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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2019	Aug. 07, 2019
Document and Entity Information
Entity Registrant Name	Liquidia Technologies Inc
Entity Central Index Key	0001330436
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		18,643,442
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false

Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash	$ 52,120,735	$ 39,534,985
Accounts receivable	604,026	272,557
Prepaid expenses and other current assets	323,405	219,057
Total current assets	53,048,166	40,026,599
Property, plant and equipment, net	8,040,739	8,130,708
Operating lease right-of-use assets, net	3,244,195
Prepaid expenses and other assets	378,042	1,260,951
Total assets	64,711,142	49,418,258
Current liabilities:
Accounts payable	4,099,841	3,235,949
Accrued expenses	2,115,913	1,459,182
Accrued compensation	1,720,202	2,515,519
Deferred rent		268,599
Current portion of operating lease liabilities	521,378
Current portion of finance lease liabilities	1,000,578
Current portion of finance lease liabilities		452,703
Current portion of long-term debt	2,835,583	316,906
Total current liabilities	12,293,495	8,248,858
Long-term operating lease liabilities	5,964,280
Long-term finance lease liabilities	1,355,586
Long-term finance lease liabilities		376,082
Long-term deferred rent		2,406,084
Long-term deferred revenue		8,071,920
Long-term debt	13,004,581	11,627,643
Total liabilities	32,617,942	30,730,587
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock — $0.001 par value, 40,000,000 shares authorized as of June 30, 2019 and December 31, 2018, 18,643,442 and 15,519,469 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	18,643	15,520
Additional paid-in capital	219,398,506	185,726,048
Accumulated deficit	(187,323,949)	(167,053,897)
Total stockholders’ equity	32,093,200	18,687,671
Total liabilities and stockholders’ equity	$ 64,711,142	$ 49,418,258

Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Balance Sheets
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	18,643,442	15,519,469
Common stock, shares outstanding (in shares)	18,643,442	15,519,469

Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statements of Operations and Comprehensive Loss
Revenues	$ 8,072,120	$ 1,042,879	$ 8,072,120	$ 1,968,849
Costs and expenses:
Cost of sales	807,192	94,342	807,192	121,391
Research and development	10,723,591	5,917,702	21,387,894	13,544,404
General and administrative	2,408,651	1,991,231	5,430,233	4,140,956
Total costs and expenses	13,939,434	8,003,275	27,625,319	17,806,751
Loss from operations	(5,867,314)	(6,960,396)	(19,553,199)	(15,837,902)
Other income (expense):
Interest income	219,869	11,846	357,654	11,846
Interest expense	(253,720)	(245,711)	(472,410)	(18,122,505)
Derivative and warrant fair value adjustments		925,337		171,450
Total other income (expense), net	(33,851)	691,472	(114,756)	(17,939,209)
Net loss	(5,901,165)	(6,268,924)	(19,667,955)	(33,777,111)
Comprehensive loss	$ (5,901,165)	$ (6,268,924)	$ (19,667,955)	$ (33,777,111)
Net loss per common share:
Basic (in dollars per share)	$ (0.31)	$ (9.86)	$ (1.13)	$ (53.79)
Diluted (in dollars per share)	$ (0.32)	$ (9.86)	$ (1.14)	$ (53.79)
Weighted average common shares outstanding:
Basic (in shares)	18,749,239	636,063	17,408,667	627,938
Diluted (in shares)	18,642,965	636,063	17,283,064	627,938

Statement of Stockholders' Equity (Deficit) - USD ($)	Preferred stock - Series A	Preferred stock - Series A-1	Preferred stock - Series B	Preferred stock - Series C	Preferred stock - Series C-1	Preferred stock - Series D	Common stock - Voting Common stock	Common stock - Voting	Common stock - Class B- Non-voting	Additional Paid-in Capital	Accumulated Deficit	Total
Increase (Decrease) in Stockholders' Equity
Cumulative adjustment - adoption of ASC \| ASC 606											$ (504,727)	$ (504,727)
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
Net loss												(33,777,111)
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
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
Cumulative adjustment - adoption of ASC \| ASC 842											(602,098)	(602,098)
Balance at beginning of period at Dec. 31, 2018							$ 15,520			185,726,048	(167,053,897)	18,687,671
Balance at beginning of period (in shares) at Dec. 31, 2018							15,519,469
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 53			63,099		$ 63,152
Exercise of stock options (in shares)							52,914					15,695
Exercise of common stock warrants							$ 64			649		$ 713
Exercise of common stock warrants (in shares)							64,629
Stock-based compensation										887,022		887,022
Public offering of common stock							$ 3,000			32,427,000		32,430,000
Public offering of common stock (in shares)							3,000,000
Public offering financing costs										(382,424)		(382,424)
Net loss											(13,766,789)	(13,766,789)
Balance at end of period at Mar. 31, 2019							$ 18,637			218,721,394	(181,422,784)	37,317,247
Balance at end of period (in shares) at Mar. 31, 2019							18,637,012
Balance at beginning of period at Dec. 31, 2018							$ 15,520			185,726,048	(167,053,897)	$ 18,687,671
Balance at beginning of period (in shares) at Dec. 31, 2018							15,519,469
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)												22,125
Net loss												$ (19,667,955)
Balance at end of period at Jun. 30, 2019							$ 18,643			219,398,506	(187,323,949)	32,093,200
Balance at end of period (in shares) at Jun. 30, 2019							18,643,442
Balance at beginning of period at Mar. 31, 2019							$ 18,637			218,721,394	(181,422,784)	37,317,247
Balance at beginning of period (in shares) at Mar. 31, 2019							18,637,012
Increase (Decrease) in Stockholders' Equity
Exercise of stock options							$ 6			30,110		$ 30,116
Exercise of stock options (in shares)							6,430					6,430
Stock-based compensation										821,770		$ 821,770
Public offering financing costs										(174,768)		(174,768)
Net loss											(5,901,165)	(5,901,165)
Balance at end of period at Jun. 30, 2019							$ 18,643			$ 219,398,506	$ (187,323,949)	$ 32,093,200
Balance at end of period (in shares) at Jun. 30, 2019							18,643,442

Statements of Cash Flows - USD ($)	6 Months Ended
Statements of Cash Flows - USD ($)	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net loss	$ (19,667,955)	$ (33,777,111)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,708,792	861,149
Depreciation and amortization	1,227,265	725,934
Amortization of discount on long-term debt and convertible notes		17,550,541
Non-cash interest expense	28,595	269,938
Warrant fair value adjustment		(171,450)
Non-cash rent (income) expense		(102,930)
Changes in operating assets and liabilities:
Accounts receivable	261,117	1,548,288
Prepaid expenses and other current assets	(104,348)	(75,805)
Other non-current assets	1,437,416	93,913
Accounts payable	1,014,353	(1,281,510)
Accrued expenses	692,129	(1,326,639)
Accrued compensation	(795,317)	(345,589)
Deferred revenue	(8,071,920)	(1,190,444)
Net cash used in operating activities	(22,269,873)	(17,221,715)
Investing activities
Purchases of property, plant and equipment	(1,080,236)	(629,979)
Net cash used in investing activities	(1,080,236)	(629,979)
Financing activities
Principal payments on finance leases		(328,109)
Principal payments on finance leases	(476,423)
Proceeds from issuance of long-term debt	5,000,000
Refund of principal payments on long-term debt		588,889
Principal payments on long-term debt		(1,000,196)
Payments for debt issuance costs		(392,000)
Proceeds from issuance of Series D preferred stock, net of issuance costs		25,107,009
Proceeds from public offering of common stock, net of underwriting fees and commissions	31,872,808
Payments for offering costs	(554,507)	(525,859)
Proceeds from exercise of stock options and warrants	93,981	215,050
Net cash provided by financing activities	35,935,859	23,664,784
Net increase (decrease) in cash	12,585,750	5,813,090
Cash, beginning of period	39,534,985	3,418,979
Cash, end of period	52,120,735	9,232,069
Supplemental disclosure of cash flow information
Cash paid for interest	443,816	302,027
Purchase of equipment with leases		413,237
Changes in purchases of equipment in accounts payable	150,461	99,197
Purchase of build-to-suit asset with deferred financing obligation		272,656
Reclassification of deferred financing obligation to long-term debt		1,614,466
Reclassification of financing costs on deferred financing obligation to discount on long-term debt		277,009
Accrued tenant improvements and receivable from landlord	$ 592,586
Conversion of accrued interest to long-term debt		106,558
Conversion of convertible notes and accrued interest into Series D preferred stock		28,877,498
Deferred offering costs incurred but not paid		849,740
Exercise of stock options through exchange of vested stock options		$ 128,529

Organization and Description of the Business	6 Months Ended
Organization and Description of the Business	Jun. 30, 2019
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

6 Months Ended

Jun. 30, 2019

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

Basis of Presentation

The unaudited interim financial statements as of June 30, 2019 and for the three and six months ended June 30, 2019 and 2018 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 six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. 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, 2018, which are included in the Company’s Form 10-K (File No. 001-38601).

With the exception of accounting for leases, there have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2019, as compared to the significant accounting policies disclosed in Note 2 of the financial statements for the years ended December 31, 2018 and 2017.

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 June 30, 2019 and December 31, 2018, the Company determined that Envisia Therapeutics Inc. (“Envisia”) was a 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 the six months ended June 30, 2019 or during the year ended December 31, 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 $47.3 million, after underwriting discounts and other offering expenses. The Company also closed a follow-on public offering in March 2019 resulting in total net proceeds of $31.9 million, after underwriting discounts and 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.

Cash

The Company considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. The Company had no cash equivalents as of June 30, 2019 and December 31, 2018.

Accounts Receivable

Accounts receivable are stated at historical cost less an allowance for doubtful accounts as of each Balance Sheet date. The Company does not accrue interest on trade receivables. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance based on its history of collections and write offs and the current status of all receivables. The Company writes off customer receivables when it becomes apparent, based upon customer facts and circumstances, that such amounts will not be collected.

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 100% and 0% of the Company’s revenues for the three months ended June 30, 2019 and 2018, respectively, and 100% and 22% of the Company’s revenues for the six months ended June 30, 2019 and 2018, respectively, and $0 and $0 of the Company’s accounts receivable as of June 30, 2019 and December 31, 2018, respectively.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases, as amended (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. The Company has elected to account for leases with a term of 12 months or less 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. The Company adopted Topic 842, as amended, as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption that approximates the results of a full retrospective approach in the year of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of net lease assets and lease liabilities of approximately $6.4 million and $9.1 million respectively, as of January 1, 2019. The standard had no impact on cash flows. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows classified as an operating activity in the Statement of Cash Flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the Statement of Operations and the repayment of the principal portion of the lease liability will be classified as a financing activity, while the interest component will be classified as an operating activity in the Statement of Cash Flows.

The net impact of applying Topic 842 was recorded as an adjustment to accumulated deficit of $0.6 million as follows:


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		Topic 842		2019
Balance Sheet:
Assets
Property, plant and equipment, net	$	8,130,708	$	(107,734)	$	8,022,974
Operating lease right-of-use assets, net		—		3,985,071		3,985,071

Liabilities
Deferred rent		2,674,683		(2,674,683)		—
Operating lease liabilities		—		6,659,725		6,659,725
Finance lease liabilities		828,785		1,636,185		2,464,970
Long-term debt		11,944,549		(1,141,792)		10,802,757

Stockholders’ equity (deficit)
Accumulated deficit		(167,053,897)		(602,098)		(167,655,995)

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASC 606” or “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.

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.

Segment Data

In accordance with ASC 280-10-50, Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company operates in one reportable segment.

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.

Research and Development Expense

Research and development costs are expensed as incurred and include direct costs incurred to third parties related to the salaries of, and stock-based compensation for, personnel involved in research and development activities, contractor fees, grant expenses, administrative expenses and allocations of research-related overhead costs. Administrative expenses and research-related overhead costs included in research and development expense consist of allocations of facility and equipment lease charges, depreciation and amortization of assets and insurance directly related to research and development activities.

Patent Maintenance

The Company is responsible for all patent costs, past and future, associated with the preparation, filing, prosecution, issuance, maintenance, enforcement and defense of United States patent applications. Such costs are recorded as general and administrative expenses as incurred. To the extent that the Company’s licensees share these costs, such benefit is recorded as a reduction of the related expenses.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values. ASC 718 requires companies to estimate the fair value of share-based awards on the grant date using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recorded as expense over the requisite service periods in the Company’s Statements of Operations and Comprehensive Loss.

The Company accounts for equity instruments issued to nonemployees in accordance with the provisions of ASC 505 50, Equity-Based Payments to Non-Employees, under which the stock-based compensation expense is recognized in the financial statements based on their grant date fair values. The Company values equity instruments, stock options and warrants for common stock granted to lenders and consultants using the Black-Scholes option-pricing model. The measurement of non-employee stock-based compensation is recognized as an expense over the term of the related financing or the period over which services are received.

On May 8, 2019, the Company’s stockholders approved the Liquidia Technologies, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”). A total of 300,000 shares of the Company’s common stock have been reserved for issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute through payroll deductions up to $25,000 per year of their earnings for the purchase of the Company’s common stock at a discounted price per share. The offering periods are six months each and begin in March and September of each year, with the initial offering period commencing on September 1, 2019. Unless otherwise determined by the administrator, the Company’s common stock will be purchased for the accounts of employees participating in the ESPP at a price per share that is 85% of the fair market value of the Company’s common stock on the last trading day of the offering period.

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. Due to their anti-dilutive effect, the calculation of diluted net loss per share for the three and six months ended June 30, 2019 and 2018 does not include the following common stock equivalent shares:


	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Preferred Stock	—	9,948,207	—	9,948,207
Stock Options	1,994,137	1,377,278	1,994,137	1,377,278
Warrants	106,274	219,761	106,274	219,761
Total	2,100,411	11,545,246	2,100,411	11,545,246

For the three and six months ended June 30, 2019 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 periods presented, there were no other 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 June 30, 2019 and December 31, 2018 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 June 30, 2019 and December 31, 2018:

Significant

Quoted Prices

Other

in Active

Observable

Significant

Markets

Inputs

Unobservable

Carrying

June 30, 2019

(Level 1)

(Level 2)

Inputs (Level 3)

Value

Pacific Western Bank note - A&R LSA

—

15,757,500

—

15,840,164


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note - A&R LSA	$	—	$	10,412,650	$	—	$	10,802,355
CSC build-to-suit equipment financing		—		1,311,135		—		1,142,194
Total	$	—	$	11,723,785	$	—	$	11,944,549

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 end of the reporting period, taking into account the remaining term of liabilities.

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 are recorded in stockholders’ equity (deficit) as a reduction of proceeds generated as a result of the offering. As of June 30, 2019 and December 31, 2018, the Company recorded deferred offering costs relating to its financing activities of $0 and $110,365, respectively, 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 six months ended June 30, 2019 and 2018, 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 system to a territorial tax system. For taxpayers with revenues over a certain threshold, 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 indefinitely.

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 ended 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 June 2016, the FASB issued new accounting guidance that significantly changes how companies will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual reporting periods beginning after December 15, 2018 and must be adopted using a cumulative effect adjustment to accumulated deficit. The adoption of this new accounting guidance is not expected to have a material effect 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 adopted this standard effective January 1, 2019 and the adoption of this standard did not have a material impact on the Company’s financial statements.

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.

In October 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 ("ASU 2018-17"). The provisions of ASU 2018-18 clarify when certain transactions between collaborative arrangement participants should be accounted for under ASC 606 and incorporates unit-of-account guidance consistent with ASC 606 to aid in this determination. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2019, with early adoption permitted, and is 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	6 Months Ended
Common and Preferred Stock	Jun. 30, 2019
Common and Preferred Stock
Common and Preferred Stock	3. Common and Preferred Stock Authorized Capital As of June 30, 2019, the authorized capital of the Company consists 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 June 30, 2019, the Company had reserved a total of 409,268 shares of common stock for issuance under the Liquidia Technologies, Inc. Stock Option Plan, as amended (the “2004 Plan”), 786,097 shares of common stock for issuance under the Liquidia Technologies, Inc. 2016 Equity Incentive Plan, as amended (the “2016 Plan”), and 2,220,779 shares of common stock for issuance under the Liquidia Technologies, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”). On January 1, 2019, the number of shares of common stock available for issuance under the 2018 Plan automatically increased from 1,600,000 to 2,220,778 pursuant to the evergreen provision contained in the 2018 Plan. During 2017, the Company issued an aggregate of $27.4 million in principal of convertible promissory notes (see Note 9). 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 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. The Series D was senior to all other series of preferred stock. In the third quarter of 2018, the Company closed the IPO of 4,833,099 shares of common stock, including the underwriters’ partial exercise of their over-allotment option in connection therewith, which resulted in aggregate net proceeds of $47.3 million, after underwriting discounts and the 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. On March 25, 2019, the Company closed an underwritten follow-on offering of 3,000,000 shares of its common stock at a public offering price of $11.50 per share. The gross proceeds from the offering were $34.5 million and net proceeds were $31.9 million, after deducting underwriting discounts and commissions and other offering expenses. 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 in the third quarter of 2018. Warrants 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 in the third quarter of 2018, these warrants were automatically converted into warrants to purchase 219,761 shares of common stock. During the three months ended March 31, 2019, 64,629 shares of common stock underlying warrants were exercised. As of June 30, 2019 an aggregate of 106,274 shares of common stock underlying warrants were exercisable, each with an exercise price of $0.0168 per share.

Stock Options

6 Months Ended

Jun. 30, 2019

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. On January 1, 2019, the number of shares of common stock available for issuance under the 2018 Plan automatically increased from 1,600,000 to 2,220,778 pursuant to the evergreen provision contained in the 2018 Plan. This reserve will automatically increase each subsequent anniversary of January 1 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						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		1.85% - 2.41	%		2.67% - 2.86	%		1.85% - 2.54	%		2.67% - 2.86	%
Volatility		83% - 84	%		78% - 79	%		83% - 84	%		78% - 79	%
Expected life		6.07	years		6.25	years		6.08	years		6.25	years
Weighted-average fair value per share	$	7.04		$	7.56		$	9.07		$	7.56

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
Outstanding at December 31, 2018	1,193,329	1,658,112	$	8.76
Shares reserved for future issuance for 2018 Plan	620,779	—
Options granted	(580,658)	580,658	$	12.89
Exercised	—	(22,125)	$	4.22
Cancelled/expired from 2004 Plan	—	—	$	—
Cancelled/expired from 2016 Plan	—	(129,234)	$	9.30
Cancelled/expired from 2018 Plan	140,228	(93,274)	$	14.01
Outstanding at June 30, 2019	1,373,678	1,994,137	$	9.73

The following summarizes certain information about stock options vested and expected to vest as of June 30, 2019:


		Weighted
		Average
		Remaining	Weighted
	Number	Contractual	Average
	of	Life	Exercise
	Options	(In Years)	Price
Outstanding and expected to vest	1,739,510	8.04	$	9.45
Vested and exercisable	675,734	6.30	$	6.51

The weighted-average grant date price per share was $12.89 and $9.41 per share for the shares issued during the six months ended June 30, 2019 and 2018, respectively.

During the three months ended March 31, 2019, 15,695 stock options were exercised for the purchase of common stock for total cash proceeds of $63,152. The intrinsic value for the options exercised was $223,989.

During the three months ended June 30, 2019, 6,430 stock options were exercised for the purchase of common stock for total cash proceeds of $30,117. The intrinsic value for the options exercised was $23,923.

As of June 30, 2019, the intrinsic value of options outstanding and exercisable was $1,613,522. The weighted average remaining contractual term of options outstanding and exercisable is 8.20 years as of June 30, 2019.

During the six months ended June 30, 2019 and 2018, stock-based compensation expense for employee stock option awards totaled $1,708,792 and $861,149, respectively. As of June 30, 2019, there was $9,646,071 of total unrecognized compensation cost related to non-vested stock option grants, which is expected to be recognized over a weighted average period of 3.04 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 six months ended June 30, 2019. RSUs represent the right to receive shares of common stock of the Company at the end of a specified time period. The RSUs were to 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.

Stock Option Modifications

In March 2019 certain stock options and RSUs were modified pursuant to a consulting agreement with the Company’s former President and CFO in addition to a retention agreement with the Interim CFO. A total of 127,576 stock options had their vesting period extended to include the one-month term of the post-separation consulting agreement through March 31, 2019. Additionally, 2,658 additional RSUs held by the Company’s former President and CFO vested in March 2019. Furthermore, a total of 30,545 shares of common stock underlying options were modified for possible acceleration of vesting during the following six months as compared to the remaining vesting period of approximately 12 months. The combined result of these modifications was additional stock option expense of $30,566 for the six months ended June 30, 2019.

License Agreements	6 Months Ended
License Agreements	Jun. 30, 2019
License Agreements
License Agreements	5. License Agreements The Company 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, the Company 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, the Company is obligated to pay UNC royalties equal to a low single-digit percentage of all net sales of drug products whose manufacture, use or sale includes any use of the technology or patent rights covered by the UNC Letter Agreement. The Company 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

6 Months Ended

Jun. 30, 2019

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 the Company expects to be entitled to in exchange for those services and technology.

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 June 30, 2019. 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 through 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 through the Technology Transfer.

The estimate of the research services to be provided through 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 and Technology Transfer are required. 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 it is entitled to receive for research and development services, which are primarily billed quarterly in arrears on a time and materials basis, as the services are performed (under a proportional performance model) and collection is reasonably assured. Additionally, any up-front or development milestone payments received are also recognized as revenues, over time, under this same proportional performance model.

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.

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 the Company 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. In February 2016, GSK Inhaled paid the Company a $3.0 million milestone payment pursuant to the collaboration agreement. The combined $18 million in up-front and milestone payments was subject to deferral pursuant to the adoption of ASC 606 and the revenue policy described herein.

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. In June 2019, the Company and GSK executed the third amendment to the collaboration agreement providing the Company rights to develop and commercialize additional inhaled programs at the Company’s sole cost and development. This amendment granted the Company the right to develop three additional molecular entities for application in inhaled programs using the Company’s PRINT technology and a mechanism to acquire further molecular entities for inhaled applications. New inhaled programs developed under this amendment would carry milestone and royalty payments due to GSK upon initiation of Phase 3 studies and subsequent commercialization, respectively. This amendment, among other factors including the lack of continued performance anticipated by the Company and GSK under the original agreement, led the Company to the belief that no further research and development services will be provided to GSK under the collaboration agreement and the earnings process related to the up-front and development milestone payments previously received under the collaboration agreement is completed under the proportional performance model. Therefore, the remaining deferred revenue of $8.1 million was recognized as revenues during the six months ended June 30, 2019. If GSK were to request additional services under the original agreement, which the Company believes is a remote likelihood, the Company does not expect the value of any incremental efforts that the Company might agree to perform to be material. Any potential milestone or royalty payments from the Company to GSK associated with this amendment will be recorded as operating expenses.

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 year ended December 31, 2018.

The following tables represent a disaggregation of revenue by each significant research, development and licensing agreement and payment type for the three and six months ended June 30, 2019 and 2018:


	Revenue for the Three Months Ended
	June 30, 2019 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	1,345,320	$	6,726,600	$	—	$	8,071,920
Other		—		—		200		200
Total	$	1,345,320	$	6,726,600	$	200	$	8,072,120


	Revenue for the Three Months Ended
	June 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	—	$	—	$	—
Other		—		943,419		99,460		1,042,879
Total	$	—	$	943,419	$	99,460	$	1,042,879


	Revenue for the Six Months Ended
	June 30, 2019 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	1,345,320	$	6,726,600	$	—	$	8,071,920
Other		—		—		200		200
Total	$	1,345,320	$	6,726,600	$	200	$	8,072,120


	Revenue for the Six Months Ended
	June 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	45,058	$	225,293	$	168,000	$	438,351
Other		—		943,419		587,079		1,530,498
Total	$	45,058	$	1,168,712	$	755,079	$	1,968,849

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. In conjunction with the June 2019 amendment to the GSK collaboration agreement, the balance of deferred sublicense payments were expensed to Cost of Sales in the same period. As of June 30, 2019, the balances of these unamortized payments included in current and long-term prepaid expenses and other assets was $0 and $0, respectively. As of December 31, 2018, the balances of these unamortized payments included in current and long-term prepaid expenses and other assets was $0 and $807,192, respectively.

Property, Plant and Equipment

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment

Property, Plant and Equipment

7. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	June 30,		December 31,
	2019		2018
Lab and build-to-suit equipment	$	5,674,477	$	6,123,194
Grant equipment		1,123,833		1,143,701
Office equipment		128,669		130,460
Furniture and fixtures		237,951		205,051
Computer equipment		796,867		799,515
Leasehold improvements		8,516,396		8,878,361
Construction-in-progress		940,788		155,148
Total property, plant and equipment		17,418,981		17,435,430
Accumulated depreciation		(9,378,242)		(9,304,722)
Property, plant and equipment, net	$	8,040,739	$	8,130,708

The Company recorded depreciation and amortization expense of $618,230 and $401,080 for the three months ended June 30, 2019 and 2018, respectively, and $1,227,265 and $725,934 for the six months ended June 30, 2019 and 2018, 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 LIQ861. 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 (“CSC Financing”).

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. In accordance with Topic 842, the CSC Financing was recharacterized as a finance lease in the first quarter of 2019 and accounted for accordingly (see Note 8).

Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Leases

The Company leases certain lab space, office space, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines lease and non-lease components, if any. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Consistent with past practice, the Company has recognized all such purchase options as part of its right-of-use assets and lease liabilities. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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 June 30, 2019. In November 2018, the Company amended the lease of its primary building to expand 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. In June 2019, the Company signed a commitment to incur construction costs of up to $3.1 million related to the leasehold improvements for this lease expansion, against which the tenant allowance will be applied.

The Company also leases copier equipment under an operating lease, which expires in 2023.

The Company leases specialized lab equipment under finance leases. The related right-of-use assets are amortized on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset. The interest rates related to these lease obligations range from 0.2% to 12.2%. The CSC Financing (see Note 7) 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. The right-of-use assets related to finance leases net of amortization is $2,192,153 as of June 30, 2019 and is included in lab equipment, build-to-suit equipment, computer equipment and leasehold improvements within property, plant and equipment in the accompanying Balance Sheet (see Note 7).

The Company’s lease cost is reflected in the accompanying Statements of Operations and Comprehensive Loss as follows:


		Three Months Ended
	Classification	June 30, 2019
Operating lease cost	General and administrative	$	238,922
Finance lease cost
Amortization of lease assets	General and administrative		313,800
Interest on lease liabilities	Interest expense		48,267
Lease cost		$	600,989

The weighted average remaining lease term and discount rates as of January 1, 2019 were as follows:


Weighted average remaining lease term (years)
Operating leases	3.9
Finance leases	1.3
Weighted average discount rate
Operating leases	10.3	%
Finance leases	3.03	%

The discount rate for operating leases was estimated based upon market rates of collateralized loan obligations of comparable companies on comparable terms. The discount rate for finance leases are estimated based upon the underlying lease terms. The future minimum lease payments as of June 30, 2019 were as follows:


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2019 (remaining six months)	$	572,212	$	587,093	$	1,159,305
2020		1,172,759		1,221,405		2,394,164
2021		1,207,708		669,739		1,877,447
2022		1,243,934		82,743		1,326,677
2023		1,283,253		—		1,283,253
Thereafter		3,830,425		—		3,830,425
Total minimum lease payments		9,310,291		2,560,980		11,871,271
Less: Interest		(2,824,633)		(204,815)		(3,029,448)
Present value of lease liabilities	$	6,485,658	$	2,356,165	$	8,841,823

As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2018 are as follows:


	Operating		Finance
	Leases		Leases
2019	$	1,077,532	$	464,797
2020		1,168,710		354,739
2021		1,203,658		33,774
2022		1,239,885		—
2023		1,276,356		—
Thereafter		3,818,795		—
Total minimum lease payments	$	9,784,936		853,310
Less: Interest				(24,525)
Present value of lease liabilities			$	828,785

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 paid upon first dosing of the first patient in the Phase 3 clinical trial which occurred in 2018, and $300,000 due no later than December 31, 2018, which was paid in 2018. In addition, the Company also agreed to pay future contingent royalties on net sales totaling no more than $1,500,000. As of June 30, 2019 and December 31, 2018, $0 and $0 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 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 was $404,407, which was recorded in March 2018 to Research and Development Expense in the accompanying Statements of Operations and Comprehensive Loss for the six months ended June 30, 2018. No further employee severance expense is planned related to this matter.

Long-Term Debt

6 Months Ended

Jun. 30, 2019

Long-Term Debt

Long-Term Debt

9. Long-Term Debt

Long-term debt consisted of the following as of:


		June 30,		December 31,
	Maturity Date	2019		2018
Pacific Western Bank note	October 25, 2022	$	15,840,164	$	10,802,355
CSC build-to-suit equipment financing, net of discount	February 28, 2021		—		1,142,194
Less current portion			(2,835,583)		(316,906)
Long-term debt, less current portion		$	13,004,581	$	11,627,643

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 available to be drawn at the Company’s option through June 30, 2019. The second tranche became accessible as a result of the full enrollment of the Company’s LIQ861 INSPIRE clinical trial, without observing any materially adverse data through the two week endpoint. The entire second tranche of $5.0 million was drawn by the Company in May 2019 bringing the total amount drawn to $16.0 million. 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”).

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. 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. On May 21, 2019, the Company and Pacific Western entered a First Amendment to A&R LSA to amend, among other things, the capital expenditure limitations to the Company.

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%. 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 continued 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. The balance of the promissory note at June 30, 2019 and December 31, 2018 was $0 and $0, respectively.

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 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 June 30, 2019 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 six months ended June 30, 2019 and 2018 are summarized below:


	Six Months Ended June 30,
	2019		2018
Fair value, beginning of period	$	—	$	2,462,859
Issuance of warrants		—		—
Change in fair value		—		(171,450)
Transfer to additional paid-in capital		—		—
Fair value, end of period	$	—	$	2,291,409

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

Scheduled annual maturities of long-term debt as of June 30, 2019 are as follows:


Year ending December 31:
2019 - (six months remaining)	$	—
2020		5,818,182
2021		5,818,182
2022		4,363,636
Total		16,000,000
Less: Unamortized discount		(124,874)
Less: Unamortized debt issuance costs		(34,962)
Less: Current portion of long-term debt		(2,835,583)
	$	13,004,581

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Significant Accounting Policies

Basis of Presentation

Variable Interest Entities

Concentration of Credit Risk

Leases

The net impact of applying Topic 842 was recorded as an adjustment to accumulated deficit of $0.6 million as follows:


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		Topic 842		2019
Balance Sheet:
Assets
Property, plant and equipment, net	$	8,130,708	$	(107,734)	$	8,022,974
Operating lease right-of-use assets, net		—		3,985,071		3,985,071

Liabilities
Deferred rent		2,674,683		(2,674,683)		—
Operating lease liabilities		—		6,659,725		6,659,725
Finance lease liabilities		828,785		1,636,185		2,464,970
Long-term debt		11,944,549		(1,141,792)		10,802,757

Stockholders’ equity (deficit)
Accumulated deficit		(167,053,897)		(602,098)		(167,655,995)

Revenue Recognition

Segment Data

Research and Development Expense

Patent maintenance

Patent Maintenance

Stock-Based Compensation

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 June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Preferred Stock	—	9,948,207	—	9,948,207
Stock Options	1,994,137	1,377,278	1,994,137	1,377,278
Warrants	106,274	219,761	106,274	219,761
Total	2,100,411	11,545,246	2,100,411	11,545,246

Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, and accounts payable at June 30, 2019 and December 31, 2018 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 June 30, 2019 and December 31, 2018:

Significant

Quoted Prices

Other

in Active

Observable

Significant

Markets

Inputs

Unobservable

Carrying

June 30, 2019

(Level 1)

(Level 2)

Inputs (Level 3)

Value

Pacific Western Bank note - A&R LSA

—

15,757,500

—

15,840,164


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note - A&R LSA	$	—	$	10,412,650	$	—	$	10,802,355
CSC build-to-suit equipment financing		—		1,311,135		—		1,142,194
Total	$	—	$	11,723,785	$	—	$	11,944,549

Deferred Offering Costs

Income Taxes

Recent Accounting Pronouncements

Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Preferred Stock	—	9,948,207	—	9,948,207
Stock Options	1,994,137	1,377,278	1,994,137	1,377,278
Warrants	106,274	219,761	106,274	219,761
Total	2,100,411	11,545,246	2,100,411	11,545,246

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 June 30, 2019 and December 31, 2018:

Significant

Quoted Prices

Other

in Active

Observable

Significant

Markets

Inputs

Unobservable

Carrying

June 30, 2019

(Level 1)

(Level 2)

Inputs (Level 3)

Value

Pacific Western Bank note - A&R LSA

—

15,757,500

—

15,840,164


			Significant
	Quoted Prices		Other
	in Active		Observable		Significant
	Markets		Inputs		Unobservable		Carrying
December 31, 2018	(Level 1)		(Level 2)		Inputs (Level 3)		Value
Pacific Western Bank Tranche I note - A&R LSA	$	—	$	10,412,650	$	—	$	10,802,355
CSC build-to-suit equipment financing		—		1,311,135		—		1,142,194
Total	$	—	$	11,723,785	$	—	$	11,944,549

ASC 842

Schedule of financial statement impact for the adoption of Topic 842


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		Topic 842		2019
Balance Sheet:
Assets
Property, plant and equipment, net	$	8,130,708	$	(107,734)	$	8,022,974
Operating lease right-of-use assets, net		—		3,985,071		3,985,071

Liabilities
Deferred rent		2,674,683		(2,674,683)		—
Operating lease liabilities		—		6,659,725		6,659,725
Finance lease liabilities		828,785		1,636,185		2,464,970
Long-term debt		11,944,549		(1,141,792)		10,802,757

Stockholders’ equity (deficit)
Accumulated deficit		(167,053,897)		(602,098)		(167,655,995)

Stock Options (Tables)

6 Months Ended

Jun. 30, 2019

Stock Options

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		1.85% - 2.41	%		2.67% - 2.86	%		1.85% - 2.54	%		2.67% - 2.86	%
Volatility		83% - 84	%		78% - 79	%		83% - 84	%		78% - 79	%
Expected life		6.07	years		6.25	years		6.08	years		6.25	years
Weighted-average fair value per share	$	7.04		$	7.56		$	9.07		$	7.56

Schedule of stock option activity


			Weighted
	Shares		Average
	Available	Options	Exercise
	for Issuance	Outstanding	Price
Outstanding at December 31, 2018	1,193,329	1,658,112	$	8.76
Shares reserved for future issuance for 2018 Plan	620,779	—
Options granted	(580,658)	580,658	$	12.89
Exercised	—	(22,125)	$	4.22
Cancelled/expired from 2004 Plan	—	—	$	—
Cancelled/expired from 2016 Plan	—	(129,234)	$	9.30
Cancelled/expired from 2018 Plan	140,228	(93,274)	$	14.01
Outstanding at June 30, 2019	1,373,678	1,994,137	$	9.73

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	1,739,510	8.04	$	9.45
Vested and exercisable	675,734	6.30	$	6.51

Revenue From Contracts With Customers (Tables)

6 Months Ended

Jun. 30, 2019

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
	June 30, 2019 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	1,345,320	$	6,726,600	$	—	$	8,071,920
Other		—		—		200		200
Total	$	1,345,320	$	6,726,600	$	200	$	8,072,120


	Revenue for the Three Months Ended
	June 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	—	$	—	$	—	$	—
Other		—		943,419		99,460		1,042,879
Total	$	—	$	943,419	$	99,460	$	1,042,879


	Revenue for the Six Months Ended
	June 30, 2019 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	1,345,320	$	6,726,600	$	—	$	8,071,920
Other		—		—		200		200
Total	$	1,345,320	$	6,726,600	$	200	$	8,072,120


	Revenue for the Six Months Ended
	June 30, 2018 From
	Non-Refundable Payments				Research and
			Up-front		Development
	Milestones		Payments		Services		Total
GSK Inhaled	$	45,058	$	225,293	$	168,000	$	438,351
Other		—		943,419		587,079		1,530,498
Total	$	45,058	$	1,168,712	$	755,079	$	1,968,849

Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment

Summary of property, plant and equipment

Property, plant and equipment consisted of the following:


	June 30,		December 31,
	2019		2018
Lab and build-to-suit equipment	$	5,674,477	$	6,123,194
Grant equipment		1,123,833		1,143,701
Office equipment		128,669		130,460
Furniture and fixtures		237,951		205,051
Computer equipment		796,867		799,515
Leasehold improvements		8,516,396		8,878,361
Construction-in-progress		940,788		155,148
Total property, plant and equipment		17,418,981		17,435,430
Accumulated depreciation		(9,378,242)		(9,304,722)
Property, plant and equipment, net	$	8,040,739	$	8,130,708

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies

Schedule of lease cost and weighted average remaining lease term and discount rates

The Company’s lease cost is reflected in the accompanying Statements of Operations and Comprehensive Loss as follows:


		Three Months Ended
	Classification	June 30, 2019
Operating lease cost	General and administrative	$	238,922
Finance lease cost
Amortization of lease assets	General and administrative		313,800
Interest on lease liabilities	Interest expense		48,267
Lease cost		$	600,989

The weighted average remaining lease term and discount rates as of January 1, 2019 were as follows:


Weighted average remaining lease term (years)
Operating leases	3.9
Finance leases	1.3
Weighted average discount rate
Operating leases	10.3	%
Finance leases	3.03	%

Schedule of future minimum lease payments

The future minimum lease payments as of June 30, 2019 were as follows:


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2019 (remaining six months)	$	572,212	$	587,093	$	1,159,305
2020		1,172,759		1,221,405		2,394,164
2021		1,207,708		669,739		1,877,447
2022		1,243,934		82,743		1,326,677
2023		1,283,253		—		1,283,253
Thereafter		3,830,425		—		3,830,425
Total minimum lease payments		9,310,291		2,560,980		11,871,271
Less: Interest		(2,824,633)		(204,815)		(3,029,448)
Present value of lease liabilities	$	6,485,658	$	2,356,165	$	8,841,823

Schedule of future minimum lease payments under legacy lease accounting (ASC 840)


	Operating		Finance
	Leases		Leases
2019	$	1,077,532	$	464,797
2020		1,168,710		354,739
2021		1,203,658		33,774
2022		1,239,885		—
2023		1,276,356		—
Thereafter		3,818,795		—
Total minimum lease payments	$	9,784,936		853,310
Less: Interest				(24,525)
Present value of lease liabilities			$	828,785

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2019

Long-Term Debt

Summary of long term debt

Long-term debt consisted of the following as of:


		June 30,		December 31,
	Maturity Date	2019		2018
Pacific Western Bank note	October 25, 2022	$	15,840,164	$	10,802,355
CSC build-to-suit equipment financing, net of discount	February 28, 2021		—		1,142,194
Less current portion			(2,835,583)		(316,906)
Long-term debt, less current portion		$	13,004,581	$	11,627,643

Summary of changes in the values of the warrant liabilities


	Six Months Ended June 30,
	2019		2018
Fair value, beginning of period	$	—	$	2,462,859
Issuance of warrants		—		—
Change in fair value		—		(171,450)
Transfer to additional paid-in capital		—		—
Fair value, end of period	$	—	$	2,291,409

Scheduled annual maturities of long-term debt


Year ending December 31:
2019 - (six months remaining)	$	—
2020		5,818,182
2021		5,818,182
2022		4,363,636
Total		16,000,000
Less: Unamortized discount		(124,874)
Less: Unamortized debt issuance costs		(34,962)
Less: Current portion of long-term debt		(2,835,583)
	$	13,004,581

- 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
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-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
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-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
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-Name Accounting Standards Codification
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 835
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-Section 55
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-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)	6 Months Ended
Organization and Description of the Business (Details)	Jun. 30, 2019 product
Organization and Description of the Business
Number of products under development	2

Significant Accounting Policies - Going Concern (Details) - USD ($) $ in Millions	1 Months Ended	2 Months Ended
	Mar. 31, 2019	Aug. 31, 2018
Significant Accounting Policies
Net proceeds from initial public offering ("IPO")		$ 47.3
Net proceeds from follow-on public offering	$ 31.9

Significant Accounting Policies - Cash (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Significant Accounting Policies
Cash equivalents	$ 0	$ 0

Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Concentration risk
Accounts receivable	$ 604,026		$ 604,026		$ 272,557
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” and “GSK Inhaled”)
Concentration risk
Accounts receivable	$ 0		$ 0		$ 0
Customer Concentration Risk \| Revenues \| GlaxoSmithKline (“GSK” and “GSK Inhaled”)
Concentration risk
Concentration risk (as a percent)	100.00%	0.00%	100.00%	22.00%

Significant Accounting Policies - Recent Accounting Pronouncements (Details) - ASC 842 - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2019	Jan. 01, 2019
New accounting pronouncements
Practical expedient - package	true
Adjustments
New accounting pronouncements
Net lease assets		$ 6.4
Lease liabilities		$ 9.1

Significant Accounting Policies - Impact of applying Topic 842 (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Assets
Property, plant and equipment, net	$ 8,040,739	$ 8,022,974	$ 8,130,708
Operating lease right-of-use assets, net	3,244,195	3,985,071
Liabilities
Operating lease liabilities	6,485,658	6,659,725
Finance lease liabilities	2,356,165	2,464,970
Long-term Debt		10,802,757
Stockholders’ equity:
Accumulated deficit	$ (187,323,949)	(167,655,995)	(167,053,897)
ASC 842 \| Without Adoption
Assets
Property, plant and equipment, net			8,130,708
Liabilities
Deferred rent			2,674,683
Finance lease liabilities			828,785
Long-term Debt			11,944,549
Stockholders’ equity:
Accumulated deficit			$ (167,053,897)
ASC 842 \| Adjustments
Assets
Property, plant and equipment, net		(107,734)
Operating lease right-of-use assets, net		3,985,071
Liabilities
Deferred rent		(2,674,683)
Operating lease liabilities		6,659,725
Finance lease liabilities		1,636,185
Long-term Debt		(1,141,792)
Stockholders’ equity:
Accumulated deficit		$ (602,098)

Significant Accounting Policies - Segment Data (Details)	6 Months Ended
	Jun. 30, 2019 segment
Significant Accounting Policies
Number of reportable segments	1

Significant Accounting Policies - ESPP (Details) - ESPP	May 08, 2019 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance \| shares	300,000
Maximum contribution through payroll \| $	$ 25,000
Purchase price of common stock expressed as a percentage of fair value	85.00%

Significant Accounting Policies - Net Loss Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Antidilutive securities excluded from computation of earnings per share
Total	2,100,411	11,545,246	2,100,411	11,545,246
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		9,948,207		9,948,207
Stock Options.
Antidilutive securities excluded from computation of earnings per share
Total	1,994,137	1,377,278	1,994,137	1,377,278
Warrants
Antidilutive securities excluded from computation of earnings per share
Total	106,274	219,761	106,274	219,761

Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Carrying Value
Significant Accounting Policies
Total financial instruments		$ 11,944,549
Carrying Value \| A&R LSA
Significant Accounting Policies
Total financial instruments	$ 15,840,164	10,802,355
Carrying Value \| CSC build-to-suit equipment financing, net of discount
Significant Accounting Policies
Total financial instruments		1,142,194
Level 2 \| Fair Value
Significant Accounting Policies
Total financial instruments		11,723,785
Level 2 \| Fair Value \| A&R LSA
Significant Accounting Policies
Total financial instruments	$ 15,757,500	10,412,650
Level 2 \| Fair Value \| CSC build-to-suit equipment financing, net of discount
Significant Accounting Policies
Total financial instruments		$ 1,311,135

Significant Accounting Policies - Deferred Offering Costs (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
TCJA, Maximum permissible interest deduction	30.00%
Prepaid expenses and other assets
Deferred offering costs	$ 0	$ 110,365

Significant Accounting Policies - Income Taxes (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2017
Significant Accounting Policies
Corporate income tax rate (as a percent)	21.00%	35.00%
TCJA, Maximum permissible interest deduction	30.00%

Common and Preferred Stock - Authorized Capital (Details)	Jun. 30, 2019 $ / 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 designated (in shares)	40,000,000
Preferred stock, shares designated (in shares)	10,000,000

Common and Preferred Stock - 2004, 2016 and 2018 Plans (Details) - shares	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018	Jul. 19, 2018
2004 Plan
Common and Preferred Stock
Shares reserved for issuance	409,268
2016 Plan
Common and Preferred Stock
Shares reserved for issuance	786,097
2018 Plan
Common and Preferred Stock
Shares reserved for issuance		2,220,778	1,600,000	1,600,000

Common and Preferred Stock - Convertible Notes and Series D Financing (Details) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Feb. 28, 2018	Mar. 31, 2018	Jun. 30, 2018	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Common and Preferred Stock
Proceeds from sale of preferred stock			$ 25,107,009
Common stock, par value (in dollars per share)				$ 0.001	$ 0.001
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
Share price (in dollars per share)	$ 0.59808
Issuance of preferred stock (in shares)	91,147,482	91,147,482
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

Common and Preferred Stock - Public Offering (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	2 Months Ended	3 Months Ended
	Mar. 25, 2019	Mar. 31, 2019	Aug. 31, 2018	Sep. 30, 2018
Common and Preferred Stock
Net proceeds from initial public offering ("IPO")			$ 47.3
Aggregate number of shares issued upon conversion of convertible preferred stock				9,948,207
Net proceeds from issuance of common shares		$ 31.9
IPO
Common and Preferred Stock
Public offering of common stock (in shares)				4,833,099
Net proceeds from initial public offering ("IPO")				$ 47.3
Follow-on offering
Common and Preferred Stock
Public offering of common stock (in shares)	3,000,000
Gross proceeds from issuance of common shares	$ 34.5
Net proceeds from issuance of common shares	$ 31.9
Share price (in dollars per share)	$ 11.50

Common and Preferred Stock - Common stock (Details) - $ / shares	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Common and Preferred Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock - Class B- Non-voting
Common and Preferred Stock
Common stock, par value (in dollars per share)			$ 0.001

Common and Preferred Stock - Warrants (Details) - $ / shares		3 Months Ended
	Jun. 30, 2018	Mar. 31, 2019	Jun. 30, 2019	Feb. 28, 2018
Common stock warrants
Warrants
Warrants outstanding			106,274
Number of common stock warrants issued in exchange for the original preferred stock warrants	219,761
Exercise of common stock warrants (in shares)		64,629
Exercise price			$ 0.0168
Preferred stock Series D warrants
Warrants
Warrants outstanding				3,698,128

Stock Options - Other (Details) - shares		6 Months Ended
Stock Options - Other (Details) - shares	Jul. 19, 2018	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Stock Options.
Stock Options
Vesting period		4 years
Contractual life		P10Y
2018 Plan
Stock Options
Shares reserved for issuance	1,600,000		2,220,778	1,600,000
Reserve increase, percentage of number of shares of common stock issued and outstanding	4.00%

Stock Options - FV Assumptions (Details) - $ / shares	3 Months Ended		6 Months Ended
Stock Options - FV Assumptions (Details) - $ / shares	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Assumptions used for estimating the fair value of stock options granted
Risk-free interest rate, minimum	1.85%	2.67%	1.85%	2.67%
Risk-free interest rate, maximum	2.41%	2.86%	2.54%	2.86%
Volatility, minimum	83.00%	78.00%	83.00%	78.00%
Volatility, maximum	84.00%	79.00%	84.00%	79.00%
Expected life	6 years 26 days	6 years 3 months	6 years 29 days	6 years 3 months
Weighted-average fair value per share	$ 7.04	$ 7.56	$ 9.07	$ 7.56

Stock Options - Summary of Stock Option Activity (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2019
Shares Available for Issuance
Beginning Balance (in shares)		1,193,329	1,193,329
Options granted (in shares)			(580,658)
Ending Balance (in shares)	1,373,678		1,373,678
Options Outstanding
Beginning Balance (in shares)		1,658,112	1,658,112
Options granted (in shares)			580,658
Exercised (in shares)	(6,430)	(15,695)	(22,125)
Ending Balance (in shares)	1,994,137		1,994,137
Weighted Average Exercise Price
Beginning Balance (in dollars per share)		8.76	8.76
Options granted (in dollars per share)			$ 12.89
Exercised (in dollars per share)			$ 4.22
Ending Balance (in dollars per share)	9.73		9.73
2016 Plan
Options Outstanding
Cancelled/expired (in shares)			(129,234)
Weighted Average Exercise Price
Cancelled/expired (in dollars per share)			$ 9.30
2018 Plan
Shares Available for Issuance
Shares reserved for future issuance (in shares)			620,779
Cancelled/expired (in shares)			140,228
Options Outstanding
Cancelled/expired (in shares)			(93,274)
Weighted Average Exercise Price
Cancelled/expired (in dollars per share)			$ 14.01

Stock Options - Summary of Stock Options Vested and Expected to Vest (Details)	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Stock options vested and expected to vest
Number of options, outstanding and expected to vest \| shares	1,739,510
Number of options, vested and exercisable \| shares	675,734
Weighted average remaining contractual life, outstanding and expected to vest	8 years 15 days
Weighted average remaining contractual life, vested and exercisable	6 years 3 months 18 days
Weighted average exercise price, outstanding and expected to vest \| $ / shares	$ 9.45
Weighted average exercise price, vested and exercisable \| $ / shares	$ 6.51

Stock Options - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
Stock Options - Narrative (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018
Stock Options
Weighted average grant date price per share				$ 12.89	$ 9.41
Exercise of stock options to purchase shares of common stock (in shares)		6,430	15,695	22,125
Proceeds from stock options exercised		$ 30,117	$ 63,152
Intrinsic value of options exercised		23,923	$ 223,989
Intrinsic value of options outstanding		1,613,522		$ 1,613,522
Intrinsic value of options exercisable		4,597,593		$ 4,597,593
Weighted average remaining contractual term of options outstanding				8 years 2 months 5 days
Weighted average remaining contractual term of options exercisable				8 years 2 months 12 days
Stock based compensation expense for employee stock option awards				$ 1,708,792	$ 861,149
Total unrecognized compensation cost		$ 9,646,071		$ 9,646,071
Stock based compensation expense, weighted average period				3 years 15 days
Stock Options.
Stock Options
Remaining vesting period				4 years
Stock Options. \| Separation Agreement
Stock Options
Number of options outstanding in which vesting period was extended	127,576		127,576
Vesting period extension			1 month
Stock Options. \| Separation Agreement \| Former President and CFO
Stock Options
Acceleration of vesting				30,545
Acceleration vesting period				6 months
Remaining vesting period				12 months
Additional stock option expense				$ 30,566
Restricted Stock Units \| 2016 Plan
Stock Options
Shares approved by board						127,576
Weighted average fair value (in dollars per share)		$ 9.31		$ 9.31
Remaining vesting period				4 years
Restricted Stock Units \| Separation Agreement \| Former President and CFO
Stock Options
Vested during period (in shares)	2,658

Revenue From Contracts With Customers - Additional information (Details) - USD ($) $ in Millions	1 Months Ended				6 Months Ended	12 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Feb. 29, 2016	Sep. 30, 2015	Jun. 30, 2019	Dec. 31, 2018
GSK Inhaled
Revenue From Contracts With Customers
Non-refundable payment to be received				$ 15.0
Milestone payment received			$ 3.0
Combined up-front and milestone payments		$ 18.0
Revenue recognized					$ 8.1
G & W
Revenue From Contracts With Customers
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
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

Revenue From Contracts With Customers - Disaggregation of revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue
Revenue	$ 8,072,120	$ 1,042,879	$ 8,072,120	$ 1,968,849
GSK Inhaled
Disaggregation of Revenue
Revenue	8,071,920		8,071,920	438,351
Deferred Revenue
Revenue recognized which was included in deferred revenue at beginning or period			8,100,000
Other
Disaggregation of Revenue
Revenue	200	1,042,879	200	1,530,498
Non-Refundable Payments - Milestones
Disaggregation of Revenue
Revenue	1,345,320		1,345,320	45,058
Non-Refundable Payments - Milestones \| GSK Inhaled
Disaggregation of Revenue
Revenue	1,345,320		1,345,320	45,058
Non-Refundable Payments - Up-front Payments
Disaggregation of Revenue
Revenue	6,726,600	943,419	6,726,600	1,168,712
Non-Refundable Payments - Up-front Payments \| GSK Inhaled
Disaggregation of Revenue
Revenue	6,726,600		6,726,600	225,293
Non-Refundable Payments - Up-front Payments \| Other
Disaggregation of Revenue
Revenue		943,419		943,419
Research and Development Services
Disaggregation of Revenue
Revenue	200	99,460	200	755,079
Research and Development Services \| GSK Inhaled
Disaggregation of Revenue
Revenue				168,000
Research and Development Services \| Other
Disaggregation of Revenue
Revenue	$ 200	$ 99,460	$ 200	$ 587,079

Revenue From Contracts With Customers - Deferred Sublicense Payments (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current and long-term prepaid expenses
Revenue From Contracts With Customers
Deferred sublicense payments	$ 0	$ 0
Other assets, net
Revenue From Contracts With Customers
Deferred sublicense payments	$ 0	$ 807,192

Property, Plant and Equipment - Summary (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Property, plant and equipment
Total property, plant and equipment	$ 17,418,981		$ 17,435,430
Accumulated depreciation	(9,378,242)		(9,304,722)
Property, plant and equipment, net	8,040,739	$ 8,022,974	8,130,708
Lab and build-to-suit equipment
Property, plant and equipment
Total property, plant and equipment	5,674,477		6,123,194
Grant equipment
Property, plant and equipment
Total property, plant and equipment	1,123,833		1,143,701
Office equipment
Property, plant and equipment
Total property, plant and equipment	128,669		130,460
Furniture and fixtures
Property, plant and equipment
Total property, plant and equipment	237,951		205,051
Computer equipment
Property, plant and equipment
Total property, plant and equipment	796,867		799,515
Leasehold improvements
Property, plant and equipment
Total property, plant and equipment	8,516,396		8,878,361
Construction-in-progress
Property, plant and equipment
Total property, plant and equipment	$ 940,788		$ 155,148

Property, Plant and Equipment - Depreciation and other expenses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property, Plant and Equipment
Depreciation expense	$ 618,230	$ 401,080	$ 1,227,265	$ 725,934

Property, Plant and Equipment - Build-to-Suit (Details) $ in Millions	Dec. 31, 2016 USD ($)
Property, Plant and Equipment
Build-to-suit asset, ultimate cost	$ 1.6

Commitments and Contingencies - Operating Leases (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)	Nov. 30, 2018 USD ($) ft²	Jan. 31, 2017 USD ($)	Nov. 30, 2015 USD ($)	Nov. 30, 2014 USD ($)
Operating Leases
Options to renew - Operating	true
Maximum commitment to incur construction cost	$ 3,100,000
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 Extension, November 2018
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 - Finance Leases (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Finance Leases
Options to renew - Finance	true
Right-of-use assets related to finance leases, net of amortization	$ 2,192,153
Right-of-use assets related to finance leases	Property, Plant and Equipment, Net
Minimum
Finance Leases
Interest rate (as a percent)	0.20%
Maximum
Finance Leases
Interest rate (as a percent)	12.20%
CSC Financing
Finance Leases
Interest rate (as a percent)	5.40%
Term	3 years
Effective interest rate (as a percent)	14.90%
Lesser of fair market value amount (as a percent)	23.00%

Commitments and Contingencies - Lease Cost and Other (Details) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jan. 01, 2019
Lease Cost
Operating Lease, Cost	$ 238,922
Finance lease cost
Amortization of lease assets	313,800
Interest on lease liabilities	48,267
Lease cost	$ 600,989
Weighted average remaining lease term and discount rates:
Operating leases, weighted average remaining lease term		3 years 10 months 24 days
Finance leases, weighted average remaining lease term		1 year 3 months 18 days
Operating leases, weighted average discount rate		10.30%
Finance leases, weighted average discount rate		3.03%

Commitments and Contingencies - Minimum Lease Payments (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019
Operating Leases
2019 (remaining nine months)	$ 572,212
2020	1,172,759
2021	1,207,708
2022	1,243,934
2023	1,283,253
Thereafter	3,830,425
Total minimum lease payments	9,310,291
Less: Interest	(2,824,633)
Present value of lease liabilities	6,485,658	$ 6,659,725
Finance Leases
2019 (remaining nine months)	587,093
2020	1,221,405
2021	669,739
2022	82,743
Total minimum lease payments	2,560,980
Less: Interest	(204,815)
Present value of lease liabilities	2,356,165	$ 2,464,970
Total
2019 (remaining nine months)	1,159,305
2020	2,394,164
2021	1,877,447
2022	1,326,677
2023	1,283,253
Thereafter	3,830,425
Total minimum lease payments	11,871,271
Less: Interest	(3,029,448)
Present value of lease liabilities	$ 8,841,823

Commitments and Contingencies - ASC 840 - Minimum Lease Payments (Details)	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 1,077,532
2020	1,168,710
2021	1,203,658
2022	1,239,885
2023	1,276,356
Thereafter	3,818,795
Total minimum lease payments	9,784,936
Capital Leases
2019	464,797
2020	354,739
2021	33,774
Total minimum lease payments	853,310
Less: Interest	(24,525)
Present value of minimum lease payments	$ 828,785

Commitments and Contingencies - Contingent Consideration (Details) - Agreement with Chasm Technologies, Inc. - USD ($)	1 Months Ended	12 Months Ended
	Mar. 31, 2012	Dec. 31, 2017	Jun. 30, 2019	Dec. 31, 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			$ 0	$ 0

Commitments and Contingencies - Severance (Details)	3 Months Ended
Commitments and Contingencies - Severance (Details)	Mar. 31, 2018 USD ($)
Research and Development Expenses
Other
Employee severance cost	$ 404,407

Long-Term Debt - Summary (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Long term debt
Long-term debt		$ 10,802,757
Less current portion	$ (2,835,583)		$ (316,906)
Long-term debt, less current portion	13,004,581		11,627,643
A&R LSA
Long term debt
Long-term debt	$ 15,840,164		10,802,355
CSC build-to-suit equipment financing, net of discount
Long term debt
Long-term debt			$ 1,142,194

Long-Term Debt - Loan and Security Agreement (Details)						1 Months Ended			6 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	May 31, 2019 USD ($)	Oct. 31, 2016 USD ($) tranche	Jan. 31, 2016	Jun. 30, 2019 USD ($)	Sep. 30, 2012 USD ($)
Debt instrument
Amount drawn									$ 5,000,000
Amount outstanding									$ 16,000,000
UNC promissory note
Debt instrument
Repayment of debt	$ 1,800,000
Face amount										$ 600,000
LSA with Pacific Western
Debt instrument
Maximum borrowing capacity							$ 10,000,000
Extinguishment of debt, amount	$ 8,000,000
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 \| Minimum
Debt instrument
Minimum proceeds from the issuance of equity instruments to be received for minimum cash balance covenant to be waived				$ 12,000,000
Minimum cash balance to be maintained				$ 2,500,000
A&R LSA
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
Amount drawn						$ 5,000,000
Amount outstanding						$ 16,000,000
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
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
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
Debt instrument
Maximum borrowing capacity	$ 11,000,000
A&R LSA \| Tranche Two
Debt instrument
Additional borrowing capacity upon the full enrollment of the LIQ861 Phase 3 clinical triales	$ 5,000,000

Long-Term Debt - UNC Promissory Note (Details) - USD ($)		1 Months Ended
	Aug. 02, 2018	Jun. 30, 2016	Sep. 30, 2012	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Debt instrument
Long-term debt					$ 10,802,757
UNC promissory note
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%
Balance of promissory note				$ 0		$ 0
Repayments of Debt	$ 600,000
one year LIBOR \| UNC promissory note
Debt instrument
Spread on variable rate			2.00%

Long-Term Debt - Convertible Notes (Details) - USD ($)	1 Months Ended			2 Months Ended	6 Months Ended		11 Months Ended
Long-Term Debt - Convertible Notes (Details) - USD ($)	Feb. 28, 2018	Nov. 30, 2017	Jan. 31, 2017	Feb. 28, 2017	Jun. 30, 2019	Jun. 30, 2018	Nov. 30, 2017	Jan. 01, 2019	Dec. 31, 2017	Jul. 31, 2017
Debt instrument
Proceeds from sale of preferred stock						$ 25,107,009
Unamortized discount charged to interest expense upon conversion of notes						$ 17,550,541
Component of Convertible notes
Principal amount of Convertible Notes					$ 16,000,000
Unamortized discount on the notes					(124,874)
Carrying value of convertible notes								$ 10,802,757
Convertible Notes
Debt instrument
Debt issued									$ 27,400,000
Interest rate (as a percent)									8.00%
Debt issuance costs							$ 1,397,624
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
Component of Convertible notes
Carrying value of convertible notes		$ 0			$ 0		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%
Interest rate (as a percent)			8.00%	8.00%
Warrants to purchase shares of common stock (in shares)				3,698,128
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 D
Debt instrument
Proceeds from sale of preferred stock	$ 25,600,000
Share price (in dollars per share)	$ 0.59808

Long-Term Debt - Warrant Liabilities (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Warrants
Issuance of warrants		$ 4,474,122
Change in fair value	$ (171,450)
Warrants
Warrants
Fair value, beginning of period	2,462,859
Change in fair value	(171,450)
Fair value, end of period	$ 2,291,409	$ 2,462,859

Long-Term Debt - Maturities of long-term debt (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Annual maturities of long-term debt
2020	$ 5,818,182
2021	5,818,182
2022	4,363,636
Total	16,000,000
Less: Unamortized discount	(124,874)
Less: Unamortized debt issuance costs	(34,962)
Less: Current portion of long-term debt	(2,835,583)	$ (316,906)
Long-term debt	$ 13,004,581	$ 11,627,643