0001583648-20-000061 | 10-Q | XBRL Viewer | Pieris Pharmaceuticals INC

Foreign currency translation

(14,283)

(2,592)

(22,830)

(24,698)

^[1]

Other comprehensive income:

632

1,636

1,462

1,908

Unrealized (loss) gain on available-for-sale securities

(350)

374

(249)

377

Comprehensive loss

$ (14,001)

$ (582)

$ (21,617)

$ (22,413)

Net loss per share

Basic and diluted (USD per share)

$ (0.26)

$ (0.05)

$ (0.42)

$ (0.50)

Weighted average number of common shares outstanding

Basic and diluted (shares)

54,340

49,353

53,976

49,805

Customer revenue

Total revenue

$ 2,578

$ 3,589

$ 22,393

$ 15,538

Collaboration revenue

Total revenue

$ 361

$ 11,543

$ 5,053

$ 13,471

[1]	(1) Restated to conform to ASC 842. See accompanying Note 2.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands

Total

Cumulative Effect, Period of Adoption, Adjustment

Preferred shares

Common shares

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Cumulative Effect, Period of Adoption, Adjustment

Balance at beginning of period (shares) at Dec. 31, 2018

54,151

Balance at beginning of period at Dec. 31, 2018

$ 39,935

$ (1,641)

$ 0

$ 54

$ 189,929

$ (2,982)

$ (147,066)

$ (1,641)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

(24,698)

^[1]

(24,698)

1,908

377

Issuance of common stock resulting from exercise of stock options

4,260

218

Issuance of common stock resulting from exercise of stock options (in shares)

111

Issuance of common stock resulting from purchase of employee stock purchase plan shares

178

Issuance of common stock resulting from purchase of employee stock purchase plan shares (in shares)

Issuance of common stock resulting from exercise of warrants

105

Issuance of common stock resulting from exercise of warrants (in shares)

Preferred stock conversion (shares)

(5,000)

Preferred stock conversion

$ (5)

Balance at end of period (shares) at Sep. 30, 2019

49,393

Balance at end of period at Sep. 30, 2019

20,642

$ 0

$ 49

194,695

(697)

(173,405)

Balance at beginning of period (shares) at Jun. 30, 2019

49,262

Balance at beginning of period at Jun. 30, 2019

19,485

$ 0

$ 49

192,956

(2,707)

(170,813)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

(2,592)

1,636

374

Issuance of common stock resulting from exercise of stock options

1,518

121

Issuance of common stock resulting from exercise of stock options (in shares)

Issuance of common stock resulting from exercise of warrants

100

Issuance of common stock resulting from exercise of warrants (in shares)

Balance at end of period (shares) at Sep. 30, 2019

49,393

Balance at end of period at Sep. 30, 2019

20,642

$ 0

$ 49

194,695

(697)

(173,405)

Balance at beginning of period (shares) at Dec. 31, 2019

55,212

Balance at beginning of period at Dec. 31, 2019

51,352

$ 0

$ 55

227,468

(1,995)

(174,176)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

(22,830)

1,462

(249)

Issuance of common stock resulting from exercise of stock options

3,916

271

Issuance of common stock resulting from exercise of stock options (in shares)

139

Issuance of common stock resulting from purchase of employee stock purchase plan shares

145

Issuance of common stock resulting from purchase of employee stock purchase plan shares (in shares)

Issuance of common stock pursuant to at the market offering program, net of $0.4 million in offering costs

9,624

$ 4

9,620

Issuance of common stock pursuant to at the market sales, net of $0.4 million in offering costs (in shares)

3,571

Preferred stock conversion (shares)

(3,000)

Preferred stock conversion

$ (3)

Balance at end of period (shares) at Sep. 30, 2020

55,971

Balance at end of period at Sep. 30, 2020

43,691

$ 0

$ 56

241,423

(782)

(197,006)

Balance at beginning of period (shares) at Jun. 30, 2020

52,399

Balance at beginning of period at Jun. 30, 2020

46,672

$ 0

$ 52

230,407

(1,064)

(182,723)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

(14,283)

632

(350)

Issuance of common stock pursuant to at the market offering program, net of $0.4 million in offering costs

1,396

9,624

$ 4

9,620

Issuance of common stock pursuant to at the market sales, net of $0.4 million in offering costs (in shares)

3,571

Balance at end of period (shares) at Sep. 30, 2020

55,971

Balance at end of period at Sep. 30, 2020

$ 43,691

$ 0

$ 56

$ 241,423

$ (782)

$ (197,006)

[1]	(1) Restated to conform to ASC 842. See accompanying Note 2.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Payments of Stock Issuance Costs	$ 0.4	$ 0.4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

9 Months Ended

Sep. 30, 2020

Sep. 30, 2019

Operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

$ (22,830)

$ (24,698)

^[1]

1,623

367

^[1]

(103)

315

^[1]

3,916

4,260

^[1]

(293)

^[1]

(14,792)

(18,827)

^[1]

Purchases of property and equipment

(32,479)

(38,493)

^[1]

Investing activities:

(2,148)

(1,286)

^[1]

Proceeds from maturity of investments

67,687

61,767

^[1]

Purchases of investments

(41,178)

(48,762)

^[1]

Net cash provided by investing activities

24,361

11,719

^[1]

Financing activities:

Proceeds from exercise of stock options

271

218

^[1]

Proceeds from exercise of warrants

105

^[1]

Proceeds from employee stock purchase plan

145

178

^[1]

Issuance of common stock, net of issuance costs

9,624

Net cash provided by financing activities

10,040

501

^[1]

Effect of exchange rate change on cash and cash equivalents

2,708

(2,526)

^[1]

Net decrease in cash and cash equivalents

4,630

(28,799)

^[1]

Cash and cash equivalents at beginning of period

62,260

74,867

^[1]

Cash and cash equivalents at end of period

66,890

46,068

^[1]

Supplemental cash flow disclosures:

Net unrealized (loss)/gain on investments

(319)

469

^[1]

Property and equipment included in accounts payable

$ 370

$ 198

^[1]

[1]	(1) Restated to conform to ASC 842. See accompanying Note 2.

Corporate Information	9 Months Ended
Corporate Information	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Corporate Information	Corporate Information Pieris Pharmaceuticals, Inc. was founded in May 2013, and acquired 100% interest in Pieris Pharmaceuticals GmbH (formerly Pieris AG, a German company that was founded in 2001) in December 2014. Pieris Pharmaceuticals, Inc. and its wholly-owned subsidiaries, hereinafter collectively Pieris, or the Company, is a clinical-stage biopharmaceutical company that discovers and develops Anticalin-based drugs to target validated disease pathways in unique and transformative ways. Pieris’ corporate headquarters is located in Boston, Massachusetts and its research facility is located in Hallbergmoos, Germany. Pieris’ clinical pipeline includes an inhaled IL-4Rα antagonist Anticalin protein to treat uncontrolled asthma and an immuno-oncology, or IO, bispecific targeting HER2 and 4-1BB. The Company’s core Anticalin technology and platform was developed in Germany, and the Company has partnership arrangements with several major multi-national pharmaceutical companies. As of September 30, 2020, the Company had cash, cash equivalents and investments of $82.6 million. The Company expects that its existing cash, cash equivalents and investments are sufficient to support operating expense and capital expenditure requirements for at least 12 months from the date of this filing.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

The Company´s significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies, within the Company´s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. There has been no material change to the significant accounting policies during the nine months ended September 30, 2020, other than the Adoption of Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, or ASU 2018-18, described in more detail below.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring adjustments, and disclosures considered necessary for a fair presentation of interim period results have been included. Interim results for the three and nine months ended September 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 13, 2020.

Basis of Presentation and Use of Estimates

The accompanying condensed consolidated financial statements of Pieris Pharmaceuticals, Inc. and its wholly-owned subsidiaries were prepared in accordance with U.S. GAAP. The condensed consolidated financial statements include the accounts of all subsidiaries. All intercompany balances and transactions have been eliminated.

The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition; deferred tax assets, deferred tax liabilities and valuation allowances; determination of the incremental borrowing rate to calculate right-of-use assets and lease liabilities; beneficial conversion features; fair value of stock options, preferred stock, and warrants; and various accruals. Management evaluates its estimates on an ongoing basis. Actual results and outcomes could differ materially from management’s estimates, judgments and assumptions.

Cash, Cash Equivalents and Investments

The Company determines the appropriate classification of its investments at the time of purchase. All liquid investments with original maturities of 90 days or less from the purchase date and for which there is an active market are considered to be cash equivalents. The Company’s investments are comprised of money market, asset backed securities, government treasuries and corporate bonds that are classified as available-for-sale in accordance with FASB Accounting Standards Codification, or ASC, 320, Investments—Debt and Equity Securities. The Company classifies investments available to fund current operations as current assets on its balance sheets.

Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive loss on the Company’s balance sheets. Realized gains and losses are determined using the specific identification method and are included as a component of other income.

The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than temporary, the Company considers its intent to sell or whether it is more likely than not that the Company will be required to sell the investment before recovery of the investment’s amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, the severity and the duration of the impairment and changes in value subsequent to period end.

Concentration of Credit Risk and Off-Balance Sheet Risk

The Company has no financial instruments with off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Financial instruments that subject Pieris to concentrations of credit risk include cash and cash equivalents, investments, and accounts receivable. The Company’s cash, cash equivalents, and investments are held in accounts with financial institutions that management believes are creditworthy. The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. Accounts receivable primarily consist of amounts due under strategic partnership and other license agreements with major multi-national pharmaceutical companies for which the Company does not obtain collateral.

Fair Value Measurement

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurement and Disclosures, established a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the financial instrument based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the financial instrument and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported or disclosed fair value of the financial instruments and is not a measure of the investment credit quality. Fair value measurements are classified and disclosed in one of the following three categories:

•Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency.

•Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments measured at fair value on a recurring basis include cash equivalents and investments (Note 4).

An entity may elect to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in net loss. The Company did not elect to measure any additional financial instruments or other items at fair value.

Property and Equipment

Property and equipment are recorded at acquisition cost, less accumulated depreciation and impairment. Depreciation on property and equipment is calculated using the straight-line method over the remaining estimated useful lives of the assets. Maintenance and repairs to these assets are charged to expenses as occurred. For the nine months ended September 30, 2020, the Company added material assets related to the February 2020 move to a new research and development facility in Hallbergmoos, Germany. Because of this, the Company expanded its presentation of property and equipment to be more descriptive and updated the useful life for one asset category on a prospective basis only. The disclosures for property and equipment, net as of December 31, 2019 have been reclassified to confirm with the current period presentation. The estimated useful life of the different groups of property and equipment is as follows:


Asset Classification						Estimated useful life (in years)
Leasehold improvements						shorter of useful life or remaining life of the lease
Laboratory furniture and equipment						8-14
Office furniture and equipment						5-13
Computer and equipment						3-7

Revenue Recognition

The Company has entered into several licensing agreements with collaboration partners for the development of Anticalin therapeutics against a variety of targets. The terms of these agreements provide for the transfer of multiple goods or services which may include: (i) licenses, or options to obtain licenses, to the Company’s Anticalin technology and/or specific programs and (ii) research and development activities to be performed on behalf of or with a collaborative partner. Payments to Pieris under these agreements may include upfront fees (which include license and option fees), payments for research and development activities, payments based upon the achievement of certain milestones and royalties on product sales. There are no performance, cancellation, termination or refund provisions in any of the arrangements that could result in material financial consequences to Pieris.

Collaborative Arrangements

The Company considers the nature and contractual terms of an arrangement and assess whether the arrangement involves a joint operating activity pursuant to which it is an active participant and exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and exposed to the significant risks and rewards with respect to the arrangement, it accounts for these arrangements pursuant to ASC 808, Collaborative Arrangements, or ASC 808, and applies a systematic and rational approach to recognize revenue. The Company classifies payments received as revenue and payments made as a reduction of revenue in the period in which they are earned.

In November 2018, the FASB issued ASU 2018-18, which makes targeted improvements to generally accepted accounting principles for collaborative arrangements, including: clarification that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, or ASC 606, when the collaborative arrangement participant is a customer in the context of a unit of account, adding unit-of-account guidance in ASC 808 to align with the guidance in ASC 606, and a requirement that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer. The guidance per ASU 2018-18 was adopted retrospectively to the date of initial application of ASC 606. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements; however, revenue recognized under a collaborative arrangement involving a participant that is not a customer (Collaboration Revenue) is now presented separately from Customer Revenue. This change has been reflected in the condensed consolidated statement of operations and the 2019 amounts were adjusted to conform to ASC 808 as follows:


	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
	As reported pre-adoption		ASC 808 Adoption Adjustment		As reported post-adoption		As reported pre-adoption		ASC 808 Adoption Adjustment		As reported post-adoption
Customer revenue	$	14,498	$	(10,909)	$	3,589	$	26,966	$	(11,428)	$	15,538
Collaboration revenue	634		10,909		11,543		2,043		11,428		13,471
Total Revenue	$	15,132	$	—	$	15,132	$	29,009	$	—	$	29,009

Revenue from Contracts with Customers

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps: 1) identify the customer contract; 2) identify the contract’s performance obligations; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when or as a performance obligation is satisfied.

The Company evaluates all promised goods and services within a customer contract and determines which of such goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

Licensing arrangements are analyzed to determine whether the promised goods or services, which often include licenses, research and development services and governance committee services, are distinct or whether they must be accounted for as part of a combined performance obligation. If the license is considered not to be distinct, the license would then be combined with other promised goods or services as a combined performance obligation. If the Company is involved in a governance committee, it assesses whether its involvement constitutes a separate performance obligation. When governance committee services are determined to be separate performance obligations, the Company determines the fair value to be allocated to this promised service.

Certain contracts contain optional and additional items, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. An option that is considered a material right is accounted for as a separate performance obligation.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. A contract may contain variable consideration, including potential payments for both milestone and research and development services. For certain potential milestone payments, the Company estimates the amount of variable consideration by using the most likely amount method. In making this assessment, the Company evaluates factors such as the clinical, regulatory, commercial and other risks that must be overcome to achieve the milestone. Each reporting period the Company re-evaluates the probability of achievement of such variable consideration and any related constraints. Pieris will include variable consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For potential research and development service payments, the Company estimates the amount of variable consideration by using the expected value method, including any approved budget updates arising from additional research or development services.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the

contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amount the Company would expect to receive for each performance obligation.

When a performance obligation is satisfied, revenue is recognized for the amount of the transaction price, excluding estimates of variable consideration that are constrained, that is allocated to that performance obligation on a relative standalone selling price basis. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement.

For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non- refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

Milestones and Royalties

The Company aggregates milestones into four categories: (i) research milestones, (ii) development milestones, (iii) commercial milestones, and (iv) sales milestones. Research milestones are typically achieved upon reaching certain success criteria as defined in each agreement related to developing an Anticalin protein against the specified target. Development milestones are typically reached when a compound reaches a defined phase of clinical research or passes such phase or upon gaining regulatory approvals. Commercial milestones are typically achieved when an approved pharmaceutical product reaches the status for commercial sale, including regulatory approval. Sales milestones are certain defined levels of net sales by the licensee, such as when a product first achieves global sales or annual sales of a specified amount.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology. The Company has thus determined that all research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur. For revenues from research and development milestones, payments will be recognized consistent with the recognition pattern of the performance obligation to which they relate.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Commercial milestones and sales royalties are determined by sales or usage-based thresholds and will be accounted for under the royalty recognition constraint as constrained variable consideration.

Contract Balances

The Company recognizes a contract asset when the Company transfers goods or services to a customer before the customer pays consideration or before payment is due, excluding any amounts presented as a receivable (i.e., accounts receivable). A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer. The contract liabilities (i.e., deferred revenue) primarily relate to contracts where the Company has received payment but has not yet satisfied the related performance obligations.

In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all Company obligations under the agreement have been fulfilled.

Costs to Obtain and Fulfill a Contract with a Customer

Certain costs to obtain customer contracts, including success-based fees paid to third-party service providers, and costs to fulfill customer contracts are capitalized in accordance with FASB ASC 340, Other Assets and Deferred Costs, or ASC 340. These costs are amortized to expense on a systemic basis that is consistent with the transfer to the customer of the goods or services to

which the asset relates. The Company will expense the amortization of costs to obtain customer contracts to general and administrative expense and costs to fulfill customer contracts to research and development expense.

Leases

Effective on December 31, 2019, the Company lost its emerging growth company, or EGC, status which accelerated the requirement of the adoption of FASB issued ASU No. 2016-02, ASC 842, Leases (Topic 842), or ASC 842. As a result, the Company adjusted its previously reported consolidated financial statements effective January 1, 2019 in the Company's 2019 Form 10-K, and amendments to previously filed Forms 10-Q were not required. Accordingly, the Company's prior period condensed consolidated financial statements and information, as presented herein, have been restated to conform to the new standard.

The following tables summarize the effects of adopting ASC 842 on our condensed consolidated financial statements (in thousands):


	Nine Months Ended September 30, 2019
	Previously reported		ASC 842 Adjustment during the period		As adjusted
Operating activities:
Net loss	$	(24,698)	$	—	$	(24,698)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	367		—		367
Right-of-use asset amortization	—		315		315
Stock-based compensation	4,260		—		4,260
Deferred rent expense	853		(853)		—
Other non-cash transactions	90		—		90
Changes in operating assets and liabilities	(19,365)		538		(18,827)
Net cash used in operating activities	$	(38,493)	$	—	$	(38,493)

The Company determines if an arrangement is a lease at inception. The Company’s contracts are determined to contain a lease within the scope of ASC 842 when all of the following criteria based on the specific circumstances of the arrangement are met: (1) there is an identified asset for which there are no substantive substitution rights; (2) the Company has the right to obtain substantially all of the economic benefits from the identified asset; and (3) the Company has the right to direct the use of the identified asset.

At the commencement date, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The Company’s lease agreements do not provide an implicit rate. As a result, the Company utilizes an estimated incremental borrowing rate to discount lease payments, which is based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term and based on observable market data points. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or lease incentives received. Operating lease cost is recognized over the expected term on a straight-line basis.

The Company typically only includes an initial lease term in its assessment of a lease agreement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. The expected lease term includes noncancelable lease periods and, when applicable, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, as well as periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.

Assumptions made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, or ASU 2016-13. ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value, and requires the reversal of previously recognized credit losses if fair value increases. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

Subsequently, in November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies codification and corrects unintended application of the guidance. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB also issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delays the effective date of ASU 2016-13 by three years for certain smaller reporting companies such as the Company. The guidance in ASU 2016-13 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is still evaluating the impact of the adoption of this standard.

The Company has considered other recent accounting pronouncements and concluded that they are either not applicable to the business or that the effect is not expected to be material to the unaudited condensed consolidated financial statements as a result of future adoption.

Revenue

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

General

The Company has not generated revenue from product sales. The Company has generated revenue from contracts with customers and revenue from collaboration agreements, which include upfront payments for licenses or options to obtain licenses, payments for research and development services and milestone payments.

The Company recognized revenue from the following strategic partnerships and other license agreements (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Seagen	$	366	$	576	$	9,326	$	2,005
AstraZeneca	2,182		2,903		7,227		12,811
Servier	391		11,653		10,893		14,193
Total Revenue	$	2,939	$	15,132	$	27,446	$	29,009

Under the Company´s existing strategic partnerships and other license agreements, the Company could receive the following potential milestone payments (in millions):


	Research, Development, Regulatory & Commercial Milestones		Sales Milestones
AstraZeneca	$	1,111	$	960
Servier	712		632
Seagen	764		450
Total potential milestone payments	$	2,587	$	2,042

Strategic Partnerships

Seagen

On February 8, 2018, the Company entered into a license and collaboration agreement, or the Seagen Collaboration Agreement, and a non-exclusive Anticalin platform technology license agreement, or the Seagen Platform License, and together with the Seagen Collaboration Agreement, the Seagen Agreements, with Seagen Inc. (formerly Seattle Genetics, Inc.), or Seagen, pursuant to which the parties will develop multiple targeted bispecific IO treatments for solid tumors and blood cancers.

Under the terms of the Seagen Agreements, the companies will pursue multiple antibody-Anticalin fusion proteins during the research phase. The Seagen Agreements provide Seagen a base option to select up to three programs for further development. Prior to the initiation of a pivotal trial, the Company may opt into global co-development and U.S. commercialization of the second program and share in global costs and profits on an equal basis. Seagen will solely develop, fund and commercialize the other two programs. Seagen may also decide to select additional candidates from the initial research phase for further development in return for the payment to the Company of additional fees, milestone payments and royalties.

The Seagen Platform License grants Seagen a non-exclusive license to certain intellectual property related to the Anticalin platform technology.

Upon signing the Seagen Agreements, Seagen paid the Company a $30.0 million upfront fee and an additional $4.9 million was estimated to be paid for research and development services as reimbursement to the Company through the end of the research term. In addition, the Company may receive tiered royalties on net sales up to the low double-digits and up to $1.2 billion in total success-based research, development, commercial and sales milestones payments across the product candidates, depending on the successful development and commercialization of those candidates. If Seagen exercises its option to select additional candidates from the initial research phase for further development, payment to Pieris of additional fees, milestone payments and royalties would result.

The term of each of the Seagen Agreements ends upon the expiration of all of Seagen’s payment obligations under each such agreement. The Seagen Collaboration Agreement may be terminated by Seagen on a product-by-product basis for convenience beginning 12 months after its effective date upon 90 days' notice or, for any program where a pivotal study has been initiated, upon 180 days' notice. Any program may be terminated at Seagen's option. If any program is terminated by Seagen after a pre-defined pre-clinical stage, the Company will have full rights to continue such program. If any program is terminated by Seagen prior to such pre-defined pre-clinical stage, the Company will have the right to continue to develop such program, but will be obligated to offer a co-development option to Seagen for such program. The Seagen Collaboration Agreement may also be terminated by Seagen or the Company for an uncured material breach by the other party upon 90 days' notice, subject to extension for an additional 90 days if the material breach relates to diligence obligations and subject, in all cases, to dispute resolution procedures. The Seagen Collaboration Agreement may also be terminated due to the other party’s insolvency and may in certain instances, including for reasons of safety, be terminated on a product-by-product basis. Each party may also terminate the Seagen Agreements if the other party challenges the validity of any patents licensed under the Seagen Agreements, subject to certain exceptions. The Seagen Platform License will terminate upon termination of the Seagen Collaboration Agreement, whether in its entirety or on a product-by-product basis.

The Company determined that the Seagen Agreements should be combined and evaluated as a single arrangement under ASC 606 as they were executed on the same date. The arrangement with Seagen provides for the transfer of the following goods or services: (i) three candidate research licenses that each consist of a non-exclusive platform technology license, a co-exclusive candidate research license, and research and development services, (ii) research, development and manufacturing services associated with each candidate research license, (iii) participation on various governance committees, and (iv) two antibody target swap options which were assessed as material rights.

Management evaluated all of the promised goods or services within the contract and determined which such goods and services were separate performance obligations. The Company determined that the licenses granted, at arrangement inception, should be combined with the research and development services to be provided for the related antibody target programs as they are not capable of being distinct. A third party would not be able to provide the research and development services due to the specific nature of the intellectual property and knowledge required to perform the services, and Seagen could not benefit from the licenses without the corresponding services. The Company determined that the participation on the various governance committees was distinct as the services could be performed by an outside party.

As a result, management concluded there were six separate performance obligations at the inception of the Seagen Agreements: (i) three combined performance obligations, each comprised of a non-exclusive platform technology license, a co-exclusive

candidate research license, and research and development services for the first three approved Seagen antibody target programs, (ii) two performance obligations each comprised of a material right for an antibody target swap option for the first and the second approved Seagen antibody target for no additional consideration, and (iii) one performance obligation comprised of the participation on the various governance committees.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices. The Company developed standalone selling prices for licenses by applying a risk adjusted, net present value, estimate of future potential cash flows approach, which included the cost of obtaining research and development services at arm’s length from a third-party provider, as well as internal full-time equivalent costs to support these services. The Company developed the standalone selling price for committee participation by using management’s estimate of the anticipated participation hours multiplied by a market rate for comparable participants.

The transaction price at inception is comprised of fixed consideration of $30.0 million in upfront fees and variable consideration of $4.9 million of estimated research and development services to be reimbursed as research and development occurs through the research term. The $30.0 million upfront fee, which represents the fixed consideration in the transaction price, was allocated to each of the performance obligations based on the relative proportion of their standalone selling prices. The $4.9 million in variable consideration related to the research and development services is allocated specifically to the three target program performance obligations based upon the budgeted services for each program.

The amounts allocated to the performance obligations for the three research programs will be recognized on a proportional performance basis through the completion of each respective estimated research term of the individual research programs. The amounts allocated to the material right for the antibody target swap option will be recognized either at the time the material right expires or, if exercised, on a proportional performance basis over the estimated research term for that program. The amounts allocated to the participation on each of the committees will be recognized straight-line over the anticipated research term for all research programs. As of September 30, 2020, there was $20.2 million of aggregate transaction price allocated to remaining performance obligations.

In June 2020, Seagen and the Company entered into amendments to the Seagen Agreements, or together, the Amendment. The Amendment extended the deadline for Seagen to nominate a second and third antibody target. As a result of the Amendment, which completed the obligations under the research term for the first antibody target, the Company recorded $4.2 million of previously deferred revenue for the three and nine months ended September 30, 2020. The Company also recorded $5.0 million of milestone revenue due from Seagen during the quarter ended June 30, 2020, as it was no longer deemed probable that a significant reversal of revenue would occur, and the remaining performance obligations on first antibody target were completed.

Under the Seagen Agreements, the Company is eligible to receive other various research, development, commercial and sales milestones. There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology. With the exception of the previously discussed achieved milestone, the Company has determined that all other research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

As of September 30, 2020, there were $3.4 million and $13.5 million of current and non-current deferred revenue, respectively, related to the Seagen Agreements.

AstraZeneca

On May 2, 2017, the Company entered into a license and collaboration agreement, or the AstraZeneca Collaboration Agreement, and a non-exclusive Anticalin platform technology license agreement, or AstraZeneca Platform License, and together with the AstraZeneca Collaboration Agreement, the AstraZeneca Agreements, with AstraZeneca AB, or AstraZeneca, which became effective on June 10, 2017, following expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Under the AstraZeneca Agreements, the parties will advance several novel inhaled Anticalin proteins.

In addition to the Company’s lead inhaled drug candidate, PRS-060/AZD1402, or the AstraZeneca Lead Product, the Company and AstraZeneca will also collaborate to progress four additional novel Anticalin proteins against undisclosed targets for respiratory diseases, or the AstraZeneca Collaboration Products, and together with the AstraZeneca Lead Product, the AstraZeneca Products. The Company is responsible for advancing the AstraZeneca Lead Product through its phase 1 study, with the associated costs funded by AstraZeneca. The parties will collaborate thereafter to conduct a phase 2a study in asthma patients, with AstraZeneca continuing to fund development costs. After completion of a phase 2a study, Pieris has the option to co-develop the AstraZeneca Lead Product and also has a separate option to co-commercialize the AstraZeneca Lead Product in

the United States. For the AstraZeneca Collaboration Products, the Company will be responsible for the initial discovery of the novel Anticalin proteins, after which AstraZeneca will take the lead on continued development of the AstraZeneca Collaboration Products. The Company has the option to co-develop two of the four AstraZeneca Collaboration Products beginning at a pre-defined preclinical stage and would also have the option to co-commercialize these two programs in the United States, while AstraZeneca will be responsible for development and commercialization of the other programs worldwide.

The term of each of the AstraZeneca Agreements ends upon the expiration of all of AstraZeneca’s payment obligations under such agreement. The AstraZeneca Collaboration Agreement may be terminated by AstraZeneca in its entirety for convenience beginning 12 months after its effective date upon 90 days’ notice or, if the Company has obtained marketing approval for the marketing and sale of a product, upon 180 days’ notice. Each program may be terminated at AstraZeneca’s option; if any program is terminated by AstraZeneca, the Company will have full rights to such program. The AstraZeneca Collaboration Agreement may also be terminated by AstraZeneca or the Company for material breach upon 180 days’ notice of a material breach (or 30 days with respect to payment breach), provided that the applicable party has not cured such breach by the permitted cure period (including an additional 180 days if the breach is not susceptible to cure during the initial 180-day period) and dispute resolution procedures specified in the agreement have been followed. The AstraZeneca Collaboration Agreement may also be terminated due to the other party’s insolvency and may in certain instances be terminated on a product-by-product and/or country-by-country basis. Each party may also terminate an AstraZeneca Agreement if the other party challenges the validity of patents related to certain intellectual property licensed under such AstraZeneca Agreement, subject to certain exceptions for infringement suits, acquisitions and newly-acquired licenses. The AstraZeneca Platform License will terminate upon termination of the AstraZeneca Collaboration Agreement, on a product-by-product and/or country-by-country basis.

At inception, AstraZeneca is granted the following licenses: (i) research and development license for the AstraZeneca Lead Product, (ii) commercial license for the AstraZeneca Lead Product, (iii) individual research licenses for each of the four AstraZeneca Collaboration Products, (iv) individual commercial licenses for each of the four AstraZeneca Collaboration Products, and (v) individual non-exclusive platform technology licenses for the AstraZeneca Lead Product and the four AstraZeneca Collaboration Products. AstraZeneca will be granted individual development licenses for each of the four AstraZeneca Collaboration Products upon completion of the initial discovery of Anticalin proteins.

The collaboration will be managed on an overall basis by a Joint Steering Committee, or JSC, formed by an equal number of representatives from the Company and AstraZeneca. In addition to the JSC, the AstraZeneca Collaboration Agreement also requires each party to designate an alliance manager to facilitate communication and coordination of the parties' activities under the agreement, and further requires participation of both parties on a joint development committee, or JDC, and a commercialization committee. The responsibilities of these committees vary, depending on the stage of development and commercialization of each product.

Under the AstraZeneca Agreements, the Company received an upfront, non-refundable payment of $45.0 million. In addition, the Company will receive payments to conduct a phase 1 clinical study for the AstraZeneca Lead Product. The Company is also eligible to receive research, development, commercial, sales milestone payments and royalty payments. The Company may receive tiered royalties on sales of potential products commercialized by AstraZeneca and for co-developed products, gross margin share on worldwide sales equal dependent on the Company’s level of committed investment.

The Company determined that the AstraZeneca Agreements should be combined and evaluated as a single arrangement under ASC 606 as they were executed on the same date. The arrangement with AstraZeneca, including the impact of any modifications, provides for the transfer of the following goods and services: (i) five non-exclusive platform technology licenses, (ii) research and development license for the AstraZeneca Lead Product, (iii) commercial license for the AstraZeneca Lead Product, (iv) development and manufacturing services for the AstraZeneca Lead Product (or the phase 1 services), (v) technology transfer services for the AstraZeneca Lead Product, (vi) research services related to the AstraZeneca Lead Product, (vii) participation on each of the committees, (viii) four research licenses for the AstraZeneca Collaboration Products, (ix) four commercial licenses for the AstraZeneca Collaboration Products, (x) research services for the AstraZeneca Collaboration Products and (xi) certain phase 2a services for the AstraZeneca Lead Product. Additionally, as the development licenses on the four AstraZeneca Collaboration Products may be granted at a discount in the future, the Company determined such discounts should be assessed as material rights at inception.

Management evaluated all of the promised goods or services within the contract and determined which such goods and services

were separate performance obligations. The Company determined that the licenses granted for the AstraZeneca Lead Product at the inception of the arrangement should be combined with the research services related to the AstraZeneca Lead Product and that the licenses granted for the AstraZeneca Collaboration Products should be combined with the research services for the AstraZeneca Collaboration Products, as the licenses are not capable of being distinct. A third party would not be able to provide the research and development services, due to the specific nature of the intellectual property and knowledge required to perform

the services, and AstraZeneca could not benefit from the licenses without the corresponding services. The Company also determined that each of the phase 1 services and the phase 2a services for the AstraZeneca Lead Product were distinct and that the participation on the various committees was also distinct, as all of the phase 1 services, phase 2a services and the committee services could be performed by an outside party. The Company determined that the commercial licenses for the AstraZeneca Collaboration Products granted at the inception of the arrangement should be combined with the development licenses for the AstraZeneca Collaboration Products as the company would not benefit from the commercial license without the ability to develop each product.

As a result, management concluded that there were 16 performance obligations: (i) combined performance obligation comprised of a non-exclusive platform technology license, research and development license, and commercial licenses for the AstraZeneca Lead Product and research services for the AstraZeneca Lead Product, (ii) combined performance obligation comprised of development and manufacturing services, and technology transfer services for the AstraZeneca Lead Product, (iii) committee participation, (iv-vii) four combined performance obligations each comprised of a non-exclusive platform technology license, research licenses, and research services for each AstraZeneca Collaboration Product, (viii-xi) four performance obligations comprised of a material right to acquire the development licenses granted for the AstraZeneca Collaboration Products, (xii-xv) four performance obligations comprised of the commercial licenses granted for the AstraZeneca Collaboration Products and (xvi) phase 2a services.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices. The Company developed standalone selling prices for licenses and corresponding research services by applying a risk adjusted, net present value, estimate of future potential cash flow approach, which included the cost of obtaining research services at arm’s length from a third-party provider, as well as internal full-time equivalent costs to support these services. The Company developed its standalone selling price for development and manufacturing services and technology transfer services for the AstraZeneca Lead Product using estimated internal and external costs to be incurred.

The Company developed its standalone selling price for committee participation by using management’s estimate of the anticipated participation hours multiplied by a market rate for comparable participants.

The Company developed its standalone selling price for the commercial licenses and material rights granted on the development licenses by probability weighting multiple cash flow scenarios using the income approach.

The transaction price was comprised of fixed consideration of $45.0 million in upfront fees and variable consideration of (i) $14.2 million in estimated phase 1 services, (ii) $12.5 million in milestone payments achieved upon the initiation of a phase 1 study in December 2017, and (iii) $4.7 million in estimated phase 2a services. The $45.0 million upfront fee, which represents the fixed consideration in the transaction price, was allocated to each of the performance obligations based on the relative proportion of their standalone selling prices. Variable consideration of $14.2 million is related to the phase 1 services and will be allocated entirely to the performance obligation to which they relate. Variable consideration of $12.5 million related to the phase 1 trial milestone was allocated by relative selling price to the combined performance obligation comprised of a non-exclusive platform technology license, research and development license and commercial licenses for the AstraZeneca Lead Product and research services for the AstraZeneca Lead Product, and the combined performance obligation comprised of development and manufacturing services and technology transfer services for the AstraZeneca Lead Product performance obligations. Variable consideration of $4.7 million for phase 2a services was allocated specifically to the related performance obligation.

The amounts allocated to the license performance obligation for the AstraZeneca Lead Product and the four performance obligations for the four research licenses for AstraZeneca Collaboration Products will be recognized on a proportional performance basis as the activities are conducted over the life of the arrangement. The amounts allocated to the performance obligation for phase 1 services, technology transfer services for the AstraZeneca Lead Product will be recognized on a proportional performance basis over the estimated term of development through phase 2a study. The amounts allocated to the performance obligation for phase 2a services for the AstraZeneca Lead Product will be recognized on a proportionate performance basis over an estimated term of 12 months. The amounts allocated to the performance obligation for participation on each of the committees will be recognized on a straight-line basis over the expected term of development of the AstraZeneca Lead Product and the AstraZeneca Collaboration Products. The term of performance is approximately five years. The amounts allocated to the four performance obligations for the material rights to acquire a development license and the four performance obligations for commercial licenses for the AstraZeneca Collaboration Products will be recognized upon exercise of the specific material right and delivery of each of the development licenses. As of September 30, 2020, there was $21.9 million of aggregate transaction price allocated to remaining performance obligations.

Additionally, the Company evaluated payments required to be made between both parties as a result of the shared development costs of the AstraZeneca Lead Product and the two AstraZeneca Collaboration Products for which the Company has a co-development option. The Company will classify payments made as a reduction of revenue and will classify payments received as revenue in the period they are earned.

Under the AstraZeneca Agreements, the Company is eligible to receive various research, development, commercial and sales milestones. There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology. The Company has thus determined that all research and development milestones, other than the phase 1 initiation milestone achieved in December 2017 and included in the impact of adoption of ASC 606, will be constrained until it is deemed probable that a significant revenue reversal will not occur.

As of September 30, 2020, there were $0.9 million and $17.9 million of current and non-current deferred revenue, respectively, related to the AstraZeneca Agreements.

The Company incurred $1.6 million of third-party success fees to obtain the contract with AstraZeneca. Upon adoption of ASC 606, the Company capitalized $1.1 million in accordance with ASC 340. As of September 30, 2020, the remaining balance of the asset recognized from transaction costs to obtain the AstraZeneca contract was $0.7 million. Amortization during the three and nine months ended September 30, 2020 was de minimis.

Servier

On January 4, 2017, the Company entered into a license and collaboration agreement, or Servier Collaboration Agreement, and a non-exclusive Anticalin platform license agreement, or Servier Platform License, and together with the Servier Collaboration Agreement, the Servier Agreements, with Les Laboratoires Servier and Institut de Recherches Internationales Servier, or Servier, pursuant to which the Company and Servier agreed to initially pursue five bispecific therapeutic programs.

Five committed programs were initially defined, which may combine antibodies from the Servier portfolio with one or more Anticalin proteins based on the Company’s proprietary platform to generate innovative IO bispecific drug candidates, or the Collaboration Products. The collaboration may be expanded by up to three additional therapeutic programs. The Company had the option to co-develop and retain commercial rights in the United States for PRS-332, the initial lead program under the collaboration, or the Initial Lead, and has a similar option on up to three additional programs, or the Co-Development Collaboration Products, while Servier will be responsible for development and commercialization of the other programs worldwide, or the Servier Worldwide Collaboration Products. Each party is responsible for an agreed upon percentage of shared costs, as set forth in the budget for the collaboration plan, and as further discussed below.

The Co-Development Collaboration Products may be jointly developed, according to a collaboration plan, through marketing approval from the U.S. Food and Drug Administration or the European Medicines Agency. Servier Worldwide Collaboration Products may be jointly developed, according to a collaboration plan, through specified preclinical activities, at which point Servier becomes responsible for further development of the Collaboration Product.

At inception, Servier was granted the following licenses: (i) development license for the Initial Lead, (ii) commercial license for the Initial Lead, (iii) individual research licenses for each of the four Collaboration Products, and (iv) individual non-exclusive platform technology licenses for the Initial Lead and for each of the four Collaboration Products. Upon achievement of certain development activities, specified by the collaboration for each Servier Agreement, Servier will be granted a development license and a commercial license. For the Initial Lead and the Co-Development Collaboration Products, the licenses granted are with respect to the entire world except for the United States. For Servier Worldwide Collaboration Products, the licenses granted are with respect to the entire world.

The Servier Agreements are managed on an overall basis by a joint executive committee, or JEC, formed by an equal number of members from the Company and Servier. Decisions by the JEC will be made by consensus; however, in the event of a disagreement, each party will have final-decision making authority as it relates to the applicable territory in which such party has commercialization rights for the applicable product. In addition to the JEC, the Servier Collaboration Agreement requires the participation of both parties on: (i) a JSC, (ii) a JDC, (iii) a joint intellectual property committee, or JIPC, and (iv) a joint research committee, or JRC. The responsibilities of these committees vary, depending on the stage of development and commercialization of the Collaboration Products.

For the Initial Lead and Co-Development Collaboration Products, the Company and Servier are responsible for an agreed upon percent of the shared costs required to develop the products through commercialization. In the event that the Company fails to

exercise its option to co-develop the Co-Development Collaboration Products, Servier has the right to continue with the development and will be responsible for all costs required to develop the products through commercialization.

Under the Servier Agreements, the Company received an upfront, non-refundable payment of €30.0 million (approximately $32.0 million). In addition, the Company is eligible to receive research, development, commercial and sales milestone payments as well as tiered royalties up to low double digits on the sales of commercialized products in the Servier territories. The Company achieved two preclinical milestones under the program, one in December 2018 for €0.5 million (approximately $0.6 million) and another in February 2019 for €1.5 million (approximately $1.7 million), both of which became billable on their respective achievement dates.

The initial research collaboration term, as it relates to the Initial Lead and Collaboration Products, shall continue for three years from the effective date of the Servier agreements and may be mutually extended for two one-year terms consecutively applied.

The term of each Servier Agreement ends upon the expiration of all of Servier’s payment obligations under such Servier Agreement. The Servier Agreements may be terminated by Servier for convenience beginning 12 months after their effective date upon 180 days’ notice. The Servier Agreements may also be terminated by Servier or the Company for material breach upon 90 days’ or 120 days’ notice under the Servier Collaboration Agreement and the Servier Platform License, respectively, provided that the applicable party has not cured such breach by the applicable 90-day or 120-day permitted cure period, and dispute resolution procedures specified in the applicable Servier Agreement have been followed. The Servier Agreements may also be terminated due to the other party’s insolvency or for a safety issue and may in certain instances be terminated on a product-by-product and/or country-by-country basis. The Servier Platform License will terminate upon termination of the Servier Collaboration Agreement, on a product-by-product and/or country-by-country basis.

As the Company and Servier are considered to be active participants in the Servier Agreements and are exposed to significant risks and rewards, certain units of account within the Servier Agreements are within the scope of ASC 808. The arrangement with Servier provides for the transfer of the following goods and services: (i) five non-exclusive platform technology licenses, a development license, a commercial license and research and development services for the Initial Lead, (ii) participation on each of the committees, (iii) four research licenses for Collaboration Products, and (iv) research and development services for the Collaboration Products. Additionally, as the development and commercial licenses on the four Collaboration Products may be granted at a discount in the future, the Company determined such discounts should be assessed as material rights at inception.

Management evaluated all of the promised goods or services within the contract and determined which goods and services

were separate performance obligations. The Company determined that the licenses granted, at the inception of the Servier collaboration, should be combined with the research and development services to be provided for the Initial Lead and Collaboration Products, over the term of the Servier Agreements, as such licenses are not capable of being distinct. A third party would not be able to provide the research and development services, due to the specific nature of the intellectual property and knowledge required to perform the services, and Servier could not benefit from the licenses without the corresponding services. The Company determined that the participation on the various committees was distinct as the services could be performed by an outside party.

As a result, management concluded that there were 10 performance obligations at the inception of the Servier Agreements. The following performance obligations are within the scope of ASC 808: (i) combined performance obligation comprised of a non-exclusive platform technology license, commercial license, development license and research and development services for the Initial Lead, (ii) two separate performance obligations each comprised of a combined non-exclusive platform technology license, research license and research and development services for each Co-Development Collaboration Product, (iii) one performance obligation comprised of participation in the various governance committees, and (iv) two combined performance obligations comprised of the development and commercial licenses granted for the Co-Development Collaboration Products (and corresponding discounts) upon the achievement of specified preclinical activities, resulting in material rights. Revenue recognized associated with these performance obligations are presented as Collaboration Revenue within the Statement of Operations. The following performance obligations are within the scope of ASC 606: (i) two separate performance obligations each comprised of a combined non-exclusive platform technology license, research license and research and development services for each Servier Worldwide Collaboration Product, and (ii) two combined performance obligations comprised of the development and commercial licenses granted for the Servier Worldwide Collaboration Products (and corresponding discounts) upon the achievement of specified preclinical activities, resulting in material rights. Revenue recognized associated with these performance obligations are presented as Customer Revenue within the Statement of Operations.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices. The Company developed its standalone selling prices for licenses by applying a risk adjusted, net present value, estimate

of future potential cash flows approach, which included the cost of obtaining research and development services at arm’s length from a third-party provider, as well as internal full-time equivalent costs to support these services.

The Company developed its estimate of standalone selling price for committee participation by using management’s estimate of the anticipated participation hours multiplied by a market rate for comparable participants.

The Company developed its estimate of standalone selling price for the material rights granted on the development and commercial licenses granted for the Collaboration Products by probability weighting multiple cash flow scenarios using the income approach.

The transaction price at inception is comprised of the fixed upfront fee of €30.0 million (approximately $32.0 million) and was allocated to the performance obligations based on the relative proportion of their standalone selling prices.

The amounts allocated to the performance obligation for the Initial Lead and the four performance obligations for the four research and development licenses for Collaboration Products will be recognized on a proportional performance basis as the activities are conducted over the life of the arrangement. The term of the performance at inception of the Servier Agreements for the Initial Lead and each of the Co-Development Collaboration Products may be through approval of certain regulatory bodies; a period which could be many years. The term of the performance for each of the other two Servier Worldwide Collaboration Products is through the initial research and collaboration term, plus potential extensions. The amounts allocated to the performance obligation for participation on each of the committees will be recognized on a straight-line basis over the anticipated performance period over the entirety of the arrangement with Servier. The amounts allocated to the four performance obligations for the material rights to acquire development and commercial licenses for the Co-Development Collaboration Products are granted in the future will be recognized over time upon delivery of each of the licenses through marketing approval. The amounts allocated to the four performance obligations for the material rights to acquire development and commercial licenses for the Servier Developed Collaboration Products are granted in the future will be recognized upon delivery of each of the licenses. As of September 30, 2020, there was $11.2 million of aggregate transaction price allocated to remaining performance obligations.

Additionally, the Company evaluated payments required to be made between both parties as a result of the shared development costs of the Initial Lead and Collaboration Products. The Company will classify payments made as a reduction of revenue and will classify payments received as revenue, in the period they are earned.

Under the Servier Agreements, the Company is eligible to receive various research, development, commercial and sales milestones. There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology. The Company has thus determined that all research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

In September 2019, Servier notified the Company of its decision to discontinue co-development of PRS-332, a PD-1-LAG-3 bispecific that served as the initial development program under the Pieris-Servier alliance, for strategic reasons. The Company does not presently intend to continue development of PRS-332 but retains full rights to advance the development and commercialization of the product on a world-wide basis in the future.

In February 2020, the research term was extended for another 12 months. The Company has updated the transaction price for the extension for revenue recognition purposes and allocated it ratably over all unsatisfied performance obligations. In March 2020, Servier notified the Company of its decision to discontinue co-development of two earlier preclinical stage programs for strategic reasons based upon an extensive portfolio review. The notification required a 60-day period to complete remaining obligations on the programs; however, the Company determined that the material rights to acquire development and commercial licenses for one Co-Development Collaboration Product and for one Servier Developed Collaboration Products lapsed in March 2020 and recognized as revenue $7.1 million of previously deferred revenue associated with these material rights during the three-month period ended March 31, 2020. The parties continue to advance the development of two preclinical programs: PRS-344, a 4-1BB/PD-L1 bispecific designed as a co-development program, and PRS-352, which addresses undisclosed targets and for which Servier has worldwide rights.

As of September 30, 2020, there were $5.8 million and $5.4 million of current and non-current deferred revenue, respectively, related to the Servier Agreements.

The Company incurred costs to obtain the contract with Servier. Upon adoption of ASC 606, the Company capitalized $0.5 million of third-party service fees in accordance with ASC 340. As of September 30, 2020, the remaining balance of the asset

recognized from costs to obtain the Servier contract was $0.1 million. Amortization during the three and nine months ended September 30, 2020 was de minimis and $0.1 million, respectively.

Contract Balances

The Company receives payments from its collaboration partners based on payments established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due until such time as the Company satisfies its performance obligations under each arrangement. A contract asset is a conditional right to consideration in exchange for goods or services that the Company has transferred to a customer. Amounts are recorded as accounts receivable when the Company’s right is unconditional.

There were no additions to deferred revenue during the three months ended September 30, 2020. Additions to deferred revenue were $1.6 million during the nine months ended September 30, 2020. Reductions to deferred revenue were $0.6 million and $14.3 million for the three and nine months, respectively, ended September 30, 2020.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Commitments and Contingencies Disclosure [Abstract]

Collaboration agreements

9 Months Ended

Sep. 30, 2020

Collaboration agreements

On August 10, 2020, the Company entered into a Clinical Trial Collaboration and Supply Agreement, or the Lilly Agreement, with Eli Lilly and Company, or Lilly, pursuant to which the Company and Lilly will collaborate on a phase 2 clinical study, or the Study, to determine the safety and efficacy of the Company's PRS-343 in combination with the standard of care regimen for the second-line treatment of advanced or metastatic gastric cancer, ramucirumab (CYRAMZA®) and paclitaxel for the second-line treatment of HER2+ gastric cancer.

Under the terms of the non-exclusive Lilly Agreement, the Company will sponsor the Study and Lilly will supply the Company with ramucirumab as well as provide input on certain clinical and regulatory aspects of the Study in exchange for jointly owning clinical data and inventions relating to the combination regimen that may arise from the Study. Any material changes to the protocol for the Study, and any changes relating to ramucirumab, will require Lilly’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

The Lilly Agreement will expire upon completion of the parties’ contractual obligations. The Lilly Agreement may also be terminated (a) by either party for an uncured material breach by the other party upon 60 days’ notice, subject to a reasonable extension if such material breach requires more than 60 days to cure; (b) by either party in the event that the Study unreasonably affects patient safety, provided that the terminating party promptly notifies the other party and the other party is given the opportunity to propose modifications to the Study to address the safety issues; (c) by either party, following 15 days’ written notice, if regulatory action is taken preventing the terminating party from providing its compound or if the terminating party decides to discontinue development of its compound; (d) by either party, immediately upon written notice to the other party for breach by the other party of its material obligations under certain sections of the Lilly Agreement, or breach of certain of the other party's representations and warranties; and (e) by Lilly in the event of certain safety concerns related to the use of ramucirumab in the Study.

The Company has concluded that the Lilly Agreement is within the scope of ASC 808, which defines collaborative arrangements and addresses the presentation of the transactions between the two parties in the income statement and related disclosures. However, ASC 808 does not provide guidance on the recognition of consideration exchanged or accounting for the obligations that may arise between the parties. The Company has concluded that ASC 730, Research and Development, should be applied by analogy. There is no financial statement impact for the Lilly Agreement as the value of the drug supply received from Lilly is offset against the drug supply cost.

Leases

The Company currently leases office space in Boston, Massachusetts. In August 2015, the Company entered into a sublease to lease approximately 3,950 square feet. The sublease expires on February 27, 2022 or such earlier date pursuant to the termination provisions of the sublease.

The Company also leased approximately 19,000 square feet of office and laboratory space in Freising, Germany under four agreements, the Freising Leases, including three leases for space on three floors of the same building and a letter agreement for additional conference room space within the building. The Freising Leases expired on March 31, 2020.

In October 2018, Pieris GmbH entered into a new lease for office and laboratory space located in Hallbergmoos, Germany, or the Hallbergmoos Lease. Pieris GmbH moved its operations, formerly conducted in Freising, Germany, to the Hallbergmoos facility in February 2020.

Under the Hallbergmoos Lease, Pieris GmbH will rent approximately 105,000 square feet, of which approximately 98,400 square feet were delivered by the lessor in February 2020 and approximately 5,100 square feet were delivered by the lessor in May 2020. An additional approximately 22,300 square feet is expected to be delivered by the lessor by October 2024. Pieris GmbH has a first right of refusal to lease an additional approximate 13,400 square feet.

The Hallbergmoos Lease provides for an initial rental term of 12.5 years which commenced in February 2020 when the leased property was delivered to Pieris GmbH. Pieris GmbH also has an option to extend the Hallbergmoos Lease for two additional 60-month periods. The Company is not reasonably certain to exercise the option to extend the lease expiration beyond its current expiration date. Pieris GmbH may sublease space within the leased property with lessor’s consent, which may not be unreasonably withheld.

Monthly base rent for the initial 105,000 square feet of the leased property, including parking spaces, will total approximately $0.2 million per month, which amount shall be adjusted starting on the second anniversary of the commencement date by an amount equal to the German consumer price index. In addition to the base rent, Pieris GmbH is also responsible for certain administrative and operational costs in accordance with the Hallbergmoos Lease. Pieris GmbH provided a security deposit of $0.8 million as required by the Hallbergmoos Lease. The Company will serve as a guarantor for the Hallbergmoos Lease.

The Hallbergmoos Lease included $11.5 million of tenant improvements allowance for normal tenant improvements, for which construction began in March 2019. The date of the construction coincided with the lease commencement date for accounting purposes under ASC 840, which did not change with the adoption off ASC 842. The Company capitalized the leasehold incentives which are included in Property and equipment, net on the Condensed Consolidated Balance Sheet and are amortized on a straight-line basis over the shorter of the useful life or the remaining lease term. The lease incentive allowance was also factored in as a reduction to the right-of-use asset upon the adoption of ASC 842.

The following table summarizes operating lease costs included in operating expenses (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease costs	$	360	$	419	$	1,134	$	1,060
Variable lease costs (1)	192		71		536		207
Total lease cost	$	552	$	490	$	1,670	$	1,267
(1) Variable lease costs include certain additional charges for operating costs, including insurance, maintenance, taxes, utilities, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage.

The following table summarizes the weighted-average remaining lease term and discount rate:


	As of September 30, 2020
Weighted-average remaining lease term (years)	11.7
Weighted-average discount rate	10.5	%

Cash paid for amounts included in the measurement of the lease liabilities was $0.6 million and $1.5 million for the three and nine months ended September 30, 2020.

As of September 30, 2020, the maturities of the Company’s operating lease liabilities and future minimum lease payments were as follows (in thousands):


	Total
2020	$	628
2021	2,513
2022	2,344
2023	2,309
2024	2,309
Thereafter	17,512
Total undiscounted lease payments	27,615
Less: present value adjustment	(11,254)
Present value of lease liabilities	$	16,361

Cash, cash equivalents and investments

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Cash, cash equivalents and investments

Cash, cash equivalents and investmentsAs of September 30, 2020 and December 31, 2019, cash, cash equivalents and investments comprised of funds in depository, money market accounts, U.S. treasury securities, asset backed securities and corporate bonds. The following table presents the cash equivalents and investments carried at fair value in accordance with the hierarchy defined in Note 2 (in thousands):


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020
Money market funds, included in cash equivalents	$	54,910	$	54,910	$	—	$	—

Investments - U.S. treasuries	8,999		8,999		—		—

Investments - Corporate bonds	6,751		—		6,751		—
Total	$	70,660	$	63,909	$	6,751	$	—

December 31, 2019
Money market funds, included in cash equivalents	$	47,384	$	47,384	$	—	$	—

Investments - U.S. treasuries	5,300		5,300		—		—
Investments - Asset-backed securities	7,950		—		7,950		—
Investments - Corporate bonds	28,644		—		28,644		—
Total	$	89,278	$	52,684	$	36,594	$	—

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. The Company validates the prices provided by its third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources, as needed. After completing its validation procedures, the Company did not adjust any fair value measurements provided by the pricing services as of September 30, 2020.

Investments as of September 30, 2020 consisted of the following (in thousands):


	Contractual maturity (in days)	Amortized Cost		Unrealized gains		Unrealized losses		Fair Value
Investments
U.S. treasuries	48-78	$	9,215	$	—	$	(216)	$	8,999

Corporate bonds	2-64	6,854		2		(105)		6,751
Total		$	16,069	$	2	$	(321)	$	15,750

The Company recorded $0.2 million and de minimis in realized losses from the maturity of available-for-sale securities during the three and nine months, respectively, ended September 30, 2020. The Company recorded realized gains of $0.1 million and $0.2 million from the maturity of available-for-sale securities for the three and nine months ended September 30, 2019, respectively.

As of September 30, 2020, there were no investments with a fair value that was significantly lower than the amortized cost basis or any investments that had been in an unrealized loss position for a significant period.

Property and equipment, net

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Property and equipment, net

Property and equipment are summarized as follows (in thousands):


	September 30,		December 31,
	2020		2019
Laboratory furniture and equipment	$	10,447	$	11,635
Office furniture and equipment	2,019		479
Computer equipment	373		245
Leasehold improvements	13,448		10,710
Property and equipment, cost	26,287		23,069
Accumulated depreciation	(4,892)		(3,567)
Property and equipment, net	$	21,395	$	19,502

Accrued Expenses

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses

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


	September 30,		December 31,
	2020		2019
Accrued accounts payable	$	1,275	$	4,251
Compensation expense	2,656		2,870
Research and development fees	1,833		1,048
Lease liabilities	934		733
Audit and tax fees	126		522
Other current liabilities	664		520

Total	$	7,488	$	9,944

Net Loss per Share	9 Months Ended
Net Loss per Share	Sep. 30, 2020
Earnings Per Share [Abstract]
Net Loss per Share	Net Loss per Share Basic net loss per share is calculated by dividing net income loss by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, preferred stock, stock options and warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. For the three months ended September 30, 2020 and 2019, and as calculated using the treasury stock method, approximately 37.3 million and 21.7 million of weighted average shares, respectively, were excluded from the calculation of diluted weighted average shares outstanding as their effect was antidilutive.

Stockholders' Equity	9 Months Ended
Stockholders' Equity	Sep. 30, 2020
Equity [Abstract]
Stockholders' Equity	Stockholders' Equity The Company had 300,000,000 shares authorized and 55,970,580 and 55,212,437 shares of common stock issued and outstanding as of September 30, 2020 and December 31, 2019, respectively, with a par value of $0.001 per share. The Company had 10,000,000 shares authorized and 14,429 shares of preferred stock issued and outstanding as of September 30, 2020. The Company had 10,000,000 shares authorized and 11,429 shares of preferred stock issued and outstanding as of December 31, 2019. Preferred stock has a par value of $0.001 per share, and consists of the following: •Series A Convertible, 2,907 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. •Series B Convertible, 5,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. •Series C Convertible, 3,522 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. •Series D Convertible, 3,000 and zero shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. 2020 Employee, Director and Consultant Equity Incentive Plan At the Annual Shareholder Meeting, held on June 23, 2020, the shareholders approved the 2020 Employee, Director and Consultant Equity Incentive Plan, or the 2020 Plan. The 2020 Plan permits the Company to issue up to 3,500,000 shares of common stock pursuant to awards granted under the 2020 Plan. Upon approval of the 2020 Plan, the 2019 Employee, Director and Consultant Equity Incentive Plan, or the 2019 Plan, was terminated; all unissued options were canceled and no additional awards will be made thereunder. All outstanding awards under the 2019 Plan will remain in effect and any awards forfeited from the outstanding awards will be allocated back into the 2020 Plan. There were approximately 1,579,678 shares remaining and available for grant under the 2019 Plan that terminated upon approval of the 2020 Plan. Series B Preferred Stock Conversion On January 30, 2019, the Company and certain entities affiliated with Biotechnology Value Fund, L.P., or BVF, entered into an exchange agreement pursuant to which BVF agreed to exchange an aggregate of 5,000,000 shares of the Company’s common stock owned by BVF for an aggregate of 5,000 shares of Series B Preferred Stock. On January 31, 2019, the Company designated 5,000 shares of its authorized and unissued preferred stock as Series B Preferred Stock and filed a Certificate of Designation of Series B Convertible Preferred Stock of Pieris Pharmaceuticals, Inc., or the Series B Certificate of Designation, with the Nevada Secretary of State. 2019 Private Placement In November 2019, the Company entered into a securities purchase agreement for a private placement, or the Purchase Agreement, with a select group of institutional investors, including lead investor BVF as well as existing and new investors, or Investors. At the time of entering into the Purchase Agreement, BVF was a more than 5% stockholder of the Company, holding shares of common stock, Series A Preferred Stock, Series B Preferred Stock and warrants to purchase shares of common stock. The private placement consisted of 9,014,960 units, at a price of $3.55 per unit for gross proceeds of approximately $32.0 million, and net proceeds to the Company of approximately $31.0 million. Each unit consists of (i) one share of the Company’s common stock, or Common Shares, or 0.001 shares of non-voting Series C convertible preferred stock, or Series C Preferred Shares, and together with the Common Shares, or Shares, and (ii) one immediately-exercisable warrant to purchase one share of the Company’s common stock with an exercise price of $7.10, or Exercise Price. If (i) the initial public disclosure of the phase 2a study of PRS-060/AZD1402 that includes the “p” value achieved for the primary endpoint of such study reveals top-line data on the primary efficacy endpoint in the phase 2a study with a “p” value below 0.05 (i.e., p < 0.05) in at least one dose level; and (ii) the 10-day volume weighted average stock price commencing on the trading day immediately after the initial public disclosure is at least three percent more than the Exercise Price, ((i) and (ii), collectively, the “Performance Condition”), then the warrants will be exercisable for a period of 60 days from the date of the initial data disclosure and may only be exercised for cash. Otherwise, the warrants will be exercisable for a period of five years from the date of issuance. If the Performance Condition has not been met and the last reported sale price of the Company’s common stock immediately prior to the Expiration Date was greater than the Exercise Price, then the warrants shall be automatically deemed exercised on a cashless basis on the Expiration Date. Upon issuance, each Series C Preferred Share included an embedded beneficial conversion feature as the market price of the Company’s Common Stock on the date of issuance of the Series C convertible preferred stock was $3.43 per share. As a result, the Company recorded the intrinsic value of the beneficial conversion feature of $2.8 million as a discount on the Series C convertible preferred stock at issuance. As the Series C Preferred Shares are immediately convertible upon issuance and do not include a stated redemption date, the discount was immediately accreted as a deemed dividend. The terms of the Series C Preferred Shares, specifically voting rights, rights of conversion, beneficial ownership limitations, entitlement to dividends and distributions upon liquidation or dissolution, are identical to the Series B Preferred Shares. Series D Preferred Stock Conversion On March 31, 2020, the Company and certain entities affiliated with BVF entered into an exchange agreement pursuant to which, on April 1, 2020, BVF exchanged an aggregate of 3,000,000 shares of the Company’s common stock owned by BVF for an aggregate of 3,000 shares of Series D Preferred Stock. The Company designated 3,000 shares of its authorized and unissued preferred stock as Series D Preferred Stock and filed a Certificate of Designation of Series D Convertible Preferred Stock of Pieris Pharmaceuticals, Inc., or the Series D Certificate of Designation, with the Nevada Secretary of State. Each share of Series D Preferred Stock is convertible into 1,000 shares of Common Stock (subject to adjustment as provided in the Series D Certificate of Designation) at any time at the option of the holder, provided that the holder is prohibited from converting the Series D Preferred Stock into shares of Common Stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of shares of Common Stock then issued and outstanding. The holder may reset the Beneficial Ownership Limitation to a higher or lower number (not to exceed 19.99% of the total number of Common Shares issued and outstanding immediately after giving effect to a conversion) upon providing written notice to the Company. Any such notice providing for an increase to the Beneficial Ownership Limitation will be effective 61 days after delivery to the Company. In the event of the Company’s liquidation, dissolution, or winding up, subject to the rights of holders of Senior Securities (defined below), holders of Series D Preferred Stock are entitled to receive a payment equal to $0.001 per share of Series D Preferred Stock before any proceeds are distributed to the holders of Common Stock and Junior Securities (defined below) and pari passu with any distributions to the holders of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, plus an additional amount equal to any dividends declared but unpaid on such shares. However, if the assets of the Company are insufficient to comply with the preceding sentence, then all remaining assets of the Company shall be distributed ratably to holders of the shares of the Series D Preferred Stock and Parity Securities (defined below). Shares of Series D Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series D Preferred Stock is required to amend the terms of the Series D Certificate of Designation. Holders of Series D Preferred Stock are entitled to receive any dividends payable to holders of Common Stock, and rank: •senior to all of the Common Stock; •senior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms junior to the Series D Preferred Stock (the “Junior Securities”); •on parity with all shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms on parity with the Series D Preferred Stock (the "Parity Securities”); and •junior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms senior to the Series D Preferred Stock (the “Senior Securities”), in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily and/or the right to receive dividends. Open Market Sales Agreement In August 2019, the Company entered into a sales agreement pursuant to which the Company may offer and sell shares of its common stock, from time to time, up to an aggregate gross sales proceeds of $50.0 million through an “at the market offering” program, or the ATM Program, under a shelf registration statement on Form S-3. In the third quarter of 2020, the Company sold 3,571,428 shares at a price of $2.80 per share under the ATM Program. The transaction resulted in gross proceeds of $10.0 million, less a 3% contractual commission incurred for the sales agent, resulting in $9.7 million in net proceeds to the Company.

Leases

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

Collaboration agreements

Leases

The following table summarizes operating lease costs included in operating expenses (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease costs	$	360	$	419	$	1,134	$	1,060
Variable lease costs (1)	192		71		536		207
Total lease cost	$	552	$	490	$	1,670	$	1,267
(1) Variable lease costs include certain additional charges for operating costs, including insurance, maintenance, taxes, utilities, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage.

The following table summarizes the weighted-average remaining lease term and discount rate:


	As of September 30, 2020
Weighted-average remaining lease term (years)	11.7
Weighted-average discount rate	10.5	%

Cash paid for amounts included in the measurement of the lease liabilities was $0.6 million and $1.5 million for the three and nine months ended September 30, 2020.

As of September 30, 2020, the maturities of the Company’s operating lease liabilities and future minimum lease payments were as follows (in thousands):


	Total
2020	$	628
2021	2,513
2022	2,344
2023	2,309
2024	2,309
Thereafter	17,512
Total undiscounted lease payments	27,615
Less: present value adjustment	(11,254)
Present value of lease liabilities	$	16,361

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Cash, Cash Equivalents and Investments

Concentration of Credit Risk and Off-Balance Sheet Risk

Fair Value Measurement

•Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency.

•Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

Financial instruments measured at fair value on a recurring basis include cash equivalents and investments (Note 4).

Property and Equipment

Revenue Recognition

Collaborative Arrangements

Revenue from Contracts with Customers

Milestones and Royalties

Contract Balances

In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all Company obligations under the agreement have been fulfilled.

Costs to Obtain and Fulfill a Contract with a Customer

Leases

The following tables summarize the effects of adopting ASC 842 on our condensed consolidated financial statements (in thousands):


	Nine Months Ended September 30, 2019
	Previously reported		ASC 842 Adjustment during the period		As adjusted
Operating activities:
Net loss	$	(24,698)	$	—	$	(24,698)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	367		—		367
Right-of-use asset amortization	—		315		315
Stock-based compensation	4,260		—		4,260
Deferred rent expense	853		(853)		—
Other non-cash transactions	90		—		90
Changes in operating assets and liabilities	(19,365)		538		(18,827)
Net cash used in operating activities	$	(38,493)	$	—	$	(38,493)

Recent Accounting Pronouncements Not Yet Adopted

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of Property and Equipment, Useful Lives

The estimated useful life of the different groups of property and equipment is as follows:


Asset Classification						Estimated useful life (in years)
Leasehold improvements						shorter of useful life or remaining life of the lease
Laboratory furniture and equipment						8-14
Office furniture and equipment						5-13
Computer and equipment						3-7

Property and equipment are summarized as follows (in thousands):


	September 30,		December 31,
	2020		2019
Laboratory furniture and equipment	$	10,447	$	11,635
Office furniture and equipment	2,019		479
Computer equipment	373		245
Leasehold improvements	13,448		10,710
Property and equipment, cost	26,287		23,069
Accumulated depreciation	(4,892)		(3,567)
Property and equipment, net	$	21,395	$	19,502

Schedule of Impact of Adopting ASC 808 and 842

This change has been reflected in the condensed consolidated statement of operations and the 2019 amounts were adjusted to conform to ASC 808 as follows:


	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
	As reported pre-adoption		ASC 808 Adoption Adjustment		As reported post-adoption		As reported pre-adoption		ASC 808 Adoption Adjustment		As reported post-adoption
Customer revenue	$	14,498	$	(10,909)	$	3,589	$	26,966	$	(11,428)	$	15,538
Collaboration revenue	634		10,909		11,543		2,043		11,428		13,471
Total Revenue	$	15,132	$	—	$	15,132	$	29,009	$	—	$	29,009

The following tables summarize the effects of adopting ASC 842 on our condensed consolidated financial statements (in thousands):


	Nine Months Ended September 30, 2019
	Previously reported		ASC 842 Adjustment during the period		As adjusted
Operating activities:
Net loss	$	(24,698)	$	—	$	(24,698)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	367		—		367
Right-of-use asset amortization	—		315		315
Stock-based compensation	4,260		—		4,260
Deferred rent expense	853		(853)		—
Other non-cash transactions	90		—		90
Changes in operating assets and liabilities	(19,365)		538		(18,827)
Net cash used in operating activities	$	(38,493)	$	—	$	(38,493)

Revenue (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Recognized Revenues

The Company recognized revenue from the following strategic partnerships and other license agreements (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Seagen	$	366	$	576	$	9,326	$	2,005
AstraZeneca	2,182		2,903		7,227		12,811
Servier	391		11,653		10,893		14,193
Total Revenue	$	2,939	$	15,132	$	27,446	$	29,009

Schedule of Potential Milestone Payments

Under the Company´s existing strategic partnerships and other license agreements, the Company could receive the following potential milestone payments (in millions):


	Research, Development, Regulatory & Commercial Milestones		Sales Milestones
AstraZeneca	$	1,111	$	960
Servier	712		632
Seagen	764		450
Total potential milestone payments	$	2,587	$	2,042

Cash, cash equivalents and investments (Tables)

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Schedule of Cash Equivalents and Investments Carried at Fair Value

The following table presents the cash equivalents and investments carried at fair value in accordance with the hierarchy defined in Note 2 (in thousands):


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020
Money market funds, included in cash equivalents	$	54,910	$	54,910	$	—	$	—

Investments - U.S. treasuries	8,999		8,999		—		—

Investments - Corporate bonds	6,751		—		6,751		—
Total	$	70,660	$	63,909	$	6,751	$	—

December 31, 2019
Money market funds, included in cash equivalents	$	47,384	$	47,384	$	—	$	—

Investments - U.S. treasuries	5,300		5,300		—		—
Investments - Asset-backed securities	7,950		—		7,950		—
Investments - Corporate bonds	28,644		—		28,644		—
Total	$	89,278	$	52,684	$	36,594	$	—

Schedule of Cash Equivalents and Investments

Investments as of September 30, 2020 consisted of the following (in thousands):


	Contractual maturity (in days)	Amortized Cost		Unrealized gains		Unrealized losses		Fair Value
Investments
U.S. treasuries	48-78	$	9,215	$	—	$	(216)	$	8,999

Corporate bonds	2-64	6,854		2		(105)		6,751
Total		$	16,069	$	2	$	(321)	$	15,750

Property and equipment, net (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

The estimated useful life of the different groups of property and equipment is as follows:


Asset Classification						Estimated useful life (in years)
Leasehold improvements						shorter of useful life or remaining life of the lease
Laboratory furniture and equipment						8-14
Office furniture and equipment						5-13
Computer and equipment						3-7

Property and equipment are summarized as follows (in thousands):


	September 30,		December 31,
	2020		2019
Laboratory furniture and equipment	$	10,447	$	11,635
Office furniture and equipment	2,019		479
Computer equipment	373		245
Leasehold improvements	13,448		10,710
Property and equipment, cost	26,287		23,069
Accumulated depreciation	(4,892)		(3,567)
Property and equipment, net	$	21,395	$	19,502

Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

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


	September 30,		December 31,
	2020		2019
Accrued accounts payable	$	1,275	$	4,251
Compensation expense	2,656		2,870
Research and development fees	1,833		1,048
Lease liabilities	934		733
Audit and tax fees	126		522
Other current liabilities	664		520

Total	$	7,488	$	9,944

Leases (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Operating Lease Costs, Lease Term and Discount Rate

The following table summarizes operating lease costs included in operating expenses (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease costs	$	360	$	419	$	1,134	$	1,060
Variable lease costs (1)	192		71		536		207
Total lease cost	$	552	$	490	$	1,670	$	1,267
(1) Variable lease costs include certain additional charges for operating costs, including insurance, maintenance, taxes, utilities, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage.

The following table summarizes the weighted-average remaining lease term and discount rate:


	As of September 30, 2020
Weighted-average remaining lease term (years)	11.7
Weighted-average discount rate	10.5	%

Operating Lease Liabilities

As of September 30, 2020, the maturities of the Company’s operating lease liabilities and future minimum lease payments were as follows (in thousands):


	Total
2020	$	628
2021	2,513
2022	2,344
2023	2,309
2024	2,309
Thereafter	17,512
Total undiscounted lease payments	27,615
Less: present value adjustment	(11,254)
Present value of lease liabilities	$	16,361

Corporate Information (Details) - USD ($) $ in Millions	Sep. 30, 2020	May 31, 2013
Business Acquisition [Line Items]
Cash, cash equivalents and investments	$ 82.6
Pieris Pharmaceuticals GmbH
Business Acquisition [Line Items]
Ownership interest acquired (as a percent)		100.00%

Summary of Significant Accounting Policies - Schedule of Property, Plant and Equipment, Useful Lives (Details)	9 Months Ended
	Sep. 30, 2020
Laboratory furniture and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	8 years
Laboratory furniture and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	14 years
Office furniture and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Office furniture and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	13 years
Computer and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Computer and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	7 years

Summary of Significant Accounting Policies - Impact of Adopting ASC 808 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue	$ 2,939	$ 15,132	$ 27,446	$ 29,009
Customer revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue	2,578	3,589	22,393	15,538
Collaboration revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue	$ 361	11,543	$ 5,053	13,471
As reported pre-adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		15,132		29,009
As reported pre-adoption \| Customer revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		14,498		26,966
As reported pre-adoption \| Collaboration revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		634		2,043
Adjustment \| Accounting Standards Update 2018-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		0		0
Adjustment \| Customer revenue \| Accounting Standards Update 2018-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		(10,909)		(11,428)
Adjustment \| Collaboration revenue \| Accounting Standards Update 2018-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenue		$ 10,909		$ 11,428

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Summary of Significant Accounting Policies - Impact of Adopting ASC 842 (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2020

Sep. 30, 2019

Sep. 30, 2020

Sep. 30, 2019

$ (14,283)

$ (2,592)

$ (22,830)

$ (24,698)

^[1]

367

(103)

315

^[1]

3,916

4,260

^[1]

Deferred rent expense

(293)

^[1]

(14,792)

(18,827)

^[1]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

$ (32,479)

(38,493)

^[1]

Previously reported

(24,698)

367

4,260

Deferred rent expense

853

(19,365)

ASC 842 Adjustment during the period | Accounting Standards Update 2016-02

(38,493)

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

315

Deferred rent expense

(853)

538

$ 0

[1]	(1) Restated to conform to ASC 842. See accompanying Note 2.

Revenue - Revenue From Licensing Agreements and Strategic Partnerships (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Total revenue	$ 2,939	$ 15,132	$ 27,446	$ 29,009
Seagen
Disaggregation of Revenue [Line Items]
Total revenue	366	576	9,326	2,005
AstraZeneca
Disaggregation of Revenue [Line Items]
Total revenue	2,182	2,903	7,227	12,811
Servier
Disaggregation of Revenue [Line Items]
Total revenue	$ 391	$ 11,653	$ 10,893	$ 14,193

Revenue - Potential Milestone Payments (Details) - Strategic Partnerships and Other License Agreements $ in Millions	Sep. 30, 2020 USD ($)
Research, Development, Regulatory & Commercial Milestones
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	$ 2,587
Research, Development, Regulatory & Commercial Milestones \| AstraZeneca
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	1,111
Research, Development, Regulatory & Commercial Milestones \| Servier
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	712
Research, Development, Regulatory & Commercial Milestones \| Seagen
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	764
Sales Milestones
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	2,042
Sales Milestones \| AstraZeneca
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	960
Sales Milestones \| Servier
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	632
Sales Milestones \| Seagen
Revenue Recognition, Milestone Method [Line Items]
Total potential milestone payments	$ 450

Revenue - Narrative (Details) € in Millions											1 Months Ended				3 Months Ended			9 Months Ended
Revenue - Narrative (Details) € in Millions	Feb. 08, 2018 USD ($) research_program license swap_option performance_obligation	May 02, 2017 performance_obligation	May 02, 2017 USD ($) performance_obligation	May 02, 2017 research_program performance_obligation	May 02, 2017 license performance_obligation	May 02, 2017 performance_obligation	May 02, 2017 performance_obligation protein	May 02, 2017 performance_obligation lease_agreement	Jan. 04, 2017 USD ($) license performance_obligation bispecific_therapeutic_program preclinical_Milestone extension_option product	Jan. 04, 2017 EUR (€) license performance_obligation bispecific_therapeutic_program preclinical_Milestone extension_option product	Feb. 28, 2019 USD ($)	Feb. 28, 2019 EUR (€)	Dec. 31, 2018 USD ($) preclinical_Milestone	Dec. 31, 2018 EUR (€) preclinical_Milestone	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jan. 01, 2019 USD ($)	May 02, 2017 collaboration_product
Disaggregation of Revenue [Line Items]
Revenue recognized from contract with customer															$ 600,000			$ 14,300,000
Deferred revenues, current portion															10,045,000			10,045,000	$ 11,256,000
Deferred revenue, net of current portion															36,919,000			36,919,000	$ 47,258,000
Additions to deferred revenue															0			1,600,000
Number of separate performance obligations (in performance obligations) \| performance_obligation									1	1
Number of technology licenses (in licenses) \| lease_agreement								5
Seagen
Disaggregation of Revenue [Line Items]
Number of performance obligations (in performance obligations) \| performance_obligation	3
Remaining performance obligation															20,200,000			20,200,000
Deferred revenues, current portion															3,400,000			3,400,000
Deferred revenue, net of current portion															13,500,000			13,500,000
AstraZeneca
Disaggregation of Revenue [Line Items]
Remaining performance obligation															21,900,000			21,900,000
Deferred revenues, current portion															900,000			900,000
Deferred revenue, net of current portion															17,900,000			17,900,000
Research collaboration agreement term		5 years
Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Number of performance obligations (in performance obligations) \| performance_obligation									10	10
Remaining performance obligation															11,200,000			11,200,000
Revenue recognized from contract with customer																	$ 7,100,000
Deferred revenues, current portion															5,800,000			5,800,000
Deferred revenue, net of current portion															5,400,000			5,400,000
Number of novel proteins (in proteins) \| bispecific_therapeutic_program									1	1
Capitalized contract cost, net															100,000			100,000
Number of research programs (in research programs) \| bispecific_therapeutic_program									3	3
Amortization of capitalized contract costs																		100,000
Number of separate performance obligations (in performance obligations) \| performance_obligation									2	2
Les Laboratoires Servier and Institut de Recherches Internationales Servier \| Research and Development Services
Disaggregation of Revenue [Line Items]
Research collaboration agreement term									3 years	3 years
Number of preclinical milestones (in preclinical milestones) \| preclinical_Milestone									2	2			1	1
License and Collaboration Agreement \| Seagen
Disaggregation of Revenue [Line Items]
Number of research programs (in research programs) \| research_program	3
Period after effective date agreements may be terminated	12 months
Contract termination advance notice period	90 days
Agreement termination advance notice period if marketing approval obtained	180 days
Agreement termination notice period upon material breach by the Company	90 days
Contract termination due to material breach, additional notice period if the breach is not susceptible	90 days
Number of licenses (in licenses) \| license	3
Number of swap options (in swap options) \| swap_option	2
Number of performance obligations (in performance obligations) \| performance_obligation	6
License and Collaboration Agreement \| AstraZeneca
Disaggregation of Revenue [Line Items]
Period after effective date agreements may be terminated		12 months
Contract termination advance notice period		90 days
Agreement termination advance notice period if marketing approval obtained		180 days
Agreement termination notice period upon material breach by the Company		180 days
Contract termination due to material breach, additional notice period if the breach is not susceptible		180 days
Number of performance obligations (in performance obligations) \| performance_obligation						16
Number of novel proteins (in proteins) \| protein							4
Agreement termination notice period upon breach of payment obligations by the Company		30 days
Period of license performance obligation		12 months
License and Collaboration Agreement \| Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Number of licenses (in licenses) \| license									5	5
Number of performance obligations (in performance obligations) \| performance_obligation									4	4
Number of research programs (in research programs) \| bispecific_therapeutic_program									5	5
Strategic Partnerships and Other License Agreements \| Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Period after effective date agreements may be terminated									12 months	12 months
Contract termination advance notice period									180 days	180 days
Revenue recognized from contract with customer											$ 1,700,000	€ 1.5	$ 600,000	€ 0.5
Number of collaboration products (in collaboration products) \| product									4	4
Other arrangement \| Seagen
Disaggregation of Revenue [Line Items]
Number of research programs (in research programs) \| research_program	2
Platform technology license \| Seagen
Disaggregation of Revenue [Line Items]
Number of performance obligations (in performance obligations) \| performance_obligation	3
Antibody target swap \| Seagen
Disaggregation of Revenue [Line Items]
Number of performance obligations (in performance obligations) \| performance_obligation	2
Governance committee participation \| Seagen
Disaggregation of Revenue [Line Items]
Number of performance obligations (in performance obligations) \| performance_obligation	1
Upfront Payment \| Seagen
Disaggregation of Revenue [Line Items]
Research and development services	$ 4,900,000
Deferred revenue	1,200,000,000
Upfront Payment \| Seagen \| License fees
Disaggregation of Revenue [Line Items]
Revenue	$ 30,000,000.0
Upfront Payment \| AstraZeneca
Disaggregation of Revenue [Line Items]
Allocable arrangement consideration			$ 45,000,000.0
Upfront Payment \| Les Laboratoires Servier and Institut de Recherches Internationales Servier \| License fees
Disaggregation of Revenue [Line Items]
Revenue									$ 32,000,000.0	€ 30.0
Additional other research services \| AstraZeneca
Disaggregation of Revenue [Line Items]
Allocable arrangement consideration			4,700,000
Estimated Development and Manufacturing Services \| Upfront Payment \| AstraZeneca
Disaggregation of Revenue [Line Items]
Allocable arrangement consideration			14,200,000
Milestone Payments \| Upfront Payment \| Seagen
Disaggregation of Revenue [Line Items]
Revenue recognized from contract with customer															4,200,000			4,200,000
Allocable arrangement consideration																$ 5,000,000.0
Milestone Payments \| Upfront Payment \| AstraZeneca
Disaggregation of Revenue [Line Items]
Allocable arrangement consideration			12,500,000
Estimated Phase 2a Services \| Upfront Payment \| AstraZeneca
Disaggregation of Revenue [Line Items]
Allocable arrangement consideration			$ 4,700,000
Agreement extension options (in extension options) \| Les Laboratoires Servier and Institut de Recherches Internationales Servier \| Research and Development Services
Disaggregation of Revenue [Line Items]
Research collaboration agreement term									1 year	1 year
Number of agreement extension options (in extension options) \| extension_option									2	2
Minimum \| License and Collaboration Agreement \| AstraZeneca
Disaggregation of Revenue [Line Items]
Number of collaboration products (in collaboration products) \| collaboration_product																					2
Minimum \| Strategic Partnerships and Other License Agreements \| Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Agreement termination notice period upon material breach by the Company									90 days	90 days
Maximum \| License and Collaboration Agreement \| AstraZeneca
Disaggregation of Revenue [Line Items]
Number of research programs (in research programs) \| research_program				2
Number of collaboration products (in collaboration products)		4	4	4	4	4	4	4													4
Number of research licenses (in licenses)					4			4
Maximum \| Strategic Partnerships and Other License Agreements \| Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Agreement termination notice period upon material breach by the Company									120 days	120 days
Accounting Standards Update 2014-09 \| AstraZeneca
Disaggregation of Revenue [Line Items]
Capitalized contract cost, net															$ 700,000			$ 700,000		$ 1,600,000
Capitalized contract cost in accordance with ASC 340																				1,100,000
Accounting Standards Update 2014-09 \| Les Laboratoires Servier and Institut de Recherches Internationales Servier
Disaggregation of Revenue [Line Items]
Capitalized contract cost, net																				$ 500,000

Cash, cash equivalents and investments - Cash Equivalents and Investments Carried at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 70,660	$ 89,278
Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	63,909	52,684
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	6,751	36,594
Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	0	0
U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	8,999	5,300
U.S. treasuries \| Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	8,999	5,300
U.S. treasuries \| Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
U.S. treasuries \| Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		7,950
Asset-backed securities \| Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		0
Asset-backed securities \| Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		7,950
Asset-backed securities \| Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		0
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	6,751	28,644
Corporate bonds \| Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Corporate bonds \| Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	6,751	28,644
Corporate bonds \| Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds, included in cash equivalents	54,910	47,384
Money market funds \| Quoted prices in active markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds, included in cash equivalents	54,910	47,384
Money market funds \| Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds, included in cash equivalents	0	0
Money market funds \| Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds, included in cash equivalents	$ 0	$ 0

Cash, cash equivalents and investments - Cash Equivalents and Investments (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	$ 16,069
Unrealized gains	2
Unrealized losses	(321)
Fair Value	15,750
U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	9,215
Unrealized gains	0
Unrealized losses	(216)
Fair Value	$ 8,999
U.S. treasuries \| Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contractual maturity	48 days
U.S. treasuries \| Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contractual maturity	78 days
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	$ 6,854
Unrealized gains	2
Unrealized losses	(105)
Fair Value	$ 6,751
Corporate bonds \| Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contractual maturity	2 days
Corporate bonds \| Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contractual maturity	64 days

Cash, cash equivalents and investments - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2019
Cash and Cash Equivalents [Abstract]
Realized gains (losses) recognized on available-for-sale investments	$ (0.2)	$ 0.1	$ 0.2

Property and equipment, net - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment, cost	$ 26,287	$ 23,069
Accumulated depreciation	(4,892)	(3,567)
Property and equipment, net	21,395	19,502
Laboratory furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, cost	10,447	11,635
Office furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, cost	2,019	479
Computer and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, cost	373	245
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, cost	$ 13,448	$ 10,710

Accrued Expenses - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accrued expenses
Accrued accounts payable	$ 1,275	$ 4,251
Compensation expense	2,656	2,870
Research and development fees	1,833	1,048
Lease liabilities	934	733
Audit and tax fees	126	522
Other current liabilities	664	520
Total	$ 7,488	$ 9,944

Net Loss per Share - Narrative (Details) - shares shares in Millions	3 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Weighted average shares excluded from the calculation of diluted weighted average shares outstanding (shares)	37.3	21.7

Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands					1 Months Ended		3 Months Ended	9 Months Ended
	Jun. 23, 2020	Apr. 01, 2020	Mar. 31, 2020	Jan. 30, 2019	Nov. 30, 2019	Aug. 31, 2019	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jan. 31, 2019
Class of Stock [Line Items]
Common stock, shares authorized (in shares)							300,000,000	300,000,000		300,000,000
Common stock, shares issued (in shares)							55,970,580	55,970,580		55,212,437
Common stock, shares outstanding (in shares)							55,970,580	55,970,580		55,212,437
Par value of common stock (USD per share)							$ 0.001	$ 0.001		$ 0.001
Preferred stock, shares authorized (in shares)							10,000,000	10,000,000		10,000,000
Preferred stock, shares issued (in shares)							14,429	14,429		11,429
Preferred stock, shares outstanding (in shares)							14,429	14,429		11,429
Par value of preferred stock (USD per share)							$ 0.001	$ 0.001		$ 0.001
Number of shares included with each unit (in shares)					1
Number of warrants included with each unit (in shares)					1
Gross sales proceeds from common stock						$ 50,000		$ 9,624	$ 0
Preferred share exchange
Class of Stock [Line Items]
Shares of stock sold, price per share (in dollars per share)					$ 3.43
Beneficial conversion feature					$ 2,800
Private placement
Class of Stock [Line Items]
Shares of stock sold (in shares)					9,014,960
Shares of stock sold, price per share (in dollars per share)					$ 3.55
Shares of stock sold, gross consideration					$ 32,000
Shares of stock sold, net consideration					$ 31,000
Stock issued upon conversion (shares)					0.001
Warrants, exercise price (in dollars per share)					$ 7.10
Notice period before increase of Beneficial Ownership Limitation					60 days
At the market offering
Class of Stock [Line Items]
Shares of stock sold (in shares)							3,571,428
Shares of stock sold, price per share (in dollars per share)							$ 2.80	$ 2.80
Shares of stock sold, net consideration							$ 10,000
Gross sales proceeds from common stock							$ 9,700
Contractual commission for sales agent							3.00%
Common Stock
Class of Stock [Line Items]
Number of securities called by each warrant					1
Common Stock \| Stock exchange, shares from existing shareholders
Class of Stock [Line Items]
Shares of stock sold (in shares)		3,000,000		5,000,000
Preferred Stock \| Preferred share exchange
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)											5,000
Shares of stock sold (in shares)		3,000		5,000
Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)							2,907	2,907		2,907
Preferred stock, shares outstanding (in shares)							2,907	2,907		2,907
Series B Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)							5,000	5,000		5,000
Preferred stock, shares outstanding (in shares)							5,000	5,000		5,000
Series C Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)							3,522	3,522		3,522
Preferred stock, shares outstanding (in shares)							3,522	3,522		3,522
Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)							3,000	3,000		0
Preferred stock, shares outstanding (in shares)							3,000	3,000		0
Series D Preferred Stock \| Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		3,000
Par value of preferred stock (USD per share)			$ 0.001
Stock issued upon conversion (shares)			1,000
Notice period before increase of Beneficial Ownership Limitation			61 days
Common stock ownership limit (as a percent)			9.99%
Beneficial ownership limitation (as a percent)			19.99%
2020 Employee, Director and Consultant Equity Incentive Plan
Class of Stock [Line Items]
Shares of stock authorized pursuant to the 2020 Plan (shares)	3,500,000
2019 Plan
Class of Stock [Line Items]
Shares of stock terminated under the 2019 Plan (shares)	1,579,678
Maximum \| Private placement
Class of Stock [Line Items]
Warrants, term					5 years

Leases - Narrative (Details) $ in Millions	1 Months Ended			3 Months Ended		9 Months Ended
Leases - Narrative (Details) $ in Millions	May 31, 2020 ft²	Feb. 29, 2020 USD ($) ft²	Aug. 31, 2015 ft²	Sep. 30, 2020 USD ($)	Mar. 31, 2020 ft² lease_agreement	Sep. 30, 2020 USD ($) ft² extension_option	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Loss Contingencies [Line Items]
Lease liabilities \| $				$ 0.6		$ 1.5
Boston, Massachusetts
Loss Contingencies [Line Items]
Area of leased property			3,950
Freising, Germany
Loss Contingencies [Line Items]
Area of leased property					19,000
Number of lease agreements \| lease_agreement					4
Hallbergmoos, Germany
Loss Contingencies [Line Items]
Area of leased property		105,000
Lease term		12 years 6 months
Number of agreement extension options (in extension options) \| extension_option						2
Lease renewal term				60 months		60 months
Rent expense \| $		$ 0.2
Security deposit \| $								$ 0.8
Tenant improvements \| $							$ 11.5
Leases in same building \| Freising, Germany
Loss Contingencies [Line Items]
Number of lease agreements \| lease_agreement					3
Leases expected to be delivered by February 2020 \| Hallbergmoos, Germany
Loss Contingencies [Line Items]
Area of leased property		98,400
Leases expected to be delivered by May 2020 \| Hallbergmoos, Germany
Loss Contingencies [Line Items]
Area of leased property	5,100
Leases expected to be delivered by October 2024 \| Hallbergmoos, Germany
Loss Contingencies [Line Items]
Area of leased property						22,300
Leases with first right of refusal for additional area \| Hallbergmoos, Germany
Loss Contingencies [Line Items]
Area of leased property						13,400

Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Leases - Lease Cost (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Operating lease costs	$ 360	$ 419	$ 1,134	$ 1,060
Variable lease costs	192	71	536	207
Total lease cost	$ 552	$ 490	$ 1,670	$ 1,267

Leases - Summary of the Lease Term and Discount Rate (Details)	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease term (years)	11 years 8 months 12 days
Weighted-average discount rate	10.50%

Leases - Maturities of the Operating Lease Liabilities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 628
2021	2,513
2022	2,344
2023	2,309
2024	2,309
Thereafter	17,512
Total undiscounted lease payments	27,615
Less: present value adjustment	(11,254)
Present value of lease liabilities	$ 16,361

Label	Element	Value
Accounting Standards Update [Extensible List]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2014-09 [Member]

Indicates amendment to accounting standards.

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