Myovant Sciences (MYOV) 10-Q 10 Aug 17 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Jun. 30, 2017	Aug. 08, 2017
Document and Entity Information
Entity Registrant Name	Myovant Sciences Ltd.
Entity Central Index Key	1,679,082
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding (in shares)		60,844,300
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Current assets:
Cash	$ 154,191	$ 180,838
Prepaid expenses and other current assets	5,182	3,221
Income tax receivable	0	105
Total current assets	159,373	184,164
Deferred tax assets	0	208
Property and equipment, net	952	906
Other assets	3,074	0
Total assets	163,399	185,278
Current liabilities:
Accounts payable	3,186	3,329
Income tax payable	721	0
Accrued expenses	11,292	11,978
Due to Roivant Sciences Ltd. and Roivant Sciences, Inc.	2,000	3,030
Total current liabilities	17,199	18,337
Warrant liability	0	52
Deferred rent	218	113
Total liabilities	17,417	18,502
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common shares, par value $0.000017727 per share, 564,111,242 shares authorized, 60,844,300 and 60,275,757 issued and outstanding at June 30, 2017 and March 31, 2017, respectively	1	1
Common shares subscribed	(1)	(1)
Additional paid-in capital	254,114	251,733
Accumulated other comprehensive income	404	140
Accumulated deficit	(108,536)	(85,097)
Total shareholders’ equity	145,982	166,776
Total liabilities and shareholders’ equity	$ 163,399	$ 185,278

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Mar. 31, 2017
Statement of Financial Position [Abstract]
Common shares par value (in USD per share)	$ 0.000017727	$ 0.000017727
Common shares authorized (in shares)	564,111,242	564,111,242
Common shares issued (in shares)	60,844,300	60,275,757
Common shares outstanding (in shares)	60,844,300	60,275,757

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating expenses:
Research and development (includes $860 and $975 of share-based compensation expense for the three months ended June 30, 2017 and 2016, respectively)	$ 17,708	$ 14,573
General and administrative (includes $1,341 and $1,646 of share-based compensation expense for the three months ended June 30, 2017 and 2016, respectively)	4,182	2,562
Total operating expenses	21,890	17,135
Other expenses:
Changes in the fair value of the warrant liability	0	1,832
Other expense	342	0
Loss before provision for income taxes	(22,232)	(18,967)
Income tax expense	1,085	3
Net loss	$ (23,317)	$ (18,970)
Net loss per common share — basic and diluted (in USD per share)	$ (0.39)	$ (0.47)
Weighted average common shares outstanding — basic and diluted (in shares)	59,247,273	40,771,548

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Operations - Parenthetical - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Research and development
Share-based compensation	$ 860	$ 975
General and administrative
Share-based compensation	$ 1,341	$ 1,646

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (23,317)	$ (18,970)
Other comprehensive income:
Foreign currency translation adjustment	264	0
Total other comprehensive income	264	0
Comprehensive loss	$ (23,053)	$ (18,970)

Condensed Consolidated Stateme7

Condensed Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Shares	Common Shares Subscribed	Additional Paid in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adjustment to adopt ASU 2016-09				$ 122		$ (122)
Beginning balance (in shares) at Mar. 31, 2017	60,275,757	60,275,757
Beginning balance at Mar. 31, 2017	$ 166,776	$ 1	$ (1)	251,733	$ 140	(85,097)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued to settle the warrant liability to Takeda (in shares)	4,432	4,432
Shares issued to settle the warrant liability to Takeda	$ 58	$ 0		58
Share-based compensation expense (in shares)		564,111
Share-based compensation expense	1,954	$ 0		1,954
Capital contribution — share-based compensation	247			247
Translation adjustment	264				264
Net loss	$ (23,317)					(23,317)
Ending balance (in shares) at Jun. 30, 2017	60,844,300	60,844,300
Ending balance at Jun. 30, 2017	$ 145,982	$ 1	$ (1)	$ 254,114	$ 404	$ (108,536)

Condensed Consolidated Stateme8

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss	$ (23,317)	$ (18,970)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	2,201	2,621
Depreciation	50	0
Acquisition of in-process research and development expense	0	13,117
Changes in the fair value of the warrant liability	0	1,832
Unrealized currency translation	264	0
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,961)	0
Deferred income taxes	208	0
Other assets	(3,074)	0
Accounts payable	(143)	0
Income tax payable	826	0
Accrued expenses	(686)	244
Due to Roivant Sciences Ltd. and Roivant Sciences, Inc.	(1,030)	1,153
Deferred rent	105	3
Net cash used in operating activities	(26,557)	0
Cash flows from investing activities:
Purchase of furniture and equipment	(90)	0
Net cash used in investing activities	(90)	0
Cash flows from financing activities:
Net cash provided by financing activities	0	0
Net change in cash	(26,647)	0
Cash—beginning of period	180,838	0
Cash—end of period	154,191	0
Non-cash investing and financing activities:
Deferred initial public offering costs, unpaid	0	524
Acquisition of in-process research and development	0	13,117
Supplemental disclosure of cash paid:
Income taxes	$ 50	$ 0

Description of Business

Description of Business	3 Months Ended
	Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business Myovant Sciences Ltd. (or together with its wholly owned subsidiaries, the Company) is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapies for women’s health and endocrine diseases. The Company is developing its lead product candidate, relugolix, for the treatment of heavy menstrual bleeding associated with uterine fibroids, endometriosis-associated pain and advanced prostate cancer, and its second product candidate, MVT-602, for the treatment of female infertility as part of assisted reproduction. The Company is an exempted limited company incorporated under the laws of Bermuda in February 2016 under the name Roivant Endocrinology Ltd. The Company changed its name to Myovant Sciences Ltd., or MSL, in May 2016. The Company has four wholly owned subsidiaries. Roivant Endocrinology Inc. was incorporated in Delaware in April 2016 and subsequently changed its name to Myovant Sciences, Inc., or MSI. Myovant Holdings Limited, or MHL, a private limited company incorporated under the laws of England and Wales, and Myovant Sciences GmbH, or MSG, a company with limited liability formed under the laws of Switzerland, were each organized in August 2016. Myovant Sciences Ireland Limited, or MSIL, a company with limited liability formed under the laws of Ireland, was organized in April 2017. MSG holds the Company's intellectual property rights and is the Company’s principal operating subsidiary. Since its inception, the Company has devoted substantially all of its efforts to organizing the Company, acquiring its product candidates, and preparing for and advancing the clinical development of its product candidates. The Company has two product candidates under development, relugolix and MVT-602, both of which were licensed from Takeda Pharmaceuticals International AG, or Takeda, on April 29, 2016. The Company has determined that it has one operating and reporting segment as it allocates resources and assesses financial performance on a consolidated basis. The Company has incurred and expects to continue to incur significant and increasing operating losses at least for the next several years. The Company does not expect to generate revenue unless and until it successfully completes development and obtains regulatory approval for one of its product candidates. The Company believes it currently has sufficient funds to meet its financial needs for at least the next 12 months, if it makes reductions in spending. The Company may be required to obtain further funding through other public or private offerings of its share capital, debt financing, collaboration and licensing arrangements or other sources. Adequate additional funding may not be available to the Company on acceptable terms, or at all.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies (A) Basis of Presentation: The Company's fiscal year ends on March 31, and its fiscal quarters end on June 30, September 30 and December 31. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the Securities and Exchange Commission, or SEC, on June 14, 2017. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented have been included. Operating results for the three months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018 , for any other interim period or for any other future year. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. There have been no significant changes in the Company's accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on June 14, 2017. (B) Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, costs, and expenses, including compensation expense allocated to the Company under its services agreements with Roivant Sciences, Inc., or RSI, and Roivant Sciences GmbH, or RSG, each a wholly owned subsidiary of the Company’s parent company, Roivant Sciences Ltd., or RSL, as well as share-based compensation and research and development costs. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. (C) Net Loss per Common Share: Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common shareholders by the diluted weighted-average number of common shares outstanding during the period calculated in accordance with the treasury stock method. For the three months ended June 30, 2017 , 1.4 million restricted share awards and 2.4 million options to purchase common shares were not included in the calculation of diluted weighted-average common shares outstanding because they were anti-dilutive. (D) Financial Instruments: The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. Fair value is identified as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following: • Level 1-Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. • Level 2-Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. • Level 3-Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments include cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. (E) Recently Issued Accounting Pronouncements: In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842),” or ASU No. 2016-02, which is a comprehensive new lease standard that amends various aspects of existing accounting guidance for leases. The core principle of ASU No. 2016-02 will require lessees to present the assets and liabilities that arise from leases on their balance sheets. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the new standard and its impact on the Company’s consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, ‘‘ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, ’’ or ASU No. 2016-09. This ASU makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of excess tax benefits or deficiencies. ASU No. 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The Company has adopted this guidance as of April 1, 2017 using a modified retrospective transition method. As a result of the adoption of this standard, the Company elected to change its policy from estimating forfeitures to recognizing forfeitures when they occur and, as a result, recorded an adjustment of $0.1 million to accumulated deficit with a corresponding offset to additional paid-in-capital as of April 1, 2017. The other amended requirements of ASU No. 2016-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Jun. 30, 2017
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses As of June 30, 2017 and March 31, 2017 , accrued expenses consisted of the following (in thousands): June 30, 2017 March 31, 2017 Research and development expenses $ 10,225 $ 9,737 Salaries, bonuses, and other compensation expenses 400 797 Legal expenses 410 481 Other expenses 257 963 Total accrued expenses $ 11,292 $ 11,978

Related Party Transactions

Related Party Transactions	3 Months Ended
	Jun. 30, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions In July 2016, the Company entered into a formal services agreement with RSI, effective April 29, 2016, under which RSI agreed to provide certain administrative and research and development services to the Company. Under this services agreement, the Company pays or reimburses RSI for any expenses it, or third parties acting on its behalf, incurs for the Company. For any general and administrative and research and development activities performed by RSI employees, RSI charges back the employee compensation expense plus a pre-determined mark-up. RSI also provided such services prior to the formalization of this services agreement, and such costs have been recognized by the Company in the period in which the services were rendered. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters. All other costs are billed back at cost. The accompanying interim unaudited condensed consolidated financial statements include third-party expenses that have been paid by RSI and RSL. In February 2017, the Company and MSI amended and restated this services agreement, effective as of November 11, 2016, to include MSG as a services recipient. In addition, in February 2017, MSG entered into a separate services agreement with RSG, effective as of November 11, 2016, for the provisioning of services by RSG to MSG in relation to services related to clinical development, administrative and financial activities. We refer to the amended and restated services agreement with RSI and the services agreement with RSG, collectively, as the Services Agreements. Under the Services Agreements, for the three months ended June 30, 2017 and 2016 , the Company incurred expenses of $1.1 million and $1.0 million , respectively, inclusive of the mark-up.

Income Taxes

Income Taxes	3 Months Ended
	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company is not subject to taxation under the laws of Bermuda since it was organized as a Bermuda Exempted Limited Company, for which there is no current tax regime. The Company’s provision for income taxes is primarily on income taxes in the United States for federal, state and local income taxes. The Company's effective tax rate of (4.88)% and (0.02)% for the three months ended June 30, 2017 and 2016 , respectively, differs from the Bermuda federal statutory rate of 0% primarily due to the U.S. permanent unfavorable tax differences, and a valuation allowance that effectively eliminates the Company's net deferred tax assets in the United States. The Company assesses the realizability of its deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary. The Company files income tax returns in the United States for federal, state and local jurisdictions. MSI will file its initial U.S. federal, state and local income tax returns for the fiscal year ended March 31, 2017 by December 2017. Once filed, the Company will be subject to income tax examinations for fiscal year 2016 and forward in all applicable income tax jurisdictions.

Shareholders' Equity

Shareholders' Equity	3 Months Ended
	Jun. 30, 2017
Equity [Abstract]
Shareholders' Equity	Shareholders’ Equity Warrant Liability: During the three months ended June 30, 2017 , the Company issued 4,432 common shares to Takeda upon the automatic exercise of a warrant issued to Takeda, which was initiated by the grant of options to its employees and directors to purchase 32,500 common shares in April 2017. This warrant expired on April 30, 2017. During the three months ended June 30, 2016 , no common shares were issued to Takeda under the warrant.

Share-Based Compensation

Share-Based Compensation	3 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	Share-Based Compensation In June 2016, the Company adopted its 2016 Equity Incentive Plan, or as amended, the 2016 Plan, under which 4.5 million common shares were originally reserved for grant. On April 1, 2017, the number of common shares authorized for issuance increased automatically to 6.9 million in accordance with the 2016 Plan. At June 30, 2017 , a total of 4.5 million common shares were available for future grant under the 2016 Plan. At June 30, 2017 , there were 2.4 million options outstanding with a weighted average exercise price of $7.97 . (A) Stock Options and Restricted Share Awards Granted to Employees and Directors: During the three months ended June 30, 2017 , the Company granted options to purchase a total of 0.9 million common shares to its employees and directors under the 2016 Plan. The Company recorded share-based compensation expense related to stock options issued to Company employees and directors of $1.4 million for the three months ended June 30, 2017 . At June 30, 2017 , total unrecognized compensation expense related to non-vested options was $21.0 million , which is expected to be recognized over the remaining weighted-average service period of 3.47 years . During the three months ended June 30, 2016 , no options were granted to employees and directors under the 2016 Plan. During the three months ended June 30, 2017 , the Company granted a restricted share award for 0.6 million common shares to the Company’s Principal Executive Officer under the 2016 Plan. This grant is a market-based award for which the grant date fair value was estimated using a Monte Carlo valuation model. The Company records expense ratably over the applicable vesting period regardless of whether the market condition is satisfied because the awards are subject to market conditions. At June 30, 2017 , total unrecognized compensation expense related to non-vested common shares was $10.9 million , which is expected to be recognized over the remaining weighted-average service period of 3.08 years . During the three months ended June 30, 2016 , the Company granted a restricted share award for 1.1 million common shares to the Company’s Principal Executive Officer. For the three months ended June 30, 2017 and 2016 , share-based compensation expense related to the restricted share awards granted to our Principal Executive Officer was $0.6 million and $18,298 , respectively. This share-based compensation expense is included in research and development and general and administrative expenses in the accompanying interim unaudited condensed consolidated statements of operations. (B) Share-Based Compensation for Related Parties: (1) Stock Options Granted to Non-Employees: For the three months ended June 30, 2017 , share-based compensation expense related to stock options granted to consultants was $0.1 million . At June 30, 2017 , total unrecognized compensation expense related to stock options granted to consultants was $0.2 million , which is expected to be recognized over 0.69 years. This share-based compensation expense is included in research and development and general and administrative expenses in the accompanying interim unaudited condensed consolidated statements of operations. During the three months ended June 30, 2017 and 2016 , no options were granted to consultants under the 2016 Plan. (2) Share-Based Compensation Allocated to the Company by RSL: Share-based compensation expense is allocated to the Company by RSL based upon the relative percentage of time utilized by RSL and RSI employees on Company matters. In relation to the RSL common share awards and options issued by RSL to RSL and RSI employees, the Company recorded share-based compensation expense of $0.2 million and $2.6 million for the three months ended June 30, 2017 and 2016 , respectively. The RSL common share awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. As RSL is a non-public entity, the RSL common share awards are classified as level 3 due to their unobservable nature. Significant judgment and estimates were used to estimate the fair value of these awards, as they are not publicly traded. RSL common share awards are subject to specified vesting schedules and requirements (a mix of time-based, performance-based and corporate event-based, including targets for RSL’s post-IPO market capitalization and future financing events). The Company estimated the fair value of each RSL option on the date of grant using the Black-Scholes closed-form option-pricing model. Compensation expense will be allocated to the Company over the required service period over which these RSL common share awards and RSL options would vest and is based upon the relative percentage of time utilized by RSI employees on Company matters.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company entered into certain commitments under its license agreement with Takeda, or the Takeda Agreement, amended its services agreement with RSI and entered into a separate services agreement with RSG (See Note 4). In addition, the Company has entered into services agreements with third parties for pharmaceutical research and manufacturing activities. The manufacturing agreements can be terminated by the Company with 30 days written notice. The Company expects to enter into other commitments as the business further develops. The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company accrues for loss contingencies when available information indicates that it is probable that a liability has been incurred and the amount of such loss can be reasonably estimated. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible. Currently, the Company is party to a legal proceeding as described in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q. The Company believes that it is not probable that a liability has been incurred and that the amount of any such liability cannot be reasonably estimated. As a result, the Company has not recorded a loss contingency related to this legal proceeding. While it is not possible to determine the outcome of the matter, the Company believes the resolution of such matter will not have a material adverse effect on its business, financial condition or results of operations. During the three months ended June 30, 2017 , there were no other material changes outside the ordinary course of business to the specified contractual obligations set forth in the contractual obligations table included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017 .

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Basis of Accounting	Basis of Presentation: The Company's fiscal year ends on March 31, and its fiscal quarters end on June 30, September 30 and December 31. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the Securities and Exchange Commission, or SEC, on June 14, 2017. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented have been included. Operating results for the three months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018 , for any other interim period or for any other future year. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. There have been no significant changes in the Company's accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on June 14, 2017.
Use of Estimates	Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, costs, and expenses, including compensation expense allocated to the Company under its services agreements with Roivant Sciences, Inc., or RSI, and Roivant Sciences GmbH, or RSG, each a wholly owned subsidiary of the Company’s parent company, Roivant Sciences Ltd., or RSL, as well as share-based compensation and research and development costs. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Net Loss Per Common Share	Net Loss per Common Share: Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common shareholders by the diluted weighted-average number of common shares outstanding during the period calculated in accordance with the treasury stock method. For the three months ended June 30, 2017 , 1.4 million restricted share awards and 2.4 million options to purchase common shares were not included in the calculation of diluted weighted-average common shares outstanding because they were anti-dilutive.
Financial Instruments	Financial Instruments: The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. Fair value is identified as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following: • Level 1-Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. • Level 2-Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. • Level 3-Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments include cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements: In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842),” or ASU No. 2016-02, which is a comprehensive new lease standard that amends various aspects of existing accounting guidance for leases. The core principle of ASU No. 2016-02 will require lessees to present the assets and liabilities that arise from leases on their balance sheets. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the new standard and its impact on the Company’s consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, ‘‘ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, ’’ or ASU No. 2016-09. This ASU makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of excess tax benefits or deficiencies. ASU No. 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The Company has adopted this guidance as of April 1, 2017 using a modified retrospective transition method. As a result of the adoption of this standard, the Company elected to change its policy from estimating forfeitures to recognizing forfeitures when they occur and, as a result, recorded an adjustment of $0.1 million to accumulated deficit with a corresponding offset to additional paid-in-capital as of April 1, 2017. The other amended requirements of ASU No. 2016-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Jun. 30, 2017
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities	As of June 30, 2017 and March 31, 2017 , accrued expenses consisted of the following (in thousands): June 30, 2017 March 31, 2017 Research and development expenses $ 10,225 $ 9,737 Salaries, bonuses, and other compensation expenses 400 797 Legal expenses 410 481 Other expenses 257 963 Total accrued expenses $ 11,292 $ 11,978

Description of Business - Narra

Description of Business - Narrative (Details)	Jun. 30, 2017subsidiary
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of wholly owned subsidiaries	4

Summary of Significant Accoun20

Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Restricted Share Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculation of diluted weighted-average common shares outstanding (in shares)	1.4
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculation of diluted weighted-average common shares outstanding (in shares)	2.4
Additional Paid in Capital
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Adjustment to adopt ASU 2016-09		$ 122
Accumulated Deficit
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Adjustment to adopt ASU 2016-09		(122)
Accounting Standards Update 2016-09 | Additional Paid in Capital
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Adjustment to adopt ASU 2016-09		100
Accounting Standards Update 2016-09 | Accumulated Deficit
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Adjustment to adopt ASU 2016-09		$ (100)

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Payables and Accruals [Abstract]
Research and development expenses	$ 10,225	$ 9,737
Salaries, bonuses, and other compensation expenses	400	797
Legal expenses	410	481
Other expenses	257	963
Total accrued expenses	$ 11,292	$ 11,978

Related Party Transactions - N

Related Party Transactions - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
RSL and RSI | RSL and RSI | Services Agreement
Related Party Transaction [Line Items]
Base salary, fringe benefits, and share-based compensation	$ 1.1	$ 1

Income Taxes - Narrative (Deta

Income Taxes - Narrative (Details)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Income Tax Contingency [Line Items]
Effective income tax rate	(4.88%)	(0.02%)
Foreign Tax Authority | Office of the Tax Commissioner, Bermuda
Income Tax Contingency [Line Items]
Federal statutory tax rate	0.00%

Shareholders' Equity - Narrati

Shareholders' Equity - Narrative (Details) - shares	1 Months Ended	3 Months Ended
	Apr. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued to settle the warrant liability to Takeda (in shares)		4,432	0
Employee and Non-employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	32,500

Share-Based Compensation - Nar

Share-Based Compensation - Narrative (Details) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Apr. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for grant (in shares)	4,500,000	4,500,000	6,923,919
RSI Employees | Share-Based Compensation Allocated to the Company by RSL
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 200,000	$ 2,600,000
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	945,616	0
Allocated share-based compensation	$ 1,400,000
Unrecognized compensation expense related to options for employees, officers, and directors	$ 21,000,000
Unrecognized compensation expense, period for recognition, related to options for employees, officers, and directors	3 years 5 months 20 days
Restricted Share Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation	$ 600,000	$ 18,298
Unrecognized compensation expense related to options for employees, officers, and directors	$ 10,900,000
Unrecognized compensation expense, period for recognition, related to options for employees, officers, and directors	3 years 1 month
Restricted stock awards granted (in shares)	600,000	1,100,000
Non-employee Stock Option | RSI Employees | Stock Options Granted to Non-Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	0
Restricted stock awards granted (in shares)		0
Share-based compensation related to stock options granted to consultants	$ 100,000
Unrecognized compensation expense related to options for non-employees	$ 200,000
Unrecognized compensation expense, period for recognition, related to options for non-employees	8 months 10 days
2016 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares)	2,400,000
Weighted average exercise price (in dollars per share)	$ 7.97

Commitments and Contingencies -

Commitments and Contingencies - Narrative (Details)	3 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Contract termination, minimum period of written notice	30 days