0001558370-21-001821 | 10-K | XBRL Viewer | Kiniksa Pharmaceuticals LTD

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2020	Jan. 31, 2021	Jun. 30, 2020
Document information
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2020
Entity File Number	001-38492
Entity Registrant Name	Kiniksa Pharmaceuticals, Ltd.
Entity Incorporation, State or Country Code	D0
Entity Tax Identification Number	98-1327726
Entity Address, Address Line One	Clarendon House
Entity Address, Address Line Two	2 Church Street
Entity Address, City or Town	Hamilton
Entity Address, Country	BM
Entity Address, Postal Zip Code	HM11
City Area Code	808
Local Phone Number	189-6257
Title of 12(b) Security	Class A Common Shares
Trading Symbol	KNSA
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 712.6
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Central Index Key	0001730430
Amendment Flag	false
Common Shares
Document information
Entity Common Stock, Shares Outstanding		68,232,304
Class A common shares
Document information
Entity Common Stock, Shares Outstanding		31,922,546
Class B common shares
Document information
Entity Common Stock, Shares Outstanding		2,227,614
Class A1 common shares
Document information
Entity Common Stock, Shares Outstanding		18,024,526
Class B1 common shares
Document information
Entity Common Stock, Shares Outstanding		16,057,618

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 114,038	$ 46,928
Restricted cash	210
Short-term investments	209,444	186,452
Prepaid expenses and other current assets	9,557	8,247
Total current assets	333,249	241,627
Property and equipment, net	4,051	6,398
Operating lease right-of-use assets	6,566	1,927
Restricted cash		210
Other long-term assets	5,588
Deferred offering costs	0	0
Deferred tax assets	10	4,372
Total assets	349,464	254,534
Current liabilities:
Accounts payable	503	5,693
Accrued expenses	29,199	20,415
Operating lease liabilities	2,107	1,697
Other current liabilities	37	25
Total current liabilities	31,846	27,830
Non-current liabilities:
Non-current operating lease liabilities	4,878	955
Other long-term liabilities	805	326
Total liabilities	37,529	29,111
Commitments and contingencies (Note 12)
Shareholders' equity:
Additional paid-in capital	829,424	581,467
Accumulated other comprehensive income	(34)	33
Accumulated deficit	(517,473)	(356,092)
Total shareholders' equity	311,935	225,423
Total liabilities and shareholders' equity	349,464	254,534
Class A common shares
Shareholders' equity:
Common stock value	8	6
Class B common shares
Shareholders' equity:
Common stock value	1	1
Class A1 common shares
Shareholders' equity:
Common stock value	5	4
Class B1 common shares
Shareholders' equity:
Common stock value	$ 4	$ 4

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating expenses:
Research and development	$ 112,042	$ 135,001	$ 86,597
General and administrative	45,321	34,962	21,563
Total operating expenses	157,363	169,963	108,160
Loss from operations	(157,363)	(169,963)	(108,160)
Interest income	1,134	6,049	4,719
Loss before (provision) benefit for income taxes	(156,229)	(163,914)	(103,441)
(Provision) benefit for income taxes	(5,152)	2,047	214
Net loss	$ (161,381)	$ (161,867)	$ (103,227)
Net loss per share attributable to common shareholders-basic and diluted	$ (2.61)	$ (2.99)	$ (3.49)
Weighted average common shares outstanding-basic and diluted	61,842,722	54,049,477	29,547,427
Comprehensive loss:
Net loss	$ (161,381)	$ (161,867)	$ (103,227)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments and currency translation adjustments, net of tax	(67)	37	(4)
Total other comprehensive income	(67)	37	(4)
Total comprehensive loss	$ (161,448)	$ (161,830)	$ (103,231)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Convertible Preferred Shares	Common Shares Initial Public Offering	Common Shares Follow-On Offering	Common Shares Private Placement	Common Shares	Additional Paid-In Capital Initial Public Offering	Additional Paid-In Capital Follow-On Offering	Additional Paid-In Capital Private Placement	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Initial Public Offering	Follow-On Offering	Private Placement	Total
Balance at the beginning of the period at Dec. 31, 2017	$ 119,770
Balance at the beginning of the period (in shares) at Dec. 31, 2017	22,885,492
Changes in temporary equity
Issuance of Series C convertible preferred shares, net of issuance costs	$ 190,822
Issuance of Series C convertible preferred shares, net of issuance costs (in shares)	12,784,601
Conversion of convertible preferred shares to common shares	$ (310,592)
Conversion of convertible preferred shares to common shares (in shares)	(35,670,093)
Balance at the beginning of the period at Dec. 31, 2017					$ 1				$ 1,289		$ (90,998)				$ (89,708)
Balance at the beginning of the period (in shares) at Dec. 31, 2017					4,288,329
Changes in equity
Conversion of convertible preferred shares into common shares					$ 8				310,584						310,592
Conversion of convertible preferred shares into common shares (in shares)					35,670,093
Issuance of common shares upon completion of offering, net of placement agent fees		$ 4				$ 155,532						$ 155,536
Issuance of common shares upon completion of offering, net of placement agent fees (in shares)		9,484,202
Issuance of Class A shares under incentive award plans and employee share purchase plan									377						377
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares)					47,023
Share-based compensation expense									5,701						5,701
Unrealized gain on short-term investments										$ (4)					(4)
Net loss											(103,227)				(103,227)
Balance at the end of the period at Dec. 31, 2018					$ 13				473,483	(4)	(194,225)				279,267
Balance at the end of the period (in shares) at Dec. 31, 2018					49,489,647
Changes in equity
Issuance of common shares upon completion of offering, net of placement agent fees			$ 2				$ 48,474	$ 34,511					$ 48,476	$ 34,511
Issuance of common shares upon completion of offering, net of placement agent fees (in shares)			2,816,110	2,000,000
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc.									7,000						7,000
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. (in shares)					337,008
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc.									1,800						1,800
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc. (in shares)					94,284
Issuance of Class A shares under incentive award plans and employee share purchase plan									1,119						1,119
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares)					200,579
Share-based compensation expense									15,080						15,080
Unrealized gain on short-term investments										37					37
Net loss											(161,867)				(161,867)
Balance at the end of the period at Dec. 31, 2019					$ 15				581,467	33	(356,092)				225,423
Balance at the end of the period (in shares) at Dec. 31, 2019					54,937,628
Changes in equity
Issuance of common shares upon completion of offering, net of placement agent fees			$ 2	$ 1			$ 164,586	$ 55,944					$ 164,588	$ 55,945
Issuance of common shares upon completion of offering, net of placement agent fees (in shares)			8,712,381	3,028,572
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. (in shares)					76,103
Issuance of Class A shares under incentive award plans and employee share purchase plan									6,552						6,552
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares)					1,460,338
Share-based compensation expense									20,875						20,875
Unrealized gain on short-term investments										(67)					(67)
Net loss											(161,381)				(161,381)
Balance at the end of the period at Dec. 31, 2020					$ 18				$ 829,424	$ (34)	$ (517,473)				$ 311,935
Balance at the end of the period (in shares) at Dec. 31, 2020					68,215,022

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ (161,381)	$ (161,867)	$ (103,227)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	2,405	2,068	286
Share-based compensation expense	20,875	15,080	5,701
Class A common shares issued or to be issued as consideration for Primatope, including milestone payments		8,800
Loss on disposal of property and equipment		21	66
Other			235
Non-cash lease expense	1,400	1,211
Accretion of discounts on short-term investments	123	(3,501)	(1,423)
Deferred income taxes	4,361	(3,156)	(978)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,334)	(1,020)	(4,791)
Other long-term assets	(5,588)
Accounts payable	(4,969)	(4,705)	8,823
Accrued expenses and other liabilities	8,797	4,638	9,296
Accrued milestones		(15,000)	5,000
Operating lease liabilities	(1,699)	(1,264)
Other long-term liabilities	478	326
Net cash used in operating activities	(136,532)	(158,369)	(81,012)
Cash flows from investing activities:
Purchases of property and equipment	(283)	(3,203)	(5,290)
Purchases of short-term investments	(430,211)	(488,773)	(402,008)
Proceeds from the maturities of short-term investments	407,050	541,190	168,100
Net cash provided by investing activities	(23,444)	49,214	(239,198)
Cash flows from financing activities:
Payments of offering costs	(1,136)	(118)	(3,657)
Proceeds from issuance of common stock under incentive award plans and employee share purchase plan	6,553	1,119	377
Net cash provided by financing activities	227,086	84,107	346,736
Net increase in cash, cash equivalents and restricted cash	67,110	(25,048)	26,526
Cash, cash equivalents and restricted cash at beginning of period	47,138	72,186	45,660
Cash, cash equivalents and restricted cash at end of period	114,248	47,138	72,186
Supplemental information:
Cash paid for income taxes	482	1,724	383
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use asset obtained in exchange for operating lease obligation	6,039
Deferred offering costs included in accrued expenses and accounts payable			404
Property and equipment included in accrued expenses and accounts payable		222	1,292
Series C convertible preferred shares
Cash flows from financing activities:
Proceeds from issuance of convertible preferred shares, net of issuance costs			190,822
Initial Public Offering \| Class A common shares
Cash flows from financing activities:
Proceeds from issuance of common shares, net of underwriting discounts and commissions inclusive of the over-allotment option exercise			$ 159,194
Follow-On Offering \| Class A common shares
Cash flows from financing activities:
Proceeds from issuance of common shares, net of underwriting discounts and commissions inclusive of the over-allotment option exercise	165,725	48,595
Private Placement \| Class A1 common shares
Cash flows from financing activities:
Proceeds from issuance of common shares from private placement, net of placement agent fees	$ 55,944	$ 34,511

Nature of the Business and Basis of Presentation

12 Months Ended

Dec. 31, 2020

Nature of the Business and Basis of Presentation

Nature of the Business and Basis of Presentation

1. Nature of the Business and Basis of Presentation

Kiniksa Pharmaceuticals, Ltd. (the “Company”) is a biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need. The Company was incorporated in July 2015 as a Bermuda exempted company. The Company’s pipeline of product candidates are designed to modulate immunological signaling pathways that are implicated across a spectrum of diseases.

The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry and global health, societal, economic and market conditions, including from the impact from the coronavirus disease 2019 (“COVID-19”) pandemic. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any products, if approved, will be commercially viable. For example, while the U.S. Food and Drug Administration (the “FDA”), accepted the supplemental Biologics License Application (“sBLA”) for rilonacept in recurrent pericarditis with priority review and assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of March 21, 2021, the Company has not yet demonstrated its ability to obtain regulatory approvals. The Company does not currently generate revenue from sales of any products, and it may never be able to develop or commercialize a marketable product. Upon approval from the FDA , if any, of rilonacept for recurrent pericarditis, the Company will assume the sales and distribution of rilonacept for the approved indications for the treatment of cryopyrin-associated periodic syndrome (“CAPS”), specifically familial cold autoinflammatory syndrome and muckle-wells syndrome, and for the treatment of deficiency of IL-1 receptor antagonist (“DIRA”) in the United States and would evenly split profits on sales with Regeneron, after deducting certain commercialization expenses subject to specified limits. The Company has never obtained any regulatory approvals, manufactured a commercial-scale drug, or conducted sales and marketing activities. The Company operates in an environment of rapid technological innovation and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties, including contract research organizations (“CROs”), and contract manufacturing organizations (“CMOs”). Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Risk and Uncertainties Related to COVID-19

In addition to risks and uncertainties common to the Company’s industry, the Company is subject to global societal, healthcare, economic and market conditions, including from the impact of the COVID-19 pandemic and measures taken in response to the pandemic or the easing of such measures, which continue to evolve. In December 2019, COVID-19 surfaced in Wuhan, China. The virus spread globally, and was declared a pandemic by the World Health Organization. The impact of this pandemic has been and will likely continue to be extensive on many aspects of society, which has resulted in and will likely continue to result in significant disruptions to healthcare systems, the global economy, as well as businesses and capital markets around the world.

In an effort to halt the spread of the COVID-19 pandemic, federal and state governments in the United States and the governments of other countries around the globe have implemented various measures in response to the pandemic, including significant restrictions on businesses and travel as well as social-distancing measures and the easing of such measures. In response to the COVID-19 pandemic and measures introduced by federal and state governments in the United States, the Company implemented workplace protocols in the jurisdictions where it has facilities. While the majority of the Company’s employees are able to carry out their responsibilities working outside of the Company’s physical locations, for the Company’s essential workers and those choosing to return to the Company’s offices to carry out their responsibilities, the Company implemented additional safety measures, including occupancy limits, restricting business travel, providing and requiring the use of personal protective equipment, self-screening prior to accessing the Company’s facilities, among other things. As these measures implemented by federal and state governments in the

United States in response to the pandemic continue to evolve, the Company continues to monitor the developments, restrictions and requirements in jurisdictions where it has offices, and plans to update the protocols for its offices as applicable.

The COVID-19 pandemic, and measures undertaken in response to the pandemic, or the easing of any of such measures, may cause significant disruptions in the Company’s business or operations as well as in the business and operations of the Company’s CMOs, CROs and other third parties with whom the Company conducts business or otherwise engages now or in the future, including as a result of staffing shortages or reprioritizations, production slowdowns or stoppages, and disruptions in delivery systems. The COVID-19 pandemic may also adversely impact the Company’s preclinical studies and clinical trials, which could impede, delay, limit or prevent the clinical development of the Company’s product candidates and ultimately lead to the delay or denial of regulatory approval of its product candidates, which would materially adversely affect the Company’s business and operations, including its ability to generate revenue. Moreover, the COVID-19 pandemic is impacting the global economy, and the U.S. economy in particular, with the potential for the economic downturn to be severe and prolonged. A severe or prolonged economic downturn could result in continued disruptions in the financial markets, which could adversely impact the Company’s ability to raise additional capital when needed or on acceptable terms, if at all.

While the Company continuously looks to identify business-critical activities and to develop contingencies and mitigation strategies for those activities to potentially minimize the impact of the COVID-19 pandemic on its business and operations, there can be no assurance that it will be able to identify all such activities or that any identified contingencies and mitigation strategies will be effective. Further, the COVID-19 pandemic, and measures undertaken in response to the pandemic continue to rapidly evolve. There is uncertainty relating to the potential effect of the pandemic on the Company’s business and operations. The extent of the impact on the Company’s business and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate spread of the disease, duration of the pandemic, business and travel restrictions and social distancing measures, and the effectiveness of these and other actions taken to contain and treat the disease as well as the impact of the easement of any such restrictions, measures and actions.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Kiniksa Pharmaceuticals Corp. (“Kiniksa US”), Primatope Therapeutics, Inc. (“Primatope”) and Kiniksa Pharmaceuticals (UK), Ltd. (“Kiniksa UK”) as well as the subsidiaries of Kiniksa UK, Kiniksa Pharmaceuticals (Germany) GmbH (“Kiniksa Germany”), Kiniksa Pharmaceuticals (France) SARL (“Kiniksa France”), and Kiniksa Pharmaceuticals GmbH (“Kiniksa Switzerland”), after elimination of all significant intercompany accounts and transactions.

In assessing the consolidation requirement for variable interest entities (“VIE”s), the Company focuses on identifying whether it has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE. In the event that the Company is the primary beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE would be included in the Company’s consolidated financial statements. At December 31, 2020 and 2019 and during the years then ended, the Company was not the primary beneficiary of a VIE.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of

expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of share-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Reporting and Functional Currency

The financial results of the Company's global activities are reported in U.S. dollars (“USD”) and its foreign subsidiaries generally utilize their respective local currency to be their functional currency.

Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at the rate of exchange in effect at the balance sheet date. Exchange rate gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income or losses in the period in which they occur.

For the Company’s foreign subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported as a component of accumulated other comprehensive gain (loss) within shareholders' equity (deficit).

Reverse Share Split

On May 11, 2018, the Company effected a 1-for-2.73235 reverse share split of its authorized, designated, issued and outstanding common shares and preferred shares. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse share split.

Initial Public Offering

On May 23, 2018, the Company’s registration statement on Form S-1 relating to its initial public offering of its Class A common shares (the “IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). On May 29, 2018, the Company completed the IPO of 8,477,777 Class A common shares at $18.00 per share for gross proceeds of $152,600. In addition, on June 22, 2018, the Company completed the sale of 1,006,425 Class A common shares to the underwriters of the IPO following the exercise of their over-allotment option to purchase additional shares at $18.00 per share for gross proceeds of $18,116. The aggregate net proceeds to the Company from the IPO, inclusive of the over-allotment option exercise, was $155,536 after deducting underwriting discounts and commissions and other offering costs.

Upon the closing of the IPO, all convertible preferred shares then outstanding automatically converted into 5,546,019 Class A common shares, 1,070,502 Class B common shares, 12,995,954 Class A1 common shares and 16,057,618 Class B1 common shares. In connection with the closing of the IPO, the Company amended and restated its bye-laws (the “Amended & Restated Bye-Laws”).

Follow-on Offerings and Private Placements

On February 4, 2019, the Company completed a follow-on offering of 2,654,984 Class A common shares at a public offering price of $18.26 and a concurrent private placement of 2,000,000 Class A1 common shares at an offering price of $18.26 per share for aggregate gross proceeds of $85,000. In addition, on March 1, 2019, the Company

completed the sale of 161,126 Class A common shares to the underwriters of the follow-on offering following the exercise in part of their over-allotment option to purchase additional shares at a public offering price of $18.26 per share for gross proceeds of $2,942. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $82,988 after deducting underwriting discounts and commissions, placement agent fees and other offering costs.

On May 18, 2020, the Company completed a follow-on offering of 2,760,000 Class A common shares, inclusive of the exercise of the underwriters’ overallotment option at a public offering price of $18.25 and a concurrent private placement of 1,600,000 Class A1 common shares at an offering price of $18.25 per share for aggregate gross proceeds of $79,570. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $74,495 after deducting underwriting discounts and commissions, placement agent fees and other offering costs.

On July 24, 2020, the Company completed a follow-on offering of 5,952,381 Class A common shares, at a public offering price of $21.00 and a concurrent private placement of 1,428,572 Class A1 common shares at an offering price of $21.00 per share for aggregate gross proceeds of $155,000. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement was $146,037 after deducting underwriting discounts and commissions, placement agent fees and other offering costs.

Liquidity

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. As of December 31, 2020, the Company had an accumulated deficit of $517,473. During the year ended December 31, 2020, the Company incurred a net loss of $161,381and used $136,532 of cash in operating activities. The Company expects to continue to generate operating losses and cash used in operations for the foreseeable future. As of December 31, 2020, the Company had cash, cash equivalents and short-term investments of $323,482.

Based on its current operating plan, the Company expects that its cash, cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations. The Company will need to finance its operations through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs for product candidates, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with maturities of three months or less at the time of purchase as cash and cash equivalents. At December 31, 2020 and 2019, cash and cash equivalents consisted principally of U.S. Treasury notes, amounts held in money market accounts and cash on deposit at commercial banks.

Short-Term Investments

The Company generally invests its excess cash in money market funds and short-term investments in U.S. Treasury notes. Such investments which are included in short-term investments on the Company's consolidated balance sheets are considered available-for-sale debt securities and are reported at fair value with unrealized gains and losses included as a component of shareholders’ equity (deficit). Realized gains and losses, if any, on short-term investments are included in interest income.

The Company evaluates its short-term investments with unrealized losses for other-than-temporary impairment. When assessing short-term investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments. At December 31, 2020 and 2019, substantially all of the Company’s cash, cash equivalents and short-term investments were held at two financial institutions. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash, cash equivalents and short-term investments and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Restricted Cash

In conjunction with the Company’s lease agreement entered into in March 2018, the Company maintains a letter of credit for the benefit of the landlord. A letter of credit to secure the lease is not required under the 2020 Agreement (see Note 5). As of December 31, 2020 and 2019, the underlying cash balance of $210 securing this letter of credit, was classified as current and non-current, respectively, in its consolidated balance sheet.

Property and Equipment

Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the consolidated balance sheet and any resulting gains or losses are included in the consolidated statement of operations and comprehensive loss in the period of disposal. The expected useful lives of the respective assets are as follows:


		Estimated Useful Life
Computer hardware and software		3 - 5 years
Laboratory equipment		5 years
Furniture, fixtures and vehicles		5 - 7 years
Leasehold improvements		Shorter of estimated useful life or lease term

Impairment of Long-Lived Assets

Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. To date, the Company has not recorded any impairment losses on long-lived assets.

Inventory

Prior to the regulatory approval of the Company’s product candidates, the Company incurs expenses for the manufacture of drug product that could potentially be available to support the commercial launch of those products. Until the date at which regulatory approval has been received or is otherwise considered probable, the Company records all such costs as research and development expenses. There were no capitalized inventory costs recorded as of December 31, 2020 and 2019.

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of convertible preferred shares or in shareholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss. There were no deferred offering costs recorded as of December 31, 2020 and 2019.

Fair Value Measurements

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

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

●

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s restricted cash, which is held in a money market fund, is carried at fair value, determined based on Level 1 inputs in the fair value hierarchy described above (see Note 3). The Company’s cash equivalents and short-term investments, consisting of money market accounts and U.S. Treasury notes, are carried at fair value, determined based on Level 1 and 2 inputs in the fair value hierarchy described above (see Note 3). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which set forth the principles for recognition, measurement, presentation and disclosure of lease arrangements to enhance the transparency and comparability of financial reporting related to the arrangements. ASU 2016-02, including subsequently issued amendments, is collectively referred to as Accounting Standards Codification, Leases (Topic 842) (“ASC 842”). The Company adopted the new standard on January 1, 2019 using the modified retrospective transition approach as applied to leases existing as of the adoption date. The standard will be applied to all leases entered into after the initial adoption date.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a “lease” as defined by ASC 842. A lease is an arrangement, or part of an arrangement, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company determines if the arrangement conveys the right to control the use of an identified asset for a period of time. It assesses throughout the period of use whether the Company has both of the following (1) the right to obtain substantially all of the economic benefits from use of the identified asset and (2) the right to direct the use of the identified asset. This determination is reassessed if the terms of the arrangement are changed. Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified asset. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement date based on the present value of the minimum future lease payments.

Most leases with a term greater than one year are recognized on the balance sheet as ROU assets with corresponding lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with a term of one year or less on its balance sheet. Operating leases, ROU assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the ROU assets may be required for items such as incentives received. The interest rate implicit in lease arrangements is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.); then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available. Companies may elect the practical expedient to not separate lease and non-lease components. In which case, the Company would account for each lease component and the related non-lease component together as a single component.

The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the arrangement consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

Upon the adoption of ASC 842, the Company recorded operating lease right-of-use assets of $3,682 and operating lease liabilities of $3,917 for its leases which were in effect and had commenced prior to January 1, 2019 and had original lease terms of more than 12 months.

Segment Information

The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on developing and delivering therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, share-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments determined to be used within one year for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Non-refundable prepayments or minimum balance requirements associated to clinical trials determined to not be used within one year are classified as other long term assets. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Milestone and other payments made to third parties with respect to in-process research and development, in accordance with the Company’s license, acquisition and other similar agreements are expensed when determined to be probable and estimable.

Research Contract Costs and Accruals

The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of the end of the reporting period. Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the research and development activities, invoicing to date under the contracts, communication from the research institution or other companies of any actual costs incurred during the period that have not yet been invoiced, and the costs included in the contracts. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs.

Patent Costs

The Company charges patent-related costs in connection with filing and prosecuting patent applications to operations as incurred as their realization is uncertain. These costs are classified as selling, general and administrative expenses.

Share-Based Compensation

The Company measures all share-based awards granted to employees and directors based on their fair value on the date of grant. The Company issues share-based awards with both service-based vesting conditions and performance-based vesting conditions. The Company recognizes compensation expense for awards with service conditions on a straight-line basis over the requisite service period. For awards with performance conditions, the Company recognizes compensation expense when the achievement of the performance milestone is probable and estimable through the vest date.

For share-based awards granted to consultants and non-employees, compensation expense is recognized over the vesting period of the awards, which is generally the period during which services are rendered by such consultants and non-employees until completed.

The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (see Note 9). Prior to May 2018, the Company was a private company and, accordingly, lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

The fair value of each restricted share unit award is based on the closing price of the Company’s Class A common shares on the date of grant. Restricted share unit awards with an associated performance condition are evaluated on a regular basis for probability of achievement to determine the timing of recording share-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in shareholders’ equity (deficit) that result from transactions and economic events other than those with shareholders. For the years ended December 31, 2020, 2019 and 2018 the Company’s other comprehensive loss was comprised of unrealized gain (loss) on short-term investments and currency translation adjustments, net of tax.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the (provision) benefit for income taxes. The Company assesses the likelihood that its deferred tax assets will

be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

As an exempted company incorporated under the laws of Bermuda, the Company is principally subject to taxation in Bermuda. Under the current laws of Bermuda, tax on a company’s income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland, are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US, operate under cost-plus arrangements.

The Company’s U.S. provision for income taxes relates to current tax expense associated with the taxable income in the United States of its wholly owned subsidiary, Kiniksa US, as well as the recognition of a valuation allowance. The current income tax expense is a result of the taxable income earned by Kiniksa US under its cost-plus arrangement offset in part by tax benefits from the U.S. federal and state research and development credits. The Company has recorded an immaterial foreign provision for income taxes related to income in non-U.S. subsidiaries.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. In 2020, the Company recognized an uncertain tax position related to research and development credits (see Note 11).

Net Loss per Share

The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common shareholders is computed by adjusting net loss attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common shareholders is computed by dividing the diluted net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding share options, unvested restricted common shares and unvested restricted share units are considered potential dilutive common shares.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB, issued ASU 2016-13, Financial Instruments: Credit Losses (Topic 326), as clarified in ASU 2019-04 and ASU 2019-05. The objective of the standard is to provide information about expected credit losses on financial instruments at each reporting date and to change how other-than-temporary impairments on investment securities are recorded. The standard became effective for the Company beginning on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”), which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a CCA that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The standard became effective for the Company beginning on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)(“ASU 2019-12”). The objective of the standard is to improve areas of GAAP by removing certain exceptions permitted by ASC Topic 740 Income Taxes and clarifying existing guidance to facilitate consistent application. The standard became effective for the Company beginning on January 1, 2021. The Company is currently evaluating the new standard to determine the potential impact of ASU 2019-12 on its consolidated financial statements and related disclosures. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

Fair Value of Financial Assets and Liabilities

12 Months Ended

Dec. 31, 2020

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:


	Fair Value Measurements
	as of December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash — money market funds	$	210	$	—	$	—	$	210
Cash equivalents — money market funds		22,942		—		—		22,942
Cash equivalents — U.S. Treasury notes		—		72,695		—		72,695
Short-term investments — U.S. Treasury notes		—		209,444		—		209,444
	$	23,152	$	282,139	$	—	$	305,291


	Fair Value Measurements
	as of December 31, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash — money market funds	$	210	$	—	$	—	$	210
Cash equivalents — money market funds		25,207		—		—		25,207
Cash equivalents — U.S. Treasury notes		—		10,192		—		10,192
Short-term investments — U.S. Treasury notes		—		186,452		—		186,452
	$	25,417	$	196,644	$	—	$	222,061

During the years ended December 31, 2020 and 2019 there were no transfers between Level 1, Level 2 and Level 3. The money market funds were valued using quoted prices in active markets, which represent a Level 1 measurement in the fair value hierarchy. The Company's cash equivalents and short-term investments as of December 31, 2020 and 2019 included U.S. Treasury notes, which are not traded on a daily basis and, therefore, represent a Level 2 measurement in the fair value hierarchy at each period end.

Cash equivalents and short-term investments as of December 31, 2020 and 2019 consisted of U.S. Treasury notes which investments were each due within six months of such date.


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2020
Cash equivalents — U.S. Treasury notes	$	72,694	$	1	$	—	$	72,695
Short-term investments — U.S. Treasury notes		209,459		4		(19)		209,444
	$	282,153	$	5	$	(19)	$	282,139


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2019
Cash equivalents — U.S. Treasury notes	$	10,191	$	1	$	—	$	10,192
Short-term investments — U.S. Treasury notes		186,415		44		(7)		186,452
	$	196,606	$	45	$	(7)	$	196,644

As of December 31, 2020, the Company held 17 securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position was $107,753 at December 31, 2020. As of December 31, 2019, the Company held seven securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position was $43,107 at December 31, 2019. As of both December 31, 2020 and 2019, these securities were held by the Company in an unrealized loss position for

less than 12 months. The Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of December 31, 2020 and 2019.

- Definition

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

+ References + Details

Convertible Preferred Shares

12 Months Ended

Dec. 31, 2020

Convertible Preferred Shares

Convertible Preferred Shares

7. Convertible Preferred Shares

As of December 31, 2017, the Company’s bye-laws, as amended and restated, designated 22,885,492 authorized shares to be issued as convertible preferred shares with a par value of $0.000273235 per share, of which 17,128,120 shares were further designated as Series A convertible preferred shares (the “Series A preferred shares”) and 5,757,372 shares were further designated as Series B convertible preferred shares (the "Series B preferred shares"). In February 2018, the Company’s bye-laws were further amended and restated to, among other things, effect an increase in the number of authorized convertible preferred shares with a par value of $0.000273235 per share to 35,670,093 shares, of which 12,784,601 shares were further designated as Series C convertible preferred shares (the "Series C preferred shares"). The holders of convertible preferred shares had liquidation rights in the event of a deemed liquidation that, in certain situations, was not solely within the control of the Company. Therefore, the Series A, Series B and Series C convertible preferred shares (collectively, the “Preferred Shares”) were classified outside of shareholders' equity (deficit).

In February 2018, the Company issued and sold 12,784,601 Series C preferred shares at a price of $15.6438 per share (the “Series C Original Issue Price”) for proceeds of $190,822, net of issuance costs of $9,178.

In May 2018, upon the completion of the Company’s IPO (which qualified as a “Qualified IPO” under the Company’s bye-laws, as amended and restated), all of the outstanding Preferred Shares were converted into 5,546,019 Class A common shares, 1,070,502 Class B common shares, 12,995,954 Class A1 common shares and 16,057,618 Class B1 common shares in accordance with the Company’s bye-laws, as amended and restated. In connection with the completion of its IPO in May 2018, the Company amended and restated its bye-laws to, among other things, authorize the issuance of undesignated preferred shares. As of December 31, 2020 and 2019, no preferred shares were designated or issued.

Prior to the conversion to common shares, the holders of the Preferred Shares had the following rights and preferences:

Voting

The holders of Preferred Shares were entitled to vote, together with the holders of common shares, on all matters submitted to shareholders for a vote. The holders of Series A preferred shares were entitled to the number of votes per Series A preferred share equal to the number of whole Class B common shares into which the Series A preferred shares were convertible at the time of such vote (which is ten votes for each Class B common share). The holders of Series B preferred shares were entitled to the number of votes per Series B preferred share equal to the number of whole Class A common shares into which the Series B preferred shares were convertible at the time of such vote (which was one vote for each Class A common share). The holders of Series C preferred shares were entitled to the number of votes per Series C preferred share equal to the number of whole Class A common shares into which the Series

C preferred shares were convertible at the time of such vote (which was one vote for each Class A common share). Except as provided by law or by the other provisions of the Company’s bye-laws, holders of Preferred Shares voted together with the holders of common shares as a single class.

The holders of Preferred Shares, voting together as a single class, were entitled to elect two directors of the Company. The holders of Preferred Shares, voting together with the holders of common shares as a single class, were entitled to elect the remaining directors of the Company, except for the one director that the holders of Class A common shares and Class B common shares, voting together as a single class were entitled to elect.

Conversion

Each Series A preferred share was convertible, at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, in such manner as permitted by Bermuda law, into such number of fully paid and non-assessable Class B common shares determined by dividing the Series A Original Issue Price by the Series A Conversion Price (as defined below) in effect at the time of conversion. Each Series B preferred share was convertible, at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, in such manner as permitted by Bermuda law, into such number of fully paid and non-assessable Class A common shares determined by dividing the Series B Original Issue Price by the Series B Conversion Price (as defined below) in effect at the time of conversion. Each Series C preferred share was convertible, at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, in such manner as permitted by Bermuda law, into such number of fully paid and non-assessable Class A common shares determined by dividing the Series C Original Issue Price by the Series C Conversion Price (as defined below) in effect at the time of conversion.

At the time of the IPO, the Series A Original Issue Price and Series A Conversion Price were equal to $4.6707. The Series B Original Issue Price and Series B Conversion Price were equal to $6.9475, and the Series C Original Issue Price and Series C Conversion Price were equal to $15.6438. Therefore, each Series A preferred share was convertible into one Class B common share, each Series B preferred share was convertible into one Class A common share and each Series C preferred share was convertible into one Class A common share.

Further, upon either (i) the closing of the sale of Class A common shares or Class B common shares to the public at a price of at least $15.6438 per share (subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalization with respect to the applicable class of common shares) in an initial public offering resulting in at least $100,000 of gross proceeds to the Company (a “Qualified IPO”) or (ii) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of the outstanding Preferred Shares, voting together as a single class on an as if converted to Class A common shares basis, all outstanding Series A preferred shares would automatically be converted, in such manner as permitted pursuant to Bermuda law, into Class B common shares at the then effective conversion rate, and all outstanding Series B and Series C preferred shares would automatically be converted, in such manner as permitted pursuant to Bermuda law, into Class A common shares at the then effective conversion rate. Notwithstanding the foregoing, in the event of a mandatory conversion of preferred shares as a result of a Qualified IPO, (a) holders of Series A preferred shares could elect to receive Class B1 common shares in lieu of Class B common shares and (b) holders of Series B and Series C preferred shares could elect to receive Class A1 common shares in lieu of Class A common shares.

Dividends

The holders of the Preferred Shares were entitled to receive noncumulative dividends when and if declared by the Company’s board of directors. The Company was not permitted to declare, pay or set aside any dividends on any other class or series of shares of the Company, other than dividends on common shares payable in common shares, unless the holders of the Preferred Share first received, or simultaneously received, a dividend on each outstanding

Preferred Share equal to (i) in the case of a dividend on any class of common shares or any class or series convertible into common shares, that dividend per Preferred Share as would have equaled the product of (a) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common shares and (b) the number of common shares issuable upon conversion of a share of the applicable series of Preferred Shares, or (ii) in the case of a dividend on any class or series that was not convertible into common shares, at a rate per Preferred Share determined by (a) dividing the amount of the dividend payable on each share of such class or series of shares by the original issue price of such class or series (subject to appropriate adjustment in the event of any bonus share, share dividend, share split, combination of or other similar recapitalization with respect to such class or series) and (b) multiplying such fraction by an amount equal to the applicable Series A, Series B or Series C Original Issue Price. No cash dividends were declared or paid on the Preferred Shares.

Liquidation Preference

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event (as defined below), the holders of Preferred Shares then outstanding were entitled to be paid out of the assets of the Company available for distribution to its shareholders, on a pari passu basis, before any payment was made to the holders of common shares by reason of their ownership thereof, an amount per share equal to the greater of (i) one times the applicable Original Issue Price, plus any dividends declared but unpaid thereon, and (ii) such amount per share as would have been payable had all Preferred Shares been converted into common shares immediately prior to such liquidation, dissolution, winding up or deemed liquidation event. Thereafter, the remaining assets of the Company available for distribution to its shareholders would have been distributed among the holders of common shares, pro rata based on the number of shares held by each such holder.

If upon any such liquidation, dissolution or winding up of the Company or deemed liquidation event, the assets of the Company available for distribution to its shareholders were insufficient to pay the holders of Preferred Shares the full amount to which they were entitled, the holders of Preferred Shares would have shared ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise have been payable in respect of the shares held by such holders of Preferred Shares upon such distribution if all amounts payable on or with respect to such shares were paid in full.

Unless a majority of the holders of the then outstanding Preferred Shares elected otherwise, a deemed liquidation event would include a merger or consolidation (other than one in which shareholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring company or corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

Redemption

The Company’s bye-laws, as amended and restated, did not provide redemption rights to the holders of Preferred Shares.

Share-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-Based Compensation

Share-Based Compensation

9. Share-Based Compensation

2018 Incentive Award Plan

In May 2018, the Company’s board of directors and shareholders approved the 2018 Incentive Award Plan (the “2018 Plan”), which became effective on May 23, 2018. The 2018 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted shares, dividend equivalents, restricted share units and other share- or cash- based awards. Upon the effectiveness of the 2018 Plan, the Company ceased granting awards under its 2015 Equity Incentive Plan (as amended, the “2015 Plan” together with the 2018 Plan, the “Plans”).

A total of 4,466,500 Class A common shares were initially reserved for issuance under the 2018 Plan. The number of Class A common shares that may be issued under the 2018 Plan will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 4% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors. In December 2019, the board of directors approved the automatic increase as of January 1, 2020 of 2,197,505 shares, equal to 4% of the as-converted Class A common shares outstanding on December 31, 2019. No more than 27,915,000 Class A common shares may be issued under the 2018 Plan upon the exercise of incentive share options. The Class A common shares underlying any awards issued under the 2018 Plan or the 2015 Plan that on or after the effective date of the 2018 Plan expire, lapses unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited under the 2018 Plan or the 2015 Plan will be added back to the Class A common shares available for issuance under the 2018 Plan. As of December 31, 2020, 1,618,474 shares remained available for future grant.

2015 Equity Incentive Plan

Until May 23, 2018 (the effective date of the 2018 Plan), the 2015 Plan provided for the Company to grant incentive share options, nonqualified share options, share grants and other share-based awards to employees and non-employees to purchase the Company’s Class A common shares. On the effective date of the 2018 Plan, the Company ceased granting awards under the 2015 Plan. At that time, the 4,691,213 Class A common shares subject to outstanding awards under the 2015 Plan remained reserved for issuance under the plan pursuant to such awards and the

92,170 Class A common shares that had been available for future grant under the 2015 Plan were no longer authorized and reserved for issuance or available for future grant under the 2015 Plan.

As of December 30, 2020, there were 2,794,056 Class A common shares subject to outstanding awards under the 2015 Plan and reserved for issuance thereunder pursuant to such awards. The 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Class A common shares subject to awards granted under the 2015 Plan that expire, lapse unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited become available for issuance under the 2018 Plan.

The exercise price for share options granted under the 2015 Plan was determined by the Company’s board of directors. All incentive share options granted to any person possessing 10% or less of the total combined voting power of all classes of shares could not have an exercise price of less than 100% of the fair market value of the Class A common shares on the grant date. All incentive share options granted to any person possessing more than 10% of the total combined voting power of all classes of shares could not have an exercise price of less than 110% of the fair market value of the Class A common shares on the grant date. The option term for incentive share options could not be greater than 10 years. Incentive share options granted to persons possessing more than 10% of the total combined voting power of all classes of shares could not have an option term of greater than five years. The vesting period for equity-based awards was determined by the board of directors, which was generally four to six years. For awards granted to employees and non-employees with four year vesting terms, 25% of the option vests on the first anniversary of the grant date and the remaining shares vest equally each month for three years thereafter. For awards granted to employees with six year vesting terms, 16% of the option vests on the first anniversary of the grant date and the remaining shares vest based on a predetermined vesting schedule for five years thereafter.

2018 Employee Share Purchase Plan

In May 2018, the Company’s board of directors and shareholders approved the 2018 Employee Share Purchase Plan (the “2018 ESPP”), which became effective on May 23, 2018. A total of 670,000 Class A common shares were initially reserved for issuance under the 2018 ESPP. The number of Class A common shares that may be issued under the 2018 ESPP will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 1% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors, provided that no more than 6,420,000 Class A common shares may be issued under the 2018 ESPP. In December 2020, the board of directors approved an increase as of January 31, 2021 of 130,000 shares. As of December 31, 2020, 518,794 Class A common shares were available for future issuance under the 2018 ESPP.

Share Options

The following table summarizes option activity for the year ended December 31, 2020:


				Weighted
				Average
		Weighted		Remaining
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value


Outstanding as of December 31, 2019	8,491,734	$	11.17	7.88	$	27,217
Granted	3,794,735	$	16.50
Exercised	(1,324,429)	$	4.57
Forfeited	(1,003,182)	$	14.88
Outstanding as of December 31, 2020	9,958,858	$	13.53	8.15	$	52,394
Share options exercisable as of December 31, 2020	3,799,854	$	10.83	7.00	$	31,526
Share options unvested as of December 31, 2020	6,159,004	$	15.19	2.79	$	64,715

The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company’s common shares for those share options that had exercise prices lower than the fair value of the Company’s common shares.

During the year ended December 31, 2020, share option holders exercised 1,324,429 share options for Class A common shares with an intrinsic value of $18,271 for total cash proceeds to the Company of $6,058. During the year ended December 31, 2019, share option holders exercised 150,253 share options for Class A common shares with an intrinsic value of $1,776 for total cash proceeds to the Company of $590. During the year ended December 31, 2018, share option holders exercised 25,683 share options for Class A common shares with an intrinsic value of $411 for total cash proceeds to the Company of $87.

The weighted-average grant-date fair value per share of share options granted during the years ended December 31, 2020, 2019 and 2018 was $11.38, $9.36 and $11.96, respectively.

The total fair value of share options vested during the years ended December 31, 2020, 2019 and 2018 was $17,931, $13,997 and $2,255, respectively.

Option Valuation

The assumptions that the Company used to determine the grant-date fair value of share options granted to employees and directors under the 2015 Plan and the 2018 Plan during the years ended December 31, 2019 and 2018 were as follows, presented on a weighted-average basis:


	Years Ended
	December 31,
	2020		2019		2018
Risk-free interest rate	0.55	%	2.07	%	2.82	%
Expected term (in years)	6.21		6.22		6.40
Expected volatility	80.81%	%	79.14	%	75.04	%
Expected dividend yield	—	%	—	%	—	%

During the year ended December 31, 2020, the Company did not grant share options to non-employees. During the year ended December 31, 2019 and 2018, the assumptions that the Company used to determine the fair value of share options granted to non-employees were as follows, presented on a weighted-average basis:


	Years Ended
	December 31,
	2019		2018
Risk-free interest rate	1.38	%	2.91	%
Expected term (in years)	2.77		7.35
Expected volatility	68.17	%	74.18	%
Expected dividend yield	—	%	—	%

Rilonacept Long-Term Incentive Plan

A restricted share unit (“RSU”) represents the right to receive shares of the Company’s Class A common shares upon vesting of the RSU. The fair value of each RSU is based on the closing price of the Company’s Class A common shares on the date of grant. In December 2019, the compensation committee of the Company’s board of directors approved the Company’s Rilonacept Long-Term Incentive Plan (“RLTIP”) under the Company’s 2018 Plan to incentivize eligible employees of the Company or any of its subsidiaries to achieve U.S. Food and Drug Administration (“FDA”) approval for the commercial sale and marketing of rilonacept for the treatment of recurrent pericarditis in the United States (“RLTIP Milestone”). The RLTIP provides for the potential to receive a cash award and two grants of RSU awards covering Class A common shares under the 2018 Plan. The target award value for each of the cash award and the two RSU awards will be equal to one-third of a participant’s annual target bonus in the year of grant, as determined in accordance with the RLTIP.

Depending on the date-range within which the RLTIP Milestone is achieved (such date the “Achievement Date”) occurs, the RLTIP provides for (i) an earnout percentage that can be achieved as to 100%, 50%, 25% or 0% and (ii) an upside earnout percentage that can be achieved as to 50%, 25% or 0%. No awards will be earned or vest, and the second RSU award will not be granted, in the event the Achievement Date does not occur by a specified date.

The cash award is eligible to be earned and vested upon the Achievement Date with respect to an amount determined in accordance with the RLTIP based on the earnout percentage. The number of Class A common shares issuable under the first RSU award (“First RSU Award”) as a result of the RLTIP Milestone will be determined in accordance with the RLTIP based on the earnout percentage, and such RSUs will vest on the first anniversary of the Achievement Date, subject to continued employment on such date. The second RSU award will be granted on the Achievement Date with respect to a number of shares determined in accordance with the RLTIP, based on both the earnout percentage and the upside earnout percentage, and will vest on the second anniversary of the Achievement Date, subject to continued employment through such date.

Restricted Share Units

In December 2019, the Company granted RSUs with service conditions (“Time-Based RSUs”) that vest in one installment on December 31, 2020, subject to the recipient’s continued employment through that date. During the years ended December 31, 2020 and 2019, the Company also granted the First RSU Award to eligible employees as part of the RLTIP, which becomes eligible to vest upon the Achievement Date and will vest upon the first anniversary of such date, subject to the recipient’s continued employment through that date. In the event the RLTIP Milestone is not achieved, the First RSU Award will not vest.

On December 31, 2020, all outstanding Time-Based RSUs vested and 56,369 class A common shares were issued and remaining shares of 24,332 were withheld for tax purposes. For the year ended December 31, 2020, the Company recognized $980 in compensation expense related to the Time-Based RSUs. For the year ended December 31, 2019, the Company did not recognize any compensation expense related to the Time-Based RSU. The grant-date fair value of the First RSU Award remaining as of December 31, 2020 was $2,754 and will be recognized when the RLTIP Milestone is deemed probable of achievement through the date the First RSU Award will vest. During the years ended December 31, 2020 and 2019, the Company did not recognize any compensation expense related to the First RSU Award, as achievement of the RLTIP Milestone was determined to be not probable.

The following table summarizes RSU activity, including the Time-Based RSUs and First RSU Awards under the RLTIP, for the year ended December 31, 2020:


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Unvested RSUs as of December 31, 2019	328,296	$	12.93
Granted	17,995	$	19.15
Vested	(80,701)	$	12.95
Forfeited	(60,278)	$	13.09
Unvested RSUs as of December 31, 2020	205,312	$	13.41

Share-Based Compensation

Share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:


	Years Ended
	December 31,
	2020		2019		2018
Research and development expenses	$	8,866	$	5,746	$	2,285
Selling, general and administrative expenses		12,009		9,334		3,416
	$	20,875	$	15,080	$	5,701

During the year ended December 31, 2020, the Company recorded compensation expense for share options and RSUs granted to employees and directors of $20,860. During the year ended December 31, 2020, the Company recorded compensation expense for share options granted to non-employees of $15.

As of December 31, 2020, total unrecognized compensation expense related to the unvested share option awards was $64,715 which is expected to be recognized over a weighted average remaining period of 2.79 years. As of December 31, 2020, the Company has recognized all of the compensation expense related to the Time-Based RSUs and none remain unvested. As of December 31, 2020, total unrecognized compensation cost related to the First RSU Award was $2,754 which will be recognized when the RLTIP Milestone is deemed probable of achievement through the date the First RSU Award vests.

License and Acquisition Agreements

12 Months Ended

Dec. 31, 2020

License and Acquisition Agreements

License and Acquisition Agreements

10. License and Acquisition Agreements

Biogen Asset Purchase Agreement

In September 2016, the Company entered into an asset purchase agreement (the "Biogen Agreement") with Biogen MA Inc. ("Biogen") to acquire all of Biogen's right, title and interest in and to certain assets used in or relating to vixarelimab and other antibodies covered by certain patent rights, including patents and other intellectual property rights, clinical data, know-how, and clinical drug supply. In addition, Biogen granted to the Company a non-exclusive, sublicensable, worldwide license to certain background patent rights related to the vixarelimab program. The Company is obligated to use commercially reasonable efforts to develop and commercialize such acquired products.

In exchange for these rights, the Company made an upfront payment to Biogen of $11,500 and a technology transfer payment of $500. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment and technology transfer payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use.

Under the Biogen Agreement, the Company is obligated to make milestone payments to Biogen of up to $179,000 upon the achievement of specified clinical and regulatory milestones in multiple indications in various territories, including milestone payments of $4,000 and $10,000 paid during the year ended December 31, 2017 and the year ended December 31, 2019, respectively, each payment was associated with the achievement of a specified clinical milestone event. No milestones were achieved or paid during the year ended December 31, 2020. Additionally, the Company could be obligated to make up to an aggregate of up to $150,000 of payments upon the achievement of specified annual net sales milestones and to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the high single-digit percentages and ending below the teens.

The Company also agreed to pay certain obligations under third-party contracts retained by Biogen that relate to the vixarelimab program. Under these retained contracts, the Company paid a one-time upfront sublicense fee of $150 and is obligated to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments of up to an aggregate of $1,575.

The Biogen Agreement will terminate upon the expiration of all payment obligations with respect to the last product in all countries in the territory. The Company has the right to terminate the agreement with 90 days’ prior written notice. Both parties may terminate by mutual written consent or in the event of material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches).

During the year ended December 31, 2020, the Company recorded research and development expense of $106 primarily related to a milestone occurring in the first quarter of 2020 and the annual maintenance fee both in connection with the retained contracts. During the year ended December 31, 2019, the Company recorded research and development expense of $10,347 primarily related to milestone payments associated with the achievement of a specified clinical milestone event as well as other payments in connection with the retained contracts due under the Biogen Agreement. The Company did not incur any research and development expense, other than insignificant payments in connection with the retained contracts, under the Biogen Agreement during the year ended December 31, 2018.

Primatope Stock Purchase Option Agreement

In September 2017, the Company entered into a stock purchase option agreement (the “Primatope Agreement”) with Primatope Therapeutics, Inc. (“Primatope”), pursuant to which the Company was granted a license to certain intellectual property rights owned or controlled by Primatope to research, develop, and manufacture the preclinical antibody, KPL-404.

The agreement provided the Company with an exclusive call option to purchase all of the outstanding securities of Primatope. Upon execution of the agreement, the Company made $500 in upfront payments for the initial option period through April 2018 (the “Initial Option Period”). The Primatope Agreement allowed for up to three extensions of the Initial Option Period through January 2019 (including the initial option period, the “Option Period”) for total extension payments of up to $800. Through December 31, 2018, the Company made payments totaling $800 to extend the Option Period to January 15, 2019. During the Option Period, the Company could conduct research and preclinical work to assess the viability of the asset.

The Company determined that the call option represented a variable interest in Primatope and that Primatope is a VIE. However, as the Company had no ability to control the board of directors or direct the ongoing activities of Primatope during the Option Period, the Company did not have power over the activities that most significantly impact Primatope’s economic performance and was not the primary beneficiary of Primatope. As a result, the Company did not consolidate the assets, liabilities, and results of operations of Primatope prior to 2019.

In January 2019, the Company exercised the call option and in March 2019, the Company acquired all of the outstanding securities of Primatope (the “Primatope Acquisition”). The aggregate amount of upfront and contingent payments the Company paid to the former Primatope shareholders to acquire the Company was comprised of (1) $15,000 paid at closing in March 2019, comprised of upfront consideration of $10,000 and milestone payments of $5,000, which had been achieved as of the closing date, and (2) $3,000 paid in June 2019 for the final milestone payment, which was achieved following the closing during the six months ended June 30, 2019, each paid in a combination of cash and Class A common shares (inclusive of escrow and holdback share amounts) in accordance with the Primatope Agreement. At the closing of the Primatope Acquisition, Primatope became a wholly owned subsidiary of the Company and the acquisition was accounted for as an asset acquisition as it did not meet the definition of a business. The Company released the escrow and issued the shares that were held back at closing in June 2020 and issued the shares that were held back at the final milestone payment in September 2020. The Company recorded the upfront payment and milestone payments as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use.

During the years ended December 31, 2020, the Company did not incur any research and development expense directly in connection with milestone or other payments related to the Primatope Acquisition or the Primatope Agreement. During the year ended December 31, 2019, the Company recorded research and development expense of $18,000 related to the Primatope Acquisition. During the year ended December 31, 2018, the Company recorded research and development expense of $800, related to the extension of the option period under the Primatope Agreement.

Beth Israel Deaconess Medical Center License Agreement

As a result of the Primatope Acquisition, the Company acquired the rights to an exclusive license to certain intellectual property rights controlled by Beth Israel Deaconess Medical Center, Inc. (“BIDMC”) to make, use, develop and commercialize KPL-404 (the “BIDMC Agreement”). Under the BIDMC Agreement, the Company is solely responsible for all development, regulatory and commercial activities and costs. The Company is also responsible for costs related to filing, prosecuting and maintaining the licensed patent rights. Under the BIDMC Agreement, the Company is obligated to pay an insignificant annual maintenance fee as well as clinical and regulatory milestone

payments of up to an aggregate of $1,200 to BIDMC. The Company is also obligated to pay a low single-digit royalty on annual net sales of products licensed under the agreement.

During the years ended December 31, 2020 and 2019, the Company recorded research and development expense of $10 and $10, respectively in connection with the BIDMC Agreement.

Regeneron License Agreement

In September 2017, the Company entered into a license agreement (the “Regeneron Agreement”) with Regeneron Pharmaceuticals, Inc. (“Regeneron”), pursuant to which the Company has been granted an exclusive, sublicensable license under certain intellectual property rights controlled by Regeneron to develop and commercialize rilonacept in certain fields and territories. The Company is obligated to use commercially reasonable efforts to develop and commercialize such licensed products.

In exchange for these rights, the Company made an upfront payment of $5,000. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use.

Under the Regeneron Agreement, the Company is also obligated to make payments to Regeneron of up to an aggregate of $27,500 upon the achievement of specified regulatory milestones, which includes a $7,500 milestone achieved and paid in the fourth quarter of 2020 and a $20,000 milestone which may be met in the first quarter of 2021. Upon approval from the FDA, if any, of the sBLA for rilonacept in recurrent pericarditis, the Company will assume the sales and distribution of rilonacept for the approved indications of CAPS and DIRA in the United States and the Company would evenly split profits on sales of commercial products with Regeneron, after deducting certain commercialization expenses subject to specified limits.

During the year ended December 31, 2020, the Company recorded research and development expense of $7,500 in connection with the achievement of a specified regulatory milestone event. The Company did not incur any research and development expense directly related to milestones due under the Regeneron Agreement during the year ended December 31, 2019 and 2018.

Under the Regeneron Agreement, the Company is solely responsible for all development and commercialization activities and costs in its territories. The Company is also responsible for costs related to the filing, prosecution and maintenance of certain licensed patent rights.

The parties also entered into a clinical supply agreement under which Regeneron agreed to manufacture the developed product during the clinical phase. During the year ended December 31, 2020, the Company did not incur any research and development expense related to the purchase of drug materials under this agreement. During the years ended December 31, 2019 and 2018, the Company recorded research and development expense of $6,854 and $1,835, respectively, related to the purchase of drug materials under this agreement. As of December 31, 2020, the Company had non-cancelable purchase commitments under the clinical supply agreement (see Note 13).

The Regeneron Agreement will expire when the Company is no longer developing or commercializing any licensed product under the Regeneron Agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches). Regeneron has the right to terminate the agreement if the Company suspends its development or commercialization activities for a consecutive 12 month period or does not grant a sublicense to a third-party to perform such activities, or if the Company challenges any of the licensed patent rights. The Company may

terminate the agreement at any time that is 18 months after the effective date of the agreement with 180 days’ written notice or with one year’s written notice if the Company terminates the agreement following U.S. marketing approval of a rilonacept product developed by the Company. The Company may also terminate the agreement with three months’ written notice if the products are determined to have certain safety concerns.

MedImmune License Agreement

In December 2017, the Company entered into a license agreement (as amended from time to time, the “MedImmune Agreement”) with MedImmune, Limited (“MedImmune”), pursuant to which MedImmune granted the Company an exclusive, sublicensable, worldwide license to certain intellectual property rights to make, use, develop and commercialize mavrilimumab. Under the MedImmune Agreement, the Company also acquired reference rights to relevant manufacturing and regulatory documents and MedImmune’s existing supply of mavrilimumab drug substance and product. The Company is obligated to use commercially reasonable efforts to develop and commercialize the licensed products.

In exchange for these rights, the Company made an upfront payment of $8,000. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use.

In addition, the Company is obligated to make clinical, regulatory and initial sales milestone payments of up to $72,500 in aggregate for the first two indications, including, a $5,000 pass-through payment due upon the achievement of a specified clinical milestone event which was achieved in the fourth quarter of 2018. Also included is a milestone payment of $10,000 due upon the earlier to occur of a specified regulatory milestone and December 31, 2018, unless the MedImmune Agreement is earlier terminated by either party. During the year ended December 31, 2019, the Company made both the $5,000 and $10,000 previously accrued milestone payments in accordance with the MedImmune Agreement. In addition, the Company is obligated to make clinical and regulatory milestone payments of up to $15,000 in the aggregate for each subsequent indication. In July 2020, the Company entered into an amendment to the MedImmune Agreement to establish a new coronavirus field and defer the payment of certain development and regulatory milestones as applied to the new coronavirus field. The Company is obligated to make milestone payments to MedImmune of up to $85,000 upon the achievement of annual net sales thresholds up to, but excluding, $1,000,000 in annual net sales as well as additional milestone payments aggregating up to $1,100,000 upon the achievement of additional specified annual net sales thresholds starting at $1,000,000 and higher. The Company has also agreed to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the low double-digit percentages and ending at twenty percent. Royalty rates are subject to reductions upon certain events.

The Company is solely responsible for all development, manufacturing, and commercial activities and costs of the licensed products, including clinical studies or other tests necessary to support the use of a licensed product. The Company is also responsible for costs related to the filing, prosecution and maintenance of the licensed patent rights.

The MedImmune Agreement will expire upon the expiration of the royalty term in the last country for the last indication, as defined in the agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days. MedImmune has the right to terminate the agreement if the Company challenges any of the licensed patent rights. The Company may terminate the agreement at any time upon 90 days’ prior written notice.

During the years ended December 31, 2020 and 2019, the Company did not record research and development expense in connection with milestone payments due under the MedImmune Agreement. During the year ended December 31, 2018, the Company recorded research and development expense and an accrued milestone of $5,000

related to a pass-through payment due upon the achievement of a specified clinical milestone event due under the MedImmune Agreement.

Kite Clinical Collaboration

In December 2019, the Company entered into a clinical collaboration (the “Kite Agreement”) with Kite Pharma, Inc., a Gilead Company (“Kite”), to initiate a Phase 2 clinical trial evaluating the combination of Yescarta (axicabtagene ciloleucel) and mavrilimumab in relapsed or refractory large B-Cell lymphoma. The objective of the Phase 2 trial is to determine the effect of mavrilimumab on the safety of Yescarta. Treatment related induction of granulocyte-macrophage colony stimulating factor (“GM-CSF”) has been identified through clinical, translational and preclinical studies as a potential key signal associated with side effects of chimeric antigen receptor T (“CAR T”), cell therapy. Preclinical evidence suggest the potential for interruption of GM-CSF signaling to disrupt CAR T cell mediated inflammation without disrupting anti-tumor activity. In August 2020, Kite as the sponsor of the study which had not begun to enroll, informed the Company that the clinical collaboration was being discontinued under a portfolio strategy review and terminated the agreement in accordance with its terms and conditions. During the years ended December 31, 2020 and 2019, the Company did not record any research and development expense in connection with the Kite Agreement.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes

Income Taxes

11. Income Taxes

As a company incorporated in Bermuda, the Company is principally subject to taxation in Bermuda. Under the current laws of Bermuda, tax on a company’s income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from its losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses.

In July 2020, the IRS issued final regulations regarding Foreign Derived Intangible Income (“FDII”), which was enacted as part of the U.S. Tax Cuts and Jobs Act in December 2017. The final FDII requirements outlined in the 2020 guidance did not materially impact the Company’s income taxes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act made various tax law changes, including, among other things: (i) modifications to the federal net operating loss rules, including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and eliminating the 80% of taxable income limitations in years 2018-2020; (ii) enhanced recoverability of alternative minimum tax credit carryforwards; and (iii) delayed payment of employer payroll taxes. On December 27, 2020 updates to the CARES Act were enacted which provided the temporary allowance of a full deduction for business meals paid or incurred between December 31, 2020 and January 1, 2023. The Company will continue to monitor for any updates but currently the only material impact to the Company’s tax provision is the ability to defer employer payroll taxes for which the Company will not get a deduction until the amounts are paid.

In August 2015, the Company entered into agreements with its wholly owned subsidiary, Kiniksa US, under which Kiniksa US provides management and research and development services to the Company for which the Company pays costs plus a service fee.

In connection with its launch readiness activities, the Company transferred all of its rights, title and interest in, among other things, certain contracts (including the Regeneron Agreement), intellectual property rights, product filings and approvals and other information, plans and materials owned or controlled by the Company insofar as they related exclusively or primarily to rilonacept to Kiniksa UK in January 2021 pursuant to an asset transfer agreement between the Company and Kiniksa UK for the consideration described therein.

Loss before benefit (provision) for income taxes consisted of the following:


	Years Ended
	December 31,
	2020		2019		2018
Bermuda	$	(161,983)	$	(168,053)	$	(105,562)
Foreign (U.S., U.K., Germany, France, Switzerland)		5,754		4,139		2,121
	$	(156,229)	$	(163,914)	$	(103,441)

The components of the Company’s income tax (provision) benefit were as follows:


	Years Ended
	December 31,
	2020		2019		2018
Current income tax provision:
Bermuda	$	—	$	—	$	—
U.S. federal		(392)		(567)		(547)
U.S. state		(366)		(530)		(217)
Foreign (U.K., Germany, France, Switzerland)		(33)		(12)		—
Total current income tax provision		(791)		(1,109)		(764)
Deferred income tax (provision) benefit:
Bermuda		—		—		—
U.S. federal		(3,056)		2,397		542
U.S. state		(1,315)		759		436
Foreign (U.K., Germany, France, Switzerland)		10		—		—
Total deferred income tax (provision) benefit		(4,361)		3,156		978
Total (provision) benefit for income taxes	$	(5,152)	$	2,047	$	214

A reconciliation of the Bermuda statutory income tax rate of 0% to the Company’s effective income tax rate is as follows:


	Years Ended
	December 31,
	2020		2019		2018
Bermuda statutory income tax rate	—	%	—	%	—	%
Foreign (U.S.) tax rate differential	(0.8)		(0.5)		(1.0)
Research and development tax credits	2.4		2.2		1.5
Share-based compensation	1.3		(0.5)		0.1
Permanent differences	(0.1)		(0.1)		—
Change in valuation allowance	(5.7)		(0.1)		—
U.S. state taxes, net of federal	0.1		(0.3)		(0.4)
FDII	0.6		0.9		—
Uncertain tax positions	(0.2)		(0.3)		—
Other	(0.9)		—		—
Effective income tax rate	(3.3)	%	1.3	%	0.2	%

Net deferred tax assets consisted of the following:


	December 31,
	2020		2019
Deferred tax assets:
Research and development tax credit carryforwards	$	1,674	$	238
Share-based compensation		6,271		3,746
Operating lease liability		1,764		712
Accrued bonus		1,208		855
Accrued expenses and other liabilities		634		223
Net operating losses		198		190
Total deferred tax assets		11,749		5,964
Valuation allowance		(9,307)		(330)
Deferred tax liabilities:
Depreciation and amortization		(786)		(745)
Right of use asset		(1,646)		(517)
Net deferred tax assets	$	10	$	4,372

As of December 31, 2020 and 2019, the Company had federal research and development tax credit carryforwards of approximately $1,383 and $228 respectively, available to reduce future tax liabilities, which begin to expire in 2040. As of December 31, 2020 and 2019, the Company had state research and development tax credit carryforwards of approximately $844 and $265 respectively, available to reduce future tax liabilities, which begin to expire in 2035.

As required by ASC 740, the Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. As a result of significant cumulative tax benefits associated with share-based compensation taxable events recognized in 2020, the Company has significant negative evidence in the form of cumulative losses and thus management has determined that it is more likely than not that the Company will not utilize the deferred tax assets in the United States. As such, the Company recorded a valuation allowance against its U.S. deferred tax assets at December 31, 2020 of $9,307. In prior years, the Company recorded a valuation allowance against certain state research and development tax credits only. In order to utilize state research and development tax credits, the Company will need taxable income in the jurisdiction of where the credit was generated. The Company currently has no taxable income in certain state jurisdictions and thus management had determined that it is more likely than not that the Company will not recognize the benefits of state research and development tax credits generated in those jurisdictions. A valuation allowance of $330 had been established at December 31, 2019.

Utilization of the state research and development tax credits may be subject to substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the shares of a corporation by more than 50% over a three-year period.

Changes in the valuation allowance for deferred tax were as follows:


	Years Ended
	December 31,
	2020		2019		2018
Valuation allowance at beginning of year	$	(330)	$	(49)	$	(27)
Increases recorded through the balance sheet		—		(200)		—
Increases recorded to income tax provision		(8,977)		(81)		(22)
Valuation allowance at end of year	$	(9,307)	$	(330)	$	(49)

The valuation allowance increased by $8,977 in 2020 primarily as a result of the recognition of a valuation allowance against all U.S. deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The amount of unrecognized tax benefits is $837 and $528 as of December 31, 2020 and 2019, respectively. The net increase relates to new tax positions on research and development credits generated in 2020, offset by positions which are no longer outstanding due to the statute of limitations closing.

A roll forward of the Company’s uncertainties in its income tax provision liability is presented below:


	Years Ended
	December 31,
	2020		2019		2018
Gross balance at the beginning of year	$	528	$	—	$	—
Gross increases based on current period tax positions		411		528		—
Gross decreases based on tax positions of the prior periods		(102)		—		—
Unrecognized tax benefits at the end of the year	$	837	$	528	$	—

The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company had recorded immaterial interest on the tax positions during the year ended December 31, 2020, 2019 and 2018.

The Company files income tax returns in the United States as well as in certain state and in certain country jurisdictions. Kiniksa US’s federal and state income tax returns are subject to tax examinations for the tax years ended December 31, 2017 and subsequent years. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period. There are currently no income tax examinations pending.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Reporting and Functional Currency

Cash and Cash Equivalents

Short-Term Investments

Concentrations of Credit Risk

Restricted Cash

Property and Equipment


		Estimated Useful Life
Computer hardware and software		3 - 5 years
Laboratory equipment		5 years
Furniture, fixtures and vehicles		5 - 7 years
Leasehold improvements		Shorter of estimated useful life or lease term

Impairment of LongLived Assets

Impairment of Long-Lived Assets

Inventory

Deferred Offering Costs

Fair Value Measurements

●

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

●

Leases

Segment Information

Research and Development Costs

Research Contract Costs and Accruals

Patent Costs

Share-Based Compensation

Comprehensive Loss

Income Taxes

Net Loss per Share

Recently Adopted and Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Fair Value of Financial Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2020

Fair Value of Financial Assets and Liabilities

Schedule of financial assets and liabilities measured at fair value on a recurring basis


	Fair Value Measurements
	as of December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash — money market funds	$	210	$	—	$	—	$	210
Cash equivalents — money market funds		22,942		—		—		22,942
Cash equivalents — U.S. Treasury notes		—		72,695		—		72,695
Short-term investments — U.S. Treasury notes		—		209,444		—		209,444
	$	23,152	$	282,139	$	—	$	305,291


	Fair Value Measurements
	as of December 31, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash — money market funds	$	210	$	—	$	—	$	210
Cash equivalents — money market funds		25,207		—		—		25,207
Cash equivalents — U.S. Treasury notes		—		10,192		—		10,192
Short-term investments — U.S. Treasury notes		—		186,452		—		186,452
	$	25,417	$	196,644	$	—	$	222,061

Schedule of short-term investments


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2020
Cash equivalents — U.S. Treasury notes	$	72,694	$	1	$	—	$	72,695
Short-term investments — U.S. Treasury notes		209,459		4		(19)		209,444
	$	282,153	$	5	$	(19)	$	282,139


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2019
Cash equivalents — U.S. Treasury notes	$	10,191	$	1	$	—	$	10,192
Short-term investments — U.S. Treasury notes		186,415		44		(7)		186,452
	$	196,606	$	45	$	(7)	$	196,644

Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of share option activity under the Plans


				Weighted
				Average
		Weighted		Remaining
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value


Outstanding as of December 31, 2019	8,491,734	$	11.17	7.88	$	27,217
Granted	3,794,735	$	16.50
Exercised	(1,324,429)	$	4.57
Forfeited	(1,003,182)	$	14.88
Outstanding as of December 31, 2020	9,958,858	$	13.53	8.15	$	52,394
Share options exercisable as of December 31, 2020	3,799,854	$	10.83	7.00	$	31,526
Share options unvested as of December 31, 2020	6,159,004	$	15.19	2.79	$	64,715

Schedule of share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss


	Years Ended
	December 31,
	2020		2019		2018
Research and development expenses	$	8,866	$	5,746	$	2,285
Selling, general and administrative expenses		12,009		9,334		3,416
	$	20,875	$	15,080	$	5,701

Employees

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option valuation assumptions presented on weighted-average basis


	Years Ended
	December 31,
	2020		2019		2018
Risk-free interest rate	0.55	%	2.07	%	2.82	%
Expected term (in years)	6.21		6.22		6.40
Expected volatility	80.81%	%	79.14	%	75.04	%
Expected dividend yield	—	%	—	%	—	%

Non-employees

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option valuation assumptions presented on weighted-average basis


	Years Ended
	December 31,
	2019		2018
Risk-free interest rate	1.38	%	2.91	%
Expected term (in years)	2.77		7.35
Expected volatility	68.17	%	74.18	%
Expected dividend yield	—	%	—	%

Restricted Share Units (RSUs)

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of restricted share activity


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Unvested RSUs as of December 31, 2019	328,296	$	12.93
Granted	17,995	$	19.15
Vested	(80,701)	$	12.95
Forfeited	(60,278)	$	13.09
Unvested RSUs as of December 31, 2020	205,312	$	13.41

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes

Schedule of loss before benefit (provision) for income taxes


	Years Ended
	December 31,
	2020		2019		2018
Bermuda	$	(161,983)	$	(168,053)	$	(105,562)
Foreign (U.S., U.K., Germany, France, Switzerland)		5,754		4,139		2,121
	$	(156,229)	$	(163,914)	$	(103,441)

Schedule of components of income tax benefit


	Years Ended
	December 31,
	2020		2019		2018
Current income tax provision:
Bermuda	$	—	$	—	$	—
U.S. federal		(392)		(567)		(547)
U.S. state		(366)		(530)		(217)
Foreign (U.K., Germany, France, Switzerland)		(33)		(12)		—
Total current income tax provision		(791)		(1,109)		(764)
Deferred income tax (provision) benefit:
Bermuda		—		—		—
U.S. federal		(3,056)		2,397		542
U.S. state		(1,315)		759		436
Foreign (U.K., Germany, France, Switzerland)		10		—		—
Total deferred income tax (provision) benefit		(4,361)		3,156		978
Total (provision) benefit for income taxes	$	(5,152)	$	2,047	$	214

Schedule of reconciliation of the Bermuda statutory income tax rate of 0% to the Company's effective income tax rate


	Years Ended
	December 31,
	2020		2019		2018
Bermuda statutory income tax rate	—	%	—	%	—	%
Foreign (U.S.) tax rate differential	(0.8)		(0.5)		(1.0)
Research and development tax credits	2.4		2.2		1.5
Share-based compensation	1.3		(0.5)		0.1
Permanent differences	(0.1)		(0.1)		—
Change in valuation allowance	(5.7)		(0.1)		—
U.S. state taxes, net of federal	0.1		(0.3)		(0.4)
FDII	0.6		0.9		—
Uncertain tax positions	(0.2)		(0.3)		—
Other	(0.9)		—		—
Effective income tax rate	(3.3)	%	1.3	%	0.2	%

Summary of net deferred tax assets


	December 31,
	2020		2019
Deferred tax assets:
Research and development tax credit carryforwards	$	1,674	$	238
Share-based compensation		6,271		3,746
Operating lease liability		1,764		712
Accrued bonus		1,208		855
Accrued expenses and other liabilities		634		223
Net operating losses		198		190
Total deferred tax assets		11,749		5,964
Valuation allowance		(9,307)		(330)
Deferred tax liabilities:
Depreciation and amortization		(786)		(745)
Right of use asset		(1,646)		(517)
Net deferred tax assets	$	10	$	4,372

Schedule of changes in the valuation allowance for deferred tax assets


	Years Ended
	December 31,
	2020		2019		2018
Valuation allowance at beginning of year	$	(330)	$	(49)	$	(27)
Increases recorded through the balance sheet		—		(200)		—
Increases recorded to income tax provision		(8,977)		(81)		(22)
Valuation allowance at end of year	$	(9,307)	$	(330)	$	(49)

Schedule of uncertainties in income tax provision liability


	Years Ended
	December 31,
	2020		2019		2018
Gross balance at the beginning of year	$	528	$	—	$	—
Gross increases based on current period tax positions		411		528		—
Gross decreases based on tax positions of the prior periods		(102)		—		—
Unrecognized tax benefits at the end of the year	$	837	$	528	$	—

Nature of the Business and Basis of Presentation (Details) $ / shares in Units, $ in Thousands									1 Months Ended	12 Months Ended
	Mar. 01, 2021 USD ($)	Jul. 24, 2020 USD ($) $ / shares shares	May 18, 2020 USD ($) $ / shares shares	Mar. 01, 2019 USD ($) $ / shares shares	Feb. 04, 2019 USD ($) $ / shares shares	Jun. 22, 2018 USD ($) $ / shares shares	May 29, 2018 USD ($) $ / shares shares	May 11, 2018	Jun. 22, 2018 USD ($) $ / shares	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	May 31, 2018 shares
Nature of the Business and Basis of Presentation
Reverse stock split								2.73235
Liquidity
Accumulated deficit										$ 517,473	$ 356,092
Net losses										161,381	161,867	$ 103,227
Cash used in operations										136,532	158,369	81,012
Cash, cash equivalents and short-term investments										323,482
Class A common shares
Nature of the Business and Basis of Presentation
Number of shares issued on conversion of convertible preferred shares \| shares							5,546,019						5,546,019
Class A1 common shares
Nature of the Business and Basis of Presentation
Number of shares issued on conversion of convertible preferred shares \| shares							12,995,954						12,995,954
Class B common shares
Nature of the Business and Basis of Presentation
Number of shares issued on conversion of convertible preferred shares \| shares							1,070,502						1,070,502
Class B1 common shares
Nature of the Business and Basis of Presentation
Number of shares issued on conversion of convertible preferred shares \| shares							16,057,618						16,057,618
Initial Public Offering
Nature of the Business and Basis of Presentation
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs									$ 155,536			155,536
Initial Public Offering \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares) \| shares							8,477,777
Share price (in dollars per share) \| $ / shares							$ 18.00
Gross proceeds from IPO							$ 152,600
Gross proceeds from offering												$ 159,194
Follow-On Public Offering and Private Placement Inclusive of Over-Allotment
Nature of the Business and Basis of Presentation
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs	$ 82,988	$ 146,037	$ 74,495	$ 82,988
Follow-On Public Offering and Private Placement \| Common Class A and Class A1 common shares
Nature of the Business and Basis of Presentation
Gross proceeds from offering		$ 155,000	$ 79,570		$ 85,000
Follow-On Offering \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares) \| shares		5,952,381	2,760,000		2,654,984
Share price (in dollars per share) \| $ / shares		$ 21.00	$ 18.25		$ 18.26
Gross proceeds from offering										$ 165,725	$ 48,595
Private Placement \| Class A1 common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares) \| shares		1,428,572	1,600,000		2,000,000
Share price (in dollars per share) \| $ / shares		$ 21.00	$ 18.25		$ 18.26
Over-allotment \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares) \| shares				161,126		1,006,425
Share price (in dollars per share) \| $ / shares				$ 18.26		$ 18.00			$ 18.00
Gross proceeds from IPO						$ 18,116
Gross proceeds from offering				$ 2,942

Fair Value of Financial Assets and Liabilities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Fair Value, Assets Transfers
Fair value of assets transferred from Level 1 to Level 2	$ 0	$ 0
Fair value of assets transferred from Level 2 to Level 1	0	0
Fair value of asset transfer into level 3	0	0
Fair value of asset transfer into level 3	$ 0	$ 0
Number of securities in an unrealized loss position \| security	17	7
Unrealized loss position	$ 107,753	$ 43,107
U.S. Treasury Notes
Assets - Fair Value
Short-term investments	282,139	196,644
Short-term investments
Amortized Cost	282,153	196,606
Gross Unrealized Gains	5	45
Gross Unrealized Losses	(19)	(7)
Cash equivalents \| U.S. Treasury Notes
Assets - Fair Value
Short-term investments	72,695	10,192
Short-term investments
Amortized Cost	72,694	10,191
Gross Unrealized Gains	1	1
Short-term Investments \| U.S. Treasury Notes
Assets - Fair Value
Short-term investments	209,444	186,452
Short-term investments
Amortized Cost	209,459	186,415
Gross Unrealized Gains	4	44
Gross Unrealized Losses	(19)	(7)
Fair Value \| Recurring basis
Assets - Fair Value
Assets	305,291	222,061
Fair Value \| Recurring basis \| Money Market Funds
Assets - Fair Value
Restricted cash	210	210
Cash equivalents	22,942	25,207
Fair Value \| Recurring basis \| U.S. Treasury Notes
Assets - Fair Value
Cash equivalents	72,695	10,192
Short-term investments	209,444	186,452
Fair Value \| Recurring basis \| Level 1
Assets - Fair Value
Assets	23,152	25,417
Fair Value \| Recurring basis \| Level 1 \| Money Market Funds
Assets - Fair Value
Restricted cash	210	210
Cash equivalents	22,942	25,207
Fair Value \| Recurring basis \| Level 2
Assets - Fair Value
Assets	282,139	196,644
Fair Value \| Recurring basis \| Level 2 \| U.S. Treasury Notes
Assets - Fair Value
Cash equivalents	72,695	10,192
Short-term investments	$ 209,444	$ 186,452

Convertible Preferred Shares (Details) $ / shares in Units, $ in Thousands	1 Months Ended		12 Months Ended
	May 31, 2018 $ / shares shares	Feb. 28, 2018 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019 USD ($) director $ / shares shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 Vote director $ / shares shares	May 29, 2018 shares
Convertible Preferred Shares
Payment of offering expenses \| $			$ 1,136	$ 118	$ 3,657
Preferred stock, cash dividends declared or paid \| $					$ 0
Convertible Preferred Shares
Convertible Preferred Shares
Preferred shares designated		35,670,093	0	0		22,885,492
Preferred stock, shares issued (in shares)			0	0
Convertible preferred shares, par value (in dollars per share) \| $ / shares		$ 0.000273235				$ 0.000273235
Number of directors entitled to elect \| director						2
Series A convertible preferred shares
Convertible Preferred Shares
Preferred shares designated						17,128,120
Number of votes for each Class B common share \| Vote						10
Original issue price (per share) \| $ / shares	$ 4.6707
Convertible ratio to Class B common share	1
Series B convertible preferred shares
Convertible Preferred Shares
Preferred shares designated						5,757,372
Number of votes for each Class A common share \| Vote						1
Original issue price (per share) \| $ / shares	$ 6.9475
Convertible ratio to Class A common share	1
Series C convertible preferred shares
Convertible Preferred Shares
Preferred shares designated		12,784,601
Preferred stock, shares issued (in shares)		12,784,601
Share price per share \| $ / shares		$ 15.6438
Proceeds from issuance of shares \| $		$ 190,822
Payment of offering expenses \| $		$ 9,178
Number of votes for each Class A common share \| Vote						1
Original issue price (per share) \| $ / shares	$ 15.6438
Convertible ratio to Class A common share	1
Common Class A and Class B
Convertible Preferred Shares
Number of directors entitled to elect \| director				1
Class A common shares
Convertible Preferred Shares
Number of shares issued on conversion of convertible preferred shares	5,546,019						5,546,019
Class B common shares
Convertible Preferred Shares
Number of shares issued on conversion of convertible preferred shares	1,070,502						1,070,502
Class A1 common shares
Convertible Preferred Shares
Number of shares issued on conversion of convertible preferred shares	12,995,954						12,995,954
Class B1 common shares
Convertible Preferred Shares
Number of shares issued on conversion of convertible preferred shares	16,057,618						16,057,618
Common Class A or Class B \| Minimum
Convertible Preferred Shares
Share price per share \| $ / shares				$ 15.6438
Gross proceeds from IPO \| $				$ 100,000

Common Shares (Details) $ / shares in Units, $ in Thousands								1 Months Ended	12 Months Ended
Common Shares (Details) $ / shares in Units, $ in Thousands	Mar. 01, 2021 USD ($)	Jul. 24, 2020 USD ($) $ / shares shares	May 18, 2020 USD ($) $ / shares shares	Mar. 01, 2019 USD ($) $ / shares shares	Feb. 04, 2019 USD ($) $ / shares shares	Jun. 22, 2018 USD ($) $ / shares shares	May 29, 2018 USD ($) $ / shares shares	Jun. 22, 2018 USD ($) $ / shares	Dec. 31, 2020 USD ($) Vote $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($)	May 31, 2018 $ / shares shares	Feb. 28, 2018 shares	Dec. 31, 2017 $ / shares shares
Nature of the Business and Basis of Presentation
Common share authorized (in shares)												200,000,000	44,746,463	43,918,239
Common stock, par value (in dollars per share) \| $ / shares												$ 0.000273235		$ 0.000273235
Common shares or Preferred Shares not designated														11,956,456
Maximum number of common shares may be issued												54,647,000
Common stock, cash dividends declared or paid \| $									$ 0
Class A common shares
Nature of the Business and Basis of Presentation
Common share authorized (in shares)													5,507,938	5,507,938
Common stock, par value (in dollars per share) \| $ / shares									$ 0.000273235	$ 0.000273235
Number of shares issued on conversion of convertible preferred shares							5,546,019					5,546,019
Number of votes (per share) \| Vote									1
Class A1 common shares
Nature of the Business and Basis of Presentation
Common share authorized (in shares)														0
Common stock, par value (in dollars per share) \| $ / shares									$ 0.000273235	0.000273235
Number of shares issued on conversion of convertible preferred shares							12,995,954					12,995,954
Number of votes (per share) \| Vote									0
Convertible ratio to Class A common share									1
Class B common shares
Nature of the Business and Basis of Presentation
Common share authorized (in shares)													3,568,353	3,568,353
Common stock, par value (in dollars per share) \| $ / shares									$ 0.000273235	0.000273235
Number of shares issued on conversion of convertible preferred shares							1,070,502					1,070,502
Number of votes (per share) \| Vote									10
Convertible ratio to Class A common share									1
Convertible ratio to Class B1 common share									1
Class B1 common shares
Nature of the Business and Basis of Presentation
Common share authorized (in shares)														0
Common stock, par value (in dollars per share) \| $ / shares									$ 0.000273235	$ 0.000273235
Number of shares issued on conversion of convertible preferred shares							16,057,618					16,057,618
Number of votes (per share) \| Vote									0
Convertible ratio to Class B1 common share									1
Convertible Preferred Shares
Nature of the Business and Basis of Presentation
Preferred shares designated									0	0			35,670,093	22,885,492
Preferred stock, shares issued (in shares)									0	0
Initial Public Offering
Nature of the Business and Basis of Presentation
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs \| $								$ 155,536			$ 155,536
Initial Public Offering \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares)							8,477,777
Share price (in dollars per share) \| $ / shares							$ 18.00
Gross proceeds from IPO \| $							$ 152,600
Gross proceeds from offering \| $											$ 159,194
Follow-On Public Offering and Private Placement Inclusive of Over-Allotment
Nature of the Business and Basis of Presentation
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs \| $	$ 82,988	$ 146,037	$ 74,495	$ 82,988
Follow-On Public Offering and Private Placement \| Common Class A and Class A1 common shares
Nature of the Business and Basis of Presentation
Gross proceeds from offering \| $		$ 155,000	$ 79,570		$ 85,000
Follow-On Offering \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares)		5,952,381	2,760,000		2,654,984
Share price (in dollars per share) \| $ / shares		$ 21.00	$ 18.25		$ 18.26
Gross proceeds from offering \| $									$ 165,725	$ 48,595
Private Placement \| Class A1 common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares)		1,428,572	1,600,000		2,000,000
Share price (in dollars per share) \| $ / shares		$ 21.00	$ 18.25		$ 18.26
Over-allotment \| Class A common shares
Nature of the Business and Basis of Presentation
Issuance of stock (in shares)				161,126		1,006,425
Share price (in dollars per share) \| $ / shares				$ 18.26		$ 18.00		$ 18.00
Gross proceeds from IPO \| $						$ 18,116
Gross proceeds from offering \| $				$ 2,942

Share Based Compensation (Details) $ in Thousands		1 Months Ended			12 Months Ended
Share Based Compensation (Details) $ in Thousands	May 23, 2018 shares	Dec. 31, 2020 shares	Dec. 31, 2019 item shares	May 31, 2018 shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($)
Share-based compensation
Maximum number of common shares may be issued				54,647,000
Shares outstanding (in shares)		9,958,858	8,491,734		9,958,858	8,491,734
Period of equal monthly vesting after first anniversary for options with six year vesting period					5 years
Number of options granted					3,794,735
Share-based compensation expense \| $					$ 20,875	$ 15,080	$ 5,701
Stock options \| Employees
Share-based compensation
Share-based compensation expense \| $					20,860
Stock options \| Non-employees
Share-based compensation
Share-based compensation expense \| $					$ 15
2018 Incentive Award Plan \| Class A common shares
Share-based compensation
Total number of common shares authorized to issue				4,466,500
Percentage of automatic increase in shares available for issue					4.00%
Additional shares authorized					2,197,505
Number of common shares available for future grant		1,618,474			1,618,474
2018 Incentive Award Plan \| Class A common shares \| Maximum
Share-based compensation
Percentage of automatic increase in shares available for issue				4.00%
Maximum number of common shares may be issued				27,915,000
Rilonacept Long-term Incentive Plan
Share-based compensation
Percentage of a participant's annual target bonus for grant year represented by cash award			33.30%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs)
Share-based compensation
Number of grants of RSU awards that a participant may receive \| item			2
Number of awards that will be earned or vest if the milestone date does not occur by the specified date \| item			0
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Earnout Level 1
Share-based compensation
Potential performance earnout percentage			100.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Earnout Level 2
Share-based compensation
Potential performance earnout percentage			50.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Earnout Level 3
Share-based compensation
Potential performance earnout percentage			25.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Earnout Level 4
Share-based compensation
Potential performance earnout percentage			0.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Upside Earnout Level 1
Share-based compensation
Potential performance earnout percentage			50.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Upside Earnout Level 2
Share-based compensation
Potential performance earnout percentage			25.00%
Rilonacept Long-term Incentive Plan \| Restricted Share Units (RSUs) \| Upside Earnout Level 3
Share-based compensation
Potential performance earnout percentage			0.00%
Rilonacept Long-term Incentive Plan \| First RSU Award
Share-based compensation
Percentage of a participant's annual target bonus for grant year that each RSU grant award represents			33.30%
Vesting period			1 year
Rilonacept Long-term Incentive Plan \| Second RSU Award
Share-based compensation
Percentage of a participant's annual target bonus for grant year that each RSU grant award represents			33.30%
Vesting period			2 years
2015 Equity Incentive Plan \| Class A common shares
Share-based compensation
Total number of common shares authorized to issue	4,691,213
Number of shares no longer available for future grant	92,170
Number of common shares available for future grant	0
Shares outstanding (in shares)		2,794,056			2,794,056
2015 Equity Incentive Plan \| Stock options
Share-based compensation
Voting power threshold percentage used to determine the exercise price for options					10.00%
Vesting percentage of options having four year vesting term on the first anniversary of the grant date		25.00%			25.00%
Period of equal monthly vesting after first anniversary for options with four year vesting period					3 years
Vesting percentage of options having six year vesting term on the first anniversary of the grant date		16.00%			16.00%
2015 Equity Incentive Plan \| Stock options \| Minimum
Share-based compensation
Vesting period					4 years
2015 Equity Incentive Plan \| Stock options \| Maximum
Share-based compensation
Option term of incentive awards					10 years
Option term of awards for the persons possessing more than 10% of voting power					5 years
Vesting period					6 years
2015 Equity Incentive Plan \| Stock options \| Class A common shares
Share-based compensation
Minimum percentage of exercise price of the fair market value of shares for the persons possessing 10% or less of voting power		100.00%			100.00%
Minimum percentage of exercise price of the fair market value of shares for the persons possessing more than 10% of voting power		110.00%			110.00%
2018 Employee Share Purchase Plan \| Class A common shares
Share-based compensation
Total number of common shares authorized to issue				670,000
Additional shares authorized		130,000
Number of common shares available for future grant		518,794			518,794
2018 Employee Share Purchase Plan \| Class A common shares \| Maximum
Share-based compensation
Percentage of automatic increase in shares available for issue	1.00%
Maximum number of common shares may be issued	6,420,000

Share-Based Compensation - Options (Details) - USD ($)	12 Months Ended
Share-Based Compensation - Options (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Number of Shares
Outstanding, beginning of the period	8,491,734
Granted	3,794,735
Exercised	(1,324,429)
Forfeited	(1,003,182)
Outstanding, end of the period	9,958,858	8,491,734
Options exercisable	3,799,854
Options unvested	6,159,004
Weighted Average Grant Date Fair Value
Outstanding, beginning of the period	$ 11.17
Granted	16.50
Exercised	4.57
Forfeited	14.88
Outstanding, end of the period	13.53	$ 11.17
Options exercisable	10.83
Options unvested	$ 15.19
Weighted Average Remaining Contractual Term (in years)
Outstanding	8 years 1 month 24 days	7 years 10 months 17 days
Exercisable	7 years
Unvested	2 years 9 months 14 days
Aggregate Intrinsic Value
Outstanding	$ 52,394,000	$ 27,217,000
Exercisable	31,526,000
Unvested	64,715,000
Proceeds from exercise of options	$ 6,553,000	$ 1,119,000	$ 377,000
Class A common shares \| Stock options
Number of Shares
Exercised	(1,324,429)	(150,253)	(25,683)
Aggregate Intrinsic Value
Intrinsic value of options exercised	$ 18,271,000	$ 1,776,000	$ 411,000
Weighted-average grant-date fair value per share of options granted	$ 11.38	$ 9.36	$ 11.96
Total fair value of options vested	$ 17,931	$ 13,997,000	$ 2,255,000
Proceeds from exercise of options	$ 6,058,000	$ 590,000	$ 87,000

Share-Based Compensation - Restricted Shares and RSUs (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) installment $ / shares shares	Dec. 31, 2018 USD ($)
Share-based compensation
Share-based compensation expense \| $	$ 20,875	$ 15,080	$ 5,701
Number of shares
Beginning of the period	328,296
Granted	17,995
Vested	(80,701)
Forfeited	(60,278)
End of the period	205,312	328,296
Weighted Average Fair Value at Issuance
Beginning of the period \| $ / shares	$ 12.93
Granted \| $ / shares	19.15
Vested \| $ / shares	12.95
Forfeited \| $ / shares	13.09
End of the period \| $ / shares	$ 13.41	$ 12.93
Time-based RSUs
Share-based compensation
Number of vesting installments \| installment		1
Common shares issued	56,369
Common shares withheld for tax purposes	24,332
Share-based compensation expense \| $	$ 980
Number of shares
End of the period	0
First RSU Award
Share-based compensation
Grant date fair value of awards granted \| $	$ 2,754

Income Taxes - Components of income tax provision (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income (loss) before provision for income taxes
Bermuda	$ (161,983)	$ (168,053)	$ (105,562)
Foreign	5,754	4,139	2,121
Income (loss) before provision for income taxes	(156,229)	(163,914)	(103,441)
Current income tax (provision):
U.S. federal	(392)	(567)	(547)
U.S. state	(366)	(530)	(217)
Foreign	(33)	(12)
Total current income tax (provision)	(791)	(1,109)	(764)
Deferred income tax benefit:
U.S. federal	(3,056)	2,397	542
U.S. state	(1,315)	759	436
Foreign	10
Total deferred income tax benefit	(4,361)	3,156	978
Total provision (benefit) for income taxes	$ (5,152)	$ 2,047	$ 214

Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Inventory
Capitalized inventory costs	$ 0	$ 0
Laboratory equipment
Property and Equipment, Net
Expected useful life	5 years
Minimum \| Computer hardware and software
Property and Equipment, Net
Expected useful life	3 years
Minimum \| Furniture, fixtures, and vehicles
Property and Equipment, Net
Expected useful life	5 years
Maximum \| Computer hardware and software
Property and Equipment, Net
Expected useful life	5 years
Maximum \| Furniture, fixtures, and vehicles
Property and Equipment, Net
Expected useful life	7 years

Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating lease assets and liabilities
Operating lease right-of-use assets	$ 6,566	$ 1,927
Operating lease liabilities	$ 6,985
ASU 2016-02 \| Cumulative Effect Adjustment
Operating lease assets and liabilities
Operating lease right-of-use assets			$ 3,682
Operating lease liabilities			$ 3,917

Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment, Net
Total property and equipment	$ 8,781	$ 8,723
Less: Accumulated depreciation	(4,730)	(2,325)
Total property and equipment, net	4,051	6,398
Depreciation expense	2,405	2,068	$ 286
Furniture, fixtures, and vehicles
Property and Equipment, Net
Total property and equipment	62	47
Computer hardware and software
Property and Equipment, Net
Total property and equipment	349	344
Leasehold improvements
Property and Equipment, Net
Total property and equipment	3,667	3,627
Lab equipment
Property and Equipment, Net
Total property and equipment	4,602	4,685
Construction in progress
Property and Equipment, Net
Total property and equipment	$ 101	$ 20

Leases - Operating Leases (Details) - Kiniksa US £ in Thousands, $ in Thousands				1 Months Ended
	Dec. 01, 2021 GBP (£) m²	Dec. 21, 2018 USD ($) ft²	Nov. 07, 2018 USD ($) ft²	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Feb. 28, 2021 USD ($)	Nov. 30, 2020 USD ($)	Dec. 31, 2020	Jun. 26, 2018 ft²
Maximum
Operating leases
Remaining lease terms								2 years
Lexington office
Operating leases
Area of leased space \| ft²			55,924						27,244
Monthly base rent payment \| $			$ 139	$ 240	$ 233		$ 153
San Diego office
Operating leases
Area of leased space \| ft²		4,400
Monthly base rent payment \| $		$ 13				$ 14
London Office
Operating leases
Area of leased space \| m²	164
Quarterly base rent \| £	£ 20
Estimated cost of restoration of the leased property to its original condition \| £	£ 22

Leases - Lease Cost and Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease cost
Operating lease cost	$ 1,578	$ 1,443
Variable lease cost	167	152
Total lease cost	$ 1,745	$ 1,595
Weighted average lease term	2 years 7 months 20 days
Weighted average discount rate	5.60%
Maturities of operating lease liabilities
2021	$ 2,419
2022	3,055
2023	2,065
Total future minimum lease payments	7,539
Less imputed interest	(554)
Present value of lease liabilities	$ 6,985

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Series C convertible preferred shares
Issuance costs	$ 9,178

Summary of Significant Accounting Policies - Concentrations of Credit Risk and Restricted Cash (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Summary of Significant Accounting Policies
Number of financial institutions holding cash, cash equivalents and short-term investments \| item	2
Restricted cash
Cash securing letter of credit \| $	$ 210	$ 210

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Accrued Expenses
Accrued research and development expenses	$ 16,945	$ 11,813
Accrued employee compensation and benefits	7,704	7,089
Accrued legal and professional fees	3,988	1,087
Other	562	426
Accrued expenses	$ 29,199	$ 20,415

License and Acquisition Agreements - Biogen Asset Purchase Agreement (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
License and Acquisition Agreements
Research and development		$ 112,042	$ 135,001	$ 86,597
Asset Purchase Agreement \| Biogen
License and Acquisition Agreements
Upfront payment for exchange of rights	$ 11,500
Technology transfer payment	500
Milestone payment upon achievement of clinical milestone event		0	10,000		$ 4,000
One-time payment of upfront sublicense fee on retained contracts	150
Maximum aggregate obligation to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments	$ 1,575
Notice period to terminate the agreement	90 days
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured	90 days
Notice period to terminate the agreement under payment-related breaches	30 days
Research and development		$ 106	$ 10,347	$ 0
Asset Purchase Agreement \| Biogen \| Maximum
License and Acquisition Agreements
Milestone payment to be paid upon clinical and regulatory milestone achievement	$ 179,000
Milestone payment to be paid upon net sales milestone achievement	$ 150,000

License and Acquisition Agreements - Primatope Stock Purchase Option Agreement (Details) $ in Thousands	1 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($)	Sep. 30, 2017 USD ($) item	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2019 USD ($)
License and Acquisition Agreements
Research and development			$ 112,042	$ 135,001	$ 86,597
Primatope \| Stock Option Purchase Agreement
License and Acquisition Agreements
Upfront payment for initial option period		$ 500
Payment for extension of option period					800
Primatope Acquisition
License and Acquisition Agreements
Purchase price	$ 15,000
Upfront consideration payable on exercise of call option to acquire all outstanding equity	10,000
Milestone payment payable after achievement of specified milestones	$ 5,000					$ 3,000
Research and development				$ 18,000	$ 800
Maximum \| Primatope \| Stock Option Purchase Agreement
License and Acquisition Agreements
Number of extensions allowed for initial option period \| item		3
Total aggregate extension payments		$ 800

License and Acquisition Agreements - Regeneron License Agreement (Details) - Regeneron - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Mar. 31, 2021
License Agreement
License and Acquisition Agreements
Upfront payment for exchange of rights	$ 5,000
Milestone payment to be paid upon regulatory milestone achievement		$ 7,500			$ 20,000
Research and development expense, Milestone		$ 7,500	$ 0	$ 0
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured	90 days
Notice period to terminate the agreement under payment-related breaches	30 days
Consecutive suspension of activities period for termination of agreement	12 months
Period after which the agreement can be terminated	18 months
Notice period to terminate the agreement	180 days
Notice period to terminate the agreement after US marketing approval of the developed product	1 year
Notice period to terminate the agreement if products are having safety concerns	3 months
Clinical Supply Agreement
License and Acquisition Agreements
Research and development expense related to purchase of drug materials			$ 6,854	$ 1,835
Maximum \| License Agreement
License and Acquisition Agreements
Milestone payment to be paid upon regulatory milestone achievement	$ 27,500

Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Taxes
Bermuda statutory income tax rate	0.00%	0.00%	0.00%
Income tax benefits - Bermuda	$ 0	$ 0	$ 0
Net operating loss carryforwards - Bermuda	$ 0	$ 0	$ 0

Income Taxes - Reconciliation (Details)	12 Months Ended
Income Taxes - Reconciliation (Details)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Taxes
Bermuda statutory income tax rate	0.00%	0.00%	0.00%
Foreign (U.S.) tax rate differential	(0.80%)	(0.50%)	(1.00%)
Research and development tax credits	2.40%	2.20%	1.50%
Share-based compensation	1.30%	(0.50%)	0.10%
Permanent differences	(0.10%)	(0.10%)
Change in valuation allowance	(5.70%)	(0.10%)
U.S. state taxes, net of federal	0.10%	(0.30%)	(0.40%)
FDII	0.60%	0.90%
Uncertain tax positions	(0.20%)	(0.30%)
Other	(0.90%)
Effective income tax rate	(3.30%)	1.30%	0.20%

Income Taxes - Components of deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Research and development tax credit carryforwards	$ 1,674	$ 238
Share-based compensation	6,271	3,746
Operating lease liability	1,764	712
Accrued bonus	1,208	855
Accrued expenses and other liabilities	634	223
Net operating losses	198	190
Total deferred tax assets	11,749	5,964
Valuation allowance	(9,307)	(330)	$ (49)	$ (27)
Deferred tax liabilities:
Depreciation and amortization	(786)	(745)
Right of use Asset	(1,646)	(517)
Net deferred tax assets	10	4,372
Foreign
Deferred tax assets:
Research and development tax credit carryforwards	1,383	228
State
Deferred tax assets:
Research and development tax credit carryforwards	$ 844	$ 265

Income Taxes - Uncertainties in Income Tax Provision Liability (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Unrecognized tax benefits
Unrecognized tax benefits, beginning balance	$ 528
Gross increases based on current period tax positions	411	$ 528
Gross decreases based on tax positions of the prior periods	(102)
Unrecognized tax benefits, ending balance	$ 837	$ 528
Number of income tax examinations pending \| item	0

Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Manufacturing commitments
Non-cancelable purchase commitments	$ 16,178
Rilonacept Long-term Incentive Plan
Long-term incentive plan
Estimated amount of cash award in the event performance goals are achieved	$ 2,013

Benefit Plans (Details) - USD ($) $ in Thousands	12 Months Ended
Benefit Plans (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Benefit Plans
Matching contributions by the Company for first 3% of each participant's salary contributed (as a percent)	100.00%
Percentage of employees' salary contributed matched 100% by employer	3.00%
Matching contributions by the Company for next 2% of each participant's salary contributed (as a percent)	50.00%
Percentage of employees' salary contributed matched 50% by employer	2.00%
Contributions made by the Company to defined contribution savings plan	$ 993	$ 851	$ 315