0001725160-20-000007 | 10-Q | XBRL Viewer | Zentalis Pharmaceuticals INC

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Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2020	May 10, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-39263
Entity Registrant Name	Zentalis Pharmaceuticals, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-3607803
Entity Address, Address Line One	530 Seventh Avenue,
Entity Address, Address Line Two	Suite 2201
Entity Address, City or Town	New York,
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10018
City Area Code	212
Local Phone Number	433-3791
Title of 12(b) Security	Common Stock,$0.001 par value per share
Trading Symbol	ZNTL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		35,878,518
Entity Central Index Key	0001725160
Amendment Flag	false
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 63,650,000	$ 67,246,000
Accounts receivable from government grants, net	139,000	140,000
Prepaid expenses and other current assets	2,220,000	1,505,000
Total current assets	66,009,000	68,891,000
Property and equipment, net	519,000	501,000
Operating lease right-of-use assets	2,276,000	2,335,000
Prepaid expenses and other assets	2,353,000	2,134,000
Deferred financing costs	3,525,000	841,000
Goodwill	3,736,000	3,736,000
In-process research and development	8,800,000	8,800,000
Restricted Cash	411,000	243,000
Total assets	87,629,000	87,481,000
Current Liabilities
Accounts payable	7,019,000	4,289,000
Accrued expenses	9,920,000	10,608,000
Total current liabilities	16,939,000	14,897,000
Deferred tax liability	2,463,000	2,463,000
Other long-term liabilities	1,484,000	1,700,000
Total liabilities	20,886,000	19,060,000
Commitments and contingencies
Convertible preferred units; Redemption value of $162,120,000 and $146,944,000 at March 31, 2020 and December 31, 2019, respectively	155,934,207	141,705,846
LIABILITIES, CONVERTIBLE PREFERRED UNITS AND DEFICIT
Accumulated deficit	(99,119,000)	(82,993,000)
Total Zentalis Pharmaceuticals, LLC members’ deficit	(95,903,000)	(80,106,000)
Noncontrolling interests	6,712,000	6,821,000
Total deficit	(89,191,000)	(73,285,000)
Total liabilities, convertible preferred units and deficit	87,629,000	87,481,000
Deferred financing costs	3,525,000	841,000
Class A Common Units
LIABILITIES, CONVERTIBLE PREFERRED UNITS AND DEFICIT
Class A and B common units	709,000	709,000
Class B Common Units
LIABILITIES, CONVERTIBLE PREFERRED UNITS AND DEFICIT
Class A and B common units	$ 2,507,000	$ 2,178,000

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Convertible preferred units, redemption value	$ 162,120,000	$ 146,944,000
Class A Common Units
Common units, authorized (in shares)	20,000,000	20,000,000
Common units, issued (in shares)	5,601,478	5,601,478
Common units, outstanding (in shares)	5,601,478	5,601,478
Class B Common Units
Common units, authorized (in shares)	3,458,522	3,458,522
Common units, issued (in shares)	2,607,309	2,670,668
Common units, outstanding (in shares)	2,607,309	2,670,668

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating Expenses
Research and development	$ 13,258	$ 7,089
General and administrative	3,141	1,633
Total operating expenses	16,399	8,722
Operating loss	(16,399)	(8,722)
Other Income (Expense)
Interest income	164	74
Other expense	0	(12)
Net loss before income taxes	(16,235)	(8,660)
Income tax expense	0	3
Net loss	(16,235)	(8,663)
Net loss attributable to noncontrolling interests	(109)	(320)
Net loss attributable to Zentalis Pharmaceuticals, LLC	$ (16,126)	$ (8,343)
Net loss per Class A common units outstanding, basic and diluted (USD per share)	$ (2.88)	$ (1.49)
Units used in computing net loss per Class A common unit, basic and diluted (in shares)	5,601	5,594

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating Activities:
Consolidated net loss	$ (16,235)	$ (8,663)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	38	21
Share-based compensation	329	129
Changes in operating assets and liabilities:
Accounts receivable	1	225
Prepaid expenses and other assets	(1,050)	(230)
Accounts payable and accrued liabilities	53	(467)
Operating lease right-of-use assets and liabilities, net	(7)	(21)
Net cash used in operating activities	(16,871)	(9,006)
Investing activities:
Purchases of property and equipment	(31)	(41)
Net cash used in investing activities	(31)	(41)
Financing Activities:
Proceeds from the issuance of Series C convertible preferred units, net	14,228	0
Deferred financing costs	(754)	0
Net cash provided by financing activities	13,474	0
Decrease in cash, cash equivalents and restricted cash	(3,428)	(9,047)
Cash, cash equivalents and restricted cash at beginning of year	67,489	25,154
Cash, cash equivalents and restricted cash at end of year	64,061	16,107
Supplemental disclosure of non-cash investing and financing activities:
Amounts accrued for purchases of property and equipment	25	7
Right-of-use assets obtained in exchange for operating lease liabilities	0	1,369
Costs incurred in connection with initial public offering included in accounts payable and accrued expenses	1,930	0
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Total cash, cash equivalents and restricted cash reported in the Consolidated Statement of Cash Flows	$ 64,061	$ 16,107

Condensed Consolidated Changes in Redeemable Preferred Stock and Stockholders' Deficit (Statement) - USD ($)	Total	Class A Common Units	Class B Common Units	Preferred Stock Convertible Preferred Units	Common Stock Class A Common Units	Common Stock Class B Common Units	Accumulated Deficit	Total Zentalis Pharmaceuticals, LLC Members’ Equity (Deficit)	Noncontrolling Interests
Beginning balance, in shares at Dec. 31, 2018				5,103,000
Beginning balance at Dec. 31, 2018	$ 32,306,000			$ 59,830,000			$ (37,330,000)	$ 24,770,000	$ 7,536,000
Common units, beginning balance (in shares) at Dec. 31, 2018					5,594,000	1,612,000
Common units, beginning balance at Dec. 31, 2018					$ 672,000	$ 1,598,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of profit interest awards, net			47,500			48,000
Share-based compensation expense	129,000				$ 2,000	$ 127,000		129,000
Net loss attributable to noncontrolling interests	(320,000)								(320,000)
Net loss attributable to Zentalis Pharmaceuticals, LLC	(8,343,000)						(8,343,000)	(8,343,000)
Ending balance, in shares at Mar. 31, 2019				5,103,000
Ending balance at Mar. 31, 2019	$ (23,592,000)			$ 59,830,000			(45,673,000)	(16,376,000)	7,216,000
Common units, ending balance (in shares) at Mar. 31, 2019					5,594,000	1,660,000
Common units, ending balance at Mar. 31, 2019					$ 674,000	$ 1,725,000
Temporary equity ending balance (in shares) at Dec. 31, 2019	9,950,154
Temporary equity, ending balance at Dec. 31, 2019	$ 141,705,846
Beginning balance, in shares at Dec. 31, 2018				5,103,000
Beginning balance at Dec. 31, 2018	32,306,000			$ 59,830,000			(37,330,000)	24,770,000	7,536,000
Common units, beginning balance (in shares) at Dec. 31, 2018					5,594,000	1,612,000
Common units, beginning balance at Dec. 31, 2018					$ 672,000	$ 1,598,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of profit interest awards, net		7,093
Ending balance at Dec. 31, 2019	$ (73,285,000)						(82,993,000)	(80,106,000)	6,821,000
Common units, ending balance (in shares) at Dec. 31, 2019		5,601,478	2,670,668		5,601,000	2,671,000
Common units, ending balance at Dec. 31, 2019		$ 709,000	$ 2,178,000		$ 709,000	$ 2,178,000
Increase (Decrease) in Temporary Equity [Roll Forward]
Issuance of Series C convertible preferred units at $17.50 per unit net of issuance costs, in shares	867,000
Issuance of Series C convertible preferred units at $17.50 per unit net of issuance costs	$ 14,228,000
Temporary equity ending balance (in shares) at Mar. 31, 2020	10,817,348
Temporary equity, ending balance at Mar. 31, 2020	$ 155,934,207
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of profit interest awards, net						(64,000)
Issuance of profit interest awards, net			70,000
Share-based compensation expense	329,000					$ 329,000		329,000
Net loss attributable to noncontrolling interests	(109,000)								(109,000)
Net loss attributable to Zentalis Pharmaceuticals, LLC	(16,126,000)						(16,126,000)	(16,126,000)
Ending balance at Mar. 31, 2020	$ (89,191,000)						$ (99,119,000)	$ (95,903,000)	$ 6,712,000
Common units, ending balance (in shares) at Mar. 31, 2020		5,601,478	2,607,309		5,601,000	2,607,000
Common units, ending balance at Mar. 31, 2020		$ 709,000	$ 2,507,000		$ 709,000	$ 2,507,000

Condensed Consolidated Changes in Redeemable Preferred Stock and Stockholders' Deficit (Parenthetical)) - $ / shares	Mar. 31, 2020	Feb. 29, 2020	Sep. 30, 2019
Series C Preferred Units
Par value per share (in dollars per share)	$ 17.50	$ 17.50	$ 17.50

Organization and Business	3 Months Ended
Organization and Business	Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business	Organization and Business Organization Zentalis Pharmaceuticals, LLC (“Zentalis”, “We” or the “Company”) is a clinical-stage pharmaceutical company focused on discovering and developing clinically differentiated, novel small molecule therapeutics targeting fundamental biological pathways of cancer. The Company was formed and incorporated in the state of Delaware as Zeno Pharmaceuticals, Inc. on December 23, 2014. Effective November 21, 2017, Zeno Pharma, LLC was formed by the shareholders of Zeno Pharmaceuticals, Inc. On December 21, 2017, Zeno Pharmaceuticals, Inc. became a wholly owned subsidiary of Zeno Pharma, LLC. In connection with this restructuring, the rights and preferences of the Preferred Stock of Zeno Pharmaceuticals, Inc. were exchanged for preferred units with similar rights and preferences of Zeno Pharma, LLC. As part of the restructuring, the employees, consultants and board members of Zeno Pharmaceuticals, Inc. exchanged their equity grants in Zeno Pharmaceuticals, Inc. stock for Class B common incentive units in Zeno Pharma, LLC. Additionally, existing common stockholders of Zeno Pharmaceuticals, Inc. exchanged their common stock for Class A common units in Zeno Pharma, LLC. All exchanges were made on a one-for-one basis. The restructuring was accounted for as a common control transaction. In December 2019, the Company was renamed to Zentalis Pharmaceuticals, LLC. Zentalis Pharmaceuticals, LLC is a Delaware limited liability company. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. To date, all of the Company’s revenue has been generated in the United States. All of the Company’s tangible assets are held in the United States. Immediately prior to the effectiveness of the registration statement pertaining to the Company’s initial public offering (“IPO”) on April 2, 2020, the Company converted from a Delaware limited liability company into a Delaware corporation, and changed its name to Zentalis Pharmaceuticals, Inc. Pursuant to the statutory corporate conversion, all of the outstanding units of Zentalis Pharmaceuticals, LLC converted into shares of common stock of Zentalis Pharmaceuticals, Inc. based upon the value of Zentalis Pharmaceuticals, Inc. at the time of the IPO with a value implied by the price of the shares of common stock sold in the IPO. Based on the IPO price of $18.00 per share, the outstanding units converted into 25,288,854 shares of common stock (including 1,160,277 shares of restricted common stock). On April 7, 2020, the Company completed the IPO in which the Company issued and sold 10,557,000 shares of common stock (including 1,377,000 shares of common stock in connection with the full exercise of the underwriters’ option to purchase additional shares) at a public offering price of $18.00 per share. The Company’s aggregate gross proceeds from the sale of shares in the IPO, including the sale of shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, was $190.0 million before fees and expenses of $17.6 million. Liquidity Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date that the interim unaudited condensed consolidated financial statements for the quarter ended March 31, 2020 are issued.

Interim Unaudited Financial Statements

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Interim Unaudited Financial Statements

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. The year-end condensed consolidated balance sheet data was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019 included in the Company’s final prospectus for its IPO, filed pursuant to Rule 424(b) under the Securities Exchange Act of 1933, as amended, with the SEC on April 6, 2020 (the Prospectus). The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operation for the periods presented, with such adjustments consisting only of normal recurring adjustments.

The condensed consolidated financial statements include the accounts of our wholly owned subsidiaries, majority-owned or controlled companies, and variable interest entity (“VIE”), Kalyra Pharmaceuticals, Inc. (“Kalyra”), for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates.

Comprehensive Loss

Comprehensive loss is equal to net loss for the periods ended March 31, 2020 and 2019.

Adoption and Pending Adoption of Recent Accounting Pronouncements

The following table provides a brief description of recently issued accounting standards, those adopted in the current period and those not yet adopted:

Standard

Description

Effective Date

Effect on the Financial
Statements or Other
Significant Matters

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments

This guidance makes improvements to financial instruments guidance, including the current expected credit losses guidance.

January 1, 2020

We have adopted the new guidance as of January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321)

This standard clarifies the interaction between accounting standards related to equity securities (ASC 321), equity method investments (ASC 323), and certain derivatives (ASC 815).

January 1, 2021

We currently do not hold equity securities, have equity method investments or derivatives. We do not believe the adoption will have a material impact on our consolidated financial position or results of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. In November 2018 and April and May of 2019, the FASB issued additional guidance related to Topic 326.

The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income.

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.

The new guidance is intended to simplify aspects of the accounting for income taxes, including the elimination of certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, among other changes.

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

Business Combinations

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Business Combinations

Kalyra Pharmaceuticals, Inc.

On December 21, 2017, we acquired $4.5 million of Kalyra’s Series B Preferred Stock representing a 25% equity interest in Kalyra for purposes of entering the analgesics therapeutic research space. The acquisition price was paid entirely in cash.

In accordance with the authoritative guidance, we concluded that Kalyra is a business consisting of inputs, employees, intellectual property and processes capable of producing outputs. Additionally, we have concluded that Kalyra is a variable interest entity, we are the primary beneficiary and have the power to direct the activities that most significantly affect Kalyra’s economic performance through common management and our board representation. Prior to the change of control, Zeno and Kalyra transacted for the delivery of research and development services and support. The financial position and results of operations of Kalyra have been included in our consolidated financial statements from the date of the initial investment.

Pursuant with authoritative guidance, we have recorded the identifiable assets, liabilities and noncontrolling interests in the VIE at their fair value upon initial consolidation. The identified goodwill is comprised of the workforce and expected synergies from combining the entities. Total assets and liabilities of Kalyra as of March 31, 2020 and December 31, 2019 are as follows (in thousands):


	March 31,		December 31,
	2020		2019
Cash and cash equivalents	$	286	$	712
Other current assets	77		21
In-process research and development	8,800		8,800
Goodwill	3,736		3,736
Other long-term assets	—		14
Accounts payable and accrued expenses	113		391
Deferred tax liability	2,463		2,463
Noncontrolling interests	$	6,712	$	6,821

The liabilities recognized as a result of consolidating Kalyra do not represent additional claims on our general assets. Pursuant to the authoritative guidance, the equity interest in Kalyra not owned by Zeno is reported as a noncontrolling interest on our consolidated balance sheets.

The following is a reconciliation of equity (net assets) attributable to the noncontrolling interest (in thousands):


	March 31,		March 31,
	2020		2019
Noncontrolling interest at beginning of period	$	6,821	$	7,536
Net loss attributable to noncontrolling interest	(109)		(320)
Noncontrolling interest at end of period	$	6,712	$	7,216

Fair Value Measurement	3 Months Ended
Fair Value Measurement	Mar. 31, 2020
Fair Value Disclosures [Abstract]
Fair Value Measurement	Fair Value Measurement As of March 31, 2020 and December 31, 2019, we held approximately $60.3 million and $63.0 million of money market funds measured at fair value on a recurring basis and categorized as Level 1 securities using the fair value hierarchy. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2020. We had no instruments that were classified within Level 3 as of March 31, 2020 or December 31, 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

Prepaid Expenses and Other Assets

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following (in thousands):


	March 31,		December 31,
	2020		2019
Prepaid insurance	$	303	$	150
Prepaid software licenses and maintenance	299		238
Prepaid research and development expenses	3,668		2,985
Other prepaid expenses	303		266
Total prepaid expenses and other current assets	4,573		3,639
Less long-term portion	2,353		2,134
Total prepaid expenses and other assets, current	$	2,220	$	1,505

Property and Equipment, net

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


	March 31,		December 31,
	2020		2019
Computer and Office Equipment	$	271	$	243
Lab Equipment	401		401
Leasehold Improvements	24		24
Construction in Progress	28		—
Subtotal	724		668
Accumulated depreciation and amortization	(205)		(167)
Property and equipment, net	$	519	$	501

Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was approximately thirty-eight thousand and twenty-one thousand respectively.

Accrued Expenses

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	March 31,		December 31,
	2020		2019
Accrued research and development expenses	$	5,103	$	5,465
Accrued employee expenses	2,008		2,977
Accrued general and administrative expenses	1,916		1,356
Lease liability	810		781
Other	83		29
Total accrued expenses	$	9,920	$	10,608

Convertible Preferred Units

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Convertible Preferred Units

Series A Convertible Preferred Units

In September 2015, Zeno Pharmaceuticals, Inc. entered into a Series A Preferred Stock Purchase Agreement (the “Series A Preferred Agreement”). Under the terms of the Series A Preferred Agreement, Zeno Pharmaceuticals, Inc. issued 1,293,104 shares of Series A convertible preferred stock at $11.60 per share for gross proceeds of $15.0 million. The net proceeds of this financing were $14.9 million after issuance costs of $0.1 million. In February and March 2016, Zeno Pharmaceuticals, Inc. issued an aggregate of 286,205 additional shares of Series A convertible preferred stock at $11.60 per share for additional gross proceeds of $3.3 million. The issuance costs of this additional financing were approximately thirty-nine thousand dollars. All Series A convertible preferred stock issued and outstanding by Zeno Pharmaceuticals, Inc. was converted into Series A convertible preferred units of Zentalis Pharmaceuticals, LLC in conjunction with the corporate restructuring and merger.

Series B Convertible Preferred Units

In December 2017, Zentalis Pharmaceuticals, LLC entered into a Series B Preferred Unit Purchase Agreement (the “Series B Preferred Agreement”). Under the terms of the Series B Preferred Agreement, Zentalis Pharmaceuticals, LLC issued 2,735,320 Series B preferred units at $12.43 per unit for gross proceeds of $34.0 million. The net proceeds of this financing were $32.1 million after issuance costs of $1.9 million. In January and August 2018, Zentalis Pharmaceuticals, LLC issued an aggregate of 788,419 additional shares of Series B preferred units at $12.43 per unit for additional gross proceeds of $9.8 million. The net proceeds of this additional financing were $9.5 million after issuance costs of $0.3 million.

Series C Preferred Unit Issuance

In September 2019, Zentalis Pharmaceuticals, LLC entered into a Series C Preferred Unit Purchase Agreement (the “Series C Preferred Agreement”). Under the terms of the Series C Preferred Agreement, Zentalis Pharmaceuticals, LLC issued 4,847,106 units of Series C convertible preferred units at $17.50 per unit for gross proceeds of $84.8 million. The net proceeds of this financing were $81.9 million after issuance costs of $2.9 million. In February 2020, Zentalis Pharmaceuticals, LLC issued 867,194 additional units of Series C preferred units under the Series C Preferred Agreement. The units were issued for $17.50 per unit for gross proceeds of $15.2 million. The net proceeds of this financing were $14.2 million after issuance costs of $1.0 million.

The authorized, issued, and outstanding shares of convertible preferred units at March 31, 2020 and December 31, 2019 were as follows:


	March 31, 2020
Series	Units Authorized	Shares Issued and Outstanding	Liquidation Value		Carrying Value
Series A convertible preferred units	1,579,309	1,579,309	$	18,319,984	$	18,225,809
Series B convertible preferred units	3,523,739	3,523,739	43,800,076		41,603,945
Series C convertible preferred units	5,714,300	5,714,300	100,000,250		96,104,453
Total	10,817,348	10,817,348	$	162,120,310	$	155,934,207


	December 31, 2019
Series	Units Authorized	Shares Issued and Outstanding	Liquidation Value		Carrying Value
Series A convertible preferred units	1,579,309	1,579,309	$	18,319,984	$	18,225,809
Series B convertible preferred units	3,523,739	3,523,739	43,800,076		41,603,945
Series C convertible preferred units	5,714,300	4,847,106	84,824,355		81,876,092
Total	10,817,348	9,950,154	$	146,944,415	$	141,705,846

During 2019, we reclassified the convertible preferred units from members’ equity to temporary equity because, in conjunction with the Series C convertible preferred units issuance, all units were now deemed to contain contingent liquidation features that are not solely within our control. During the year ended December 31, 2019 and three months ended March 31, 2020, we did not adjust the carrying values of the convertible preferred units to the deemed redemption values of such units since a liquidation event was not probable.

Dividends

Dividends are payable if and when declared by the Board of Directors. No dividends have been declared through March 31, 2020.

Conversion

Each Series A preferred unit, Series B preferred unit and Series C preferred unit shall be convertible at the option of the holder thereof, at any time after the issuance of such unit, into Class A common units at a conversion price equal to the original purchase price (subject to anti-dilution adjustments, discussed below) which is $11.60, $12.43 and $17.50 per unit, respectively. The convertible preferred units will automatically convert at the then applicable conversion rate upon the closing of a firm commitment underwritten public offering of shares of a successor corporations’ common stock, at a public offering price per share of equal to or greater than the Series C original purchase price (as adjusted for any stock splits, stock dividends, combinations or other similar recapitalization) resulting in aggregate gross cash proceeds of at least $75.0 million (a “Qualified IPO”). Additionally, the convertible preferred unit will be automatically converted into common stock, at the then applicable conversion rate, upon written consent of a majority of the then outstanding Series A, Series B and Series C convertible preferred units (voting as a separate class on an as converted to Common Unit basis).

Anti-dilution protection

The holders of the convertible preferred unit have proportional anti-dilution protection for unit splits, unit dividends and similar recapitalizations. Subject to certain exclusions, anti-dilution price protection for additional sales of securities by us for consideration per unit less than the applicable conversion price per unit of any series of convertible preferred stock, shall be on a broad-based weighted average basis.

Protective rights

The holders of the convertible preferred unit have certain protective rights, including, without limitation, regarding the authorization, alteration, redemption, or sale of Class B common units; commencement of a liquidation or deemed liquidation event; entrance into a joint venture or partnership; any incurrence of indebtedness; certain transactions that exceed a certain dollar threshold; changes to our governing documents; or the declaration of any dividends. Such actions must be approved by a majority of the then outstanding Series A, Series B and Series C convertible preferred unit holders (voting as a single class and on an as-converted basis), as specified in the amended and restated LLC agreement. An increase or decrease in the authorized number of Directors constituting the Board or the creation of a membership interest or equity security senior to or pari passu with Series C convertible preferred units must be approved by a majority of the then outstanding Series C convertible preferred Units (voting as a separate class on an as converted basis).

Redemption

The Series A, Series B and Series C convertible preferred units are not redeemable except in the event of certain effected deemed liquidation events. As of March 31, 2020 and December 31, 2019, we have classified convertible preferred units as temporary equity in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption is based upon certain change in control events outside of our control, including liquidation, sale or transfer of control of the Company. We did not adjust the carrying value of the convertible preferred units to the deemed redemption values of such units since a liquidation event was not probable.

Liquidation preference

In the event of the dissolution, liquidation, merger or winding up of the Company, the holders of Series C convertible preferred units are entitled to receive, on a pro rata basis in respect of each such Series C convertible preferred unit, a preference amount of $17.50 per Series C convertible unit (as adjusted for any unit splits, dividends, combinations, recapitalizations or the like).

Subsequent to the payment of the Series C convertible preferred unit preferences, Series A and Series B convertible preferred units are entitled to receive, on a pro rata basis in respect of each convertible preferred unit in proportion to the relative preference amount of each preferred unit, a preference amount of $11.60 and $12.43 per unit of Series A and Series B convertible preferred units (as adjusted for any units splits, dividend, combinations, recapitalizations of the like), respectively.

Subsequent to the payment of the Series C, Series A and Series B convertible preferred unit preferences, Series A, Series B and Series C convertible preferred units are entitled to receive, on an as converted to common unit pro rata basis, an amount equal to distributions made to Class A common units prior to all unit classes sharing in distributions on a pro rata basis. Thereafter, Series A, Series B and Series C convertible preferred units and Series A and Series B common units are entitled to receive the remaining assets of the Company available for distribution to its unit holders pro rata based on the number of common units held by each holder, treating for these purposes as if all units had been converted to common.

Voting Rights

The holders of all units other than Class B common units that are unvested shall vote together as a single class. Each holder of Series A, Series B and Series C convertible preferred units shall be entitled to the number of votes calculated on an as converted to Class A common unit basis.

Members' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Members' Equity

Members’ Equity

In November 2017, Zentalis Pharmaceuticals, LLC was formed in the state of Delaware. In conjunction with a corporate restructuring, Zeno Pharmaceuticals, Inc., a Delaware Corporation formed in 2014, was acquired by the Company pursuant to a merger agreement and became a wholly owned subsidiary of the Company. Per the terms of the merger agreement, each share of Zeno Pharmaceuticals, Inc. common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive one Class A common unit and each share of Zeno Pharmaceuticals, Inc. Series A preferred stock issued and outstanding immediately prior to the effective date of the merger converted into the right to receive one Series A preferred unit. As of the effective time of the merger agreement, all outstanding options to purchase shares of Zeno Pharmaceuticals, Inc. common stock were cancelled and replaced with profit interest awards in the LLC.

In connection with the December 2017 corporate restructuring, we amended and restated the LLC agreement, and as amended, the capital units of the Company consisted of 1,638,000 authorized Series A preferred units, 3,621,000 authorized Series B preferred units, 15,000,000 authorized Class A common units and 872,620 authorized Class B common units.

Class A Common Units

In conjunction with the corporate restructuring in December 2017, 5,187,554 shares of common stock issued and outstanding and 406,831 shares of common stock subject to future vesting provisions of Zeno Pharmaceuticals, Inc. were converted into an equal number of Class A common units of Zentalis Pharmaceuticals, LLC. During the three months ended March 31, 2020 and 2019, we did not issue any Class A common units and 9,572 shares of Class A common units were subject to future vesting conditions. During the year ended December 31, 2019, 7,093 Class A common units were issued and 9,572 shares of Class A common units were subject to future vesting conditions. In September 2019, the number of authorized Class A common units was increased to 20,000,000.

Class B Common Units

In conjunction with the corporate restructuring in December 2017, 703,000 options exercisable into Zeno Pharmaceuticals, Inc. common stock were converted into an equal number of Class B Common Units of Zentalis Pharmaceuticals, LLC. In September 2019, the number of authorized Class B common units was increased to 3,458,522.

Share-based Compensation

Total share-based compensation expense related to share based awards was comprised of the following (in thousands):


	Three Months Ended March 31,
	2020		2019
Research and development expense	$	136	$	66
General and administrative expense	193		63
Total share-based compensation expense	$	329	$	129

As of March 31, 2020, there was $3.4 million of total unrecognized compensation expense related to unvested profit interest award compensation arrangements granted under the Zeno Pharma, LLC 2017 Profit Interest Plan (the “Plan”). The cost is expected to be recognized over a weighted average period of 3.2 years.

The fair value of the profit interest awards is estimated using an option pricing model with the following assumptions:


	Three Months Ended March 31,
	2020			2019
Members’ equity value (in thousands)	$	271,207		$	197,041
Threshold amounts (in thousands)	$	309,824		$	143,800
Risk free rate	1.5		%	1.5		%
Volatility	75.0		%	75.0		%
Time to liquidity (in years)	1.1			1.3
Lack of marketability discount	26.5		%	1.9		%
Grant date fair value	$	3.06		$	1.88

The Black Scholes option pricing model is used to estimate the fair value of each profit unit award on the date of grant. The members’ equity value was based on a recent enterprise valuation analysis performed. The threshold amounts are based on the discretion of the Board of Directors at the time of grant. The expected life of the Class B Common Unit awards granted during the period presented was determined based on an expected liquidation event under the plan. We apply the risk-free interest rate based on the U.S. Treasury yield in effect at the time of the grant consistent with the life of the award. The expected volatility is based on a peer group in the industry in which the Company does business consistent with the expected time to liquidity. The dividend yield was set at zero as the underlying security does not and is not expected to pay a dividend. The Finnerty model and the Asian Protective Put Model methods were used to estimate the discount for lack of marketability inherent to the awards.The Class B common units issued have been classified as equity awards and share-based compensation expense is based on the grant date fair value of the award. During the three months ended March 31, 2020 and 2019, we issued 70,000 and 47,500 Class B common units, respectively. As of March 31, 2020 and December 31, 2019, approximately 1.5 million units and 1.7 million units of unvested Class B common units were outstanding.

Commitment and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Legal Contingencies

From time to time, we may be involved in various disputes, including lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. Any of these claims could subject us to costly legal expenses. While we do generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage, or our policy limits may be inadequate to fully satisfy any damage awards or settlement. If this were to happen, the payment of any such awards could have a material adverse effect on our consolidated results of operations and financial position. Additionally, any such claims, whether or not successful, could damage our reputation and business. We are currently not a party to any legal proceedings.

Leases

Our commitments include payments related to operating leases. Approximate annual future minimum operating lease payments as of March 31, 2020 are as follows (in thousands):


Year	Operating Leases
2020	$	765
2021	1,044
2022	661
2023	187
Total minimum lease payments:	2,657
Less: imputed interest	(363)
Total operating lease liabilities	2,294

The weighted-average remaining lease term of our operating leases is approximately 2.7 years. As of March 31, 2020, we have entered an additional lease for real estate that has not yet commenced with total minimum lease payments of approximately $23.1 million. This lease is expected to commence in the first quarter of 2021 and has a lease term of 10 years.

Net Loss Per Class A Common Unit

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Net Loss Per Class A Common Unit

Basic and diluted net loss per Class A common unit were calculated as follows (in thousands except per unit amounts):


	Three Months Ended March 31,
	2020		2019
Numerator:
Net loss attributable to Zentalis Pharmaceuticals, LLC	$	(16,126)	$	(8,343)
Denominator:
Weighted average number of Class A common units outstanding, basic and diluted	5,601		5,594
Net loss per Class A common unit	$	(2.88)	$	(1.49)

Our potential and dilutive securities, which include preferred units, have been excluded from the computation of diluted net loss per Class A common unit as the effect would be to reduce the net loss per Class A common unit. We considered the impact of presenting a separate earnings per unit calculation for Class B common units. However, as earnings and losses are only allocable to Class B common units after the applicable threshold has been met, and such thresholds have not been met for earnings per unit purposes, no losses were allocated to Class B common units.

The following Class A common unit equivalents have been excluded from the calculations of diluted net loss per Class A common unit because their inclusion would be antidilutive (in thousands).


	Three Months Ended March 31,
	2020	2019
Preferred units, as if converted to Class A common units	10,817	5,103
Incentive units—Class B common units	2,607	1,660
	13,424	6,763

Related Party Disclosures	3 Months Ended
Related Party Disclosures	Mar. 31, 2020
Related Party Transactions [Abstract]
Related Party Disclosures	Related Party Disclosures On December 21, 2017, we acquired 17,307,692 shares of Series B preferred stock of Kalyra for a per share price of twenty-six cents ($0.26) or approximately $4.5 million. The management team and stockholders of Kalyra are also stockholders of the Company. Prior to the investment, we entered into a license agreement and a master services agreement with Kalyra. The license agreement was signed and commenced on December 31, 2014 for the exclusive rights to develop and commercialize products derived from Kalyra’s technology in the initial area of oncology. The license agreement and all rights were subsequently sold from Kalyra to Recurium IP Holdings, LLC (“Recurium IP”), an entity with common ownership to Kalyra prior to the Zentalis investment. Under the agreement, we have agreed to make payments to Recurium IP based on specific milestones and based on Recurium Equity, LLC’s equity ownership stake in us at the time the milestone is earned. Recurium Equity, LLC (“Recurium Equity”) is also an entity with common ownership to Kalyra prior to the Zentalis investment. In addition, the Company shall pay low to mid-single digit percentage royalties on net product sales to Recurium IP and sublicense fees on any consideration paid to us by a sublicensor. The royalty payments are also based on Recurium Equity’s then equity ownership in us. The license agreement will terminate upon the later of the last expiration of the patent rights or 15 years from the date of commencement. The Master Services Agreement (“MSA”) was entered into in January 2015 and states that Kalyra may provide research and development services to us and that we shall reimburse such expenses on a time and materials basis based on the initial statements of work. For the three months ended March 31, 2020 and 2019, we incurred approximately seventeen thousand and five thousand dollars of expense with Kalyra that was eliminated in consolidation for research and development services provided, respectively. As of March 31, 2020 and 2019, approximately seventeen thousand and five thousand dollars was due to Kalyra and eliminated in consolidation. We entered into an Intercompany Services Agreement (“ISA”) with Kalyra in January 2018 which states that we may provide research and development services to Kalyra and that Kalyra shall reimburse such expenses on a time and materials basis. For the three months ended March 31, 2020 and 2019, we provided $0.1 million and $0.2 million of research and development services to Kalyra that was eliminated in consolidation, respectively. As of March 31, 2020 and 2019, $0.1 million and $0.8 million was due from Kalyra and eliminated in consolidation, respectively.

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events IPO On April 2, 2020 and immediately prior to the effectiveness of the Company’s IPO, Zentalis Pharmaceuticals, LLC converted from a Delaware limited liability company into a Delaware corporation pursuant to a statutory conversion, and changed its name to Zentalis Pharmaceuticals, Inc. In order to consummate the corporate conversion, a certificate of conversion was filed with the Secretary of State of the State of Delaware. All of the outstanding units of Zentalis Pharmaceuticals, LLC converted into shares of common stock of Zentalis Pharmaceuticals, Inc. based upon the value of Zentalis Pharmaceuticals, Inc. at the time of the IPO with a value implied by the price of the shares of common stock sold in the IPO. No cash or fractional shares of common stock were issued in connection with the corporate conversion. Based on the IPO price of $18.00 per share of common stock, all of the outstanding units converted, into an aggregate of 25,288,854 shares of common stock (including 1,160,277 shares of restricted common stock). In connection with the completion of the IPO, the board and stockholders approved the certificate of incorporation to provide for 250,000,000 authorized shares of common stock with a par value of $0.001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.001 per share. On April 7, 2020, the Company completed an IPO in which the Company issued and sold 10,557,000 shares of common stock (including 1,377,000 shares of common stock in connection with the full exercise of the underwriters’ option to purchase additional shares) at a price of $18.00 per share. The Company’s aggregate gross proceeds from the sale of shares in the IPO, including the sale of shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, was $190.0 million before fees and expenses of $17.6 million.

Interim Unaudited Financial Statements (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Comprehensive loss is equal to net loss for the periods ended March 31, 2020 and 2019.

Adoption and Pending Adoption of Recent Accounting Pronouncements

The following table provides a brief description of recently issued accounting standards, those adopted in the current period and those not yet adopted:

Standard

Description

Effective Date

Effect on the Financial
Statements or Other
Significant Matters

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments

This guidance makes improvements to financial instruments guidance, including the current expected credit losses guidance.

January 1, 2020

We have adopted the new guidance as of January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321)

This standard clarifies the interaction between accounting standards related to equity securities (ASC 321), equity method investments (ASC 323), and certain derivatives (ASC 815).

January 1, 2021

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

Interim Unaudited Financial Statements (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Recently Issued Accounting Standards Adopted and Not Yet Adopted

The following table provides a brief description of recently issued accounting standards, those adopted in the current period and those not yet adopted:

Standard

Description

Effective Date

Effect on the Financial
Statements or Other
Significant Matters

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments

This guidance makes improvements to financial instruments guidance, including the current expected credit losses guidance.

January 1, 2020

We have adopted the new guidance as of January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321)

This standard clarifies the interaction between accounting standards related to equity securities (ASC 321), equity method investments (ASC 323), and certain derivatives (ASC 815).

January 1, 2021

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.

January 1, 2020

We have adopted the new guidance on January 1, 2020. The impact of the adoption was not material to the consolidated financial statements.

Business Combinations (Tables)

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Schedule of Assets and Liabilities of VIE

Total assets and liabilities of Kalyra as of March 31, 2020 and December 31, 2019 are as follows (in thousands):


	March 31,		December 31,
	2020		2019
Cash and cash equivalents	$	286	$	712
Other current assets	77		21
In-process research and development	8,800		8,800
Goodwill	3,736		3,736
Other long-term assets	—		14
Accounts payable and accrued expenses	113		391
Deferred tax liability	2,463		2,463
Noncontrolling interests	$	6,712	$	6,821

Reconciliation Of Equity Attributable to Noncontrolling Interest

The following is a reconciliation of equity (net assets) attributable to the noncontrolling interest (in thousands):


	March 31,		March 31,
	2020		2019
Noncontrolling interest at beginning of period	$	6,821	$	7,536
Net loss attributable to noncontrolling interest	(109)		(320)
Noncontrolling interest at end of period	$	6,712	$	7,216

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details

Prepaid Expenses and Other Assets (Tables)

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Summary of Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following (in thousands):


	March 31,		December 31,
	2020		2019
Prepaid insurance	$	303	$	150
Prepaid software licenses and maintenance	299		238
Prepaid research and development expenses	3,668		2,985
Other prepaid expenses	303		266
Total prepaid expenses and other current assets	4,573		3,639
Less long-term portion	2,353		2,134
Total prepaid expenses and other assets, current	$	2,220	$	1,505

Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


	March 31,		December 31,
	2020		2019
Computer and Office Equipment	$	271	$	243
Lab Equipment	401		401
Leasehold Improvements	24		24
Construction in Progress	28		—
Subtotal	724		668
Accumulated depreciation and amortization	(205)		(167)
Property and equipment, net	$	519	$	501

Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was approximately thirty-eight thousand and twenty-one thousand respectively.

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consist of the following (in thousands):


	March 31,		December 31,
	2020		2019
Accrued research and development expenses	$	5,103	$	5,465
Accrued employee expenses	2,008		2,977
Accrued general and administrative expenses	1,916		1,356
Lease liability	810		781
Other	83		29
Total accrued expenses	$	9,920	$	10,608

Convertible Preferred Units (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Temporary Equity

The authorized, issued, and outstanding shares of convertible preferred units at March 31, 2020 and December 31, 2019 were as follows:


	March 31, 2020
Series	Units Authorized	Shares Issued and Outstanding	Liquidation Value		Carrying Value
Series A convertible preferred units	1,579,309	1,579,309	$	18,319,984	$	18,225,809
Series B convertible preferred units	3,523,739	3,523,739	43,800,076		41,603,945
Series C convertible preferred units	5,714,300	5,714,300	100,000,250		96,104,453
Total	10,817,348	10,817,348	$	162,120,310	$	155,934,207


	December 31, 2019
Series	Units Authorized	Shares Issued and Outstanding	Liquidation Value		Carrying Value
Series A convertible preferred units	1,579,309	1,579,309	$	18,319,984	$	18,225,809
Series B convertible preferred units	3,523,739	3,523,739	43,800,076		41,603,945
Series C convertible preferred units	5,714,300	4,847,106	84,824,355		81,876,092
Total	10,817,348	9,950,154	$	146,944,415	$	141,705,846

Members' Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Share-based Compensation Expense

Total share-based compensation expense related to share based awards was comprised of the following (in thousands):


	Three Months Ended March 31,
	2020		2019
Research and development expense	$	136	$	66
General and administrative expense	193		63
Total share-based compensation expense	$	329	$	129

Schedule of Valuation Assumptions of Profit Interest Awards

The fair value of the profit interest awards is estimated using an option pricing model with the following assumptions:


	Three Months Ended March 31,
	2020			2019
Members’ equity value (in thousands)	$	271,207		$	197,041
Threshold amounts (in thousands)	$	309,824		$	143,800
Risk free rate	1.5		%	1.5		%
Volatility	75.0		%	75.0		%
Time to liquidity (in years)	1.1			1.3
Lack of marketability discount	26.5		%	1.9		%
Grant date fair value	$	3.06		$	1.88

Commitment and Contingencies (Tables)

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Operating Lease Payments

Approximate annual future minimum operating lease payments as of March 31, 2020 are as follows (in thousands):


Year	Operating Leases
2020	$	765
2021	1,044
2022	661
2023	187
Total minimum lease payments:	2,657
Less: imputed interest	(363)
Total operating lease liabilities	2,294

Net Loss Per Class A Common Unit (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Loss Per Unit

Basic and diluted net loss per Class A common unit were calculated as follows (in thousands except per unit amounts):


	Three Months Ended March 31,
	2020		2019
Numerator:
Net loss attributable to Zentalis Pharmaceuticals, LLC	$	(16,126)	$	(8,343)
Denominator:
Weighted average number of Class A common units outstanding, basic and diluted	5,601		5,594
Net loss per Class A common unit	$	(2.88)	$	(1.49)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Unit

The following Class A common unit equivalents have been excluded from the calculations of diluted net loss per Class A common unit because their inclusion would be antidilutive (in thousands).


	Three Months Ended March 31,
	2020	2019
Preferred units, as if converted to Class A common units	10,817	5,103
Incentive units—Class B common units	2,607	1,660
	13,424	6,763

Organization and Business (Details) $ / shares in Units, $ in Thousands	Apr. 07, 2020 USD ($) $ / shares shares	Apr. 02, 2020 $ / shares shares	Dec. 21, 2017
Class of Stock [Line Items]
Exchange ratio			1
Subsequent Event
Class of Stock [Line Items]
Proceeds from initial public offering \| $	$ 190,000
Issuance fees and expenses \| $	17,600
Subsequent Event \| IPO
Class of Stock [Line Items]
Share price (in dollars per sharee) \| $ / shares		$ 18.00
Proceeds from initial public offering \| $	190,000
Issuance fees and expenses \| $	$ 17,600
Subsequent Event \| Common Stock \| IPO
Class of Stock [Line Items]
Share price (in dollars per sharee) \| $ / shares	$ 18.00
Number of shares converted (in shares) \| shares		25,288,854
Number of shares issued and sold (in shares) \| shares	10,557,000
Subsequent Event \| Common Stock \| Underwriters
Class of Stock [Line Items]
Share price (in dollars per sharee) \| $ / shares	$ 18.00
Number of shares issued and sold (in shares) \| shares	1,377,000
Subsequent Event \| Restricted Common Stock \| IPO
Class of Stock [Line Items]
Number of shares converted (in shares) \| shares		1,160,277

Business Combinations - Narrative (Details) - Kalyra Pharmaceuticals, Inc. $ in Millions	Dec. 21, 2017 USD ($)
Variable Interest Entity [Line Items]
Cash payments to acquire interest	$ 4.5
Ownership percentage	25.00%

Business Combinations - Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 63,650	$ 67,246	$ 16,107
In-process research and development	8,800	8,800
Goodwill	3,736	3,736
Deferred tax liability	2,463	2,463
Noncontrolling interests	6,712	6,821	$ 7,216	$ 7,536
VIE, Primary Beneficiary
Variable Interest Entity [Line Items]
Cash and cash equivalents	286	712
Other current assets	77	21
In-process research and development	8,800	8,800
Goodwill	3,736	3,736
Other long-term assets	0	14
Accounts payable and accrued expenses	113	391
Deferred tax liability	2,463	2,463
Noncontrolling interests	$ 6,712	$ 6,821

Business Combinations - Rollforward of Noncontrolling Interest (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Noncontrolling interest at beginning of period	$ 6,821	$ 7,536
Net loss attributable to noncontrolling interests	(109)	(320)
Noncontrolling interest at end of period	$ 6,712	$ 7,216

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which is directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent (that is, noncontrolling interest, previously referred to as minority interest).

+ References + Details

Fair Value Measurement (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Money Market Funds \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, fair value disclosure	$ 60.3	$ 63.0

Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid insurance	$ 303	$ 150
Prepaid software licenses and maintenance	299	238
Prepaid research and development expenses	3,668	2,985
Other prepaid expenses	303	266
Total prepaid expenses and other current assets	4,573	3,639
Less long-term portion	2,353	2,134
Total prepaid expenses and other assets, current	$ 2,220	$ 1,505

Property and Equipment, net - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Subtotal	$ 724	$ 668
Accumulated depreciation and amortization	(205)	(167)
Property and equipment, net	519	501
Computer and Office Equipment
Property, Plant and Equipment [Line Items]
Subtotal	271	243
Lab Equipment
Property, Plant and Equipment [Line Items]
Subtotal	401	401
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Subtotal	24	24
Construction in Progress
Property, Plant and Equipment [Line Items]
Subtotal	$ 28	$ 0

Property and Equipment, net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Abstract]
Depreciation and amortization	$ 38	$ 21

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued research and development expenses	$ 5,103	$ 5,465
Accrued employee expenses	2,008	2,977
Accrued general and administrative expenses	1,916	1,356
Lease liability	810	781
Other	83	29
Total accrued expenses	$ 9,920	$ 10,608

Convertible Preferred Units - Narrative (Details) - USD ($)	1 Months Ended				2 Months Ended	3 Months Ended		8 Months Ended
	Feb. 29, 2020	Sep. 30, 2019	Dec. 31, 2017	Sep. 30, 2015	Mar. 31, 2016	Mar. 31, 2020	Mar. 31, 2019	Aug. 31, 2018	Dec. 31, 2019
Class of Stock [Line Items]
Convertible preferred units issued (in shares)						867,000
Shares issued (in shares)						10,817,348			9,950,154
Net proceeds from issuance of convertible preferred units						$ 14,228,000	$ 0
Dividends declared						$ 0
Automatic conversion feature, minimum gross cash proceeds received in a public offering						$ 75,000,000.0
Series A Preferred Units
Class of Stock [Line Items]
Convertible preferred units issued (in shares)				1,293,104
Par value per share (in dollars per share)				$ 11.60	$ 11.60
Shares issued (in shares)					286,205	1,579,309			1,579,309
Gross proceeds from issuance of convertible preferred units				$ 15,000,000.0	$ 3,300,000
Net proceeds from issuance of convertible preferred units				14,900,000
Issuance costs of financing				$ 100,000	$ 39,000
Conversion price (in dollars per share)						$ 11.60
Liquidation preference (in dollars per share)						$ 11.60
Series B Preferred Units
Class of Stock [Line Items]
Par value per share (in dollars per share)			$ 12.43					$ 12.43
Shares issued (in shares)			2,735,320			3,523,739		788,419	3,523,739
Gross proceeds from issuance of convertible preferred units			$ 34,000,000.0					$ 9,800,000
Net proceeds from issuance of convertible preferred units			32,100,000					9,500,000
Issuance costs of financing			$ 1,900,000					$ 300,000
Conversion price (in dollars per share)						$ 12.43
Liquidation preference (in dollars per share)						12.43
Series C Preferred Units
Class of Stock [Line Items]
Par value per share (in dollars per share)	$ 17.50	$ 17.50				$ 17.50
Shares issued (in shares)	867,194	4,847,106				5,714,300			4,847,106
Gross proceeds from issuance of convertible preferred units	$ 15,200,000	$ 84,800,000
Net proceeds from issuance of convertible preferred units	14,200,000	81,900,000
Issuance costs of financing	$ 1,000,000.0	$ 2,900,000
Conversion price (in dollars per share)						$ 17.50
Liquidation preference (in dollars per share)						$ 17.50

Convertible Preferred Units - Schedule of Units Authorized, Issued, and Outstanding (Details) - USD ($)	Mar. 31, 2020	Feb. 29, 2020	Dec. 31, 2019	Sep. 30, 2019	Aug. 31, 2018	Dec. 31, 2017	Mar. 31, 2016
Class of Stock [Line Items]
Units authorized (in shares)	10,817,348		10,817,348
Shares issued (in shares)	10,817,348		9,950,154
Shares outstanding (in shares)	10,817,348		9,950,154
Liquidation Value	$ 162,120,310		$ 146,944,415
Carrying Value	$ 155,934,207		$ 141,705,846
Series A Preferred Units
Class of Stock [Line Items]
Units authorized (in shares)	1,579,309		1,579,309
Shares issued (in shares)	1,579,309		1,579,309				286,205
Shares outstanding (in shares)	1,579,309		1,579,309
Liquidation Value	$ 18,319,984		$ 18,319,984
Carrying Value	$ 18,225,809		$ 18,225,809
Series B Preferred Units
Class of Stock [Line Items]
Units authorized (in shares)	3,523,739		3,523,739
Shares issued (in shares)	3,523,739		3,523,739		788,419	2,735,320
Shares outstanding (in shares)	3,523,739		3,523,739
Liquidation Value	$ 43,800,076		$ 43,800,076
Carrying Value	$ 41,603,945		$ 41,603,945
Series C Preferred Units
Class of Stock [Line Items]
Units authorized (in shares)	5,714,300		5,714,300
Shares issued (in shares)	5,714,300	867,194	4,847,106	4,847,106
Shares outstanding (in shares)	5,714,300		4,847,106
Liquidation Value	$ 100,000,250		$ 84,824,355
Carrying Value	$ 96,104,453		$ 81,876,092

Members' Equity - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 31, 2017	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Sep. 30, 2019
Class of Stock [Line Items]
Common stock issued (in shares)	5,187,554
Common stock outstanding (in shares)	5,187,554
Common stock subject to future vesting provisions (in shares)	406,831
Series A Preferred Units
Class of Stock [Line Items]
Preferred units authorized (in shares)	1,638,000
Series B Preferred Units
Class of Stock [Line Items]
Preferred units authorized (in shares)	3,621,000
Class A Common Units
Class of Stock [Line Items]
Common units, authorized (in shares)	15,000,000	20,000,000		20,000,000	20,000,000
Stock issued (in shares)				7,093
Common units subject to future vesting conditions (in shares)				9,572
Class B Common Units
Class of Stock [Line Items]
Common units, authorized (in shares)	872,620	3,458,522		3,458,522	3,458,522
Stock issued (in shares)		70,000	47,500
Stock issued upon conversion of units (in shares)	703,000
Unvested common units outstanding (in shares)		1,500,000		1,700,000
Profit Interest Awards
Class of Stock [Line Items]
Unrecognized compensation expense		$ 3.4
Period for recognition of unrecognized compensation expense		3 years 2 months 12 days

Members' Equity - Share-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 329	$ 129
Research and development expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	136	66
General and administrative expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 193	$ 63

Members' Equity - Fair Value Assumptions for Profit Interest Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Members’ equity value (in thousands)	$ (95,903)		$ (80,106)
Profit Interest Awards
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Members’ equity value (in thousands)	271,207	$ 197,041
Threshold amounts (in thousands)	$ 309,824	$ 143,800
Risk free rate (as a percent)	1.50%	1.50%
Volatility (as a percent)	75.00%	75.00%
Time to liquidity (in years)	1 year 1 month 6 days	1 year 3 months 18 days
Lack of marketability discount (as a percent)	26.50%	1.90%
Grant date fair value (USD per share)	$ 3.06	$ 1.88

Commitment and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 765
2021	1,044
2022	661
2023	187
Total minimum lease payments:	2,657
Less: imputed interest	(363)
Total operating lease liabilities	$ 2,294

Commitment and Contingencies - Narrative (Details) $ in Millions	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease, weighted-average remaining lease term	2 years 8 months 12 days
Total minimum lease payments on leases not yet commenced	$ 23.1
Operating leases not yet commenced, term	10 years

Net Loss Per Class A Common Unit - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net loss attributable to Zentalis Pharmaceuticals, LLC	$ (16,126)	$ (8,343)
Denominator:
Weighted average number of Class A common units outstanding, basic and diluted (in shares)	5,601	5,594
Net loss per Class A common unit (USD per share)	$ (2.88)	$ (1.49)

- Definition

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

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+ Details

Net Loss Per Class A Common Unit - Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per unit (in shares)	13,424	6,763
Preferred units, as if converted to Class A common units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per unit (in shares)	10,817	5,103
Incentive units—Class B common units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per unit (in shares)	2,607	1,660

Related Party Disclosures (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Dec. 21, 2017	Mar. 31, 2020	Mar. 31, 2019
Affiliated Entity \| Master Services Agreement
Related Party Transaction [Line Items]
Expenses from transactions with related party		$ 17,000	$ 5,000
Due to related parties		17,000	5,000
Affiliated Entity \| Intercompany Services Agreement
Related Party Transaction [Line Items]
Revenue from related parties		100	200
Due from related parties		$ 100	$ 800
VIE, Primary Beneficiary \| Kalyra Pharmaceuticals, Inc.
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 0.26
Cash payments to acquire interest	$ 4,500
VIE, Primary Beneficiary \| Series B Preferred Units \| Kalyra Pharmaceuticals, Inc.
Related Party Transaction [Line Items]
Number of shares acquired (in shares)	17,307,692

Subsequent Events (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Thousands	Apr. 07, 2020	Apr. 02, 2020
Subsequent Event [Line Items]
Common stock, shares authorized (in shares)		250,000,000
Common stock, par value (in dollars per share)		$ 0.001
Preferred stock, shares authorized (in shares)		10,000,000
Preferred stock, par value (in dollars per share)		$ 0.001
Proceeds from initial public offering	$ 190,000
Issuance fees and expenses	17,600
IPO
Subsequent Event [Line Items]
Stock issued (in dollars per share)		$ 18.00
Proceeds from initial public offering	190,000
Issuance fees and expenses	$ 17,600
Common Stock \| Corporate Conversion
Subsequent Event [Line Items]
Stock issued (in shares)		0
Common Stock \| IPO
Subsequent Event [Line Items]
Stock issued (in dollars per share)	$ 18.00
Stock issued upon conversion of units (in shares)		25,288,854
Stock issued (in shares)	10,557,000
Stock issued (in dollars per share)	$ 18.00
Common Stock \| Underwriters
Subsequent Event [Line Items]
Stock issued (in shares)	1,377,000
Stock issued (in dollars per share)	$ 18.00
Restricted Common Stock \| IPO
Subsequent Event [Line Items]
Stock issued upon conversion of units (in shares)		1,160,277

Label	Element	Value
Restricted Cash, Noncurrent	us-gaap_RestrictedCashNoncurrent	$ 411,000
Restricted Cash, Noncurrent	us-gaap_RestrictedCashNoncurrent	$ 0