Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2019	Aug. 09, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Trading Symbol	PSNL
Entity Registrant Name	Personalis, Inc.
Entity Central Index Key	0001527753
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		31,128,674
Entity Current Reporting Status	No
Entity Shell Company	false
Entity File Number	001-38943
Entity Tax Identification Number	275411038
Entity Address, Address Line One	1330 O’Brien Drive
Entity Address, City or Town	Menlo Park
Entity Address, State or Province	California
Entity Address, Postal Zip Code	94025
City Area Code	650
Local Phone Number	752-1300

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 163,269	$ 19,744
Accounts receivable	7,465	4,457
Inventory and other deferred costs	3,538	3,432
Prepaid expenses and other current assets	1,897	1,926
Total current assets	176,169	29,559
Property and equipment, net	13,409	11,452
Operating lease right-of-use assets	1,320
Other long-term assets	947	659
Total assets	191,845	41,670
Current liabilities
Accounts payable	8,781	6,565
Accrued and other current liabilities	4,676	3,392
Contract liabilities	41,866	42,897
Short-term debt	1,020	4,996
Total current liabilities	56,343	57,850
Redeemable convertible preferred stock warrant liability		683
Long-term debt	18,016
Other long-term liabilities	468	121
Total liabilities	74,827	58,654
Commitments and Contingencies (Note 12)
Redeemable convertible preferred stock	0	89,404
Stockholders’ equity (deficit)
Common stock, $0.0001 par value — 200,000,000 shares authorized and 31,121,605 shares issued and outstanding as of June 30, 2019; 102,700,000 shares authorized and 3,085,307 shares issued and outstanding as of December 31, 2018	3	1
Additional paid-in-capital	244,089	9,131
Accumulated other comprehensive loss	(15)	(15)
Accumulated deficit	(127,059)	(115,505)
Total stockholders’ equity (deficit)	117,018	(106,388)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)	$ 191,845	$ 41,670

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	102,700,000
Common stock, shares, issued	31,121,605	3,085,307
Common stock, shares, outstanding	31,121,605	3,085,307

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenues	$ 15,825	$ 8,799	$ 29,900	$ 12,963
Costs and expenses
Costs of revenues	9,923	6,403	20,014	10,468
Research and development	4,497	3,500	9,742	6,449
Selling, general and administrative	5,466	2,604	9,636	4,917
Total costs and expenses	19,886	12,507	39,392	21,834
Loss from operations	(4,061)	(3,708)	(9,492)	(8,871)
Interest income	200	71	284	132
Interest expense	(745)	(573)	(929)	(1,195)
Loss on debt extinguishment		(3,322)		(3,322)
Other (expense) income, net	(1,261)	218	(1,413)	569
Loss before income taxes	(5,867)	(7,314)	(11,550)	(12,687)
Provision for income taxes	(2)	(1)	(4)	(3)
Net loss	$ (5,869)	$ (7,315)	$ (11,554)	$ (12,690)
Net loss per share, basic and diluted	$ (0.89)	$ (2.39)	$ (2.38)	$ (4.15)
Weighted-average shares outstanding, basic and diluted	6,597,007	3,063,126	4,853,325	3,061,069

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (5,869)	$ (7,315)	$ (11,554)	$ (12,690)
Other comprehensive income (loss)
Foreign currency translation adjustment	(15)	(5)		(2)
Comprehensive loss	$ (5,884)	$ (7,320)	$ (11,554)	$ (12,692)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY (DEFICIT) (unaudited) - USD ($) $ in Thousands	Total	Common Stock and Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Redeemable Convertible Preferred Stock
Total redeemable convertible preferred stock, beginning balances at Dec. 31, 2017	$ 75,995
Conversion of redeemable convertible preferred stock to common stock		$ 0			$ 0
Total redeemable convertible preferred stock, ending balances at Jun. 30, 2018	75,995
Beginning balances at Dec. 31, 2017		3,026	$ (95,619)	$ (10)
Equity component credited to additional paid-in capital upon Convertible Notes modification on May 31, 2018		3,890
Proceeds from initial public offering, net of expenses		0
Conversion of redeemable convertible preferred stock warrants to common stock warrants		0
Proceeds from exercise of common stock warrant		0
Issuance of common stock warrants		0
Proceeds from exercise of stock options		24
Stock-based compensation		583
Net loss	(12,690)		(12,690)
Foreign currency translation adjustment	(2)			(2)
Ending balances at Jun. 30, 2018	(100,798)	7,523	(108,309)	(12)
Total redeemable convertible preferred stock, beginning balances at Mar. 31, 2018	75,995
Conversion of redeemable convertible preferred stock to common stock		0			0
Total redeemable convertible preferred stock, ending balances at Jun. 30, 2018	75,995
Beginning balances at Mar. 31, 2018		3,219	(100,994)	(7)
Equity component credited to additional paid-in capital upon Convertible Notes modification on May 31, 2018		3,890
Proceeds from initial public offering, net of expenses		0
Conversion of redeemable convertible preferred stock warrants to common stock warrants		0
Proceeds from exercise of common stock warrant		0
Issuance of common stock warrants		0
Proceeds from exercise of stock options		0
Stock-based compensation		414
Net loss	(7,315)		(7,315)
Foreign currency translation adjustment	(5)			(5)
Ending balances at Jun. 30, 2018	(100,798)	7,523	(108,309)	(12)
Total redeemable convertible preferred stock, beginning balances at Dec. 31, 2018	89,404
Conversion of redeemable convertible preferred stock to common stock		89,404			(89,404)
Total redeemable convertible preferred stock, ending balances at Jun. 30, 2019	0
Beginning balances at Dec. 31, 2018	(106,388)	9,132	(115,505)	(15)
Equity component credited to additional paid-in capital upon Convertible Notes modification on May 31, 2018		0
Proceeds from initial public offering, net of expenses		140,024
Conversion of redeemable convertible preferred stock warrants to common stock warrants		2,086
Proceeds from exercise of common stock warrant		8
Issuance of common stock warrants		572
Proceeds from exercise of stock options		611
Stock-based compensation		2,255
Net loss	(11,554)		(11,554)
Foreign currency translation adjustment				0
Ending balances at Jun. 30, 2019	117,018	244,092	(127,059)	(15)
Total redeemable convertible preferred stock, beginning balances at Mar. 31, 2019	89,404
Conversion of redeemable convertible preferred stock to common stock		89,404			$ (89,404)
Total redeemable convertible preferred stock, ending balances at Jun. 30, 2019	0
Beginning balances at Mar. 31, 2019		10,667	(121,190)	0
Equity component credited to additional paid-in capital upon Convertible Notes modification on May 31, 2018		0
Proceeds from initial public offering, net of expenses		140,024
Conversion of redeemable convertible preferred stock warrants to common stock warrants		2,086
Proceeds from exercise of common stock warrant		8
Issuance of common stock warrants		0
Proceeds from exercise of stock options		257
Stock-based compensation		1,646
Net loss	(5,869)		(5,869)
Foreign currency translation adjustment	(15)			(15)
Ending balances at Jun. 30, 2019	$ 117,018	$ 244,092	$ (127,059)	$ (15)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net loss	$ (11,554)	$ (12,690)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization	2,192	1,200
Noncash lease expense	429
Stock-based compensation expense	2,255	583
Loss on debt extinguishment		3,322
Change in fair value of convertible preferred stock warrant liability	1,403
Change in fair value of compound derivative instrument		(574)
Accretion of noncash interest and debt reduction	103	900
Other	(2)	3
Changes in operating assets and liabilities
Accounts receivable	(3,009)	(2,240)
Inventories and other deferred costs	(106)	(1,675)
Prepaid expenses and other current assets	(257)	(250)
Accounts payable	(163)	634
Accrued and other current liabilities	(567)	(49)
Contract liabilities	(1,030)	13,679
Other long-term liabilities	(530)	(43)
Net cash (used in) provided by operating activities	(10,836)	2,800
Cash flows from investing activities:
Purchase of property and equipment	(2,801)	(5,237)
Net cash used in investing activities	(2,801)	(5,237)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions	144,025
Payment of costs related to initial public offering	(1,991)
Proceeds from borrowings	20,000
Payments of borrowing costs	(490)
Repayments under borrowing arrangements	(5,000)	(427)
Proceeds from exercise of common stock warrants	8
Proceeds from exercise of stock options	611	24
Net cash provided by (used in) financing activities	157,163	(403)
Effect of exchange rates on cash flows and cash equivalents	(1)	1
Net increase (decrease) in cash and cash equivalents	143,525	(2,839)
Cash and cash equivalents, beginning of period	19,744	22,617
Cash and cash equivalents, end of period	$ 163,269	$ 19,778

Company and Nature of Business

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Company and Nature of Business

Note 1. Company and Nature of Business

Description of Business

Personalis, Inc. (the “Company”) was incorporated in Delaware on February 21, 2011, and began operations in September 2011. The Company formed a wholly owned subsidiary, Personalis (UK) Ltd., in August 2013. The Company is a growing cancer genomics company transforming the development of next-generation therapies by providing more comprehensive molecular data about each patient’s cancer and immune response. The Company operates and manages its business as one reportable operating segment, which is the sale of sequencing and data analysis services.

Significant Risks and Uncertainties

The Company has incurred net operating losses and negative cash flows from operations every year. As of June 30, 2019, the Company had an accumulated deficit of $127.1 million.

In June 2019, the Company completed an initial public offering (“IPO”) of its common stock and raised proceeds of $140.0 million, after deducting underwriting discounts, commissions and offering expenses. Management believes that these proceeds combined with existing sources of liquidity will be sufficient to fund operations for at least one year from the issuance of these unaudited condensed consolidated financial statements. However, there can be no assurance that additional financing will not be required or that the Company will be successful in raising additional capital on terms which are acceptable to the Company.

If the Company requires but is unable to obtain additional funding, the Company could be required to modify, delay, or abandon some of its planned future expansion or expenditures or reduce some of its ongoing operating costs, which could harm its business, operating results, financial condition, and ability to achieve its intended business objectives.

Approval of Amended and Restated Certificate of Incorporation

An amended and restated certificate of incorporation, which authorized 200,000,000 shares of common stock and 10,000,000 shares of preferred stock became effective in June 2019 in connection with the closing of the Company’s IPO. As of June 30, 2019 no shares of preferred stock are outstanding.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 20, 2019 (the “Prospectus”).

The condensed consolidated balance sheet as of December 31, 2018 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The condensed consolidated financial statements include the accounts of Personalis, Inc. and its wholly owned subsidiary, Personalis (UK) Ltd. All intercompany balances and transactions have been eliminated.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2019.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the condensed consolidated financial statements and the reported amounts of revenues and expense during the reporting period. The estimates include, but are not limited to, useful lives assigned to long-lived assets, the valuation of common and convertible redeemable preferred stock and related warrants and options, the valuation of the compound derivative instrument, the valuation of stock-based awards, and provisions for income taxes and contingencies. Actual results could differ from these estimates, and such differences could be material to the Company’s condensed consolidated financial position and results of operations.

Reverse Stock Split

On June 4, 2019, the Company filed an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s common stock and redeemable convertible preferred stock on a four-for-one basis (the “Reverse Stock Split”). The par value of the common stock and redeemable convertible preferred stock was not adjusted as a result of the Reverse Stock Split. All references to common stock, options to purchase common stock, share data, per share data, redeemable convertible preferred stock and related information contained in these consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

Initial Public Offering

On June 20, 2019, the Company completed an IPO in which it issued and sold 9,109,725 shares of its common stock at a public offering price of $17.00 per share. The Company received net proceeds of $140.0 million after deducting underwriting discounts, commissions and offering expenses. A warrant to purchase 188,643 shares of our common stock was exercised prior to completion of the IPO. In addition, in connection with the IPO, all shares of the Company’s then-outstanding redeemable convertible preferred stock were automatically converted into 18,474,703 shares of the Company’s common stock, and all then-outstanding warrants to purchase the Company’s convertible preferred stock were automatically converted into warrants to purchase 84,585 shares of the Company’s common stock.

Deferred Offering Costs

Deferred offering costs consist of fees and expenses incurred in connection with the anticipated sale of the Company’s common stock in the IPO, including legal, accounting, printing and other IPO-related costs. In June 2019, upon completion of the IPO, the Company reclassified deferred offering costs of $4.0 million into additional paid-in capital as a reduction of the net proceeds received from the IPO. During the six months ended June 30, 2019, $2.0 million of the deferred offering costs were paid.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents are deposited with a high-quality financial institution. Deposits at this institution may, at times, exceed federally insured limits. Management believes that this financial institution is financially sound and, accordingly, that minimal credit risk exists. The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company purchases various reagents and sequencing materials from sole source suppliers. Any extended interruption in the supply of these materials could result in the Company’s inability to secure sufficient materials to conduct business and meet customer demand.

The Company routinely assesses the creditworthiness of its customers. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Due to these factors, no additional credit risk is believed by management to be probable in the Company’s accounts receivable.

Significant customers are those which represent more than 10% of the Company’s total revenue or accounts receivable balance at each respective condensed consolidated balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows:

	Revenue (unaudited)						Revenue (unaudited)						Accounts Receivable
	Three Months Ended June 30						Six Months Ended June 30						June 30, 2019			December 31, 2018
	2019			2018			2019			2018			(unaudited)
VA MVP		54	%		45	%		56	%		46	%		30	%	*
Merck & Co., Inc.	*				16	%	*				14	%	*				10	%
Pfizer Inc.		23	%	*				20	%	*				38	%		33	%
Customer D		12	%	*			*			*				18	%	*
Customer E	*				10	%	*			*			*			*
Customer F	*			*			*			*			*				17	%
Customer G	*			*			*			*			*				10	%

*	Less than 10% of revenue or accounts receivable

Revenue Recognition

The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”).

Revenue Recognition

The revenue guidance provides a five-step framework through which revenue is recognized when control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company concludes are within the scope of the new revenue recognition standard, management performs the following five steps: (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract(s); (iii) determines the transaction price, including whether there are any constraints on variable consideration; (iv) allocates the transaction price to the performance obligations; and (v) recognizes revenue when (or as) the Company satisfies a performance obligation. At contract inception, once a contract is determined to be within the scope of the new revenue standard, the Company assesses whether individual goods or services promised within each contract are distinct and, therefore, represent separate performance obligation.

The Company derives revenues from sequencing and data analysis services to support the development of personalized cancer vaccines and other next-generation cancer immunotherapies. The Company’s contracts are in the form of a combination of signed agreements, statements of work, and/or purchase orders. Under ASC Topic 606, the Company accounts for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it will be entitled.

The sequencing and data analysis services are the only distinct services that meet the definition of a performance obligation and are accounted for as one performance obligation under ASC Topic 606. The Company recognizes revenue from such services at the point in time when control of the test results is transferred to the customer. The Company has elected to exclude all sales and value added taxes from the measurement of the transaction price. Sequencing and data analysis services are based on a fixed price per test.

Payment terms and conditions vary by contract and customer. The Company’s standard payment terms are less than 90 days from the invoice date. In instances where the timing of the Company’s revenue recognition differs from the timing of its invoicing, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised services to the customer will be one year or less. The Company assessed each of its revenue-generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of its arrangements. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s services and provides payment protection for the Company.

Practical Expedients and Exemptions

As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as an expense when incurred since the amortization period of the asset the Company otherwise would have recognized is one year or less. Sales commissions are recorded within selling, general, and administrative expenses in the consolidated statements of operations.

Cost of Revenues

The Company’s costs of revenues primarily consist of production materials, personnel costs (e.g., salaries, bonuses, benefit, and stock-based compensation), cost of expensed equipment, consumables and laboratory supplies, information technology (“IT”) and facility costs, and depreciation and service maintenance contracts on capitalized equipment.

Net Loss per Share Attributable to Common Stockholders

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the redeemable convertible preferred stock, convertible preferred stock warrants, common stock warrants, common stock subject to repurchase, and stock options are considered to be potentially dilutive securities. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss is attributed entirely to common stockholders. Because the Company has reported a net loss for the reporting periods presented, the diluted net loss per common share is the same as basic net loss per common share for those periods.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). Subsequently, the FASB also issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which adjusted the effective date of ASU No. 2014-09; ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which amends the principal-versus-agent implementation guidance and illustrations in ASU No. 2014-09; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies identifying performance obligation and licensing implementation guidance and illustrations in ASU No. 2014-09; and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which addresses implementation issues and is intended to reduce the cost and complexity of applying the new revenue standard in ASU No. 2014-09 (collectively, the “Revenue ASUs”).

The Revenue ASUs provide an accounting standard for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2017. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company performed a detailed review of its revenue agreements and assessed the differences in accounting for such contracts under this guidance compared with previous revenue accounting standards. On January 1, 2017, the Company early adopted ASU No. 2014-09 using the full retrospective method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Results for all periods presented are under ASC Topic 606.

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (“ASU No. 2018-07”). ASU No. 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. For all entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020. Early adoption is permitted for any entity in any interim or annual period for which consolidated financial statements have not been issued or made available for issuance, but not before an entity adopts ASC Topic 606. The Company early adopted this guidance on January 1, 2017, which did not result in a material impact on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which provides clarification to ASU 2016-02. These ASUs (collectively, the “new lease standard”) require an entity to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for leases with lease terms of more than twelve months. Lessor accounting is largely unchanged, while lessees will no longer be provided with a source of off-balance sheet financing. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements, which allows entities to elect a modified retrospective transition method where entities may continue to apply the existing lease guidance during the comparative periods and apply the new lease requirements through a cumulative effect adjustment in the period of adoptions rather than in the earliest period presented.

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), and its associated amendments using the modified retrospective transition method by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. There was no cumulative-effect adjustment recorded to retained earnings upon adoption. Under the standard, a lessee is required to recognize a lease liability and ROU asset for all leases. The new guidance also modified the classification criteria and requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. Consistent with current guidance, a lessee’s recognition, measurement, and presentation of expenses and cash flows arising from a lease continues to depend primarily on its classification. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January 1, 2019. In addition, the Company elected the short-term lease exception as a practical expedient.

At the date of adoption, the Company derecognized a deferred rent liability in the amount of $0.3 million, and recognized a ROU asset and respective lease liability in the amount of $1.7 million and $2.0 million, respectively. As of June 30, 2019, lease liabilities in the amount of $1.0 million and $0.5 million are included in “Accrued and other current liabilities” and “Other long-term liabilities,” respectively.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The guidance is effective for the Company beginning in the first quarter of 2020. Early adoption beginning January 1, 2019 is permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and related disclosures.

JOBS Act Accounting Election

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected not to avail itself of this exemption from new or revised accounting standards, and therefore, the Company will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Revenues

6 Months Ended

Jun. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenues

Note 3. Revenues

The following table presents the Company’s revenues disaggregated by customer type (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
VA MVP	$	8,536	$	3,976	$	16,879	$	5,952
All other customers		7,289		4,823		13,021		7,011
Total	$	15,825	$	8,799	$	29,900	$	12,963

Countries outside of the United States, based on the billing addresses of customers, represented less than 1% and 4% of the Company’s revenues for the three months ended June 30, 2019 and 2018, respectively, and less than 2% and 4% for the six months ended June 30, 2019 and 2018, respectively.

Contract Assets and Liabilities

The Company had no contract assets as of June 30, 2019 and December 31, 2018, respectively.

The Company’s contract liabilities consist of customer deposits in excess of revenues recognized and are presented as current liabilities in the condensed consolidated balance sheets.

The balance of contract liabilities was $41.9 million and $42.9 million as of June 30, 2019 and December 31, 2018, respectively. Contract liabilities of $8.4 million and $0.5 million were recognized in revenues during the three months ended June 30, 2019 and 2018, respectively. Contract liabilities of $16.1 million and $2.0 million were recognized in revenues during the six months ended June 30, 2019 and 2018, respectively.

As of December 31, 2018, the remaining performance obligations under contracts for which revenues are expected to be recognized over a period of more than one year is $73.0 million. Management expects to recognize such revenues over a three-year period.

As of June 30, 2019, the remaining performance obligations under contracts for which revenues are expected to be recognized over a period of more than one year is $57.4 million. Management expects to recognize such revenues over a two-year period.

The Company does not disclose remaining performance obligations under its other contracts since contract terms are less than one year and are recognized over a term of less than 12 months.

Balance Sheet Details

6 Months Ended

Jun. 30, 2019

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Details

Note 4. Balance Sheet Details

Inventory and other deferred costs consist of the following (in thousands):

	June 30,		December 31,
	2019		2018
Raw materials	$	1,625	$	2,134
Other deferred costs		1,913		1,298
Total inventory and other deferred costs	$	3,538	$	3,432

Property and equipment. Depreciation and amortization expense for the three months ended June 30, 2019 and 2018 was $1.1 million and $0.7 million, respectively, and for the six months ended June 30, 2019 and 2018 was $2.2 million and $1.2 million, respectively.

Accrued and other current liabilities consist of the following (in thousands):

	June 30,		December 31,
	2019		2018
Accrued compensation	$	2,457	$	2,843
Operating lease right-of-use liabilities		1,030		—
Accrued taxes		354		181
Accrued interest		280		207
Deferred rent		—		99
Accrued liabilities		547		59
Deferred revenues		8		3
Total accrued and other current liabilities	$	4,676	$	3,392

Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5. Fair Value Measurements

Financial assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The authoritative guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.

The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1 — Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

•

Quoted prices for similar assets and liabilities in active markets

•

Quoted prices for identical or similar assets or liabilities in markets that are not active

•

Observable inputs other than quoted prices that are used in the valuation of the asset or liabilities (e.g., interest rate and yield curve quotes at commonly quoted intervals)

•

Inputs that are derived principally from or corroborated by observable market data by correlation or other means

Level 3 — Unobservable inputs for the assets or liabilities (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The following table represents the fair value hierarchy for the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):

	As of June 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	160,352	$	—	$	—	$	160,352
Total assets measured at fair value	$	160,352	$	—	$	—	$	160,352

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	18,142	$	—	$	—	$	18,142
Total assets measured at fair value	$	18,142	$	—	$	—	$	18,142
Liabilities
Convertible preferred stock warrants liability	$	—	$	—	$	683	$	683
Total liabilities measured at fair value	$	—	$	—	$	683	$	683

The Black-Scholes option-pricing model was used to estimate the fair value of the convertible preferred stock warrants at the date of issuance and at each subsequent consolidated balance sheet date. The fair value of the convertible preferred stock warrants was also estimated at the time of conversion to common stock warrants (see Note 10). Under this option-pricing model, convertible preferred stock warrants were valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the redeemable convertible preferred stock and common stock are inferred by analyzing these options.

The fair value of each convertible preferred stock warrant was estimated using the Black-Scholes option-pricing model with the assumptions described below. For the periods indicated the Company has limited historical volatility information available, and the expected volatility was based on actual volatility for comparable public companies projected over the expected terms of the warrants. The Company did not apply a forfeiture rate to the warrants as there is not enough historical information available to estimate such a rate. The risk-free interest rate was based on the U.S. Treasury yield curve over the expected term of the warrants.

	Six Months Ended	Year Ended
	June 30, 2019	December 31, 2018
Expected term (in years)	5.01 - 5.26	5.17 - 7.00
Volatility	57.20% - 57.24%	55.56% - 56.42%
Risk-free interest rate	1.75%	2.58% - 3.01%
Dividend yield	0%	0%

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial instruments (in thousands):

	Warrant Liability
Balance — December 31, 2018	$	683
Change in fair value	$	1,403
Reclassification of warrant liability to additional paid in capital on conversion		(2,086	)
Balance — June 30, 2019	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Borrowings

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Borrowings

Note 6. Borrowings

Amounts outstanding under the Company’s financing arrangements consisted of the following (in thousands):

	June 30,			December 31,
	2019			2018
Credit agreement
Revolving Loan	$	—		$	5,000
Growth Capital Loan		20,000			—
Total principal payments due		20,000			5,000
Less reduction in carrying value		(964	)		(4	)
Total amounts outstanding		19,036			4,996
Less: Current portion		(1,020	)		(4,996	)
Long-Term portion	$	18,016		$	—

The repayment schedule relating to the Company’s long-term debt as of June 30, 2019 is as follows (in thousands):

	June 30,
	2019
2019 (remaining six months)	$	—
2020		4,395
2021		6,463
2022		7,212
2023		1,930
Thereafter		—
Total	$	20,000

Term Loan

In September 2014, the Company entered into a loan and security agreement with Silicon Valley Bank, to borrow up to $3.0 million under an equipment loan that will be secured with the equipment financed (the “Term Loan”). On October 3, 2014, the Company borrowed $2.4 million under the Term Loan. The Term Loan required 12 interest-only payments, followed by 36 equal monthly installments of principal, plus interest, which began on October 3, 2015.

In connection with the Term Loan, the Company issued to the bank a warrant exercisable for ten years from the date of grant to purchase 22,489 shares of the Company’s Series B redeemable convertible preferred stock at an exercise price of $4.60 per share (see Note 10).

The estimated fair value of the warrants upon draw down of $0.1 million was based on the Black-Scholes option-pricing model. The Company recorded the fair value of the warrant at issuance as a reduction in the debt-carrying value and as a warrant liability. The debt-carrying value reduction is being accreted using the effective interest method as additional interest expense over the contractual period of four years for the Term Loan.

On September 30, 2018, the Term Loan was repaid in full.

Revolving Loan

In June 2017, the Company entered into a $10.0 million revolving loan and security agreement (the “Revolving Loan”) with TriplePoint Capital LLC (“TriplePoint”). Borrowings under the Revolving Loan bear an interest rate of prime, plus 6.75%. The Revolving Loan also has a 5.5% end of term loan payment on the highest outstanding principal amount. The Revolving Loan requires monthly interest-only payments until the maturity date. The Revolving Loan’s original maturity date was December 31, 2018, and in December 2018 the maturity date was further extended until March 22, 2019. Upon determining that the change in cash flows between the previous and current credit facility was not greater than 10%, the Company accounted for the transaction as a debt modification.

As of December 31, 2018, the Company’s outstanding principal under the Revolving Loan was $5.0 million and $5.0 million was available to borrow.

In connection with the Revolving Loan, the Company issued to TriplePoint a warrant to purchase up to 62,096 shares of the Company’s Series C redeemable convertible preferred stock at an exercise price of $8.052 per share (see Note 10).

The estimated fair value of the warrant upon draw down of $0.1 million was based on the Black-Scholes option-pricing model. The Company recorded the fair value of the warrant at issuance as a reduction in the debt-carrying value and as a warrant liability. The debt-carrying value reduction is being accreted using the effective interest method as additional interest expense over the contractual period of 1.5 years for the Revolving Loan.

The Revolving Loan had an effective interest rate of 19.22% per year. The Revolving Loan interest expense for the three and six months ended June 30, 2018 was $0.2 million and $0.4 million, respectively. Interest expense for the three and six months ended June 30, 2019 was not significant.

The Company accrued $0.2 million as of December 31, 2018 related to accretion of final payment due at maturity per agreement using the effective interest rate method.

On March 22, 2019, this Revolving Loan was repaid in full.

Growth Capital Loan

On March 22, 2019, the Company entered into a growth capital loan (the “Growth Capital Loan”) with TriplePoint to provide for a $20.0 million growth capital loan facility and as of June 30, 2019 had drawn down the full $20.0 million available under the facility. The Company used $5.3 million of the growth capital loan facility to repay, in its entirety, all amounts outstanding under the Revolving Loan. Borrowings under the Growth Capital Loan bear interest at a floating rate of prime rate plus 5.00% for borrowings up to $15.0 million and the prime rate plus 6.50% for borrowing greater than $15.0 million; provided, however, that in an event of default, as defined in the loan and security agreement, the interest rate applicable to borrowings under such agreement will be increased by 5.0%. Under the agreement, the Company is required to make monthly interest-only payments through April 1, 2020 and is required to make 36 equal monthly payments of principal, plus accrued interest, from April 1, 2020 through March 1, 2023, when all unpaid principal and interest becomes due and payable. The Company may voluntarily prepay all, but not part, of the outstanding principal at any time prior to the maturity date, subject to a prepayment fee of 1.00% of the outstanding balance, if prepaid in months one through 12 of the loan term. If prepaid after month 12 of the loan term of any growth capital loan, no additional prepayment premium shall be due. In addition to the final payment, the Company will pay an amount equal to 2.75% of each principal amount drawn under this growth capital loan facility.

In connection with the growth capital loan facility, the Company issued a warrant to purchase 65,502 shares of common stock to TriplePoint at an exercise price of $9.16 per share. The Company recorded the issuance-date fair value of the warrant of $0.6 million and fees paid to TriplePoint of $0.3 million as a debt discount which is amortized over the term of the Growth Capital Loan using the effective interest rate method.

Upon issuance, the Growth Capital loan had an effective interest rate of 15.23% per year.

Convertible Notes

On June 29, 2017, the Company entered into a convertible promissory note agreement with certain existing redeemable convertible preferred stockholders and third parties (collectively, the “Investors”) for the issuance of convertible promissory notes with a face value of $12.2 million (the “Convertible Notes”). Under the terms of the Convertible Notes agreement, the Convertible Notes bear interest of 8% per annum, with a maturity date of June 28, 2018. In the event that the Company issued and sold shares of its equity securities (the “Equity Securities”) to Investors on or before the maturity date in an equity financing with total proceeds to the Company of not less than $10 million (including the conversion of the Convertible Notes or other convertible securities issued for capital raising purposes) (a “Qualified Financing”), then the outstanding principal amount of the Convertible Notes and any unpaid accrued interest would have automatically converted in whole without any further action by the holder into such Equity Securities sold in the Qualified Financing at a conversion price equal to the price paid per share for Equity Securities by the Investors in the Qualified Financing multiplied by 0.8. If the Company consummated a change of control while the Convertible Notes remained outstanding, the Company would have repaid the holders in cash an amount equal to 150% of the outstanding principal amount of the Convertible Notes, plus any unpaid accrued interest on the original principal. The Convertible Notes had customary events of default.

Certain conversion and redemption features of the Convertible Notes met the requirements for separate accounting and were accounted for as a single, compound derivative instrument. The compound derivative instrument was recorded at fair value at inception and was subject to remeasurement to fair value at each consolidated balance sheet date, with any changes in fair value recognized in the consolidated statements of operations as other income (expense). The estimated fair value of the compound derivative instrument was $0.5 million at issuance and was recorded as a reduction in the carrying value of the Convertible Notes and as a single compound derivative liability. The Convertible Notes carrying value reduction was accreted using the effective interest method as interest expense over the Convertible Notes contractual period of one year. The Convertible Notes had an effective interest rate of 12.69% per year. The compound derivative instrument fair value was $0 as of December 2018 and June 30, 2019.

On May 31, 2018, the original maturity date for the Convertible Notes was extended to June 28, 2019 (previously June 28, 2018). The maturity date extension was deemed substantial and was accounted for as a debt extinguishment under ASC 470, Debt. In connection with the debt extinguishment on May 31, 2018, the fair value of the Convertible Notes was allocated between the carrying amount of the Convertible Notes and accrued interested of $13.1 million, a compound derivate asset of $0.6 million, and an equity component of $3.9 million, which was credited to additional paid-in capital within the consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit). A $3.3 million loss on debt extinguishment was also recorded in the accompanying consolidated statements of operations. The new carrying value of the Convertible Notes was accreted using the effective interest method as interest expense over the new contractual period of 1.1 years. On August 20, 2018, the maturity date for the Convertible Notes was changed to September 20, 2018 (previously June 28, 2019). The term change was deemed substantial and was accounted for as a debt extinguishment under ASC 470. In connection with the debt extinguishment on August 20, 2018, the fair value of the Convertible Notes was allocated between the new carrying amount of the Convertible Notes and accrued interest of $13.4 million, and an equity component of $0.8 million, which resulted in an additional credit to additional paid-in capital. Upon modification, the compound derivative asset was eliminated. A $0.8 million loss on debt extinguishment was also recorded in the accompanying consolidated statements of operations. The new carrying value of Convertible Notes was accreted using the effective interest method as interest expense over the new contractual period of 1.1 years.

On August 20, 2018, the maturity date for the Convertible Notes was changed to September 20, 2018 (previously June 28, 2019). The term change was deemed substantial and was accounted for as a debt extinguishment under ASC 470. In connection with the debt extinguishment on August 20, 2018, the fair value of the Convertible Notes was allocated between the new carrying amount of the Convertible Notes and accrued interest of $13.4 million, and an equity component of $0.8 million, which resulted in an additional credit to additional paid-in capital. A $0.8 million loss on debt extinguishment was also recorded in the consolidated statements of operations. The new carrying value of Convertible Notes was accreted using the effective interest method as interest expense over the new contractual period of one month.

On September 20, 2018, upon the maturity of the Convertible Notes, the carrying amount, including accrued interest of $13.4 million was converted into 1,667,997 shares of the Company’s Series C redeemable convertible preferred stock at a conversion price equal to $8.052 per share. No gain or loss was recorded on the conversion.

The interest expense on the Convertible Notes for the three and six months ended June 30, 2018 was $0.3 million and $0.7 million, respectively.

Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Note 7. Leases

Operating Lease Obligations

In February 2015, the Company entered into a noncancelable operating lease for approximately 31,280 square feet of space used for its current laboratory and office space. The lease expires on November 30, 2020 and includes an option to extend the term for a period of three years immediately following the expiration of the term with rent payments equal to then current fair market rental for the space.

The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The Company’s rent expense was $0.3 million and $0.5 million for the three and six months ended June 30, 2018, respectively.

The Company adopted ASC 842 as of January 1, 2019. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. At the date of adoption of ASC 842, the Company determined the amounts of lease liability using a discount rate of 8%, which represents the Company’s incremental borrowing rate. The Company determines its incremental borrowing rate for lease liability using its current borrowing rate, adjusted for various factors including level of collateralization and term. The optional renewal period was not recognized as part of the right-of-use asset or lease liability. Operating lease cost for the three and six month periods ended June 30, 2019 was $0.3 million and $0.5 million, respectively. Cash paid for operating lease liabilities, included in cash flow from operating activities in the Condensed Consolidated Statement of Cash Flows was $0.5 million for the six month period ended June 30, 2019. As of June 30, 2019, the remaining lease term for the lease is 1.4 years.

Future minimum lease payments at December 31, 2018 under this noncancelable operating lease were as follows (in thousands):

	Amount
2019	$	1,091
2020		1,030
Total future minimum lease payments	$	2,121

Future minimum lease payments at June 30, 2019 under this noncancelable operating lease were as follows (in thousands):

	Amount
2019 (remaining six months)	$	552
2020		1,030
Total future minimum lease payments		1,582
Less: Imputed interest		(84	)
Present value of future minimum lease payments		1,498
Less: Current portion of operating lease liability		(1,030	)
Operating lease liabilities - noncurrent	$	468

Redeemable Convertible Preferred Stock

6 Months Ended

Jun. 30, 2019

Temporary Equity Disclosure [Abstract]

Redeemable Convertible Preferred Stock

Note 8. Redeemable Convertible Preferred Stock

Series A redeemable convertible preferred stock, Series B redeemable convertible preferred stock and Series C redeemable convertible preferred stock (collectively the “Redeemable Convertible Preferred Stock”) outstanding consisted of the following as of December 31, 2018 and as of immediately prior to the automatic conversion of the Redeemable Convertible Preferred Stock into common stock:

	December 31, 2018
	Shares Authorized		Shares Issued and Outstanding		Aggregate Liquidation Preference		Net Carrying Value
					(in thousands)
Series A		31,250,000		7,812,497	$	20,500	$	20,261
Series B		19,288,150		4,799,548		22,078		22,047
Series C		24,700,000		5,862,697		47,206		47,096
Total redeemable convertible preferred stock		75,238,150		18,474,742	$	89,784	$	89,404

Immediately prior to the closing of the Company’s IPO, all shares of the Company’s then-outstanding Redeemable Convertible Preferred Stock, as shown in the table above, automatically converted on a one-for-one basis into an aggregate of 18,474,703 shares of common stock. The Reverse Stock Split was effected on a holder-by-holder basis with no fractional shares issued, which resulted in 39 fewer shares of common stock issued as compared to the amounts shown in the above table.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 9. Stock-Based Compensation

2011 Equity Incentive Plan and 2019 Equity Incentive Plan

In 2011, the Company established its 2011 Equity Incentive Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company. Under the 2011 Plan, the Company had the ability to issue incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, and restricted stock unit awards. Options under the 2011 Plan could be granted for periods of up to 10 years. The ISOs could be granted at a price per share not less than the fair value at the date of grant. The exercise price of an ISO granted to a 10% stockholder was not less than 110% of the estimated fair value of the shares on the date of grant, as determined by the board of directors (the “Board”). Options granted to new hires generally vested over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter; options granted as merit awards generally vested monthly over a four-year period.

For stock option grants issued prior to December 31, 2015, the Company allowed employees to exercise options granted under the 2011 Plan prior to vesting (early exercise of stock options). The unvested shares are subject to the Company’s repurchase rights at the original purchase price. Initially, the proceeds were recorded as an accrued liability from the early exercise of stock options and reclassified to common stock as the Company’s repurchase rights lapse. There were 262 and 548 unvested shares subject to the Company’s repurchase rights as of December 31, 2018 and June 30, 2019, respectively.

The Company’s Board adopted and the Company’s stockholders approved the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) in May 2019 and June 2019, respectively. The 2019 Plan became effective in June 2019 in connection with the Company’s IPO, and no further grants will be made under the 2011 Plan. Shares reserved and remaining available for issuance under the 2011 Plan were added to the 2019 Plan reserve upon its effectiveness. No stock awards have yet been granted under the 2019 Plan as of June 30, 2019.

The 2019 Plan provides for the grant of ISOs, NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation. Additionally, the 2019 Plan provides for the grant of performance cash awards. ISOs may be granted only to the Company’s employees and to any of the Company’s parent or subsidiary corporation’s employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of the Company and any of the Company’s affiliates. The exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options under the 2019 Plan may be granted for periods of up to 10 years.

At December 31, 2018 there were 4,647,839 shares of common stock available for issuance under the 2011 Plan. At June 30, 2019 there were 4,563,163 shares of common stock available for issuance under the 2011 Plan and 2,726,681 available for issuance under the 2019 Plan.

Stock Option Activity

A summary of the Company’s stock option activity under the 2011 Plan for the six months ended June 30, 2019 is as follows:

	Outstanding Options
(in thousands, except share and per share data)	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance—December 31, 2018		4,110,130		$	3.16		6.94	$	24,716
Options granted		724,940			11.19				—
Options exercised		(244,189	)		2.51				—
Options cancelled		(27,718	)		6.91				—
Balance—June 30, 2019		4,563,163		$	4.44		7.02	$	103,632

The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $27.15 on June 28, 2019 (the last trading day of the quarter) and the exercise prices of the underlying stock options.

The weighted-average grant date fair value of options granted was $8.40 and $3.37 per share for the three months ended June 30, 2019 and 2018, respectively, and $8.07 and $3.37 per share for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the unrecognized stock-based compensation of unvested options was $10.3 million, which is expected to be recognized over a weighted-average period of 3.3 years.

Valuation of Stock Options

The Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is recognized on a straight-line basis over the requisite service periods of the awards.

The fair value of stock options was estimated using the following weighted-average assumptions:

	Three Months Ended June 30,			Six Months Ended June 30,
	2019	2018		2019	2018
Expected term (in years)	5.00 - 6.08		5.99	5.00 - 6.87		5.99
Volatility	56.89 - 57.27%	56.20%		56.20 - 57.27%	56.20%
Risk-free interest rate	2.31 - 2.36%	2.84 - 2.88%		2.31 - 2.52%	2.84 - 2.88%
Dividend yield	0%	0%		0%	0%

Expected Term. The expected term is calculated using the simplified method, which is available if there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting tranche for awards with graded vesting. The midpoint of the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting tranches, the times from grant until the midpoints for each of the tranches may be averaged to provide an overall expected term.

Expected Volatility. The Company used an average historical stock price volatility of a peer group of publicly traded companies to be representative of its expected future stock price volatility, as the Company did not have sufficient trading history for its common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size, and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term.

Risk-Free Interest Rate. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with remaining terms equivalent to the expected term of a stock award.

Expected Dividend Rate. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

2019 Employee Stock Purchase Plan

In May 2019, the Board adopted the 2019 Employee Stock Purchase Plan (the “ESPP”), which was approved by the Company’s stockholders in June 2019. A total of 250,000 shares of common stock are initially reserved for issuance under the ESPP. The number of shares may be increased in accordance with the terms of the ESPP.

Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company’s common stock on the first or last day of the offering period, whichever is lower. Except for the initial offering period, the ESPP provides for separate six-month offering periods beginning on May 1 and November 1 of each year. The initial offering period runs from June 20, 2019 through October 31, 2019.

During the six-months ended June 30, 2019, no shares of common stock were purchased under the ESPP. The total compensation expense related to the ESPP for the six-months ended June 30, 2019 was not material. The following assumptions were used to calculate the stock-based compensation for each stock purchase right granted under the ESPP: a weighted-average expected life of 0.37 years; expected volatility of 59.1%; a risk-free interest rate of 2.1%; and a zero dividend yield.

Stock-based Compensation Expense

The following is a summary of stock-based compensation expense by function (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
		2019				2018