10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2016

OR

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     .

Commission File Number: 001-37490

ProNAi Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-0138994
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

ProNAi Therapeutics, Inc.

2150 – 885 West Georgia Street

Vancouver, British Columbia, Canada V6C 3E8

(Address of principal executive offices and zip code)

(604) 558-6536

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

As of May 6, 2016, there were 30,174,778 shares of the Registrant’s Common Stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (unaudited)		2
Condensed Consolidated Balance Sheets		2
Condensed Consolidated Statements of Operations		3
Condensed Consolidated Statements of Convertible and Redeemable Preferred Stock and Stockholders’ Equity (Deficit)		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
Item 4. Controls and Procedures		25
Part II. Other Information
Item 1. Legal Proceedings		26
Item 1A. Risk Factors		26
Item  2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults Upon Senior Securities		26
Item 4. Mine Safety Disclosures		26
Item 5. Other Information		26
Item 6. Exhibits		26
Signatures		27
Exhibit Index		28

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and section 27A of the Securities Act of 1933, as amended (Securities Act). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q. These forward-looking statements may include, but are not limited to, statements regarding our future clinical development activities, expected timing and results of clinical trials, future results of operations and financial position, our business strategy and plans and our objectives for future operations. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements to conform these statements to actual results or to changes in our expectations, except as required by law.

As used in this Quarterly Report on Form 10-Q, the terms “ProNAi,” “the Company,” “we,” “us,” and “our” refer to ProNAi Therapeutics, Inc., a Delaware corporation, and its subsidiaries taken as a whole, unless otherwise noted. ProNAi and DNAi are our registered trademarks. The “ProNAi” logo and all product names are our common law trademarks.

1

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PRONAI THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

	March 31, 2016			December 31, 2015
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents (Note 5)	$	140,871		$	150,180
Prepaid expenses and other current assets (Note 5)		1,746			1,673
Total current assets		142,617			151,853
Property and equipment, net (Note 5)		623			566
Other assets		196			349
TOTAL ASSETS	$	143,436		$	152,768
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued liabilities (Note 5)	$	5,342		$	7,016
Accounts payable		1,779			358
Other current liabilities		7			23
Total current liabilities		7,128			7,397
TOTAL LIABILITIES		7,128			7,397
Commitments and Contingencies (Note 6)
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of March 31, 2016 and December 31, 2015; nil shares issued and outstanding as of March 31, 2016 and December 31, 2015		—			—
Common stock, $0.001 par value; 500,000,000 shares authorized as of March 31, 2016 and December 31, 2015; 30,174,778 and 30,058,105 shares issued and outstanding as of March 31, 2016 and December 31, 2015		30			30
Additional paid-in capital		681,003			679,528
Accumulated deficit		(544,725	)		(534,187	)
TOTAL STOCKHOLDERS’ EQUITY		136,308			145,371
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	143,436		$	152,768

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

PRONAI THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2016			2015
Operating expenses:
Research and development	$	6,636		$	5,296
General and administrative		3,977			1,441
Total operating expenses		10,613			6,737
Loss from operations		(10,613	)		(6,737	)
Other income (expense), net:
Change in fair value of preferred stock warrants		—			(1,326	)
Other income		83			25
Total other income (expense), net		83			(1,301	)
Loss before provision for income taxes		(10,530	)		(8,038	)
Provision for income taxes		8			10
Net loss		(10,538	)		(8,048	)
Adjustment to redemption value on redeemable convertible preferred stock		—			(11,005	)
Net loss attributable to common stockholders	$	(10,538	)	$	(19,053	)
Net loss per share attributable to common stockholders, basic and diluted (Note 3)	$	(0.35	)	$	(12.83	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (Note 3)		30,070,227			1,485,609

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

PRONAI THERAPEUTICS, INC.

Condensed Consolidated Statements of Convertible and Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)

(in thousands, except share and per share data)

	Convertible Preferred Stock						Redeemable Convertible Preferred Stock						Common Stock				Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares			Amount			Shares		Amount
Balance — December 31, 2014		224,564			2,543			17,042,064			141,832			1,588,701		2		—			(10	)		(107,807	)		(107,815	)
Issuance of common stock for exercise of stock options		—			—			—			—			41,505		—		18			—			—			18
Stock-based compensation		—			—			—			—			—		—		3,186			—			—			3,186
Vesting of early exercised stock options		—			—			—			—			—		—		90			—			—			90
Issuance of redeemable convertible preferred stock upon exercise of redeemable convertible preferred stock warrants		—			—			481,671			8,976			—		—		—			—			—			—
Issuance of redeemable convertible preferred stock upon net exercise of redeemable convertible preferred stock warrants upon initial public offering		—			—			390,032			11,785			—		—		—			—			—			—
Adjustment to redemption value on redeemable convertible preferred stock		—			—			—			374,015			—		—		(895	)		—			(373,120	)		(374,015	)
Conversion of convertible preferred stock to common stock upon initial public offering		(224,564	)		(2,543	)		—			—			252,817		—		2,543			—			—			2,543
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		—			—			(17,913,767	)		(536,608	)		18,109,136		18		536,590			—			—			536,608
Issuance of common stock in connection with initial public offering, net of issuance costs of $14.8 million		—			—			—			—			9,315,000		9		143,540			—			—			143,549
Series B and B-1 redeemable convertible preferred stock dividend		—			—			—			—			—		—		(5,543	)		—			—			(5,543	)
Series C and D redeemable convertible preferred stock dividend		—			—			—			—			750,946		1		(1	)		—			—			—
Reclassification of other-than-temporary losses on short-term investments to net loss		—			—			—			—			—		—		—			10			—			10
Net loss		—			—			—			—			—		—		—			—			(53,260	)		(53,260	)
Balance — December 31, 2015		—			—			—			—			30,058,105		30		679,528			—			(534,187	)		145,371
Issuance of common stock for exercise of stock options		—			—			—			—			116,673		—		96			—			—			96
Stock-based compensation		—			—			—			—			—		—		1,363			—			—			1,363
Vesting of early exercised stock options		—			—			—			—			—		—		16			—			—			16
Net loss		—			—			—			—			—		—		—			—			(10,538	)		(10,538	)
Balance — March 31, 2016		—		$	—			—		$	—			30,174,778	$	30	$	681,003		$	—		$	(544,725	)	$	136,308

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

PRONAI THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,538	)	$	(8,048	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,363			180
Change in fair value of preferred stock warrant liabilities		—			1,326
Depreciation and amortization		52			13
Other		13			9
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(85	)		229
Accrued liabilities		(1,451	)		(276	)
Accounts payable		1,415			1,581
Net cash used in operating activities		(9,231	)		(4,986	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(179	)		(12	)
Change in restricted cash		25			(50	)
Purchase of short-term investments		—			(9	)
Net cash used in investing activities		(154	)		(71	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options		96			15
Payment of deferred offering costs		(15	)		(71	)
Proceeds from early exercise of stock options		—			13
Net cash provided by (used in) financing activities		81			(43	)
Effect of exchange rate changes on cash and cash equivalents		(5	)		—
NET DECREASE IN CASH AND CASH EQUIVALENTS		(9,309	)		(5,100	)
CASH AND CASH EQUIVALENTS — Beginning of period		150,180			29,154
CASH AND CASH EQUIVALENTS — End of period	$	140,871		$	24,054
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	—		$	—
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Change in redemption value of redeemable convertible preferred stock	$	—		$	(11,005	)
Deferred offering costs included in accounts payable and accrued liabilities	$	—		$	944
Property and equipment purchases included in accounts payable and accrued liabilities	$	20		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

PRONAI THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. The Company and Basis of Presentation

Organization and Description of Business

ProNAi Therapeutics, Inc. (together with its subsidiaries, collectively referred to as the “Company”), a Delaware corporation, is a clinical-stage oncology company led by a world-class senior management team of proven oncology drug developers. The Company’s vision is to be a leader in developing and commercializing a broad and diverse portfolio of cancer therapies that deliver therapeutic outcomes that dramatically change patients’ lives. The Company’s lead product candidate, PNT2258, is designed to target BCL2, a widely overexpressed oncogene that is an important gatekeeper of the programmed cell death process known as apoptosis and has been linked to many forms of cancer. In addition to advancing PNT2258, the Company is seeking to expand the number of products it has under clinical development to leverage the full potential of its team.

The Company’s primary activities since inception have been conducting research and development activities, conducting preclinical and clinical testing, recruiting personnel, performing business and financial planning, and raising capital to support development activities.

The Company has not generated any product revenue related to its primary business purpose to date, nor has it generated any income, and is subject to a number of risks and uncertainties, which include dependence on key individuals, the need for development of commercially viable products, the need to obtain regulatory approval for its products and commercialize them and the need to obtain adequate additional financing to fund the development of its product candidates.

Initial Public Offering

On July 15, 2015, the Company’s Registration Statement on Form S-1 (File No. 333-204921) relating to the initial public offering (IPO) of its common stock was declared effective by the Securities and Exchange Commission (SEC). Pursuant to such Registration Statement, the Company sold an aggregate of 9,315,000 shares of its common stock at a price of $17.00 per share for aggregate cash proceeds of approximately $143.6 million, net of underwriting discounts and commissions and offering costs.

On July 21, 2015, immediately prior to the closing of the IPO, all outstanding shares of convertible and redeemable convertible preferred stock converted into 18,361,953 shares of common stock, including an aggregate of 390,680 shares of common stock that were issued pursuant to the net exercise of 493,648 preferred stock warrants at the IPO price of $17.00 per share and an aggregate of 481,671 shares of common stock that were issued pursuant to the cash exercise of 481,671 preferred stock warrants. The IPO closed on July 21, 2015.

As discussed further in Note 8, on the closing of the IPO, the Company paid $5.5 million to the holders of its Series B and B-1 redeemable convertible preferred stock in settlement of the cumulative dividends. In addition, the Company issued 750,946 shares of common stock to the holders of its Series C and D redeemable convertible preferred stock in settlement of the cumulative dividends.

Following the filing of the Restated Certificate of Incorporation of the Company on July 21, 2015, the number of shares of capital stock the Company is authorized to issue is 510,000,000 shares, of which 500,000,000 shares may be common stock and 10,000,000 shares may be preferred stock. Both the common stock and the preferred stock have a par value of $0.001 per share.

Reverse Stock Split

On June 29, 2015, the Company’s board of directors approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse split of the Company’s common stock, convertible preferred stock and redeemable convertible preferred stock at a 7.45-to-1 ratio (Reverse Stock Split). The Reverse Stock Split became effective on July 2, 2015, upon the filing of the amendment to the Company’s Amended and Restated Certificate of Incorporation. The authorized shares and par value of the common, convertible preferred and redeemable convertible preferred stock were not adjusted as a result of the Reverse Stock Split. All issued and outstanding common stock, convertible preferred stock, redeemable convertible preferred stock, warrants to purchase preferred stock, options to purchase common stock and per share amounts contained in the condensed consolidated financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented.

6

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated balance sheet as of March 31, 2016, the condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of convertible and redeemable convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2016 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated financial data disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016, or for any other future annual or interim period. The consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 3, 2016.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of common stock, the fair value of preferred stock, the fair value of preferred stock warrant liabilities, the fair value of stock options, recoverability of the Company’s net deferred tax assets, and related valuation allowance and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the U.S. Dollar. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are recorded at historical exchange rates. Gains and losses related to remeasurement are recorded in other income (expense) in the condensed consolidated statements of operations. The net foreign exchange transaction gains (losses) included in other income (expense) in the accompanying condensed consolidated statements of operations was insignificant for the three months ended March 31, 2016 and 2015.

Cash and Cash Equivalents 

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist primarily of funds invested in readily available checking and savings accounts and highly liquid investments in money market funds.

Restricted Cash

Restricted cash represents collateral for a corporate credit card facility and security deposits required for facility leases. Restricted cash consists of funds invested in a money market fund. As of March 31, 2016, the current portion of restricted cash of $12,000 was included in prepaid expenses and other current assets and the long-term portion of restricted cash of $0.2 million was included in other assets in the accompanying condensed consolidated balance sheets. As of December 31, 2015, the current portion of restricted cash included in prepaid expenses and other current assets and the long-term portion of restricted cash included in other assets were $25,000 and $0.2 million, respectively.

7

Investments 

The Company determines the appropriate designation of its investments as “trading,” “available-for-sale” or “held-to-maturity” based on management’s intent at the time of purchase and reevaluates such designation at each reporting date. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity (deficit), except for unrealized losses determined to be other-than-temporary which are recorded in other income (expense) in the accompanying condensed consolidated statements of operations. The Company determines any realized gains or losses on the sale of any investments on a specific identification method and records such gains and losses as a component of other income (expense) in the accompanying condensed consolidated statements of operations.

The Company evaluates its short-term investments periodically for possible other-than-temporary impairment. A decline in fair value below the amortized cost of the investment is considered other-than-temporary impairment if the Company has the intent to sell the investment or it is more likely than not that the Company will be required to sell the investment before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in other income (expense). Regardless of the Company’s intent or requirement to sell an investment, impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis.

Investments with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the condensed consolidated balance sheet date are classified as long-term.

Concentrations of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist of cash, cash equivalents and restricted cash. All of the Company’s cash, cash equivalents and restricted cash are held at financial institutions in the United States and Canada that management believes to be of high credit quality. Deposits held in the United States with these financial institutions exceed federally insured limits.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer and establishing a minimum allowable credit rating.

Comprehensive Income (Loss)

The Company had no components of comprehensive income (loss) other than net loss for all periods presented.

Fair Value of Financial Instruments 

The Company’s cash and cash equivalents, restricted cash, other current assets, accounts payable, and accrued liabilities approximate their fair value at March 31, 2016 and December 31, 2015, due to their short duration. The Company’s preferred stock warrant liabilities contain unobservable inputs that reflect the Company’s own assumptions in which there is little, if any, market activity at the measurement date, thus the Company’s warrant liabilities were measured at fair value on a recurring basis using unobservable inputs until they were exercised in 2015.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

8

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property and equipment, excluding leasehold improvements, is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Depreciation and amortization begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in the condensed consolidated statement of operations. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease term.

Other Assets

Other assets consist primarily of restricted cash pledged as collateral for a corporate credit card facility and security deposits required for facility leases.

Preferred Stock Warrant Liabilities

The Company accounts for its warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and remeasured to fair value on each subsequent reporting period, with the changes in fair value recognized as a component of other income (expense), net in the accompanying condensed consolidated statements of operations. On the closing of the IPO on July 21, 2015 (discussed in Note 1), all outstanding warrants were exercised and the liability on the preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit), and was no longer subject to remeasurement.

Research and Development Costs 

Research and development costs are expensed as incurred. The Company accounts for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Depending on the timing of payments to service providers of research and development costs, the Company recognizes prepaid expenses or accrued expenses related to these costs. These prepaid or accrued expenses are based on management’s estimates of the work performed under service agreements and milestones achieved. Research and development costs include fees incurred in connection with license agreements, compensation and other related costs for employees engaged in research and development, costs associated with preclinical studies and trials, regulatory activities, manufacturing activities to support clinical activities, license fees, fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company and an allocation of overhead expenses.

Stock-Based Compensation 

The Company accounts for share-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for employee stock-based compensation awards is the date of grant and the expense is recognized on a straight line basis over the vesting period.

For share-based awards that vest subject to the satisfaction of a service requirement and a performance component, the fair value measurement date is the date of grant and is recognized over the requisite service period as achievement of the performance objective becomes probable.

Stock-based compensation arrangements with non-employees are recognized at the grant date and remeasured to fair value at each reporting period. The expense is recognized over the vesting period, which is generally the service period.

Income Taxes 

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net U.S. deferred tax assets have been offset by a full valuation allowance.

9

The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of provision for income taxes.

Segment Information 

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with cancer. Accordingly, the Company has a single reporting segment.

Recent Accounting Pronouncements Not Yet Effective

In February 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The amendments in this update require that organizations recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued FASB ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update involve the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, less common stock issued that is subject to repurchase, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, preferred stock and warrants to purchase preferred stock, stock options and common stock subject to repurchase are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

	Three Months Ended March 31,
	2016		2015
Options to purchase common stock		4,153,460		2,462,631
Common stock subject to repurchase		7,614		116,674
Convertible preferred stock		—		252,817
Redeemable convertible preferred stock		—		17,236,784
Warrants to purchase preferred stock		—		976,492
Total potential dilutive shares		4,161,074		21,045,398

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4. Fair Value Measurements

The Company measures and reports its cash equivalents and restricted cash at fair value. The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	139,218	$	—	$	—	$	139,218
Restricted money market funds		200		—		—		200
Total financial assets	$	139,418	$	—	$	—	$	139,418
	December 31, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	148,604	$	—	$	—	$	148,604
Restricted money market funds		225		—		—		225
Total financial assets	$	148,829	$	—	$	—	$	148,829

Money market funds and restricted money market funds are measured at fair value on a recurring basis using quoted prices and are classified as a Level 1 input.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2016.

5. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Cash	$	1,653	$	1,576
Cash equivalents:
Money market accounts		139,218		148,604
Total cash and cash equivalents	$	140,871	$	150,180

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Prepaid research and development project costs	$	816	$	878
Prepaid insurance		286		480
Other receivables		303		44
Other		341		271
Total prepaid expenses and other current assets	$	1,746	$	1,673

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Property and Equipment, net

Property and equipment, net consists of the following:

	March 31, 2016			December 31, 2015
	(in thousands)
Computer equipment	$	258		$	242
Software		150			126
Lab equipment		236			236
Leasehold improvements		106			79
Furniture and fixtures		47			5
Property and equipment, gross		797			688
Less: accumulated depreciation		(174	)		(122	)
Total property and equipment, net	$	623		$	566

Depreciation and amortization related to the Company’s property and equipment was $52,000 and $13,000 for the three months ended March 31, 2016 and 2015, respectively.

Accrued Liabilities

Accrued liabilities consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Accrued research and development costs	$	3,608	$	4,318
Accrued employee related costs		965		1,529
Accrued professional fees		540		933
Other		229		236
Total accrued liabilities	$	5,342	$	7,016

6. Commitments and Contingencies

License Agreements

In March 2007, the Company entered into an exclusive license agreement with Novosom AG (Novosom) to use certain patented LNP delivery technology for any of its DNAi drug candidates that target a region of the BCL2 gene (the Novosom License Agreement). In July 2010, the Novosom License Agreement was acquired by Marina Biotech, Inc. (Marina), but Novosom retained the right to receive all payments due from the Company under the Novosom License Agreement.

In March 2012, the Company and Marina entered into another exclusive license agreement (the Marina License Agreement) for the use of certain of Marina’s patented delivery technology, including LNP technology, for any of the Company’s current or future DNAi product candidates that target any gene. In exchange for this exclusive right, the Company paid Marina an upfront payment of $0.3 million in 2012 to be applied to the first DNAi product candidate under this agreement. The Company will be required to pay Marina milestone payments of up to an aggregate of $14.5 million for each DNAi product candidate, other than PNT2258, upon successful completion of certain clinical and regulatory milestone events relating to each DNAi product candidate identified in the Marina License Agreement. In addition, for DNAi product candidates other than PNT2258, the Company is required to pay Marina a low single-digit royalty on net sales.

In May 2013, the Company issued Novosom 283,069 shares of common stock with a fair market value of $0.1 million in settlement of the first milestone payment.

In April 2014, the Company entered into a Second License Amendment and Consent to Termination Agreement with Marina pursuant to which the Novosom License Agreement (which had been transferred to Marina by Novosom in July 2010) was terminated and the obligations previously set forth in the Novosom License Agreement were restated in the Marina License Agreement. In connection therewith, in April 2014, the Company also entered into a License Payment Agreement with Novosom under which the Company

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agreed to pay Novosom $11.0 million in cash upon the closing of a minimum $35.0 million financing. Also, the Company agreed to pay Novosom a $3.0 million milestone payment within 30 days of regulatory authority approval of PNT2258. Upon Novosom’s receipt of the cash payment of $11.0 million, all financial obligations of the Company to Novosom were terminated, other than the aforementioned milestone payment, historic manufacturing costs and a low-single digit royalty payment on net sales of PNT2258.

The Company made the $11.0 million payment to Novosom in April 2014, upon the closing of the Series D redeemable convertible preferred stock financing and a payment of $0.1 million in July 2014 settling the obligation for the historic manufacturing costs. The April 2014 Second License Amendment and Consent to Termination Agreement serves as the second amendment to the Marina License Agreement.

As of March 31, 2016, the Company has not accrued the $3.0 million milestone payment to Novosom as regulatory approval was not considered probable of occurring.

As of March 31, 2016, the Company has not identified any product candidates that would pertain to the Marina License Agreement. Therefore, there is currently no potential expense or payment due under the Marina License Agreement.

Lease Agreements

The Company leases its Michigan facility under a short-term operating lease with a term of less than a year that provides for a fixed monthly rent for the term of the lease and also provides for certain rent adjustments covering the expenses and taxes of the facility.

In February 2015, the Company entered into an operating lease agreement to sublease office space in Vancouver, Canada. The operating lease agreement expires on February 27, 2018. Under the terms of the agreement, the Company issued a letter of credit to the sublessor on closing, which was collateralized by a restricted deposit of $25,000 at March 31, 2016.

In January 2016, the Company entered into an operating lease agreement to lease office space in San Francisco, California. The operating lease agreement expires on April 30, 2019.

In addition to base rent, these leases require payment of taxes and other operating costs. These operating costs are not included in the table below.

As of March 31, 2016, the aggregate future non-cancelable minimum lease payments associated with these operating leases (based on the noon rate on March 31, 2016 for the conversion of Canadian dollars into U.S. dollars, as quoted by The Bank of Canada) are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
2016	$	233
2017		356
2018		208
2019		66
Total	$	863

The total rent expense for all operating leases was $0.1 million and $35,000 for the three months ended March 31, 2016 and 2015.

Legal

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened litigation that, in the Company’s opinion, would have a material adverse effect on the business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

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7. Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans and shares reserved for issuance under the employee stock purchase plan.

	March 31, 2016		December 31, 2015
Outstanding and issued stock options		4,153,460		3,522,813
Shares reserved for future option grants		3,978,883		3,523,879
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Total common stock reserved for issuance		8,832,343		7,746,692

8. Preferred Stock

Preferred Stock

As of March 31, 2016, the Company had 10,000,000 shares of preferred stock authorized with a par value of $0.001. No shares of preferred stock were outstanding as of March 31, 2016.

Convertible and Redeemable Convertible Preferred Stock

During the year ended December 31, 2015, the Company issued an aggregate of 481,671 shares of redeemable convertible preferred stock upon the cash exercise of the Company’s Series B-1 and Series C redeemable convertible preferred stock warrants, consisting of 444,286 shares of Series B-1 redeemable convertible preferred stock and 37,385 shares of Series C redeemable convertible preferred stock.

In addition, during the year ended December 31, 2015, the Company issued an aggregate of 390,032 shares of redeemable convertible preferred stock upon the net exercise of the Company’s Series B, Series B-1 and Series C redeemable convertible preferred stock warrants, consisting of 5,850 shares of Series B redeemable convertible preferred stock, 291,165 shares of Series B-1 redeemable convertible preferred stock and 93,017 shares of Series C redeemable convertible preferred stock.

On July 21, 2015 (closing date of the IPO), all outstanding shares of Series A convertible preferred stock converted into 252,817 shares of common stock and all outstanding shares of Series B, Series B-1, Series C and Series D redeemable convertible preferred stock converted into 18,109,136 shares of common stock. On issuance, the Company’s convertible and redeemable convertible preferred stock was recorded at fair value or the amount of allocated proceeds, net of issuance costs.

The Company’s Series B, B-1, C and D redeemable convertible preferred stock was classified outside of stockholders’ equity (deficit) from issuance through the closing of the IPO, because the stock contained redemption features that commenced at any time on or after December 31, 2018 at the election of the Series B, B-1, C and D redeemable convertible preferred stockholders. The Company adjusted the carrying amount of the redeemable convertible preferred stock to equal the redemption value at the end of each reporting period. Due to the absence of retained earnings, adjustments to redemption value were recorded against additional paid-in capital, if any, and then to accumulated deficit. The change in the redemption value of the redeemable convertible preferred stock for the three months ended March 31, 2015 was as follows:

	(in thousands)
Redeemable Convertible Preferred Stock
Series B	$	5,216
Series B-1		3,513
Series C		416
Series D		1,860
Total adjustment to redemption value on redeemable convertible preferred stock	$	11,005

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As the redemption value for the redeemable convertible preferred stock was at times based on fair market value, the Company determined the fair value of the redeemable convertible preferred stock using a combination of the OPM and/or the PWERM models, or the fair value of the Company’s common stock. The following assumptions were used in the OPM to determine fair value of the redeemable convertible preferred stock for the three months ended March 31, 2015:

Expected term (in years)	1.1
Expected volatility	81	%
Risk-free interest rate	0.3	%
Expected dividend rate	—	%

Amendment to Dividend Rights

On June 11, 2015, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to modify the terms of the cumulative accruing dividends on the outstanding shares of the Company’s Series C and Series D redeemable convertible preferred stock. Under the terms of the Amended Certificate of Incorporation, upon conversion of the Company’s redeemable convertible preferred stock into common stock in connection with an IPO, the Company was required to pay 50% of the then accrued but unpaid accruing dividends on shares of the Series C and Series D redeemable convertible preferred stock in shares of the Company’s common stock instead of payment in cash and the remaining 50% of the then accrued but unpaid accruing dividends was to be forfeited. The settlement of the accrued but unpaid accruing dividends in shares of common stock was required to be at the original issue price of the Series C and Series D redeemable convertible preferred stock of $5.215 per share. The terms of the dividends payable on the Series B and Series B-1 preferred stock were not modified.

Settlement of Cumulative Dividends

On July 21, 2015 (closing date of the IPO), the Company had total cumulative unpaid dividends in arrears of $18.9 million, which consisted of $9.4 million for the Series B, $1.7 million for the Series B-1, $1.7 million for the Series C and $6.1 million for the Series D redeemable convertible preferred stock. During the year ended December 31, 2015, the Company paid in cash accruing dividends in the aggregate amount of $5.5 million to the Series B and B-1 redeemable convertible preferred stockholders, consisting of $4.7 million for the Series B and $0.8 million for the Series B-1 redeemable convertible preferred stockholders. In addition, during the year ended December 31, 2015, the Company issued an aggregate of 750,946 shares of common stock to the Series C and D redeemable convertible preferred stockholders with an aggregate fair value of $20.4 million in settlement of the Series C and Series D redeemable convertible preferred stock cumulative dividends in accordance with the June 11, 2015 amendment discussed above, consisting of 161,536 shares of common stock with a fair value of $4.4 million to the Series C redeemable convertible preferred stockholders and 589,410 shares of common stock with a fair value of $16.0 million to the Series D redeemable convertible preferred stockholders.

9. Preferred Stock Warrants

The Company classified its preferred stock warrants as liabilities. During the year ended December 31, 2015, $19.3 million of the fair value of the warrant liability was reclassified to redeemable convertible preferred stock and then into additional paid-in capital in stockholders’ equity (deficit) on conversion of redeemable convertible preferred stock into common stock on the closing of the IPO. The warrants were no longer outstanding at December 31, 2015.

During the year ended December 31, 2015, 31,778 of the Series B-1 warrants were cash exercised at an exercise price of $7.45 per share, 412,508 of the Series B-1 warrants were cash exercised at an exercise price of $2.6075 per share and 37,385 of the Series C warrants were cash exercised at an exercise price of $5.215 per share, resulting in total aggregate cash proceeds to the Company of $1.5 million.

On the closing of the Company’s IPO, all of the remaining outstanding preferred stock warrants were net exercised at the IPO price of $17.00 per share, which resulted in 6,499 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 10,414 shares of Series B preferred stock, 291,164 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 349,054 shares of Series B-1 preferred stock and 93,017 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 134,180 shares of Series C preferred stock.

During the three months ended March 31, 2015, the Company remeasured the preferred stock warrants using the OPM and/or PWERM models, or based on the fair value of the underlying stock. On the closing of the IPO in July 2015, the outstanding preferred stock warrants were exercised and the liability on the preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit), and was no longer subject to remeasurement.

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The change in fair value of the preferred stock warrant liabilities is attributable to the increase of the fair value of the underlying stock. The change in the fair value of preferred stock warrants for the three months ended March 31, 2015 is recognized as a component of other income (expense), net in the condensed consolidated statements of operations.

10. Stock-Based Compensation

In the accompanying condensed consolidated statement of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Research and development	$	954	$	74
General and administrative		409		106
Total stock-based compensation	$	1,363	$	180

Determination of Fair Value

The estimated grant-date fair value of all the Company’s stock-based awards was calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2016	2015
Expected term (in years)	5.4 – 10.0	6.0 – 10.0
Expected volatility	77 – 84%	75 – 82%
Risk-free interest rate	1.3 – 1.9%	1.5 – 1.9%
Expected dividend rate	—   %	—   %

Equity Incentive Plans

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. Under the 2015 Plan, 3,400,000 shares of common stock were initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards, cash awards and stock bonuses. In addition, 365,535 shares that had been available for future awards under the 2008 Plan as of July 14, 2015, were added to the initial reserve available under the 2015 Plan, bringing the total number of shares reserved for issuance under the 2015 Plan upon its effective date to 3,765,535 shares. The number of shares initially reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. Accordingly, 1,202,324 shares were added to the reserve available under the 2015 Plan on January 1, 2016. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

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A summary of activity under the 2008 Plan and 2015 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2015		3,523,879			3,522,813		$	3.81		8.78	$	40,425
Awards authorized		1,202,324
Options granted		(821,200	)		821,200			7.28
Options exercised		—			(116,673	)		0.83
Options cancelled		73,880			(73,880	)		5.59
Outstanding — March 31, 2016		3,978,883			4,153,460		$	4.55		8.88	$	12,717
Exercisable — March 31, 2016					2,110,814		$	1.20		8.28	$	11,695
Vested and expected to vest — March 31, 2016					4,005,036		$	4.49		8.87	$	12,431

The weighted-average grant date fair values of options granted during the three months ended March 31, 2016 and 2015 was $5.00 and $3.58 per share, respectively. The aggregate intrinsic value of options exercised was $0.8 million for the three months ended March 31, 2016 and $0.1 million for the three months ended March 31, 2015. The total grant date fair value of options vested for the three months ended March 31, 2016 and 2015 was $0.7 million and $18,000, respectively.

As of March 31, 2016, total unrecognized stock-based compensation related to unvested stock options was $15.2 million, net of estimated forfeitures. These costs are expected to be recognized over a remaining weighted-average period of 3.2 years as of March 31, 2016.

Liability for Early Exercise of Stock Options

The 2008 Plan allows for the granting of options that may be exercised before the options have vested. In December 2014, an executive officer early exercised 103,252 stock options. In February 2015, an executive officer early exercised 13,422 stock options. On early exercise, the awards became subject to a restricted stock agreement. The shares of restricted stock granted upon early exercise of the options are subject to the same vesting provisions as the original stock option awards. Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment or services, at the price paid by the purchaser, and are not deemed to be issued for accounting purposes until those related shares vest. The liability is reclassified into common stock and additional paid-in capital as the shares vest and the repurchase right lapses. Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $7,000 as a current liability as of March 31, 2016 and $23,000 as of December 31, 2015 from the early exercise in the accompanying condensed consolidated balance sheets. As of March 31, 2016 and December 31, 2015, 7,614 and 23,554 shares held by the employees remained unvested and subject to repurchase.

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2015 Employee Stock Purchase Plan

The Company adopted the 2015 Employee Stock Purchase Plan (ESPP) and initially reserved 700,000 shares of common stock as of its effective date of July 15, 2015. The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The aggregate number of shares issued over the term of the 2015 Employee Stock Purchase Plan will not exceed 3,400,000 shares of common stock.

Under the ESPP, participants are offered the options to purchase shares of the Company’s common stock at a 15% discount during a series of discrete offering periods, subject to any plan limitations. The ESPP will not become effective until such time as the Compensation Committee determines in the future, and as of March 31, 2016, the initial offering periods had not commenced. As of March 31, 2016, no shares of common stock have been issued to employees participating in the ESPP and 700,000 shares were available for issuance under the ESPP.

11. Income Taxes

The Company did not record a provision for federal income taxes for the three months ended March 31, 2016 because it expects to generate a loss for the year ended December 31, 2016. The income tax expense of $8,000 for the three months ended March 31, 2016 represents foreign taxes. The Company’s net U.S. deferred tax assets continue to be offset by a full valuation allowance.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1 of this report and with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2015, included in our Annual Report on Form 10-K. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this report.

Overview

We are a clinical-stage oncology company led by a world-class senior management team of proven oncology drug developers. Our vision is to be a leader in developing and commercializing a broad and diverse portfolio of cancer therapies that deliver therapeutic outcomes that dramatically change patients’ lives. Our lead product candidate, PNT2258, is designed to target BCL2, a widely overexpressed oncogene that is an important gatekeeper of the programmed cell death process known as apoptosis and has been linked to many forms of cancer. In addition to advancing PNT2258, we are seeking to expand the number of products we have under clinical development to leverage the full potential of our team.

We have conducted two clinical trials with PNT2258 to date: a Phase 1 safety trial in patients with relapsed or refractory solid tumors and a Phase 2 trial in patients with relapsed or refractory non-Hodgkin’s lymphoma (NHL). Having observed preliminary evidence of efficacy and tolerability, we plan to pursue a broad registration-oriented clinical development program, initially in hematologic malignancies, that we anticipate will provide the foundation of a global registration strategy for PNT2258. In December 2014, we initiated “Wolverine,” an open-label 60 patient Phase 2 trial evaluating PNT2258 for the treatment of third-line relapsed or refractory diffuse large B-cell lymphoma (DLBCL). In October 2015, we initiated “Brighton”, an open-label 50 patient Phase 2 trial evaluating PNT2258 for the treatment of Richter’s transformed chronic lymphocytic leukemia (Richter’s CLL). Richter’s CLL is a rare and aggressive form of NHL with no currently approved therapies. We may also evaluate PNT2258 in additional Phase 2 trials.

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Since inception, we have devoted substantially all of our resources to research and development activities, including the clinical development of our lead product candidate, PNT2258, and providing general and administrative support for these operations. We have never generated revenue and have incurred significant net losses since inception. Our net losses were $10.5 million and $8.0 million for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, we had an accumulated deficit of $544.7 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

• invest significantly to further develop, and seek regulatory approval for, our lead product candidate, PNT2258;

• acquire or in-license other drugs and technologies;

• invest in scaling our manufacturing capacity to support development and our global commercialization strategy;

• continue to develop our DNAi technology platform;

• identify and develop additional product candidates;

• hire additional clinical, scientific and management personnel;

• seek regulatory and marketing approvals for any product candidates that we may develop;

• ultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;

• maintain, expand and protect our intellectual property portfolio; and

• add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and to operate as a public company.

On July 21, 2015, we completed the initial public offering (IPO) of our common stock pursuant to a registration statement on Form S-1. In the IPO, we sold an aggregate of 9,315,000 shares of our common stock, which included 1,215,000 shares of common stock purchased by the underwriters upon the full exercise of their options to purchase additional common stock, at a price of $17.00 per share. We received aggregate cash proceeds of approximately $143.6 million from the IPO, net of underwriting discounts and commissions and offering expenses.

We have funded our operations to date primarily from the issuance and sale of our common stock in our IPO and our convertible and redeemable convertible preferred stock in private financings and, to a lesser extent, through debt financings and exercises of our preferred stock warrants. As of March 31, 2016, we had cash and cash equivalents of $140.9 million.

Components of Statements of Operations

Operating Expenses

Research and Development

Research and development expenses consist primarily of the following:

• fees or milestone payments incurred in connection with license agreements;

• personnel-related costs, which include salaries, benefits, stock-based compensation, recruitment fees and travel costs;

• costs associated with preclinical studies and clinical trials, regulatory activities and manufacturing activities to support clinical activities;

• fees paid to external service providers that conduct certain research and development, clinical and manufacturing activities on our behalf; and

• facility-related costs, which include direct and allocated expenses for rent and maintenance of facilities, depreciation and amortization expense and other supplies.

The largest recurring component of our total operating expenses has historically been our investment in research and development activities, including the clinical development of our product candidate. We expect our research and development expenses will increase over the next few years as we advance our development programs, pursue regulatory approval of our product candidate in the United States and other jurisdictions and prepare for potential commercialization, which will require a significant investment in costs related to contract manufacturing and inventory buildup.

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The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for PNT2258 or any future product candidates. The probability of success of our product candidate may be affected by numerous factors, including clinical data, regulatory developments, competition, manufacturing capability and commercial viability. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization of PNT2258 or any future product candidates.

General and Administrative

General and administrative expenses consist of personnel-related costs, facility-related costs, allocated expenses and professional fees for services, including legal, human resources, audit and accounting services. Personnel-related costs consist of salaries, benefits, stock-based compensation, recruitment fees and travel costs.

We expect to incur additional expenses associated with supporting our growing research and development activities, operating as a public company and other administration and professional services.

Other Income (Expense), net

Change in Fair Value of Preferred Stock Warrants

Our preferred stock warrants were previously classified as a liability on our condensed consolidated balance sheets and, as such, were re-measured to fair value at each balance sheet date, with the corresponding gain or loss from the adjustment recorded in the condensed consolidated statement of operations. Upon the completion of the IPO, the liability on the outstanding preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit).

Other Income

Other income primarily consists of interest earned on our cash and cash equivalents and short-term investments, as well as foreign currency exchange gains and losses. Foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. Foreign currency gains and losses may continue to fluctuate in the future due to changes in foreign currency exchange rates.

Provision for Income Taxes

Provision for income taxes consists of federal and state income taxes in the United States and income taxes in Canada and Australia, as well as deferred income taxes and changes in related valuation allowance reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

We did not record a provision for U.S. federal income taxes for the three months ended March 31, 2016 because we expect to generate a loss for the year ended December 31, 2016. Our tax expense to date relates to income taxes in Canada and Australia. Our net U.S. deferred tax assets continue to be offset by a full valuation allowance.

21

Results of Operations

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

	Three Months Ended March 31,						Change
	2016			2015			$
	(In thousands)
Operating expenses:
Research and development	$	6,636		$	5,296		$	1,340
General and administrative		3,977			1,441			2,536
Total operating expenses		10,613			6,737			3,876
Loss from operations		(10,613	)		(6,737	)		(3,876	)
Other income (expense), net:
Change in fair value of preferred stock warrants		—			(1,326	)		1,326
Other income		83			25			58
Total other income (expense), net		83			(1,301	)		1,384
Loss before provision for income taxes		(10,530	)		(8,038	)		(2,492	)
Provision for income taxes		8			10			(2	)
Net loss	$	(10,538	)	$	(8,048	)	$	(2,490	)

Research and Development

Research and development expenses increased $1.3 million, from $5.3 million for the three months ended March 31, 2015 to $6.6 million for the three months ended March 31, 2016. The increase was primarily due to a $1.2 million increase in costs related to the continuation of our PNT2258 clinical trials and a $2.3 million increase in personnel-related costs due mainly to increased headcount, of which $0.9 million was attributable to stock-based compensation. These increased costs were partially offset by a $2.4 million decrease in third-party manufacturing costs for the manufacture of PNT2258.

General and Administrative

General and administrative expenses increased $2.5 million, from $1.4 million for the three months ended March 31, 2015 to $4.0 million for the three months ended March 31, 2016. The increase was primarily due to a $1.1 million increase in personnel-related costs associated mainly with increased headcount, of which $0.3 million was attributable to an increase in stock-based compensation. The remaining increase was attributable to a $0.5 million increase in accounting, consulting, legal and other professional fees incurred in connection with activities related to being a public company, a $0.5 million increase in allocated overhead expenses primarily related to increased headcount in support of corporate growth and a $0.4 million increase relating to business development activities.

Change in Fair Value of Preferred Stock Warrants

The change in the fair value of our preferred stock warrants decreased $1.3 million, from $1.3 million for the three months ended March 31, 2015 to nil for the three months ended March 31, 2016. The preferred stock warrants were exercised immediately prior to the closing of the IPO, which closed on July 21, 2015.

Liquidity and Capital Resources

Capital Resources

Since our inception, we have never generated revenue and have incurred significant net losses. Our net losses for the three months ended March 31, 2016 and 2015 were $10.5 million and $8.0 million, respectively. As of March 31, 2016, we had an accumulated deficit of $544.7 million. Our principal sources of liquidity as of March 31, 2016 were cash and cash equivalents of $140.9 million.

In July 2015, we closed our IPO and sold an aggregate of 9,315,000 shares of our common stock (inclusive of 1,215,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares) at a price of $17.00 per share. We received aggregate cash proceeds of approximately $143.6 million from the IPO, net of underwriting discounts and commissions and offering expenses. As of March 31, 2016, we did not have any outstanding borrowings or any debt arrangements.

22

We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

• invest significantly to further develop, and seek regulatory approval for, our lead product candidate, PNT2258;

• acquire or in-license other drugs and technologies;

• invest in scaling our manufacturing capacity to support development and our global commercialization strategy;

• continue to develop our DNAi technology platform;

• identify and develop additional product candidates;

• hire additional clinical, scientific and management personnel;

• seek regulatory and marketing approvals for any product candidates that we may develop;

• ultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;

• maintain, expand and protect our intellectual property portfolio; and

• add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and to operate as a public company.

To fund our current operating plans, we will need to raise additional capital. Our existing cash and cash equivalents will not be sufficient for us to complete development of our lead product candidate and, if applicable, to prepare for commercializing any product candidate that may receive approval. Accordingly, we will continue to require substantial additional capital to continue our clinical development and potential commercialization activities; however, we believe that our existing cash and cash equivalents will be sufficient to fund our current operating plans through at least the next 18 months. We cannot assure that we will ever be profitable or generate positive cash flow from operating activities. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts.

We plan to continue to fund our current operating plans’ needs through equity financings or other arrangements. To the extent that we raise additional capital through future equity financings, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. There can be no assurance that such additional financing, if available, can be obtained on terms acceptable to us. If we are unable to obtain such additional financing, we would need to reevaluate our future operating plans.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three Months Ended March 31,
	2016			2015
	(In thousands)
Cash used in operating activities	$	(9,231	)	$	(4,986	)
Cash used in investing activities		(154	)		(71	)
Cash provided by (used in) financing activities		81			(43	)
Effect of exchange rate changes on cash and cash equivalents		(5	)		—
Net decrease in cash and cash equivalents	$	(9,309	)	$	(5,100	)

Cash Flows from Operating Activities

For the three months ended March 31, 2016, cash used in operating activities of $9.2 million was attributable to a net loss of $10.5 million, partially offset by $1.4 million in non-cash charges that consisted primarily of stock-based compensation.

23

For the three months ended March 31, 2015, cash used in operating activities of $5.0 million was attributable to a net loss of $8.0 million, partially offset by $1.5 million in non-cash charges and a net change of $1.5 million in our net operating assets and liabilities. The non-cash charges consisted primarily of $1.3 million for the change in fair value of our preferred stock warrants and $0.2 million in stock-based compensation. The change in operating assets and liabilities was primarily attributable to a $1.3 million net increase in accounts payable and accrued liabilities due to an increase in manufacturing and clinical costs associated with our PNT2258 clinical trials and an increase in headcount.

Cash Flows from Investing Activities

For the three months ended March 31, 2016, cash used in investing activities of $0.2 million was primarily attributable to the purchase of property and equipment.

For the three months ended March 31, 2015, cash used in investing activities was $0.1 million, consisting primarily of $50,000 of cash transferred to a restricted cash account as collateral for our facility lease.

Cash Flows from Financing Activities

For the three months ended March 31, 2016, cash provided by financing activities was $0.1 million, consisting of proceeds received from the exercise of options to purchase common stock.

For the three months ended March 31, 2015, cash used in financing activities was $43,000, consisting of the payment of $0.1 million in deferred offering costs, partially offset by proceeds received from the exercise of options to purchase common stock.

Contractual Obligations and Other Commitments

The following table summarizes our contractual obligations as of March 31, 2016, which represent material expected or contractually committed future obligations.

	Payments Due by Period
Contractual Obligations:	Remainder of 2016		1 to 3 Years		3 to 5 Years		More Than 5 Years		Total
	(in thousands)
Clinical obligations(1)	$	3,677	$	7,331	$	—	$	—	$	11,008
Operating lease obligations(2)		233		564		66		—		863
Total contractual obligations	$	3,910	$	7,895	$	66	$	—	$	11,871

(1) Reflects payments we are required to make pursuant to clinical agreements relating to the clinical trials for PNT2258.

(2) Reflects payments we are required to make under operating lease agreements. Costs such as taxes and other operating costs are not included in the amounts disclosed.

In the event we receive regulatory authority approval of PNT2258, we are required to pay Novosom a $3.0 million milestone payment. This milestone payment has been excluded from the table above as we are unable to reliably estimate the timing of the future payment.

Off-Balance Sheet Arrangements

We do not currently engage in off-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purpose entities and other structure finance entities.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

24

We believe that the assumptions and estimates associated with research and development expenses, stock-based compensation and preferred stock warrant liabilities have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Operations included in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency risk.

Interest Rate Sensitivity

We had cash and cash equivalents of $140.9 million as of March 31, 2016, which consisted primarily of bank deposits and money market funds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our condensed consolidated financial condition or results of operations. We do not believe that our cash or cash equivalents have significant risk of default or illiquidity.

Foreign Currency Risk

Our condensed consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A substantial majority of our expenses are denominated in U.S. Dollars, with the remainder in Canadian and Australian Dollars. Our condensed consolidated results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative instruments. The effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have a material impact on our operating loss.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2016 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Use of Proceeds

On July 15, 2015, our Registration Statement on Form S-1 (File No. 333-204921) relating to the IPO of our common stock was declared effective by the SEC.

There has been no material change in the expected use of the net proceeds from our IPO, as described in our final prospectus filed with the SEC on July 16, 2015 pursuant to Rule 424(b).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM  5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRONAI THERAPEUTICS, INC.
Date:  May 10, 2016	By:	/s/ Nick Glover
		Dr. Nick Glover
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:  May 10, 2016	By:	/s/ Sukhi Jagpal
		Sukhi Jagpal
		Chief Financial Officer
		(Principal Financial Officer)

27

EXHIBIT INDEX

			Incorporated by Reference			Filed/Furnished Herewith
Exhibit Number	Exhibit Description	Form	File No.	Exhibit No.	Exhibit Filing Date
10.1	Standard Office Lease, dated January 8, 2016, by and between the Registrant and Fund VIII 1000 Marina, LLC.	10-K	001-37490	10.9	March 3, 2016
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document.					X
101.SCH	XBRL Taxonomy Extension Schema Document.					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.					X

* This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

28

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Nick Glover, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ProNAi Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016

/s/ Nick Glover

Dr. Nick Glover

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Sukhi Jagpal, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ProNAi Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016

/s/ Sukhi Jagpal

Sukhi Jagpal

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Nick Glover, Chief Executive Officer of ProNAi Therapeutics, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (Report), as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 10, 2016

/s/ Nick Glover

Dr. Nick Glover

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Sukhi Jagpal, Chief Financial Officer of ProNAi Therapeutics, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (Report), as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 10, 2016

/s/ Sukhi Jagpal

Sukhi Jagpal

Chief Financial Officer

(Principal Financial Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 06, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	DNAI
Entity Registrant Name	ProNAi Therapeutics Inc
Entity Central Index Key	0001290149
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		30,174,778

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents (Note 5)	$ 140,871	$ 150,180
Prepaid expenses and other current assets (Note 5)	1,746	1,673
Total current assets	142,617	151,853
Property and equipment, net (Note 5)	623	566
Other assets	196	349
TOTAL ASSETS	143,436	152,768
CURRENT LIABILITIES:
Accrued liabilities (Note 5)	5,342	7,016
Accounts payable	1,779	358
Other current liabilities	7	23
Total current liabilities	7,128	7,397
TOTAL LIABILITIES	$ 7,128	$ 7,397
Commitments and Contingencies (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of March 31, 2016 and December 31, 2015; nil shares issued and outstanding as of March 31, 2016 and December 31, 2015
Common stock, $0.001 par value; 500,000,000 shares authorized as of March 31, 2016 and December 31, 2015; 30,174,778 and 30,058,105 shares issued and outstanding as of March 31, 2016 and December 31, 2015	$ 30	$ 30
Additional paid-in capital	681,003	679,528
Accumulated deficit	(544,725)	(534,187)
TOTAL STOCKHOLDERS' EQUITY	136,308	145,371
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 143,436	$ 152,768

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	30,174,778	30,058,105
Common stock, shares outstanding	30,174,778	30,058,105

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating expenses:
Research and development	$ 6,636	$ 5,296
General and administrative	3,977	1,441
Total operating expenses	10,613	6,737
Loss from operations	(10,613)	(6,737)
Other income (expense), net:
Change in fair value of preferred stock warrants		(1,326)
Other income	83	25
Total other income (expense), net	83	(1,301)
Loss before provision for income taxes	(10,530)	(8,038)
Provision for income taxes	8	10
Net loss	(10,538)	(8,048)
Adjustment to redemption value on redeemable convertible preferred stock		(11,005)
Net loss attributable to common stockholders	$ (10,538)	$ (19,053)
Net loss per share attributable to common stockholders, basic and diluted (Note 3)	$ (0.35)	$ (12.83)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (Note 3)	30,070,227	1,485,609

XML

Condensed Consolidated Statements of Convertible and Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) - USD ($) $ in Thousands	Total	Convertible Preferred Stock [Member]	Redeemable Convertible Preferred Stock [Member]	Common Stock [Member]	Common Stock [Member] Series C and D Redeemable Convertible Preferred Stock [Member]	Additional Paid-In Capital [Member]	Additional Paid-In Capital [Member] Series C and D Redeemable Convertible Preferred Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Stockholders Equity, Beginning Balance at Dec. 31, 2014	$ (107,815)	$ 2,543	$ 141,832	$ 2				$ (10)	$ (107,807)
Stockholders Equity, Beginning Balance, Shares at Dec. 31, 2014		224,564	17,042,064	1,588,701
Issuance of common stock for exercise of stock options	18					$ 18
Issuance of common stock for exercise of stock options, Shares				41,505
Stock-based compensation	3,186					3,186
Vesting of early exercised stock options	90					90
Issuance of redeemable convertible preferred stock upon exercise of redeemable convertible preferred stock warrants			$ 8,976
Issuance of redeemable convertible preferred stock upon exercise of redeemable convertible preferred stock warrants, Shares			481,671
Issuance of redeemable convertible preferred stock upon net exercise of redeemable convertible preferred stock warrants and reclassification of preferred stock warrant liability upon initial public offering			$ 11,785
Issuance of redeemable convertible preferred stock upon net exercise of redeemable convertible preferred stock warrants and reclassification of preferred stock warrant liability upon initial public offering, Shares			390,032
Adjustment to redemption value on redeemable convertible preferred stock	(374,015)		$ 374,015			(895)			(373,120)
Conversion of convertible preferred stock to common stock upon initial public offering	2,543	$ (2,543)				2,543
Conversion of convertible preferred stock to common stock upon initial public offering, Shares		(224,564)		252,817
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	536,608		$ (536,608)	$ 18		536,590
Conversion of redeemable convertible preferred stock to common stock upon initial public offering, Shares			(17,913,767)	18,109,136
Issuance of stock, value	143,549			$ 9		143,540
Issuance of stock, shares				9,315,000
Redeemable convertible preferred stock dividend	(5,543)					(5,543)
Redeemable convertible preferred stock dividend, common stock issued					$ 1		$ (1)
Redeemable convertible preferred stock dividend					750,946
Reclassification of other-than-temporary losses on short-term investments to net loss	10							$ 10
Net loss	(53,260)								(53,260)
Stockholders Equity, Ending Balance at Dec. 31, 2015	145,371			$ 30		679,528			(534,187)
Stockholders Equity, Ending Balance, Shares at Dec. 31, 2015				30,058,105
Issuance of common stock for exercise of stock options	96					96
Issuance of common stock for exercise of stock options, Shares				116,673
Stock-based compensation	1,363					1,363
Vesting of early exercised stock options	16					16
Net loss	(10,538)								(10,538)
Stockholders Equity, Ending Balance at Mar. 31, 2016	$ 136,308			$ 30		$ 681,003			$ (544,725)
Stockholders Equity, Ending Balance, Shares at Mar. 31, 2016				30,174,778

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Condensed Consolidated Statements of Convertible and Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) (Parenthetical) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($)
Common Stock [Member]
Issuance of common stock in connection with initial public offering, issuance costs	$ 14.8

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (10,538)	$ (8,048)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,363	180
Change in fair value of preferred stock warrant liabilities		1,326
Depreciation and amortization	52	13
Other	13	9
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(85)	229
Accrued liabilities	(1,451)	(276)
Accounts payable	1,415	1,581
Net cash used in operating activities	(9,231)	(4,986)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(179)	(12)
Change in restricted cash	25	(50)
Purchase of short-term investments		(9)
Net cash used in investing activities	(154)	(71)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options	96	15
Payment of deferred offering costs	(15)	(71)
Proceeds from early exercise of stock options		13
Net cash provided by (used in) financing activities	81	(43)
Effect of exchange rate changes on cash and cash equivalents	(5)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(9,309)	(5,100)
CASH AND CASH EQUIVALENTS - Beginning of period	150,180	29,154
CASH AND CASH EQUIVALENTS - End of period	140,871	24,054
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	0	0
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Change in redemption value of redeemable convertible preferred stock		(11,005)
Deferred offering costs included in accounts payable and accrued liabilities		$ 944
Property and equipment purchases included in accounts payable and accrued liabilities	$ 20

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The Company and Basis of Presentation

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Company and Basis of Presentation

1. The Company and Basis of Presentation

Organization and Description of Business

ProNAi Therapeutics, Inc. (together with its subsidiaries, collectively referred to as the “Company”), a Delaware corporation, is a clinical-stage oncology company led by a world-class senior management team of proven oncology drug developers. The Company’s vision is to be a leader in developing and commercializing a broad and diverse portfolio of cancer therapies that deliver therapeutic outcomes that dramatically change patients’ lives. The Company’s lead product candidate, PNT2258, is designed to target BCL2, a widely overexpressed oncogene that is an important gatekeeper of the programmed cell death process known as apoptosis and has been linked to many forms of cancer. In addition to advancing PNT2258, the Company is seeking to expand the number of products it has under clinical development to leverage the full potential of its team.

The Company’s primary activities since inception have been conducting research and development activities, conducting preclinical and clinical testing, recruiting personnel, performing business and financial planning, and raising capital to support development activities.

The Company has not generated any product revenue related to its primary business purpose to date, nor has it generated any income, and is subject to a number of risks and uncertainties, which include dependence on key individuals, the need for development of commercially viable products, the need to obtain regulatory approval for its products and commercialize them and the need to obtain adequate additional financing to fund the development of its product candidates.

Initial Public Offering

On July 15, 2015, the Company’s Registration Statement on Form S-1 (File No. 333-204921) relating to the initial public offering (IPO) of its common stock was declared effective by the Securities and Exchange Commission (SEC). Pursuant to such Registration Statement, the Company sold an aggregate of 9,315,000 shares of its common stock at a price of $17.00 per share for aggregate cash proceeds of approximately $143.6 million, net of underwriting discounts and commissions and offering costs.

On July 21, 2015, immediately prior to the closing of the IPO, all outstanding shares of convertible and redeemable convertible preferred stock converted into 18,361,953 shares of common stock, including an aggregate of 390,680 shares of common stock that were issued pursuant to the net exercise of 493,648 preferred stock warrants at the IPO price of $17.00 per share and an aggregate of 481,671 shares of common stock that were issued pursuant to the cash exercise of 481,671 preferred stock warrants. The IPO closed on July 21, 2015.

As discussed further in Note 8, on the closing of the IPO, the Company paid $5.5 million to the holders of its Series B and B-1 redeemable convertible preferred stock in settlement of the cumulative dividends. In addition, the Company issued 750,946 shares of common stock to the holders of its Series C and D redeemable convertible preferred stock in settlement of the cumulative dividends.

Following the filing of the Restated Certificate of Incorporation of the Company on July 21, 2015, the number of shares of capital stock the Company is authorized to issue is 510,000,000 shares, of which 500,000,000 shares may be common stock and 10,000,000 shares may be preferred stock. Both the common stock and the preferred stock have a par value of $0.001 per share.

Reverse Stock Split

On June 29, 2015, the Company’s board of directors approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse split of the Company’s common stock, convertible preferred stock and redeemable convertible preferred stock at a 7.45-to-1 ratio (Reverse Stock Split). The Reverse Stock Split became effective on July 2, 2015, upon the filing of the amendment to the Company’s Amended and Restated Certificate of Incorporation. The authorized shares and par value of the common, convertible preferred and redeemable convertible preferred stock were not adjusted as a result of the Reverse Stock Split. All issued and outstanding common stock, convertible preferred stock, redeemable convertible preferred stock, warrants to purchase preferred stock, options to purchase common stock and per share amounts contained in the condensed consolidated financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated balance sheet as of March 31, 2016, the condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of convertible and redeemable convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2016 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated financial data disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016, or for any other future annual or interim period. The consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 3, 2016.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of common stock, the fair value of preferred stock, the fair value of preferred stock warrant liabilities, the fair value of stock options, recoverability of the Company’s net deferred tax assets, and related valuation allowance and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the U.S. Dollar. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are recorded at historical exchange rates. Gains and losses related to remeasurement are recorded in other income (expense) in the condensed consolidated statements of operations. The net foreign exchange transaction gains (losses) included in other income (expense) in the accompanying condensed consolidated statements of operations was insignificant for the three months ended March 31, 2016 and 2015.

Cash and Cash Equivalents 

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist primarily of funds invested in readily available checking and savings accounts and highly liquid investments in money market funds.

Restricted Cash

Restricted cash represents collateral for a corporate credit card facility and security deposits required for facility leases. Restricted cash consists of funds invested in a money market fund. As of March 31, 2016, the current portion of restricted cash of $12,000 was included in prepaid expenses and other current assets and the long-term portion of restricted cash of $0.2 million was included in other assets in the accompanying condensed consolidated balance sheets. As of December 31, 2015, the current portion of restricted cash included in prepaid expenses and other current assets and the long-term portion of restricted cash included in other assets were $25,000 and $0.2 million, respectively.

Investments 

The Company determines the appropriate designation of its investments as “trading,” “available-for-sale” or “held-to-maturity” based on management’s intent at the time of purchase and reevaluates such designation at each reporting date. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity (deficit), except for unrealized losses determined to be other-than-temporary which are recorded in other income (expense) in the accompanying condensed consolidated statements of operations. The Company determines any realized gains or losses on the sale of any investments on a specific identification method and records such gains and losses as a component of other income (expense) in the accompanying condensed consolidated statements of operations.

The Company evaluates its short-term investments periodically for possible other-than-temporary impairment. A decline in fair value below the amortized cost of the investment is considered other-than-temporary impairment if the Company has the intent to sell the investment or it is more likely than not that the Company will be required to sell the investment before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in other income (expense). Regardless of the Company’s intent or requirement to sell an investment, impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis.

Investments with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the condensed consolidated balance sheet date are classified as long-term.

Concentrations of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist of cash, cash equivalents and restricted cash. All of the Company’s cash, cash equivalents and restricted cash are held at financial institutions in the United States and Canada that management believes to be of high credit quality. Deposits held in the United States with these financial institutions exceed federally insured limits.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer and establishing a minimum allowable credit rating.

Comprehensive Income (Loss)

The Company had no components of comprehensive income (loss) other than net loss for all periods presented.

Fair Value of Financial Instruments 

The Company’s cash and cash equivalents, restricted cash, other current assets, accounts payable, and accrued liabilities approximate their fair value at March 31, 2016 and December 31, 2015, due to their short duration. The Company’s preferred stock warrant liabilities contain unobservable inputs that reflect the Company’s own assumptions in which there is little, if any, market activity at the measurement date, thus the Company’s warrant liabilities were measured at fair value on a recurring basis using unobservable inputs until they were exercised in 2015.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property and equipment, excluding leasehold improvements, is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Depreciation and amortization begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in the condensed consolidated statement of operations. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease term.

Other Assets

Other assets consist primarily of restricted cash pledged as collateral for a corporate credit card facility and security deposits required for facility leases.

Preferred Stock Warrant Liabilities

The Company accounts for its warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and remeasured to fair value on each subsequent reporting period, with the changes in fair value recognized as a component of other income (expense), net in the accompanying condensed consolidated statements of operations. On the closing of the IPO on July 21, 2015 (discussed in Note 1), all outstanding warrants were exercised and the liability on the preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit), and was no longer subject to remeasurement.

Research and Development Costs 

Research and development costs are expensed as incurred. The Company accounts for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Depending on the timing of payments to service providers of research and development costs, the Company recognizes prepaid expenses or accrued expenses related to these costs. These prepaid or accrued expenses are based on management’s estimates of the work performed under service agreements and milestones achieved. Research and development costs include fees incurred in connection with license agreements, compensation and other related costs for employees engaged in research and development, costs associated with preclinical studies and trials, regulatory activities, manufacturing activities to support clinical activities, license fees, fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company and an allocation of overhead expenses.

Stock-Based Compensation 

The Company accounts for share-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for employee stock-based compensation awards is the date of grant and the expense is recognized on a straight line basis over the vesting period.

For share-based awards that vest subject to the satisfaction of a service requirement and a performance component, the fair value measurement date is the date of grant and is recognized over the requisite service period as achievement of the performance objective becomes probable.

Stock-based compensation arrangements with non-employees are recognized at the grant date and remeasured to fair value at each reporting period. The expense is recognized over the vesting period, which is generally the service period.

Income Taxes 

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net U.S. deferred tax assets have been offset by a full valuation allowance.

The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of provision for income taxes.

Segment Information 

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with cancer. Accordingly, the Company has a single reporting segment.

Recent Accounting Pronouncements Not Yet Effective

In February 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The amendments in this update require that organizations recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued FASB ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update involve the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Net Loss Per Share

3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, less common stock issued that is subject to repurchase, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, preferred stock and warrants to purchase preferred stock, stock options and common stock subject to repurchase are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

	Three Months Ended March 31,
	2016		2015
Options to purchase common stock		4,153,460		2,462,631
Common stock subject to repurchase		7,614		116,674
Convertible preferred stock		—		252,817
Redeemable convertible preferred stock		—		17,236,784
Warrants to purchase preferred stock		—		976,492
Total potential dilutive shares		4,161,074		21,045,398

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Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company measures and reports its cash equivalents and restricted cash at fair value. The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	139,218	$	—	$	—	$	139,218
Restricted money market funds		200		—		—		200
Total financial assets	$	139,418	$	—	$	—	$	139,418
	December 31, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	148,604	$	—	$	—	$	148,604
Restricted money market funds		225		—		—		225
Total financial assets	$	148,829	$	—	$	—	$	148,829

Money market funds and restricted money market funds are measured at fair value on a recurring basis using quoted prices and are classified as a Level 1 input.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2016.

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Balance Sheet Components

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

5. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Cash	$	1,653	$	1,576
Cash equivalents:
Money market accounts		139,218		148,604
Total cash and cash equivalents	$	140,871	$	150,180

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Prepaid research and development project costs	$	816	$	878
Prepaid insurance		286		480
Other receivables		303		44
Other		341		271
Total prepaid expenses and other current assets	$	1,746	$	1,673

Property and Equipment, net

Property and equipment, net consists of the following:

	March 31, 2016			December 31, 2015
	(in thousands)
Computer equipment	$	258		$	242
Software		150			126
Lab equipment		236			236
Leasehold improvements		106			79
Furniture and fixtures		47			5
Property and equipment, gross		797			688
Less: accumulated depreciation		(174	)		(122	)
Total property and equipment, net	$	623		$	566

Depreciation and amortization related to the Company’s property and equipment was $52,000 and $13,000 for the three months ended March 31, 2016 and 2015, respectively.

Accrued Liabilities

Accrued liabilities consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Accrued research and development costs	$	3,608	$	4,318
Accrued employee related costs		965		1,529
Accrued professional fees		540		933
Other		229		236
Total accrued liabilities	$	5,342	$	7,016

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

License Agreements

In March 2007, the Company entered into an exclusive license agreement with Novosom AG (Novosom) to use certain patented LNP delivery technology for any of its DNAi drug candidates that target a region of the BCL2 gene (the Novosom License Agreement). In July 2010, the Novosom License Agreement was acquired by Marina Biotech, Inc. (Marina), but Novosom retained the right to receive all payments due from the Company under the Novosom License Agreement.

In March 2012, the Company and Marina entered into another exclusive license agreement (the Marina License Agreement) for the use of certain of Marina’s patented delivery technology, including LNP technology, for any of the Company’s current or future DNAi product candidates that target any gene. In exchange for this exclusive right, the Company paid Marina an upfront payment of $0.3 million in 2012 to be applied to the first DNAi product candidate under this agreement. The Company will be required to pay Marina milestone payments of up to an aggregate of $14.5 million for each DNAi product candidate, other than PNT2258, upon successful completion of certain clinical and regulatory milestone events relating to each DNAi product candidate identified in the Marina License Agreement. In addition, for DNAi product candidates other than PNT2258, the Company is required to pay Marina a low single-digit royalty on net sales.

In May 2013, the Company issued Novosom 283,069 shares of common stock with a fair market value of $0.1 million in settlement of the first milestone payment.

In April 2014, the Company entered into a Second License Amendment and Consent to Termination Agreement with Marina pursuant to which the Novosom License Agreement (which had been transferred to Marina by Novosom in July 2010) was terminated and the obligations previously set forth in the Novosom License Agreement were restated in the Marina License Agreement. In connection therewith, in April 2014, the Company also entered into a License Payment Agreement with Novosom under which the Company agreed to pay Novosom $11.0 million in cash upon the closing of a minimum $35.0 million financing. Also, the Company agreed to pay Novosom a $3.0 million milestone payment within 30 days of regulatory authority approval of PNT2258. Upon Novosom’s receipt of the cash payment of $11.0 million, all financial obligations of the Company to Novosom were terminated, other than the aforementioned milestone payment, historic manufacturing costs and a low-single digit royalty payment on net sales of PNT2258.

The Company made the $11.0 million payment to Novosom in April 2014, upon the closing of the Series D redeemable convertible preferred stock financing and a payment of $0.1 million in July 2014 settling the obligation for the historic manufacturing costs. The April 2014 Second License Amendment and Consent to Termination Agreement serves as the second amendment to the Marina License Agreement.

As of March 31, 2016, the Company has not accrued the $3.0 million milestone payment to Novosom as regulatory approval was not considered probable of occurring.

As of March 31, 2016, the Company has not identified any product candidates that would pertain to the Marina License Agreement. Therefore, there is currently no potential expense or payment due under the Marina License Agreement.

Lease Agreements

The Company leases its Michigan facility under a short-term operating lease with a term of less than a year that provides for a fixed monthly rent for the term of the lease and also provides for certain rent adjustments covering the expenses and taxes of the facility.

In February 2015, the Company entered into an operating lease agreement to sublease office space in Vancouver, Canada. The operating lease agreement expires on February 27, 2018. Under the terms of the agreement, the Company issued a letter of credit to the sublessor on closing, which was collateralized by a restricted deposit of $25,000 at March 31, 2016.

In January 2016, the Company entered into an operating lease agreement to lease office space in San Francisco, California. The operating lease agreement expires on April 30, 2019.

In addition to base rent, these leases require payment of taxes and other operating costs. These operating costs are not included in the table below.

As of March 31, 2016, the aggregate future non-cancelable minimum lease payments associated with these operating leases (based on the noon rate on March 31, 2016 for the conversion of Canadian dollars into U.S. dollars, as quoted by The Bank of Canada) are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
2016	$	233
2017		356
2018		208
2019		66
Total	$	863

The total rent expense for all operating leases was $0.1 million and $35,000 for the three months ended March 31, 2016 and 2015.

Legal

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened litigation that, in the Company’s opinion, would have a material adverse effect on the business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

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Common Stock Reserved for Issuance

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Common Stock Reserved for Issuance

7. Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans and shares reserved for issuance under the employee stock purchase plan.

	March 31, 2016		December 31, 2015
Outstanding and issued stock options		4,153,460		3,522,813
Shares reserved for future option grants		3,978,883		3,523,879
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Total common stock reserved for issuance		8,832,343		7,746,692

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Preferred Stock

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Preferred Stock

8. Preferred Stock

Preferred Stock

As of March 31, 2016, the Company had 10,000,000 shares of preferred stock authorized with a par value of $0.001. No shares of preferred stock were outstanding as of March 31, 2016.

Convertible and Redeemable Convertible Preferred Stock

During the year ended December 31, 2015, the Company issued an aggregate of 481,671 shares of redeemable convertible preferred stock upon the cash exercise of the Company’s Series B-1 and Series C redeemable convertible preferred stock warrants, consisting of 444,286 shares of Series B-1 redeemable convertible preferred stock and 37,385 shares of Series C redeemable convertible preferred stock.

In addition, during the year ended December 31, 2015, the Company issued an aggregate of 390,032 shares of redeemable convertible preferred stock upon the net exercise of the Company’s Series B, Series B-1 and Series C redeemable convertible preferred stock warrants, consisting of 5,850 shares of Series B redeemable convertible preferred stock, 291,165 shares of Series B-1 redeemable convertible preferred stock and 93,017 shares of Series C redeemable convertible preferred stock.

On July 21, 2015 (closing date of the IPO), all outstanding shares of Series A convertible preferred stock converted into 252,817 shares of common stock and all outstanding shares of Series B, Series B-1, Series C and Series D redeemable convertible preferred stock converted into 18,109,136 shares of common stock. On issuance, the Company’s convertible and redeemable convertible preferred stock was recorded at fair value or the amount of allocated proceeds, net of issuance costs.

The Company’s Series B, B-1, C and D redeemable convertible preferred stock was classified outside of stockholders’ equity (deficit) from issuance through the closing of the IPO, because the stock contained redemption features that commenced at any time on or after December 31, 2018 at the election of the Series B, B-1, C and D redeemable convertible preferred stockholders. The Company adjusted the carrying amount of the redeemable convertible preferred stock to equal the redemption value at the end of each reporting period. Due to the absence of retained earnings, adjustments to redemption value were recorded against additional paid-in capital, if any, and then to accumulated deficit. The change in the redemption value of the redeemable convertible preferred stock for the three months ended March 31, 2015 was as follows:

	(in thousands)
Redeemable Convertible Preferred Stock
Series B	$	5,216
Series B-1		3,513
Series C		416
Series D		1,860
Total adjustment to redemption value on redeemable convertible preferred stock	$	11,005

As the redemption value for the redeemable convertible preferred stock was at times based on fair market value, the Company determined the fair value of the redeemable convertible preferred stock using a combination of the OPM and/or the PWERM models, or the fair value of the Company’s common stock. The following assumptions were used in the OPM to determine fair value of the redeemable convertible preferred stock for the three months ended March 31, 2015:

Expected term (in years)	1.1
Expected volatility	81	%
Risk-free interest rate	0.3	%
Expected dividend rate	—	%

Amendment to Dividend Rights

On June 11, 2015, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to modify the terms of the cumulative accruing dividends on the outstanding shares of the Company’s Series C and Series D redeemable convertible preferred stock. Under the terms of the Amended Certificate of Incorporation, upon conversion of the Company’s redeemable convertible preferred stock into common stock in connection with an IPO, the Company was required to pay 50% of the then accrued but unpaid accruing dividends on shares of the Series C and Series D redeemable convertible preferred stock in shares of the Company’s common stock instead of payment in cash and the remaining 50% of the then accrued but unpaid accruing dividends was to be forfeited. The settlement of the accrued but unpaid accruing dividends in shares of common stock was required to be at the original issue price of the Series C and Series D redeemable convertible preferred stock of $5.215 per share. The terms of the dividends payable on the Series B and Series B-1 preferred stock were not modified.

Settlement of Cumulative Dividends

On July 21, 2015 (closing date of the IPO), the Company had total cumulative unpaid dividends in arrears of $18.9 million, which consisted of $9.4 million for the Series B, $1.7 million for the Series B-1, $1.7 million for the Series C and $6.1 million for the Series D redeemable convertible preferred stock. During the year ended December 31, 2015, the Company paid in cash accruing dividends in the aggregate amount of $5.5 million to the Series B and B-1 redeemable convertible preferred stockholders, consisting of $4.7 million for the Series B and $0.8 million for the Series B-1 redeemable convertible preferred stockholders. In addition, during the year ended December 31, 2015, the Company issued an aggregate of 750,946 shares of common stock to the Series C and D redeemable convertible preferred stockholders with an aggregate fair value of $20.4 million in settlement of the Series C and Series D redeemable convertible preferred stock cumulative dividends in accordance with the June 11, 2015 amendment discussed above, consisting of 161,536 shares of common stock with a fair value of $4.4 million to the Series C redeemable convertible preferred stockholders and 589,410 shares of common stock with a fair value of $16.0 million to the Series D redeemable convertible preferred stockholders.

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Preferred Stock Warrants

3 Months Ended

Mar. 31, 2016

Text Block [Abstract]

Preferred Stock Warrants

9. Preferred Stock Warrants

The Company classified its preferred stock warrants as liabilities. During the year ended December 31, 2015, $19.3 million of the fair value of the warrant liability was reclassified to redeemable convertible preferred stock and then into additional paid-in capital in stockholders’ equity (deficit) on conversion of redeemable convertible preferred stock into common stock on the closing of the IPO. The warrants were no longer outstanding at December 31, 2015.

During the year ended December 31, 2015, 31,778 of the Series B-1 warrants were cash exercised at an exercise price of $7.45 per share, 412,508 of the Series B-1 warrants were cash exercised at an exercise price of $2.6075 per share and 37,385 of the Series C warrants were cash exercised at an exercise price of $5.215 per share, resulting in total aggregate cash proceeds to the Company of $1.5 million.

On the closing of the Company’s IPO, all of the remaining outstanding preferred stock warrants were net exercised at the IPO price of $17.00 per share, which resulted in 6,499 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 10,414 shares of Series B preferred stock, 291,164 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 349,054 shares of Series B-1 preferred stock and 93,017 shares of common stock being issued upon the net exercise of outstanding warrants to purchase 134,180 shares of Series C preferred stock.

During the three months ended March 31, 2015, the Company remeasured the preferred stock warrants using the OPM and/or PWERM models, or based on the fair value of the underlying stock. On the closing of the IPO in July 2015, the outstanding preferred stock warrants were exercised and the liability on the preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit), and was no longer subject to remeasurement.

The change in fair value of the preferred stock warrant liabilities is attributable to the increase of the fair value of the underlying stock. The change in the fair value of preferred stock warrants for the three months ended March 31, 2015 is recognized as a component of other income (expense), net in the condensed consolidated statements of operations.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

In the accompanying condensed consolidated statement of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Research and development	$	954	$	74
General and administrative		409		106
Total stock-based compensation	$	1,363	$	180

Determination of Fair Value

The estimated grant-date fair value of all the Company’s stock-based awards was calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2016	2015
Expected term (in years)	5.4 – 10.0	6.0 – 10.0
Expected volatility	77 – 84%	75 – 82%
Risk-free interest rate	1.3 – 1.9%	1.5 – 1.9%
Expected dividend rate	—   %	—   %

Equity Incentive Plans

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. Under the 2015 Plan, 3,400,000 shares of common stock were initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards, cash awards and stock bonuses. In addition, 365,535 shares that had been available for future awards under the 2008 Plan as of July 14, 2015, were added to the initial reserve available under the 2015 Plan, bringing the total number of shares reserved for issuance under the 2015 Plan upon its effective date to 3,765,535 shares. The number of shares initially reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. Accordingly, 1,202,324 shares were added to the reserve available under the 2015 Plan on January 1, 2016. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a 10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

A summary of activity under the 2008 Plan and 2015 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2015		3,523,879			3,522,813		$	3.81		8.78	$	40,425
Awards authorized		1,202,324
Options granted		(821,200	)		821,200			7.28
Options exercised		—			(116,673	)		0.83
Options cancelled		73,880			(73,880	)		5.59
Outstanding — March 31, 2016		3,978,883			4,153,460		$	4.55		8.88	$	12,717
Exercisable — March 31, 2016					2,110,814		$	1.20		8.28	$	11,695
Vested and expected to vest — March 31, 2016					4,005,036		$	4.49		8.87	$	12,431

The weighted-average grant date fair values of options granted during the three months ended March 31, 2016 and 2015 was $5.00 and $3.58 per share, respectively. The aggregate intrinsic value of options exercised was $0.8 million for the three months ended March 31, 2016 and $0.1 million for the three months ended March 31, 2015. The total grant date fair value of options vested for the three months ended March 31, 2016 and 2015 was $0.7 million and $18,000, respectively.

As of March 31, 2016, total unrecognized stock-based compensation related to unvested stock options was $15.2 million, net of estimated forfeitures. These costs are expected to be recognized over a remaining weighted-average period of 3.2 years as of March 31, 2016.

Liability for Early Exercise of Stock Options

The 2008 Plan allows for the granting of options that may be exercised before the options have vested. In December 2014, an executive officer early exercised 103,252 stock options. In February 2015, an executive officer early exercised 13,422 stock options. On early exercise, the awards became subject to a restricted stock agreement. The shares of restricted stock granted upon early exercise of the options are subject to the same vesting provisions as the original stock option awards. Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment or services, at the price paid by the purchaser, and are not deemed to be issued for accounting purposes until those related shares vest. The liability is reclassified into common stock and additional paid-in capital as the shares vest and the repurchase right lapses. Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $7,000 as a current liability as of March 31, 2016 and $23,000 as of December 31, 2015 from the early exercise in the accompanying condensed consolidated balance sheets. As of March 31, 2016 and December 31, 2015, 7,614 and 23,554 shares held by the employees remained unvested and subject to repurchase.

2015 Employee Stock Purchase Plan

The Company adopted the 2015 Employee Stock Purchase Plan (ESPP) and initially reserved 700,000 shares of common stock as of its effective date of July 15, 2015. The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The aggregate number of shares issued over the term of the 2015 Employee Stock Purchase Plan will not exceed 3,400,000 shares of common stock.

Under the ESPP, participants are offered the options to purchase shares of the Company’s common stock at a 15% discount during a series of discrete offering periods, subject to any plan limitations. The ESPP will not become effective until such time as the Compensation Committee determines in the future, and as of March 31, 2016, the initial offering periods had not commenced. As of March 31, 2016, no shares of common stock have been issued to employees participating in the ESPP and 700,000 shares were available for issuance under the ESPP.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company did not record a provision for federal income taxes for the three months ended March 31, 2016 because it expects to generate a loss for the year ended December 31, 2016. The income tax expense of $8,000 for the three months ended March 31, 2016 represents foreign taxes. The Company’s net U.S. deferred tax assets continue to be offset by a full valuation allowance.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated balance sheet as of March 31, 2016, the condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of convertible and redeemable convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2016 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report. The condensed consolidated financial data disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016, or for any other future annual or interim period. The consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 3, 2016.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of common stock, the fair value of preferred stock, the fair value of preferred stock warrant liabilities, the fair value of stock options, recoverability of the Company’s net deferred tax assets, and related valuation allowance and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Foreign Currency

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the U.S. Dollar. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are recorded at historical exchange rates. Gains and losses related to remeasurement are recorded in other income (expense) in the condensed consolidated statements of operations. The net foreign exchange transaction gains (losses) included in other income (expense) in the accompanying condensed consolidated statements of operations was insignificant for the three months ended March 31, 2016 and 2015.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist primarily of funds invested in readily available checking and savings accounts and highly liquid investments in money market funds.

Restricted Cash

Restricted Cash

Restricted cash represents collateral for a corporate credit card facility and security deposits required for facility leases. Restricted cash consists of funds invested in a money market fund. As of March 31, 2016, the current portion of restricted cash of $12,000 was included in prepaid expenses and other current assets and the long-term portion of restricted cash of $0.2 million was included in other assets in the accompanying condensed consolidated balance sheets. As of December 31, 2015, the current portion of restricted cash included in prepaid expenses and other current assets and the long-term portion of restricted cash included in other assets were $25,000 and $0.2 million, respectively.

Investments

Investments 

The Company determines the appropriate designation of its investments as “trading,” “available-for-sale” or “held-to-maturity” based on management’s intent at the time of purchase and reevaluates such designation at each reporting date. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity (deficit), except for unrealized losses determined to be other-than-temporary which are recorded in other income (expense) in the accompanying condensed consolidated statements of operations. The Company determines any realized gains or losses on the sale of any investments on a specific identification method and records such gains and losses as a component of other income (expense) in the accompanying condensed consolidated statements of operations.

The Company evaluates its short-term investments periodically for possible other-than-temporary impairment. A decline in fair value below the amortized cost of the investment is considered other-than-temporary impairment if the Company has the intent to sell the investment or it is more likely than not that the Company will be required to sell the investment before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in other income (expense). Regardless of the Company’s intent or requirement to sell an investment, impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis.

Investments with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the condensed consolidated balance sheet date are classified as long-term.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist of cash, cash equivalents and restricted cash. All of the Company’s cash, cash equivalents and restricted cash are held at financial institutions in the United States and Canada that management believes to be of high credit quality. Deposits held in the United States with these financial institutions exceed federally insured limits.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer and establishing a minimum allowable credit rating.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The Company had no components of comprehensive income (loss) other than net loss for all periods presented.

Fair Value of Financial Instruments

Fair Value of Financial Instruments 

The Company’s cash and cash equivalents, restricted cash, other current assets, accounts payable, and accrued liabilities approximate their fair value at March 31, 2016 and December 31, 2015, due to their short duration. The Company’s preferred stock warrant liabilities contain unobservable inputs that reflect the Company’s own assumptions in which there is little, if any, market activity at the measurement date, thus the Company’s warrant liabilities were measured at fair value on a recurring basis using unobservable inputs until they were exercised in 2015.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property and equipment, excluding leasehold improvements, is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Depreciation and amortization begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in the condensed consolidated statement of operations. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease term.

Other Assets

Other Assets

Other assets consist primarily of restricted cash pledged as collateral for a corporate credit card facility and security deposits required for facility leases.

Preferred Stock Warrant Liabilities

Preferred Stock Warrant Liabilities

The Company accounts for its warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and remeasured to fair value on each subsequent reporting period, with the changes in fair value recognized as a component of other income (expense), net in the accompanying condensed consolidated statements of operations. On the closing of the IPO on July 21, 2015 (discussed in Note 1), all outstanding warrants were exercised and the liability on the preferred stock warrants was reclassified to additional paid-in capital in stockholders’ equity (deficit), and was no longer subject to remeasurement.

Research and Development Costs

Research and Development Costs 

Research and development costs are expensed as incurred. The Company accounts for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Depending on the timing of payments to service providers of research and development costs, the Company recognizes prepaid expenses or accrued expenses related to these costs. These prepaid or accrued expenses are based on management’s estimates of the work performed under service agreements and milestones achieved. Research and development costs include fees incurred in connection with license agreements, compensation and other related costs for employees engaged in research and development, costs associated with preclinical studies and trials, regulatory activities, manufacturing activities to support clinical activities, license fees, fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company and an allocation of overhead expenses.

Stock-Based Compensation

Stock-Based Compensation 

The Company accounts for share-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for employee stock-based compensation awards is the date of grant and the expense is recognized on a straight line basis over the vesting period.

For share-based awards that vest subject to the satisfaction of a service requirement and a performance component, the fair value measurement date is the date of grant and is recognized over the requisite service period as achievement of the performance objective becomes probable.

Stock-based compensation arrangements with non-employees are recognized at the grant date and remeasured to fair value at each reporting period. The expense is recognized over the vesting period, which is generally the service period.

Income Taxes

Income Taxes 

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net U.S. deferred tax assets have been offset by a full valuation allowance.

The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of provision for income taxes.

Segment Information

Segment Information 

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with cancer. Accordingly, the Company has a single reporting segment.

Recent Accounting Pronouncements Not Yet Effective

Recent Accounting Pronouncements Not Yet Effective

In February 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The amendments in this update require that organizations recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued FASB ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update involve the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the impact of the ASU on the Company’s consolidated financial statements.

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Schedule of Outstanding Shares of Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share Attributable to Common Stockholders

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

	Three Months Ended March 31,
	2016		2015
Options to purchase common stock		4,153,460		2,462,631
Common stock subject to repurchase		7,614		116,674
Convertible preferred stock		—		252,817
Redeemable convertible preferred stock		—		17,236,784
Warrants to purchase preferred stock		—		976,492
Total potential dilutive shares		4,161,074		21,045,398

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value Financial Assets and Liabilities Measured on Recurring Basis

The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:

	March 31, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	139,218	$	—	$	—	$	139,218
Restricted money market funds		200		—		—		200
Total financial assets	$	139,418	$	—	$	—	$	139,418
	December 31, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets
Money market funds	$	148,604	$	—	$	—	$	148,604
Restricted money market funds		225		—		—		225
Total financial assets	$	148,829	$	—	$	—	$	148,829

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Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Cash	$	1,653	$	1,576
Cash equivalents:
Money market accounts		139,218		148,604
Total cash and cash equivalents	$	140,871	$	150,180

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Prepaid research and development project costs	$	816	$	878
Prepaid insurance		286		480
Other receivables		303		44
Other		341		271
Total prepaid expenses and other current assets	$	1,746	$	1,673

Summary of Property and Equipment, Net

Property and equipment, net consists of the following:

	March 31, 2016			December 31, 2015
	(in thousands)
Computer equipment	$	258		$	242
Software		150			126
Lab equipment		236			236
Leasehold improvements		106			79
Furniture and fixtures		47			5
Property and equipment, gross		797			688
Less: accumulated depreciation		(174	)		(122	)
Total property and equipment, net	$	623		$	566

Summary of Accrued Liabilities

Accrued liabilities consist of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Accrued research and development costs	$	3,608	$	4,318
Accrued employee related costs		965		1,529
Accrued professional fees		540		933
Other		229		236
Total accrued liabilities	$	5,342	$	7,016

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of Aggregate Future Non-Cancelable Minimum Lease Payments

As of March 31, 2016, the aggregate future non-cancelable minimum lease payments associated with these operating leases (based on the noon rate on March 31, 2016 for the conversion of Canadian dollars into U.S. dollars, as quoted by The Bank of Canada) are as follows:

Years Ending December 31:	Operating Leases
	(in thousands)
2016	$	233
2017		356
2018		208
2019		66
Total	$	863

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Common Stock Reserved for Issuance (Tables)

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Schedule of Common Stock Reserved for Issuance

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding options granted and available for grant under the incentive plans and shares reserved for issuance under the employee stock purchase plan.

	March 31, 2016		December 31, 2015
Outstanding and issued stock options		4,153,460		3,522,813
Shares reserved for future option grants		3,978,883		3,523,879
Shares reserved under the 2015 employee stock purchase plan		700,000		700,000
Total common stock reserved for issuance		8,832,343		7,746,692

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Preferred Stock (Tables)

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Change in Redemption Value of Convertible Preferred Stock

The change in the redemption value of the redeemable convertible preferred stock for the three months ended March 31, 2015 was as follows:

	(in thousands)
Redeemable Convertible Preferred Stock
Series B	$	5,216
Series B-1		3,513
Series C		416
Series D		1,860
Total adjustment to redemption value on redeemable convertible preferred stock	$	11,005

Summary of Assumptions used to Determine Fair Value of Temporary Equity

As the redemption value for the redeemable convertible preferred stock was at times based on fair market value, the Company determined the fair value of the redeemable convertible preferred stock using a combination of the OPM and/or the PWERM models, or the fair value of the Company’s common stock. The following assumptions were used in the OPM to determine fair value of the redeemable convertible preferred stock for the three months ended March 31, 2015:

Expected term (in years)	1.1
Expected volatility	81	%
Risk-free interest rate	0.3	%
Expected dividend rate	—	%

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense for Employees and Non-employees

In the accompanying condensed consolidated statement of operations, the Company recognized stock-based compensation expense for its employees and non-employees as follows:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Research and development	$	954	$	74
General and administrative		409		106
Total stock-based compensation	$	1,363	$	180

Schedule of Estimated Grant-date Fair Value of Stock-based Awards Using Black-Scholes Option Pricing Model Assumptions

The estimated grant-date fair value of all the Company’s stock-based awards was calculated using the Black-Scholes option pricing model, based on assumptions as follows:

	Three Months Ended March 31,
	2016	2015
Expected term (in years)	5.4 – 10.0	6.0 – 10.0
Expected volatility	77 – 84%	75 – 82%
Risk-free interest rate	1.3 – 1.9%	1.5 – 1.9%
Expected dividend rate	—   %	—   %

Summary of Stock-Based Compensation Activity

A summary of activity under the 2008 Plan and 2015 Plan and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2015		3,523,879			3,522,813		$	3.81		8.78	$	40,425
Awards authorized		1,202,324
Options granted		(821,200	)		821,200			7.28
Options exercised		—			(116,673	)		0.83
Options cancelled		73,880			(73,880	)		5.59
Outstanding — March 31, 2016		3,978,883			4,153,460		$	4.55		8.88	$	12,717
Exercisable — March 31, 2016					2,110,814		$	1.20		8.28	$	11,695
Vested and expected to vest — March 31, 2016					4,005,036		$	4.49		8.87	$	12,431

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The Company and Basis of Presentation - Additional Information (Detail) $ / shares in Units, $ in Millions				3 Months Ended	12 Months Ended
	Jul. 21, 2015 $ / shares shares	Jul. 15, 2015 USD ($) $ / shares shares	Jun. 29, 2015	Mar. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 $ / shares shares
Class of Stock [Line Items]
Shares issued, price per share | $ / shares	$ 17.00
Convertible preferred stock, conversion basis				On July 21, 2015, immediately prior to the closing of the IPO, all outstanding shares of convertible and redeemable convertible preferred stock converted into 18,361,953 shares of common stock, including an aggregate of 390,680 shares of common stock that were issued pursuant to the net exercise of 493,648 preferred stock warrants at the IPO price of $17.00 per share and an aggregate of 481,671 shares of common stock that were issued pursuant to the cash exercise of 481,671 preferred stock warrants. The IPO closed on July 21, 2015.
Number of common stock shares issued upon exercise of preferred stock warrants	390,680				481,671
Preferred stock warrants exercised	493,648
Capital stock, authorized	510,000,000
Common stock, shares authorized	500,000,000			500,000,000	500,000,000
Preferred stock, shares authorized	10,000,000			10,000,000	10,000,000
Preferred stock, par value | $ / shares	$ 0.001			$ 0.001	$ 0.001
Common stock, par value | $ / shares	$ 0.001			$ 0.001	$ 0.001
Reverse stock split, description				7.45-to-1
Reverse Stock Split, Conversion Ratio			7.45
Reverse stock split, effective date				Jul. 02, 2015
Series B and B-1 Redeemable Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Cumulative dividends | $				$ 5.5
Series C and D Redeemable Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Issuable common stock to redeemable convertible preferred stockholders				750,946
Common Stock [Member]
Class of Stock [Line Items]
Stock issued, shares					9,315,000
Redeemable convertible preferred stock converted into common stock	18,361,953
Cash Exercise [Member]
Class of Stock [Line Items]
Number of common stock shares issued upon exercise of preferred stock warrants	481,671
Preferred stock warrants exercised	481,671
Initial Public Offering [Member]
Class of Stock [Line Items]
Stock issued, shares		9,315,000
Shares issued, price per share | $ / shares		$ 17.00
Proceeds from issuance of common stock, net | $		$ 143.6

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 USD ($) Segment	Dec. 31, 2015 USD ($)
Summary Of Significant Accounting Policy [Line Items]
Number of operating segment | Segment	1
Minimum [Member] | Property Plant And Equipment Other Than Leasehold Improvement[Member]
Summary Of Significant Accounting Policy [Line Items]
Estimated useful lives of assets	3 years
Maximum [Member] | Property Plant And Equipment Other Than Leasehold Improvement[Member]
Summary Of Significant Accounting Policy [Line Items]
Estimated useful lives of assets	5 years
Other Assets [Member]
Summary Of Significant Accounting Policy [Line Items]
Long-term portion of restricted cash	$ 200,000	$ 200,000
Prepaid Expenses and Other Current Assets [Member]
Summary Of Significant Accounting Policy [Line Items]
Current portion of restricted cash	$ 12,000	$ 25,000

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Net Loss Per Share - Schedule of Outstanding Shares of Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	4,161,074	21,045,398
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares		252,817
Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares		17,236,784
Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	4,153,460	2,462,631
Common Stock Subject to Repurchase [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares	7,614	116,674
Warrants to Purchase Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potential dilutive shares		976,492

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Fair Value Measurements - Schedule of Fair Value Financial Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financial Assets
Total financial assets	$ 139,418	$ 148,829
Money Market Funds [Member]
Financial Assets
Total financial assets	139,218	148,604
Restricted Money Market Funds [Member]
Financial Assets
Total financial assets	200	225
Level 1 [Member]
Financial Assets
Total financial assets	139,418	148,829
Level 1 [Member] | Money Market Funds [Member]
Financial Assets
Total financial assets	139,218	148,604
Level 1 [Member] | Restricted Money Market Funds [Member]
Financial Assets
Total financial assets	$ 200	$ 225

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Fair Value Measurements - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 USD ($)
Fair Value Disclosures [Abstract]
Transfer of assets from level 1 to 2	$ 0
Transfer of assets from level 2 to 1	0
Transfer of liabilities from level 1 to 2	0
Transfer of liabilities from level 2 to 1	0
Transfer of assets into level 3	0
Transfer of assets out of level 3	0
Transfer of liabilities into level 3	0
Transfer of liabilities out of level 3	$ 0

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Balance Sheet Components - Summary of Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Cash and Cash Equivalents [Abstract]
Cash	$ 1,653	$ 1,576
Cash equivalents:
Money market accounts	139,218	148,604
Total cash and cash equivalents	$ 140,871	$ 150,180	$ 24,054	$ 29,154

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Balance Sheet Components - Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid research and development project costs	$ 816	$ 878
Prepaid insurance	286	480
Other receivables	303	44
Other	341	271
Total prepaid expenses and other current assets	$ 1,746	$ 1,673

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Balance Sheet Components - Summary of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 797	$ 688
Less: accumulated depreciation	(174)	(122)
Total property and equipment, net	623	566
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	258	242
Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	150	126
Lab Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	236	236
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	106	79
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 47	$ 5

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Balance Sheet Components - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Property, Plant and Equipment [Abstract]
Depreciation and amortization related to property and equipment	$ 52	$ 13

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Balance Sheet Components - Summary of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accrued research and development costs	$ 3,608	$ 4,318
Accrued employee related costs	965	1,529
Accrued professional fees	540	933
Other	229	236
Total accrued liabilities	$ 5,342	$ 7,016

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	1 Months Ended				3 Months Ended		12 Months Ended
	Jan. 31, 2016	Jul. 31, 2014	Apr. 30, 2014	May. 31, 2013	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2012
Lease Agreements [Member]
Loss Contingencies [Line Items]
Total rent expense for operating leases					$ 100,000	$ 35,000
License Agreements [Member]
Loss Contingencies [Line Items]
Upfront payment paid							$ 300,000
Shares of common stock issued in settlement of first milestone payment				283,069
Fair marker value of common stock issued				$ 100,000
Payment in cash upon closing of financing			$ 11,000,000
Minimum financing			35,000,000
Milestone payment upon regulatory authority approval			$ 3,000,000
Manufacturing costs obligation		$ 100,000
Milestone payment not accrued					$ 3,000,000
Operating Lease Agreement To Lease Office Space [Member] | San Francisco [Member]
Loss Contingencies [Line Items]
Operating lease agreement expiration date	Apr. 30, 2019
Operating Lease Agreement To Sublease Office Space [Member] | Vancouver [Member]
Loss Contingencies [Line Items]
Operating lease agreement expiration date					Feb. 27, 2018
Collateralized restricted deposit					$ 25,000
Maximum [Member] | License Agreements [Member]
Loss Contingencies [Line Items]
Aggregate milestone payment							$ 14,500,000

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Commitments and Contingencies - Schedule of Aggregate Future Non-Cancelable Minimum Lease Payments (Detail) $ in Thousands	Mar. 31, 2016 USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2016	$ 233
2017	356
2018	208
2019	66
Total	$ 863

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Common Stock Reserved for Issuance - Schedule of Common Stock Reserved for Issuance (Detail) - shares	Mar. 31, 2016	Dec. 31, 2015	Jul. 15, 2015
Class of Stock [Line Items]
Outstanding and issued stock options	4,153,460	3,522,813
Total common stock reserved for future issuance	8,832,343	7,746,692
2015 Employee Stock Purchase Plan [Member]
Class of Stock [Line Items]
Total common stock reserved for future issuance	700,000	700,000	700,000
Shares Reserved For Future Option Grants [Member]
Class of Stock [Line Items]
Total common stock reserved for future issuance	3,978,883	3,523,879

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Preferred Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions			12 Months Ended
	Jul. 21, 2015	Jun. 11, 2015	Dec. 31, 2015	Mar. 31, 2016
Temporary Equity [Line Items]
Preferred stock, shares authorized	10,000,000		10,000,000	10,000,000
Preferred stock, par value	$ 0.001		$ 0.001	$ 0.001
Preferred stock, shares outstanding			0	0
Number of shares issued upon exercise of stock warrants	390,680		481,671
Number of convertible preferred stock issued upon exercise of stock warrants			390,032
Percentage of accrued but unpaid dividends paid in shares		50.00%
Percentage of accrued but unpaid dividends forfeited		50.00%
Share price		$ 5.215
Cumulative unpaid dividends in arrears	$ 18.9
Series C Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Number of shares issued upon exercise of stock warrants	93,017		37,385
Number of convertible preferred stock issued upon exercise of stock warrants			93,017
Cumulative unpaid dividends in arrears	$ 1.7
Issuable common stock to redeemable convertible preferred stockholders			161,536
Fair value of common stock to redeemable convertible preferred stockholders			$ 4.4
Series D Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Cumulative unpaid dividends in arrears	$ 6.1
Issuable common stock to redeemable convertible preferred stockholders			589,410
Fair value of common stock to redeemable convertible preferred stockholders			$ 16.0
Series B-1 Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Number of shares issued upon exercise of stock warrants	291,164		444,286
Number of convertible preferred stock issued upon exercise of stock warrants			291,165
Cumulative unpaid dividends in arrears	$ 1.7
Accruing dividends			$ 0.8
Series B Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Number of shares issued upon exercise of stock warrants	6,499
Number of convertible preferred stock issued upon exercise of stock warrants			5,850
Cumulative unpaid dividends in arrears	$ 9.4
Accruing dividends			$ 4.7
Series A Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Preferred stock converted into common stock shares	252,817
Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Preferred stock converted into common stock shares	18,109,136		(17,913,767)
Series B and B-1 Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Accruing dividends			$ 5.5
Series C and D Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Issuable common stock to redeemable convertible preferred stockholders			750,946
Fair value of common stock to redeemable convertible preferred stockholders			$ 20.4

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Preferred Stock - Change in Redemption Value of Convertible Preferred Stock (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2015 USD ($)
Temporary Equity [Line Items]
Adjustment to redemption value	$ 11,005
Series B Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Adjustment to redemption value	5,216
Series B-1 Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Adjustment to redemption value	3,513
Series C Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Adjustment to redemption value	416
Series D Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Adjustment to redemption value	1,860
Redeemable Convertible Preferred Stock [Member]
Temporary Equity [Line Items]
Adjustment to redemption value	$ 11,005

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Preferred Stock - Summary of Assumptions used to Determine Fair Value of Temporary Equity (Detail)	3 Months Ended
	Mar. 31, 2015
Temporary Equity Disclosure [Abstract]
Expected term (in years)	1 year 1 month 6 days
Expected volatility	81.00%
Risk-free interest rate	0.30%
Expected dividend rate	0.00%

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Preferred Stock Warrants - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Jul. 21, 2015	Dec. 31, 2015
Class of Warrant or Right [Line Items]
Fair value of warrant liability reclassified to redeemable convertible preferred stock and additional paid-in capital		$ 19.3
Warrants exercised	493,648
Warrants exercise price	$ 17.00
Cash proceeds from warrants exercised		$ 1.5
Number of common stock shares issued upon exercise of preferred stock warrants	390,680	481,671
Series B Redeemable Convertible Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Warrants exercised	10,414
Number of common stock shares issued upon exercise of preferred stock warrants	6,499
Series B-1 Redeemable Convertible Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Warrants exercised	349,054
Number of common stock shares issued upon exercise of preferred stock warrants	291,164	444,286
Series C Redeemable Convertible Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Warrants exercised	134,180
Number of common stock shares issued upon exercise of preferred stock warrants	93,017	37,385
Series B-1 Redeemable Convertible Preferred Stock Cash Exercised at Exercise Price of $7.45 [Member]
Class of Warrant or Right [Line Items]
Warrants exercised		31,778
Warrants exercise price		$ 7.45
Series B-1 Redeemable Convertible Preferred Stock Warrants Cash Exercised at Exercise Price of $2.6075 [Member]
Class of Warrant or Right [Line Items]
Warrants exercised		412,508
Warrants exercise price		$ 2.6075
Series C Redeemable Convertible Preferred Stock Warrants Cash Exercised at Exercise Price of $5.215 [Member]
Class of Warrant or Right [Line Items]
Warrants exercised		37,385
Warrants exercise price		$ 5.215

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Stock-Based Compensation - Schedule of Stock-based Compensation Expense for Employees and Non-employees (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 1,363	$ 180
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	954	74
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 409	$ 106

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Stock-Based Compensation - Schedule of Estimated Grant-date Fair Value of Stock-based Awards Using Black-Scholes Option Pricing Model Assumptions (Detail)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, Minimum	77.00%	75.00%
Expected volatility, Maximum	84.00%	82.00%
Risk-free interest rate, Minimum	1.30%	1.50%
Risk-free interest rate, Maximum	1.90%	1.90%
Expected dividend rate	0.00%	0.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 4 months 24 days	6 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	10 years	10 years

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Stock-Based Compensation - Additional Information (Detail) - USD ($)					1 Months Ended		3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Jul. 15, 2015	Jul. 14, 2015	Feb. 28, 2015	Dec. 31, 2014	Mar. 31, 2016	Mar. 31, 2015	Jan. 01, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance	8,832,343	7,746,692					8,832,343
Proceeds from early exercise of stock options of unvested portion								$ 13,000
2008 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance				365,535
Number of shares held by employees subject to repurchase	7,614	23,554					7,614
2008 Plan [Member] | Executive officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options early exercised					13,422	103,252
Proceeds from early exercise of stock options of unvested portion	$ 7,000	$ 23,000
2015 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares reserved for issuance	700,000	700,000	700,000				700,000
Stock option grants description							The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company's common stock as of the immediately preceding December 31.
Percentage threshold of outstanding shares increased annually under the plan			1.00%
Maximum number of common stock shares allowed to issue under employee stock purchase plan			3,400,000
Options to purchase shares of common stock, discount percentage			15.00%
Number of common stock issued							0
2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock shares initially reserved for issuance				3,400,000
Number of common stock shares reserved for issuance				3,765,535					1,202,324
Stock option grants description							The number of shares initially reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company's common stock as of the immediately preceding December 31.
Percentage threshold of outstanding shares increased annually under the plan				4.00%
Stock option life in years							10 years
2008 Plan and 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair values of options granted							$ 5.00	$ 3.58
Aggregate intrinsic value of options exercised							$ 800,000	$ 100,000
Total grant date fair value of options vested							700,000	$ 18,000
Total unrecognized stock-based compensation related to unvested stock options	$ 15,200,000						$ 15,200,000
Weighted-average period							3 years 2 months 12 days
Maximum number of common stock shares allowed to issue under employee stock purchase plan	1,202,324						1,202,324

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Stock-Based Compensation - Summary of Stock-Based Compensation Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Options Outstanding, Number of Shares Outstanding
Number of Shares Outstanding, Beginning balance	3,522,813
Number of Shares Outstanding, Ending balance	4,153,460	3,522,813
2008 Plan and 2015 Plan [Member]
Options Outstanding, Shares Available for Grant
Shares Available for Grant, Beginning balance	3,523,879
Shares Available for Grant, Awards authorized	1,202,324
Shares Available for Grant, Granted	(821,200)
Shares Available for Grant, Exercised	0
Shares Available for Grant, Cancelled	73,880
Shares Available for Grant, Ending balance	3,978,883	3,523,879
Options Outstanding, Number of Shares Outstanding
Number of Shares Outstanding, Beginning balance	3,522,813
Number of Shares Outstanding, Options granted	821,200
Number of Shares Outstanding, Options exercised	(116,673)
Number of Shares Outstanding, Options cancelled	(73,880)
Number of Shares Outstanding, Ending balance	4,153,460	3,522,813
Number of Shares Outstanding, Exercisable	2,110,814
Number of Shares Outstanding, Vested and expected to vest	4,005,036
Options Outstanding, Weighted-Average Exercise Price Per Share
Weighted-Average Exercise Price Per Share, Beginning balance	$ 3.81
Weighted-Average Exercise Price Per Share, Options granted	7.28
Weighted-Average Exercise Price Per Share, Options exercised	0.83
Weighted-Average Exercise Price Per Share, Options cancelled	5.59
Weighted-Average Exercise Price Per Share, Ending balance	4.55	$ 3.81
Weighted-Average Exercise Price Per Share, Exercisable	1.20
Weighted-Average Exercise Price Per Share, Vested and expected to vest	$ 4.49
Options Outstanding, Weighted-Average Remaining Contractual Term (Years)
Weighted-Average Remaining Contractual Term (Years)	8 years 10 months 17 days	8 years 9 months 11 days
Weighted-Average Remaining Contractual Term (Year), Exercisable	8 years 3 months 11 days
Weighted-Average Remaining Contractual Term (Year), Vested and expected to vest	8 years 10 months 13 days
Aggregate Intrinsic Value of Outstanding Options
Aggregate Intrinsic Value of Outstanding Options	$ 12,717	$ 40,425
Aggregate Intrinsic Value of Outstanding Options, Exercisable	11,695
Aggregate Intrinsic Value of Outstanding Options, Vested and expected to vest	$ 12,431

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Income Taxes - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 USD ($)
Income Tax Disclosure [Abstract]
Income tax expense for foreign taxes	$ 8,000
Provision for federal income taxes	$ 0