2016, the Company (as licensee) negotiated modifications to its license agreement with UNC in exchange for an increase of $1.5 million to the note payable and extension of the maturity to December 31, 2017. As the Company had previously recorded a contingent liability of $1.5 million related to this license, the increase to the note payable was recorded as a reduction to the accrued expense balance at this time. In addition, the initial note of $0.6 million plus accrued interest were extended under the same terms. The combined note payable interest rate was increased by 1%. The balance of the promissory note at September 30, 2018 and December 31, 2017 was $1,764,243 and $2,257,684, respectively. In December 2017, the Company executed an amendment to the UNC Promissory Note that extended the maturity date of the promissory note from December 31, 2017 to June 30, 2018. All other terms and conditions of the Letter Agreement continue in force through the new maturity date. In June 2018, the Company executed an amendment to the UNC Promissory Note that extended the maturity date of the promissory note from June 30, 2018 to December 31, 2018 with the potential for acceleration depending on the proceeds of the IPO. All other terms and conditions of the Letter Agreement were to continue in force through the new maturity date. All such amendments to the UNC Promissory Note were accounted for as a modification. On August 2, 2018, the Company made a payment of $600,000 to UNC. The Company repaid the entire balance outstanding plus accrued interest pursuant to the closing of the A&R LSA with Pacific Western on October 26, 2018.

Convertible Notes

In January and February 2017, the Company issued an aggregate of $11.8 million in principal of convertible promissory notes (the “January and February Notes”). The January and February Notes were accompanied by warrants to purchase of up to 25% of the aggregate principal amounts of the notes, equal to 3,698,128 shares of Series D. The January and February Notes were scheduled to mature on December 31, 2018, as amended, and bore interest at eight percent (8%) per annum. Interest was earned daily and computed on the actual number of days elapsed until all the amounts under the notes had been paid in full. All unpaid principal and all accrued, but unpaid interest of each investor’s note was due and payable on demand at the request of the investor at any time after December 31, 2018. In addition, upon the consummation of an asset sale, acquisition, or IPO, as defined, the investors may have elected to accelerate the repayment of the note or convert into common stock or Series C‑1 based on various scenarios.

In July 2017, the Company entered into a series of unsecured convertible note agreements of $10.4 million in the aggregate (the “July Notes”). The July Notes bore interest at a rate of 8% per annum with a scheduled maturity date of December 31, 2018. In conjunction with this financing, the Company also entered into a commitment with an advisor in the form of a convertible note amounting to $0.4 million with terms similar to the related transaction. The July Notes were not accompanied by warrants. Principal plus accrued interest were convertible into either preferred or common stock at the time of a qualified financing, as defined in the July Notes, at a discount to the share price, depending on the type of financing similar to the January and February Notes.

In November 2017, the Company issued a series of unsecured subordinated convertible notes with an aggregate principal amount of $5.2 million to new and existing investors (the “November Notes”). The November Notes bore interest at a rate of 8% per annum with a scheduled maturity date of December 31, 2018. Principal plus accrued interest were convertible into either preferred or common stock at the time of a qualified financing, as defined in the November Notes, at a discount to the share price, depending on the type of financing. In conjunction with this financing, the Company also incurred fees of $0.4 million. The November Notes were not accompanied by warrants. Conversion discounts on these convertible notes were largely similar to the July Notes except that there was no discount upon mandatory conversion into a private financing round.

Accounting for Convertible Notes

The Company accounts for debt as liabilities measured at amortized cost and amortizes the resulting debt discount from allocation of proceeds to interest expense using the straight‑line method over the expected term of the notes pursuant to ASC 835, Interest (ASC 835).

In connection with the issuance of the convertible notes and warrants, the Company recorded discounts equal to the full amount of each series of notes based on an allocation of proceeds to the warrants, an allocation to bifurcated derivatives which consist of a contingent put option upon a change of control or acceleration upon event of default and a contingent call option upon a change of control included in the notes, and a beneficial conversion feature, before issuance costs, based on the difference between the fair value of the underlying common stock at the commitment date of each note transaction and the effective conversion price of the notes, as limited by the proceeds allocated to the notes. Since the initial carrying value of all three series of convertible notes was $0, the combined debt issuance costs of $1,397,624 were charged to Interest Expense. See Note 2 for discussion of the Company’s policies for accounting for convertible instruments with detachable liability‑classified warrants.

In February 2018, the Company received proceeds of $25.6 million in exchange for the corresponding sale of shares of Series D at a price per share of $0.59808. In addition, all outstanding convertible notes, plus accrued interest, totaling $28.9 million, were converted into Series D at the same price per share. The unamortized balances of the discounts on convertible notes of $17.6 million were then amortized to interest expense. Therefore, the balances of these notes at September 30, 2018 was $0. No gain or loss was recorded upon the conversion of the convertible notes.

Accounting for the Warrant Liabilities

The Company’s liability‑classified warrants were recorded as liabilities at their estimated fair value at the date of issuance, with the subsequent changes in estimated fair value recorded in derivative and warrant fair value adjustments in the Company’s Statements of Operations and Comprehensive Loss. The warrants, with a fair value of $4,474,122 at inception, were initially recorded as warrant liabilities on the Balance Sheets with a corresponding discount to the notes. The change in the estimated fair value of the warrant liabilities resulted in a fair value adjustment and is included in derivative and warrant fair value adjustments in the Statements of Operations and Comprehensive Loss. In conjunction with the IPO, the warrants automatically converted to warrants to purchase common stock. Therefore, upon IPO, the warrant liabilities were marked to fair market value and transferred to additional paid-in capital. Changes in the values of the warrant liabilities for the nine months ended September 30, 2018 and 2017 are summarized below:


	Nine Months Ended September 30,
	2018		2017
Fair value, beginning of period	$	2,462,859	$	—
Issuance of warrants		—		4,474,122
Change in fair value		(277,715)		1,583,987
Transfer to additional paid-in capital		(2,185,144)		—
Fair value, end of period	$	—	$	6,058,109

Assumptions Used in Determining Fair Value of Liability Classified Warrants

To estimate the fair value of the warrants, the Company used a combination of the Current Value Method, Option Pricing Method (“OPM”) and Black‑Scholes Option Pricing Model, in a Probability‑Weighted Expected Return Method (“PWERM”) context, or the Hybrid Method (“Hybrid Method”). The Company estimated the fair value of the most senior series of preferred stock and estimated the fair value of common stock in the various conversion scenarios. The Company used a Black‑Scholes option pricing model to estimate the fair value of the warrants using the life of the warrants, assuming a sale of the Company does not occur, and the fair value of underlying equity values from the first step. The Company probability‑weighted each scenario to arrive at an estimated fair value of the warrants.

Depending upon the scenario, warrants could be exercised to purchase either common stock or the most senior series of preferred stock. To value the warrants in each scenario, the Company used either an OPM or the Black‑Scholes option pricing model. The hybrid method is a useful alternative to explicitly modeling all PWERM scenarios in situations when the Company has transparency into one or more near‑term exits but is unsure about what will occur if the current plans fall through.

Key assumptions in the hybrid method include:

OPM‑various conversion scenarios

Probability

Timing (Each financing scenario)

Enterprise value

Type of Security

Estimated security value

Methodology of valuing warrant OPM

Accounting for the Derivative Liabilities

Management determined that the various conversion features discussed above represent, in substance, a put option (redemption feature) designed to provide the investor with a fixed monetary amount, settled in shares. Management determined that this put option and the contingent interest should be separated from the notes and accounted for as a compound derivative liability primarily because the notes were issued at a substantial discount because the warrants, put option, and the contingent interest meet the net settlement criterion. The compound derivative liabilities were initially recorded as derivative liabilities on the Balance Sheets and a corresponding discount to the notes. As the estimated fair value of the derivative liabilities was $0 at December 31, 2017 and did not change in value as of September 30, 2018, no fair value adjustment was recorded for the nine months ended September 30, 2018. The change in the estimated fair value of the derivative liabilities for the nine months ended September 30, 2017 resulted in a fair value adjustment and is included in Derivative and Warrant Fair Value Adjustments in the Statements of Operations and Comprehensive Loss.

Changes in the values of the derivative liabilities for the nine months ended September 30, 2018 and 2017 are summarized below:


	Nine Months Ended September 30,
	2018		2017
Fair value, beginning of period	$	—	$	—
Issuance of derivatives		—		9,872,990
Change in fair value		—		6,613,368
Fair value, end of period	$	—	$	16,486,358

Assumptions Used in Determining Fair Value of Compound Bifurcated Derivative

The Company assessed the accounting for the convertible notes and determined that there were several embedded derivatives that required bifurcation from the host debt instrument at fair value in accordance with ASC 815, Derivatives and Hedging. These embedded derivatives are more like equity instruments, and thus not “clearly and closely related” to the economic characteristics of the convertible notes. Further, they were determined not to meet the definition of being indexed to the Company’s own stock due to the variable number of shares to be converted under different scenarios. When a host instrument has multiple embedded derivative features that require bifurcation, ASC 815 requires that they be bundled as one and accounted for separately from the convertible notes at fair value.

To determine the fair value of such derivatives, the Company compared (1) the expected payout from the different conversion scenarios upon their expected date of occurrence, discounted to present value at a risk‑free rate, to (2) the fair value of the convertible notes if it were paid in cash or converted into Series C‑1 on December 31, 2017. The difference between these two results represents the fair value of the bundled derivative.

First, the Company estimated the expected payout under the various conversion scenarios. The principal and accrued interest on the convertible notes were calculated through the expected payout date, and divided by the stated conversion price discount to determine the amount that would be paid upon occurrence of the event. The payoff from each scenario was then discounted to present value at the risk‑free rate and the Company probability‑weighted each scenario to arrive at the expected payout value for purposes of the valuation. Next, it was assumed that if conversion under the certain financing scenarios did not occur by December 31, 2017, it would be most advantageous for the investors to convert the convertible notes into Series C‑1 or request payment of principal and interest in cash. The value of the convertible notes under these scenarios was modeled using the OPM. The difference between the payout value under the various conversion scenarios and the value of the convertible notes under the OPM, assuming the convertible notes are not converted or paid until December 31, 2017, results in the fair value of the bundled derivative.

Accounting for the Beneficial Conversion Feature

The Company did not separate from the notes the conversion feature in which the holders may convert the principal and interest on the notes into shares of the Company’s Series C‑1 at $0.59808 per share if a qualified financing, as defined in the notes, had not occurred prior to December 31, 2017. The Company concluded that this conversion feature is a beneficial conversion feature that should be recognized separately and measured initially at its intrinsic value. Since the intrinsic value of this beneficial conversion feature is greater than the proceeds allocated to the notes, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the notes. The Company recorded the beneficial conversion feature of $2,956,166, $4,935,246, and $5,150,000 as additional paid in capital upon issuance of the respective convertible notes and a corresponding discount to the notes on the Balance Sheet for the January and February Notes, July Notes and November Notes, respectively.

Scheduled annual maturities of long-term debt as of September 30, 2018 are as follows:


Year ending December 31:
2018 - (three months remaining)	$	2,972,164
2019		4,868,840
2020		2,993,363
2021		410,660
Total		11,245,027
Less: Unamortized discount		(199,161)
Less: Unamortized debt issuance costs		(26,159)
Less: Current portion of long-term debt		(293,274)
	$	10,726,433

The schedule by year reflects maturities prior to the refinancing on October 26, 2018 that is discussed above.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2018
Subsequent Events
Subsequent Events	11. Subsequent Events In October 2018, the Company signed a non-binding letter of intent to expand the lease of its primary building by 8,264 additional square footage expiring October 31, 2026 in exchange for terminating another lease the Company has with the same landlord for 4,400 noncontiguous square feet (see Note 9). On October 26, 2018, the Company and Pacific Western entered into the A&R LSA in which the Company received an initial tranche of $11.0 million to extinguish its current debt under the LSA, repay in full the outstanding indebtedness under the UNC Promissory Note and for general corporate purposes (see Note 10).

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Significant Accounting Policies

Basis of Presentation

Reverse Stock Split

Variable Interest Entities

Going Concern

Use of Estimates

Concentration of Credit Risk

Revenue Recognition

The cumulative effect of the changes made to the January 1, 2018 balance of accumulated deficit on the Balance Sheet for the adoption of Topic 606 was $0.5 million as follows:


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2017		Topic 606		2018
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	443,460	$	10,551	$	454,011
Prepaid expenses and other assets		1,115,972		45,529		1,161,501

Liabilities
Current portion of deferred revenue		3,605,199		105,512		3,710,711
Long-term deferred revenue		5,527,296		455,295		5,982,591

Stockholders’ equity (deficit)
Accumulated deficit		(113,413,311)		(504,727)		(113,918,038)

In accordance with the new revenue standard requirements, the impact of adoption on the Statement of Operations and Comprehensive Loss and Balance Sheet was as follows:


	For the Three Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	169,730	$	919,730	$	(750,000)

Costs and expenses
Cost of sales		—		75,000		(75,000)

Net loss		(9,673,012)		(8,998,012)		675,000


	For the Nine Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	2,138,579	$	4,118,228	$	(1,979,649)

Costs and expenses
Cost of sales		121,391		319,356		(197,965)

Net loss		(43,450,124)		(41,668,440)		1,781,684


	September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	240,883	$	540,883	$	(300,000)
Prepaid expenses and other assets		1,160,839		631,980		528,859

Liabilities
Current portion of deferred revenue		326,700		3,326,700		(3,000,000)
Long-term deferred revenue		8,071,921		2,783,334		5,288,587

Stockholders’ equity (deficit)
Accumulated deficit		(157,368,161)		(155,308,433)		2,059,728

Segment Data

The segment data is reflected below for three and nine months ended September 30, 2018 and 2017, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenues:
Pharmaceutical Products	$	—	$	—	$	—	$	—
Partnering and Licensing		169,730		1,820,848		2,138,579		5,442,020
Total		169,730		1,820,848		2,138,579		5,442,020
Operating (loss) income:
Pharmaceutical Products		(5,481,289)		(3,832,268)		(14,427,982)		(10,058,345)
Partnering and Licensing		57,399		564,841		1,342,359		1,637,588
Corporate / Operations		(3,846,934)		(4,529,217)		(12,023,103)		(12,422,590)
Total		(9,270,824)		(7,796,644)		(25,108,726)		(20,843,347)
Interest income		128,120		—		139,965		268
Interest expense		(636,573)		(4,155,714)		(18,759,078)		(8,323,924)
Derivative and warrant fair value adjustments		106,265		(7,284,256)		277,715		(8,197,356)
Net loss	$	(9,673,012)	$	(19,236,614)	$	(43,450,124)	$	(37,364,359)

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Preferred Stock	—	4,172,437	—	4,172,437
Stock Options	1,642,004	673,684	1,642,004	673,684
Warrants	198,870	235,805	198,870	235,805
Total	1,840,874	5,081,926	1,840,874	5,081,926

Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, and accounts payable at September 30, 2018 and December 31, 2017 approximated fair value due to the short maturity of these instruments.

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

Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value as of September 30, 2018 and December 31, 2017:


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
September 30, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,136,320	$	—	$	2,126,422
Pacific Western Bank Tranche II note		—		2,536,270		—		2,538,047
Pacific Western Bank Tranche III note		—		3,381,693		—		3,384,063
CSC build-to-suit equipment financing		—		1,406,093		—		1,206,932
UNC Promissory Note		—		1,764,243		—		1,764,243
Total	$	—	$	11,224,619	$	—	$	11,019,707


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2017	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,512,301	$	—	$	2,488,572
Pacific Western Bank Tranche II note		—		2,845,194		—		2,820,382
Pacific Western Bank Tranche III note		—		3,793,644		—		3,760,509
UNC Promissory Note		—		2,257,684		—		2,257,684
Convertible notes		—		—		28,702,268		9,837,984
Warrant liabilities		—		—		2,462,859		2,462,859
Total	$	—	$	11,408,823	$	31,165,127	$	23,627,990

Warrant Liabilities

Embedded Derivatives

Deferred Offering Costs

Income Taxes

Recent Accounting Pronouncements

Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of segment data

The segment data is reflected below for three and nine months ended September 30, 2018 and 2017, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenues:
Pharmaceutical Products	$	—	$	—	$	—	$	—
Partnering and Licensing		169,730		1,820,848		2,138,579		5,442,020
Total		169,730		1,820,848		2,138,579		5,442,020
Operating (loss) income:
Pharmaceutical Products		(5,481,289)		(3,832,268)		(14,427,982)		(10,058,345)
Partnering and Licensing		57,399		564,841		1,342,359		1,637,588
Corporate / Operations		(3,846,934)		(4,529,217)		(12,023,103)		(12,422,590)
Total		(9,270,824)		(7,796,644)		(25,108,726)		(20,843,347)
Interest income		128,120		—		139,965		268
Interest expense		(636,573)		(4,155,714)		(18,759,078)		(8,323,924)
Derivative and warrant fair value adjustments		106,265		(7,284,256)		277,715		(8,197,356)
Net loss	$	(9,673,012)	$	(19,236,614)	$	(43,450,124)	$	(37,364,359)

Schedule of common stock equivalent shares excluded from calculation of diluted net loss per share


	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Preferred Stock	—	4,172,437	—	4,172,437
Stock Options	1,642,004	673,684	1,642,004	673,684
Warrants	198,870	235,805	198,870	235,805
Total	1,840,874	5,081,926	1,840,874	5,081,926

Schedule of fair value hierarchy of financial instruments measured at fair value

The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value as of September 30, 2018 and December 31, 2017:


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
September 30, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,136,320	$	—	$	2,126,422
Pacific Western Bank Tranche II note		—		2,536,270		—		2,538,047
Pacific Western Bank Tranche III note		—		3,381,693		—		3,384,063
CSC build-to-suit equipment financing		—		1,406,093		—		1,206,932
UNC Promissory Note		—		1,764,243		—		1,764,243
Total	$	—	$	11,224,619	$	—	$	11,019,707


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2017	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note	$	—	$	2,512,301	$	—	$	2,488,572
Pacific Western Bank Tranche II note		—		2,845,194		—		2,820,382
Pacific Western Bank Tranche III note		—		3,793,644		—		3,760,509
UNC Promissory Note		—		2,257,684		—		2,257,684
Convertible notes		—		—		28,702,268		9,837,984
Warrant liabilities		—		—		2,462,859		2,462,859
Total	$	—	$	11,408,823	$	31,165,127	$	23,627,990

ASU 2014-09

Schedule of accumulated deficit on the Statement of Operations and Comprehensive Loss and Balance Sheet

The cumulative effect of the changes made to the January 1, 2018 balance of accumulated deficit on the Balance Sheet for the adoption of Topic 606 was $0.5 million as follows:


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2017		Topic 606		2018
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	443,460	$	10,551	$	454,011
Prepaid expenses and other assets		1,115,972		45,529		1,161,501

Liabilities
Current portion of deferred revenue		3,605,199		105,512		3,710,711
Long-term deferred revenue		5,527,296		455,295		5,982,591

Stockholders’ equity (deficit)
Accumulated deficit		(113,413,311)		(504,727)		(113,918,038)

In accordance with the new revenue standard requirements, the impact of adoption on the Statement of Operations and Comprehensive Loss and Balance Sheet was as follows:


	For the Three Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	169,730	$	919,730	$	(750,000)

Costs and expenses
Cost of sales		—		75,000		(75,000)

Net loss		(9,673,012)		(8,998,012)		675,000


	For the Nine Months Ended September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Statement of Operations and Comprehensive Loss:
Revenues	$	2,138,579	$	4,118,228	$	(1,979,649)

Costs and expenses
Cost of sales		121,391		319,356		(197,965)

Net loss		(43,450,124)		(41,668,440)		1,781,684


	September 30, 2018
			Balances
			Without
			Adoption of		Effect of Change
	As Reported		Topic 606		Higher/(Lower)
Balance Sheet:
Assets
Prepaid expenses and other current assets	$	240,883	$	540,883	$	(300,000)
Prepaid expenses and other assets		1,160,839		631,980		528,859

Liabilities
Current portion of deferred revenue		326,700		3,326,700		(3,000,000)
Long-term deferred revenue		8,071,921		2,783,334		5,288,587

Stockholders’ equity (deficit)
Accumulated deficit		(157,368,161)		(155,308,433)		2,059,728

Stock Options (Tables)

9 Months Ended

Sep. 30, 2018

Stock Options

Schedule of assumptions used for estimating the fair value of stock options granted


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		2.91% - 3.01	%		1.81	%		2.67% - 3.01	%		1.34% - 1.92	%
Volatility		79	%		78	%		78% - 79	%		77% - 78	%
Expected life		6.25	years		6.25	years		6.25	years		6.25	years
Weighted-average fair value per share	$	8.33		$	4.53		$	8.33		$	4.53

Schedule of stock option activity


			Weighted
	Shares		Average
	Available	Options	Exercise
	for Issuance	Outstanding	Price
Balance at December 31, 2017	31,192	667,592	$	4.56
Shares reserved for future issuance	2,579,446	—
Options granted	(1,196,023)	1,196,023	$	9.82
RSU's granted	(185,768)	—	$	10.19
Exercised	—	(106,155)	$	4.30
Cancelled/expired from 2004 Plan	—	(70,477)	$	7.37
Cancelled/expired from 2016 Plan	—	(44,979)	$	9.26
Balance at September 30, 2018	1,228,847	1,642,004	$	8.33

Schedule of stock options vested and expected to vest


		Weighted
		Average
		Remaining	Weighted
	Number	Contractual	Average
	of	Life	Exercise
	Options	(In Years)	Price
Outstanding and expected to vest	1,461,885	9.02	$	8.28
Vested and exercisable	394,713	6.37	$	4.41

Revenue From Contracts With Customers (Tables)

9 Months Ended

Sep. 30, 2018

Revenue From Contracts With Customers

Schedule of disaggregation of revenue by each significant research, development and licensing agreement and payment type


	Revenue for the Three Months Ended
	September 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 606	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	—	$	—	$	—
Other		—		—		169,730		169,730
Total	$	—	$	—	$	169,730	$	169,730


	Revenue for the Three Months Ended
	September 30, 2017 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 605	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	750,000	$	775,618	$	1,525,618
Gates Foundation		—		36,408		—		36,408
Other		—		49,396		209,426		258,822
Total	$	—	$	835,804	$	985,044	$	1,820,848


	Revenue for the Nine Months Ended
	September 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 606	Milestones		Payments		Services		Total
GSK Inhaled	$	45,058	$	225,293	$	168,000	$	438,351
Other		—		943,419		756,809		1,700,228
Total	$	45,058	$	1,168,712	$	924,809	$	2,138,579


	Revenue for the Nine Months Ended
	September 30, 2017 From
	Non-Refundable Payments				Research and
			Up-front		Development
Under Topic 605	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	2,250,000	$	2,160,577	$	4,410,577
Gates Foundation		—		109,223		—		109,223
Other		—		148,203		774,017		922,220
Total	$	—	$	2,507,426	$	2,934,594	$	5,442,020

Property, Plant and Equipment (Tables)

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment

Summary of property, plant and equipment

Property, plant and equipment consisted of the following:


	September 30,		December 31,
	2018		2017
Lab and build-to-suit equipment	$	6,103,074	$	3,847,546
Grant equipment		1,143,701		1,143,701
Office equipment		123,655		123,655
Furniture and fixtures		205,051		205,051
Computer equipment		709,266		677,569
Leasehold improvements		8,757,291		7,218,687
Construction-in-progress		128,061		2,830,407
Total property, plant and equipment		17,170,099		16,046,616
Accumulated depreciation		(8,939,154)		(7,803,604)
Property, plant and equipment, net	$	8,230,945	$	8,243,012

Long Term Debt (Tables)

9 Months Ended

Sep. 30, 2018

Long Term Debt

Summary of long term debt

Long‑term debt consisted of the following as of:


		September 30,		December 31,
	Maturity Date	2018		2017
Pacific Western Bank Tranche I note	December 8, 2019	$	2,126,422	$	2,488,572
Pacific Western Bank Tranche II note	October 10, 2020		2,538,047		2,820,382
Pacific Western Bank Tranche III note	October 10, 2020		3,384,063		3,760,509
UNC Promissory Note	December 31, 2018		1,764,243		2,257,684
Convertible notes, net of discounts	December 31, 2018		—		9,837,984
CSC build-to-suit equipment financing, net of discount	February 28, 2021		1,206,932		—
Less current portion			(293,274)		(15,608,349)
Long-term debt, less current portion		$	10,726,433	$	5,556,782

Summary of changes in the values of the warrant liabilities


	Nine Months Ended September 30,
	2018		2017
Fair value, beginning of period	$	2,462,859	$	—
Issuance of warrants		—		4,474,122
Change in fair value		(277,715)		1,583,987
Transfer to additional paid-in capital		(2,185,144)		—
Fair value, end of period	$	—	$	6,058,109

Summary of changes in the values of the derivative liabilities

Changes in the values of the derivative liabilities for the nine months ended September 30, 2018 and 2017 are summarized below:


	Nine Months Ended September 30,
	2018		2017
Fair value, beginning of period	$	—	$	—
Issuance of derivatives		—		9,872,990
Change in fair value		—		6,613,368
Fair value, end of period	$	—	$	16,486,358

Scheduled annual maturities of long-term debt


Year ending December 31:
2018 - (three months remaining)	$	2,972,164
2019		4,868,840
2020		2,993,363
2021		410,660
Total		11,245,027
Less: Unamortized discount		(199,161)
Less: Unamortized debt issuance costs		(26,159)
Less: Current portion of long-term debt		(293,274)
	$	10,726,433

- 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.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

Organization and Description of the Business (Details)	9 Months Ended
Organization and Description of the Business (Details)	Sep. 30, 2018 product
Organization and Description of the Business
Number of products under development	2

Significant Accounting Policies - Other (Details) $ in Millions		2 Months Ended
	Jul. 19, 2018	Aug. 31, 2018 USD ($)
Disclosures
Net proceeds from initial public offering ("IPO")		$ 49.4
Convertible preferred stock
Disclosures
Reverse stock split conversion ratio	0.0594
Common stock
Disclosures
Reverse stock split conversion ratio	0.0594

Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Concentration risk
Revenue	$ 169,730		$ 2,138,579
Accounts receivable	81,926		$ 81,926		$ 1,622,179
Credit Concentration Risk \| Cash held on deposit \| Pacific Western Bank
Concentration risk
Concentration risk (as a percent)			100.00%
Credit Concentration Risk \| Accounts receivable \| GlaxoSmithKline (“GSK”, “GSK Vaccines” and “GSK Inhaled”)
Concentration risk
Concentration risk (as a percent)			0.00%	69.00%
Accounts receivable	$ 0	$ 1,100,000	$ 0	$ 1,100,000
Customer Concentration Risk \| Revenues \| GlaxoSmithKline (“GSK”, “GSK Vaccines” and “GSK Inhaled”)
Concentration risk
Concentration risk (as a percent)	0.00%	84.00%	20.00%	81.00%
Without Adoption of Topic 606
Concentration risk
Revenue	$ 919,730	$ 1,820,848	$ 4,118,228	$ 5,442,020

Significant Accounting Policies - Revenue Recognition (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Assets
Prepaid expenses and other current assets	$ 240,883						$ 240,883		$ 454,011	$ 443,460
Prepaid expenses and other assets	1,160,839						1,160,839		1,161,501	1,115,972
Liabilities
Current portion of deferred revenue	326,700						326,700		3,710,711	3,605,199
Long-term deferred revenue	8,071,921						8,071,921		5,982,591	5,527,296
Stockholders’ equity (deficit):
Accumulated deficit	(157,368,161)						(157,368,161)		(113,918,038)	$ (113,413,311)
Statement of Operations and Comprehensive Loss:
Revenues	169,730						2,138,579
Costs and expenses:
Cost of sales							121,391
Net loss	(9,673,012)	$ (6,268,924)	$ (27,508,187)	$ (19,236,614)	$ (8,290,999)	$ (9,836,746)	(43,450,124)	$ (37,364,359)
Without Adoption of Topic 606
Assets
Prepaid expenses and other current assets	540,883						540,883
Prepaid expenses and other assets	631,980						631,980
Liabilities
Current portion of deferred revenue	3,326,700						3,326,700
Long-term deferred revenue	2,783,334						2,783,334
Stockholders’ equity (deficit):
Accumulated deficit	(155,308,433)						(155,308,433)
Statement of Operations and Comprehensive Loss:
Revenues	919,730			$ 1,820,848			4,118,228	$ 5,442,020
Costs and expenses:
Cost of sales	75,000						319,356
Net loss	(8,998,012)						(41,668,440)
Adjustments
Assets
Prepaid expenses and other current assets	(300,000)						(300,000)		10,551
Prepaid expenses and other assets	528,859						528,859		45,529
Liabilities
Current portion of deferred revenue	(3,000,000)						(3,000,000)		105,512
Long-term deferred revenue	5,288,587						5,288,587		455,295
Stockholders’ equity (deficit):
Accumulated deficit	2,059,728						2,059,728		$ (504,727)
Statement of Operations and Comprehensive Loss:
Revenues	(750,000)						(1,979,649)
Costs and expenses:
Cost of sales	(75,000)						(197,965)
Net loss	$ 675,000						$ 1,781,684

Significant Accounting Policies - Segment Data (Details)	3 Months Ended						9 Months Ended
	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2018 USD ($) segment	Sep. 30, 2017 USD ($)
Segment reporting
Number of reportable segment \| segment							2
Revenue	$ 169,730						$ 2,138,579
Operating (loss) income	(9,270,824)			$ (7,796,644)			(25,108,726)	$ (20,843,347)
Interest income	128,120						139,965	268
Interest expense	636,573			4,155,714			18,759,078	8,323,924
Derivative and warrant fair value adjustments	106,265			(7,284,256)			277,715	(8,197,356)
Net loss	(9,673,012)	$ (6,268,924)	$ (27,508,187)	(19,236,614)	$ (8,290,999)	$ (9,836,746)	(43,450,124)	(37,364,359)
Partnering and Licensing
Segment reporting
Revenue	169,730						2,138,579
Operating Segments \| Pharmaceutical Products
Segment reporting
Operating (loss) income	(5,481,289)			(3,832,268)			(14,427,982)	(10,058,345)
Operating Segments \| Partnering and Licensing
Segment reporting
Operating (loss) income	57,399			564,841			1,342,359	1,637,588
Corporate/Operations
Segment reporting
Operating (loss) income	(3,846,934)			(4,529,217)			(12,023,103)	(12,422,590)
Without Adoption of Topic 606
Segment reporting
Revenue	919,730			1,820,848			4,118,228	5,442,020
Net loss	$ (8,998,012)						$ (41,668,440)
Without Adoption of Topic 606 \| Partnering and Licensing
Segment reporting
Revenue				$ 1,820,848				$ 5,442,020

Significant Accounting Policies - Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Antidilutive securities excluded from computation of earnings per share
Total	1,840,874	5,081,926	1,840,874	5,081,926
Reconciling items between Basic and Diluted loss per share	0	0	0	0
Preferred stock
Antidilutive securities excluded from computation of earnings per share
Total		4,172,437		4,172,437
Stock Options.
Antidilutive securities excluded from computation of earnings per share
Total	1,642,004	673,684	1,642,004	673,684
Warrants
Antidilutive securities excluded from computation of earnings per share
Total	198,870	235,805	198,870	235,805

Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Carrying Value
Significant Accounting Policies
Total financial instruments	$ 11,019,707	$ 23,627,990
Carrying Value \| Pacific Western Bank Tranche I note
Significant Accounting Policies
Total financial instruments	2,126,422	2,488,572
Carrying Value \| Pacific Western Bank Tranche II note
Significant Accounting Policies
Total financial instruments	2,538,047	2,820,382
Carrying Value \| Pacific Western Bank Tranche III note
Significant Accounting Policies
Total financial instruments	3,384,063	3,760,509
Carrying Value \| CSC build-to-suit equipment financing, net of discount
Significant Accounting Policies
Total financial instruments	1,206,932
Carrying Value \| UNC promissory note
Significant Accounting Policies
Total financial instruments	1,764,243	2,257,684
Carrying Value \| Convertible notes
Significant Accounting Policies
Total financial instruments		9,837,984
Carrying Value \| Warrant liabilities
Significant Accounting Policies
Total financial instruments		2,462,859
Level 2 \| Fair Value
Significant Accounting Policies
Total financial instruments	11,224,619	11,408,823
Level 2 \| Fair Value \| Pacific Western Bank Tranche I note
Significant Accounting Policies
Total financial instruments	2,136,320	2,512,301
Level 2 \| Fair Value \| Pacific Western Bank Tranche II note
Significant Accounting Policies
Total financial instruments	2,536,270	2,845,194
Level 2 \| Fair Value \| Pacific Western Bank Tranche III note
Significant Accounting Policies
Total financial instruments	3,381,693	3,793,644
Level 2 \| Fair Value \| CSC build-to-suit equipment financing, net of discount
Significant Accounting Policies
Total financial instruments	1,406,093
Level 2 \| Fair Value \| UNC promissory note
Significant Accounting Policies
Total financial instruments	$ 1,764,243	2,257,684
Level 3 \| Fair Value
Significant Accounting Policies
Total financial instruments		31,165,127
Level 3 \| Fair Value \| Convertible notes
Significant Accounting Policies
Total financial instruments		28,702,268
Level 3 \| Fair Value \| Warrant liabilities
Significant Accounting Policies
Total financial instruments		$ 2,462,859

Significant Accounting Policies - Deferred Offering Costs and Income Taxes (Details) - USD ($)		9 Months Ended	12 Months Ended
	Jan. 01, 2018	Sep. 30, 2018	Dec. 31, 2017
Statutory rate	21.00%		35.00%
TCJA, Maximum permissible interest deduction		30.00%
TCJA , disallowed interest expense to be carried forward ( in years)		5 years
Prepaid expenses and other assets
Deferred offering costs			$ 125,000

Common and Preferred Stock - Other (Details)	Sep. 30, 2018 $ / shares shares
Common and Preferred Stock
Stock, shares authorized (in shares)	50,000,000
Stock, par value (in dollars per share) \| $ / shares	$ 0.001
Common stock, shares authorized (in shares)	40,000,000
Preferred stock, shares authorized (in shares)	10,000,000

Common and Preferred Stock - 2004 and 2016 Plan (Details) - shares	Sep. 30, 2018	Jul. 19, 2018
2004 Plan
Common and Preferred Stock
Shares reserved for issuance	1,004,297
2016 Plan
Common and Preferred Stock
Shares reserved for issuance	1,355,610
2018 Plan
Common and Preferred Stock
Shares reserved for issuance	1,600,000	1,600,000

Common and Preferred Stock - Convertible Promissory Notes (Details) - USD ($)	1 Months Ended	9 Months Ended
	Feb. 28, 2018	Sep. 30, 2018	Jul. 30, 2018	Dec. 31, 2017
Common and Preferred Stock
Proceeds from sale of preferred stock		$ 25,106,896
Convertible Notes
Common and Preferred Stock
Debt issued				$ 27,400,000
Interest rate (as a percent)				8.00%
Preferred stock - Series D
Common and Preferred Stock
Proceeds from sale of preferred stock	$ 25,600,000
Preferred stock, par value (in dollars per share)		$ 0.001
Share price	$ 0.59808
Issuance of preferred stock (in shares)	91,147,482
Dividend (as percent)	8.00%
Dividend (in dollars per share)	$ 0.0478
Liquidation preference	$ 54,500,000
Preferred stock - Series D \| Convertible Notes
Common and Preferred Stock
Conversion of convertible debt	$ 28,900,000
Preferred stock - Series C-1
Common and Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	0.001		$ 0.001
Share price				0.59808
Common stock - Class B- Non-voting
Common and Preferred Stock
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001	$ 0.001

Common and Preferred Stock - Initial Public Offering (Details) - USD ($) $ in Millions			2 Months Ended
	Aug. 14, 2018	Jul. 30, 2018	Aug. 31, 2018
Common and Preferred Stock
Net proceeds from initial public offering ("IPO")			$ 49.4
Aggregate number of shares issued upon conversion of convertible preferred stock		9,948,207
IPO
Common and Preferred Stock
Share issuances (in shares)		4,545,455
Net proceeds from initial public offering ("IPO")		$ 46.5
Over-Allotment Option
Common and Preferred Stock
Share issuances (in shares)	287,644
Net proceeds from initial public offering ("IPO")	$ 2.9

Common and Preferred Stock - Common stock (Details) - $ / shares	Sep. 30, 2018	Jul. 30, 2018	Dec. 31, 2017
Common stock - Class B- Non-voting
Common and Preferred Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001	$ 0.001

Common and Preferred Stock - Warrants (Details) - $ / shares		3 Months Ended	9 Months Ended
	Jul. 30, 2018	Sep. 30, 2018	Sep. 30, 2018	Mar. 28, 2018	Feb. 28, 2018	Dec. 31, 2017
Warrants
Term			10 years
Preferred stock - Series D
Warrants
Warrants outstanding					3,698,128
Preferred stock - Series B
Warrants
Warrants outstanding						123,215
Exercise price				$ 3.56
Common stock - Voting
Warrants
Warrants outstanding		198,870	198,870
Number of common stock warrants issued in exchange for the original preferred stock warrants	219,761
Exercise of common stock warrants (in shares)		20,891
Exercise price		$ 0.0168	$ 0.0168
Warrants to purchase shares of common stock (in shares)						14,663

Stock Options - 2018 Plan (Details) - 2018 Plan - shares	Jul. 19, 2018	Sep. 30, 2018
Stock Options
Shares reserved for issuance	1,600,000	1,600,000
Reserve increase, percentage of number of shares of common stock issued and outstanding	4.00%

Stock Options - Other (Details) - $ / shares	3 Months Ended		9 Months Ended
Stock Options - Other (Details) - $ / shares	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock Options
Vesting period			4 years
Contractual life			P10Y
Assumptions used for estimating the fair value of stock options granted
Risk-free interest rate, minimum	2.91%		2.67%	1.34%
Risk-free interest rate		1.81%
Risk-free interest rate, maximum	3.01%		3.01%	1.92%
Volatility, minimum			78.00%	77.00%
Volatility	79.00%	78.00%
Volatility, maximum			79.00%	78.00%
Expected life	6 years 3 months	6 years 3 months	6 years 3 months	6 years 3 months
Weighted-average fair value per share	$ 8.33	$ 4.53	$ 8.33	$ 4.53

Stock Options - Summary of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Shares Available for Issuance
Beginning Balance (in shares)	31,192
Shares reserved for future issuance (in shares)	2,579,446
Options granted (in shares)	(1,196,023)
RSU's granted (in shares)	(185,768)
Ending Balance (in shares)	1,228,847
Options Outstanding
Beginning Balance (in shares)	667,592
Options granted (in shares)	1,196,023
Exercised (in shares)	(106,155)
Ending Balance (in shares)	1,642,004
Weighted Average Exercise Price
Beginning Balance (in dollars per share)	4.56
Options granted (in dollars per share) \| $ / shares	$ 9.82
RSU's granted (in dollars per share) \| $ / shares	10.19
Exercised (in dollars per share) \| $ / shares	$ 4.30
Ending Balance (in dollars per share)	8.33
2004 Plan
Options Outstanding
Cancelled/expired (in shares)	(70,477)
Weighted Average Exercise Price
Cancelled/expired (in dollars per share) \| $ / shares	$ 7.37
2016 Plan
Options Outstanding
Cancelled/expired (in shares)	(44,979)
Weighted Average Exercise Price
Cancelled/expired (in dollars per share) \| $ / shares	$ 9.26

Stock Options - Summary of Stock Options Vested and Expected to Vest (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Stock options vested and expected to vest
Number of options, outstanding and expected to vest \| shares	1,461,885
Number of options, vested and exercisable \| shares	394,713
Weighted average remaining contractual life, outstanding and expected to vest	9 years 7 days
Weighted average remaining contractual life, vested and exercisable	6 years 4 months 13 days
Weighted average exercise price, outstanding and expected to vest \| $ / shares	$ 8.28
Weighted average exercise price, vested and exercisable \| $ / shares	$ 4.41

Stock Options - Narrative (Details) - USD ($)	9 Months Ended
Stock Options - Narrative (Details) - USD ($)	Sep. 30, 2018	Sep. 30, 2017	Jul. 25, 2018	Mar. 31, 2018
Stock Options
Weighted average grant date price per share	$ 9.82	$ 20.36
Exercise of stock options to purchase shares of common stock (in shares)	106,155
Proceeds from stock options exercised	$ 286,646
Intrinsic value of options exercised	1,156,152
Intrinsic value of options outstanding	31,178,309
Intrinsic value of options exercisable	$ 31,178,309
Weighted average remaining contractual term of options outstanding	9 years 7 days
Weighted average remaining contractual term of options exercisable	9 years 7 days
Stock based compensation expense for employee stock option awards	$ 1,725,501	$ 432,013
Total unrecognized compensation cost	$ 7,567,560
Stock based compensation expense, weighted average period	2 years
Vesting period	4 years
Stock Options.
Stock Options
Shares approved by board			310,432
Exercise price (in dollars per share)			$ 11.00
Restricted Stock Units
Stock Options
Shares approved by board			41,084
Restricted Stock Units \| 2016 Plan
Stock Options
Shares approved by board				127,576
Weighted average fair value (in dollars per share)	$ 9.31
Vesting period	4 years

Revenue From Contracts With Customers - Additional information (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended	9 Months Ended
	Jun. 30, 2016	Sep. 30, 2015	Sep. 30, 2018	Sep. 30, 2018
Revenue From Contracts With Customers
Non-refundable payment to be received		$ 15.0
Non-refundable up-front fee	$ 1.0
Unamortized balance of deferred revenue that was recorded as revenues due to the termination of the development and license agreement			$ 0.9	$ 0.9
Unamortized balance of deferred sublicense payments that was recorded as cost of sales due to the termination of the development and license agreement			$ 0.1	$ 0.1

Revenue From Contracts With Customers - Disaggregation of revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue
Revenue	$ 169,730		$ 2,138,579
GSK Inhaled
Disaggregation of Revenue
Revenue			438,351
Other
Disaggregation of Revenue
Revenue	169,730		1,700,228
Non-Refundable Payments - Milestones
Disaggregation of Revenue
Revenue			45,058
Non-Refundable Payments - Milestones \| GSK Inhaled
Disaggregation of Revenue
Revenue			45,058
Non-Refundable Payments - Up-front Payments
Disaggregation of Revenue
Revenue			1,168,712
Non-Refundable Payments - Up-front Payments \| GSK Inhaled
Disaggregation of Revenue
Revenue			225,293
Non-Refundable Payments - Up-front Payments \| Other
Disaggregation of Revenue
Revenue			943,419
Research and Development Services
Disaggregation of Revenue
Revenue	169,730		924,809	$ 2,934,594
Research and Development Services \| GSK Inhaled
Disaggregation of Revenue
Revenue			168,000	2,160,577
Research and Development Services \| Other
Disaggregation of Revenue
Revenue	169,730		756,809	774,017
Without Adoption of Topic 606
Disaggregation of Revenue
Revenue	$ 919,730	$ 1,820,848	$ 4,118,228	5,442,020
Without Adoption of Topic 606 \| GSK Inhaled
Disaggregation of Revenue
Revenue		1,525,618		4,410,577
Without Adoption of Topic 606 \| Gates Foundation
Disaggregation of Revenue
Revenue		36,408		109,223
Without Adoption of Topic 606 \| Other
Disaggregation of Revenue
Revenue		258,822		922,220
Without Adoption of Topic 606 \| Non-Refundable Payments - Up-front Payments
Disaggregation of Revenue
Revenue		835,804		2,507,426
Without Adoption of Topic 606 \| Non-Refundable Payments - Up-front Payments \| GSK Inhaled
Disaggregation of Revenue
Revenue		750,000		2,250,000
Without Adoption of Topic 606 \| Non-Refundable Payments - Up-front Payments \| Gates Foundation
Disaggregation of Revenue
Revenue		36,408		109,223
Without Adoption of Topic 606 \| Non-Refundable Payments - Up-front Payments \| Other
Disaggregation of Revenue
Revenue		49,396		$ 148,203
Without Adoption of Topic 606 \| Research and Development Services
Disaggregation of Revenue
Revenue		985,044
Without Adoption of Topic 606 \| Research and Development Services \| GSK Inhaled
Disaggregation of Revenue
Revenue		775,618
Without Adoption of Topic 606 \| Research and Development Services \| Other
Disaggregation of Revenue
Revenue		$ 209,426

Revenue From Contracts With Customers - Performance Obligation (Details) - USD ($) $ in Millions	1 Months Ended
	Dec. 31, 2017	Sep. 30, 2018
Revenue From Contracts With Customers
Amount of deferred revenue previously considered current, reclassified to long-term	$ 3.0
Revenue, remaining performance obligation		$ 8.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue From Contracts With Customers
Percentage of remaining performance obligation to be recognized as revenue		0.00%
Remaining performance obligation period		12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue From Contracts With Customers
Percentage of remaining performance obligation to be recognized as revenue		3.00%
Remaining performance obligation period		12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue From Contracts With Customers
Percentage of remaining performance obligation to be recognized as revenue		11.00%
Remaining performance obligation period		12 months

Revenue From Contracts With Customers - Deferred Sublicense Payments (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Current and long-term prepaid expenses
Revenue From Contracts With Customers
Deferred sublicense payments	$ 0	$ 319,758
Other assets, net
Revenue From Contracts With Customers
Deferred sublicense payments		$ 552,730	$ 807,192

Property, Plant and Equipment - Summary (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Property, plant and equipment
Total property, plant and equipment	$ 17,170,099	$ 16,046,616
Accumulated depreciation	(8,939,154)	(7,803,604)
Property, plant and equipment, net	8,230,945	8,243,012
Lab and build-to-suit equipment
Property, plant and equipment
Total property, plant and equipment	6,103,074	3,847,546
Grant equipment
Property, plant and equipment
Total property, plant and equipment	1,143,701	1,143,701
Office equipment
Property, plant and equipment
Total property, plant and equipment	123,655	123,655
Furniture and fixtures
Property, plant and equipment
Total property, plant and equipment	205,051	205,051
Computer equipment
Property, plant and equipment
Total property, plant and equipment	709,266	677,569
Leasehold improvements
Property, plant and equipment
Total property, plant and equipment	8,757,291	7,218,687
Construction-in-progress
Property, plant and equipment
Total property, plant and equipment	$ 128,061	$ 2,830,407

Property, Plant and Equipment - Depreciation and other expenses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Property, Plant and Equipment
Depreciation expense	$ 409,617	$ 226,647	$ 1,135,550	$ 674,243

Property, Plant and Equipment - Build-to-Suit (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, plant and equipment
Build-to-suit asset, ultimate cost			$ 1,600,000
Build-to-suit asset, recorded in construction-in-progress		$ 1,341,810
Deferred financing obligation		$ 1,341,810
Build-to-suit asset cost	$ 1,479,927
CSC build-to-suit equipment financing, net of discount
Property, plant and equipment
Long-term debt	$ 1,206,932

Related Party Transactions (Details) - USD ($)	1 Months Ended	9 Months Ended
Related Party Transactions (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2018	Sep. 30, 2017
Chief Executive Officer
Related party transaction
Number of stock options exercised that were financed through the issuance of a note receivable from an officer of the Company	29,713
Value of stock options exercised that were financed through the issuance of a note receivable from an officer of the Company	$ 94,271
Note receivable from Company's Chief Executive Officer, interest rate (as a percent)	1.00%
Note receivable from the Company's Chief Executive Officer for the financing of stock options	$ 55,000
Research and Development Expenses \| Envisa
Related party transaction
Sharing of patent costs		$ 0	$ 2,080

Commitments and Contingencies - Operating Leases (Details)	Oct. 31, 2018 USD ($) ft²	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 31, 2017 USD ($)	Nov. 30, 2015 USD ($)	Nov. 30, 2014 USD ($)
Operating Leases
Unamortized deferred rent and allowances		$ 2,726,785	$ 2,881,180
Lease Extension, November 2014
Operating Leases
Tenant allowances recorded as long-term deferred rent liability						$ 228,973
Lease Extension, November 2015
Operating Leases
Tenant allowances recorded as long-term deferred rent liability					$ 392,020
Lease Extension, January 2017
Operating Leases
Tenant allowances recorded as long-term deferred rent liability				$ 2,000,000
Renewable lease term				48 months
Lease, Letter of Intent to Expand, October 2018 \| Subsequent event
Operating Leases
Additional square footage to be leased per the letter of intent to expand the lease of the Company's primary building \| ft²	8,264
Square footage under the current lease which is to be terminated in exchange for entering into a new lease for the expansion of space of the Company's primary building \| ft²	4,400
Tenant allowance available to help fund the build out per the letter of intent to expand the lease of the Company's primary building	$ 1,000,000
Incremental rent over the terminated lease for the first twelve months	$ 100,000

Commitments and Contingencies - Capital Leases (Details)	9 Months Ended
	Sep. 30, 2018
Minimum
Capital leased assets
Interest rate, capital lease (as a percent)	0.20%
Maximum
Capital leased assets
Interest rate, capital lease (as a percent)	12.20%

Commitments and Contingencies - Contingent Consideration (Details) - Agreement with Chasm Technologies, Inc. - USD ($)	1 Months Ended	12 Months Ended
	Mar. 31, 2012	Dec. 31, 2017	Sep. 30, 2018
Commitments and Contingencies
Contingent consideration	$ 400,000
Consideration paid		$ 20,000
Contingent consideration due upon first dosing of first patient in the Phase 3 clinical trial	80,000
Remaining amount of contingent consideration due			$ 300,000
Maximum net sales amount that is used as the basis in determining the payment of future contingent royalties	$ 1,500,000
Contingent consideration liability		$ 380,000	$ 300,000

Commitments and Contingencies - Severance (Details)	9 Months Ended
Commitments and Contingencies - Severance (Details)	Sep. 30, 2018 USD ($)
Research and Development Expenses
Other
Employee severance cost	$ 404,407

Long Term Debt - Summary (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Nov. 30, 2017
Long term debt
Less current portion	$ (293,274)	$ (15,608,349)
Long-term debt, less current portion	10,726,433	5,556,782
Pacific Western Bank Tranche I note
Long term debt
Long-term debt	2,126,422	2,488,572
Pacific Western Bank Tranche II note
Long term debt
Long-term debt	2,538,047	2,820,382
Pacific Western Bank Tranche III note
Long term debt
Long-term debt	3,384,063	3,760,509
UNC promissory note
Long term debt
Long-term debt	1,764,243	2,257,684
Convertible Notes
Long term debt
Long-term debt	0	$ 9,837,984	$ 0
CSC build-to-suit equipment financing, net of discount
Long term debt
Long-term debt	$ 1,206,932

Long Term Debt - Loan and Security Agreement (Details)						1 Months Ended
Long Term Debt - Loan and Security Agreement (Details)	Oct. 26, 2018 USD ($)	Aug. 06, 2018 USD ($)	Mar. 29, 2018 USD ($)	Nov. 30, 2017 USD ($)	Aug. 06, 2017	Oct. 31, 2016 USD ($) tranche	Jan. 31, 2016	Oct. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2012 USD ($)
Debt instrument
Minimum cash balance required under the agreement and monitored daily									$ 47,515,790	$ 3,418,979
UNC promissory note
Debt instrument
Face amount											$ 600,000
UNC promissory note \| Subsequent event
Debt instrument
Repayment of debt	$ 1,800,000
LSA with Pacific Western
Debt instrument
Maximum borrowing capacity						$ 10,000,000
Number of tranches \| tranche						3
Amortization period of equal monthly payments of principal plus interest					30 months
Interest rate during the interest only period (as a percent)							3.75%
Interest only period (in months)							18 months
Interest rate (as a percent)							5.00%
Liquidity event success fee paid		$ 400,000
Minimum cash balance to be maintained			$ 8,000,000
Increase in prior cash balance			5,500,000
Periodic principal payments			$ 600,000
LSA with Pacific Western \| Subsequent event
Debt instrument
Extinguishment of debt, amount	$ 8,000,000
LSA with Pacific Western \| Minimum
Debt instrument
Minimum cash balance required under the agreement and monitored daily				$ 2,500,000
Minimum proceeds from the issuance of equity instruments to be received for minimum cash balance covenant to be waived				$ 12,000,000
A&R LSA \| Subsequent event
Debt instrument
Threshold period of prior written notification to the bank for replacing or suffer the departure of the CEO or CFO	10 days
Interest rate (as a percent)	5.00%
Debt term	4 years
Interest only extension period upon the Company closing on at least $40 million in new financing	6 months
Minimum amount of new financing the Company is required to close on for the interest only period to be extended for a period of six months	$ 40,000,000
Minimum cash balance to be maintained	8,500,000
Minimum cash covenant upon new financing in addition to clinical milestones	6,000,000
A&R LSA \| Minimum \| Subsequent event
Debt instrument
Success fee tiered by tranche and also based upon new financing	$ 187,000
Prepayment penalty for first 24 months (as a percent)	1.00%
A&R LSA \| Maximum \| Subsequent event
Debt instrument
Success fee tiered by tranche and also based upon new financing	$ 375,000
Prepayment penalty for first 24 months (as a percent)	2.00%
A&R LSA \| Tranche One \| Subsequent event
Debt instrument
Maximum borrowing capacity	$ 11,000,000							$ 11,000,000
A&R LSA \| Tranche Two \| Subsequent event
Debt instrument
Additional borrowing capacity upon the full enrollment of the LIQ861 Phate 3 clinical triales	$ 5,000,000

Long Term Debt - Equipment Financing (Details) - CSC build-to-suit equipment financing, net of discount	9 Months Ended
	Sep. 30, 2018
Debt instrument
Debt term	3 years
Implied interest rate (as a percent)	5.40%
Effective interest rate (as a percent)	14.90%
Purchase option amount of the build-to-suit equipment, expressed as a percentage of the initial financed amount	23.00%

Long Term Debt - UNC Promissory Note (Details) - UNC promissory note - USD ($)		1 Months Ended
	Aug. 02, 2018	Jun. 30, 2016	Sep. 30, 2012	Sep. 30, 2018	Dec. 31, 2017
Debt instrument
Debt issued			$ 600,000
Increase in notes payable		$ 1,500,000
Contingent liability		$ 1,500,000
Increase in interest rate of combined notes payable		1.00%
Long-term debt				$ 1,764,243	$ 2,257,684
Repayments of Debt	$ 600,000
one year LIBOR
Debt instrument
Spread on variable rate			2.00%

Long Term Debt - Convertible Notes (Details) - USD ($)	1 Months Ended			2 Months Ended	9 Months Ended		11 Months Ended
Long Term Debt - Convertible Notes (Details) - USD ($)	Feb. 28, 2018	Nov. 30, 2017	Jan. 31, 2017	Feb. 28, 2017	Sep. 30, 2018	Sep. 30, 2017	Nov. 30, 2017	Dec. 31, 2017	Jul. 31, 2017
Debt instrument
Proceeds from sale of preferred stock					$ 25,106,896
Unamortized discount charged to interest expense upon conversion of notes					17,550,541	$ 6,232,841
Convertible Notes
Debt instrument
Debt issued								$ 27,400,000
Interest rate (as a percent)								8.00%
Debt issuance costs							$ 1,397,624
Carrying value of all three series of convertible notes		$ 0			0		0	$ 9,837,984
Outstanding convertible notes, plus accrued interest converted into preferred stock					28,900,000
Unamortized discount charged to interest expense upon conversion of notes					17,600,000
Gain (loss) on conversion of the convertible note					$ 0
January and February Notes
Debt instrument
Debt issued			$ 11,800,000	$ 11,800,000
Warrants to purchase maximum percentage of the aggregate principal amounts of the notes			25.00%	25.00%
Warrants to purchase shares of common stock (in shares)				3,698,128
Interest rate (as a percent)			8.00%	8.00%
July Notes
Debt instrument
Debt issued									$ 10,400,000
Interest rate (as a percent)									8.00%
Convertible Note with Advisor
Debt instrument
Debt issued									$ 400,000
November Notes
Debt instrument
Debt issued		$ 5,200,000					$ 5,200,000
Interest rate (as a percent)		8.00%					8.00%
Debt issuance costs		$ 400,000
Preferred stock - Series C-1
Debt instrument
Share price								$ 0.59808
Preferred stock - Series D
Debt instrument
Proceeds from sale of preferred stock	$ 25,600,000
Share price	$ 0.59808

Long Term Debt - Warrant Liabilities (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Warrants
Fair value, beginning of period	$ 2,462,859
Change in fair value	(277,715)	$ 1,583,987
Warrants
Warrants
Fair value, beginning of period	2,462,859
Issuance of warrants		4,474,122
Change in fair value	(277,715)	1,583,987
Transfer to additional paid-in capital	$ (2,185,144)
Fair value, end of period		$ 6,058,109

Long Term Debt - Derivative Liabilities (Details) - Derivative - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Derivative
Beginning Balance	$ 0	$ 0
Issuance of derivatives		9,872,990
Change in fair value	0	6,613,368
Ending Balance	$ 0	$ 16,486,358

Long Term Debt - Conversion Feature (Details) - USD ($)	1 Months Ended		2 Months Ended	9 Months Ended
Long Term Debt - Conversion Feature (Details) - USD ($)	Nov. 30, 2017	Jul. 31, 2017	Feb. 28, 2017	Sep. 30, 2017	Dec. 31, 2017
Debt instrument
Beneficial conversion feature				$ 7,891,412
Preferred stock - Series C-1
Debt instrument
Share price					$ 0.59808
January and February Notes
Debt instrument
Beneficial conversion feature			$ 2,956,166
July Notes
Debt instrument
Beneficial conversion feature		$ 4,935,246
November Notes
Debt instrument
Beneficial conversion feature	$ 5,150,000

Long Term Debt - Maturities of long-term debt (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Annual maturities of long-term debt
2018 - (six months remaining)	$ 2,972,164
2019	4,868,840
2020	2,993,363
2021	410,660
Total	11,245,027
Less: Unamortized discount	(199,161)
Less: Unamortized debt issuance costs	(26,159)
Less: Current portion of long-term debt	(293,274)	$ (15,608,349)
Long-term debt	$ 10,726,433	$ 5,556,782

Subsequent Events (Details) - Subsequent event $ in Millions	Oct. 31, 2018 USD ($) ft²	Oct. 26, 2018 USD ($)
A&R LSA \| Tranche One
Subsequent events
Maximum borrowing capacity \| $	$ 11.0	$ 11.0
Lease, Letter of Intent to Expand, October 2018
Subsequent events
Additional square footage to be leased per the letter of intent to expand the lease of the Company's primary building	8,264
Square footage under the current lease which is to be terminated in exchange for entering into a new lease for the expansion of space of the Company's primary building	4,400