Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Mar. 31, 2015 | 8-May-15 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ARWR | |
Entity Registrant Name | ARROWHEAD RESEARCH CORP | |
Entity Central Index Key | 879407 | |
Current Fiscal Year End Date | -21 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 59,498,362 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $96,447,301 | $132,510,610 |
Prepaid expenses | 3,811,096 | 588,626 |
Other current assets | 327,384 | 48,502 |
Short term investments | 19,561,172 | 21,653,032 |
TOTAL CURRENT ASSETS | 120,146,953 | 154,800,770 |
Property and equipment, net | 4,127,366 | 3,872,753 |
Intangible assets, net | 25,701,657 | 1,013,473 |
Investments | 12,361,068 | 23,088,346 |
Other assets | 41,414 | 41,414 |
TOTAL ASSETS | 162,378,458 | 182,816,756 |
CURRENT LIABILITIES | ||
Accounts payable | 4,936,282 | 2,579,478 |
Accrued expenses | 2,041,174 | 1,399,486 |
Due to Novartis | 3,000,000 | |
Accrued payroll and benefits | 1,272,001 | 3,268,506 |
Deferred revenue | 65,625 | 103,125 |
Derivative liabilities | 1,619,755 | 4,173,943 |
Capital lease obligation | 215,762 | 213,991 |
Notes payable | 50,000 | |
Other current liabilities | 59,762 | 58,495 |
TOTAL CURRENT LIABILITIES | 13,210,361 | 11,847,024 |
LONG-TERM LIABILITIES | ||
Capital lease obligation, net of current portion | 650,014 | 758,340 |
Contingent consideration obligations | 3,970,931 | 3,970,931 |
Other non-current liabilities | 350,798 | 255,206 |
TOTAL LONG-TERM LIABILITIES | 4,971,743 | 4,984,477 |
Commitments and contingencies | ||
Arrowhead Research Corporation stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 15,652 and 18,300 shares issued and outstanding as of March 31, 2015 and September 30, 2014, respectively | 16 | 18 |
Common stock, $0.001 par value; 145,000,000 shares authorized; 59,435,862 and 54,656,936 shares issued and outstanding as of March 31, 2015 and September 30, 2014, respectively | 151,805 | 147,026 |
Additional paid-in capital | 420,696,539 | 391,164,558 |
Accumulated other comprehensive income (loss) | -63,965 | |
Accumulated deficit | -276,032,853 | -224,771,159 |
Total Arrowhead Research Corporation stockholders' equity | 144,751,542 | 166,540,443 |
Noncontrolling interest | -555,188 | -555,188 |
TOTAL STOCKHOLDERS’ EQUITY | 144,196,354 | 165,985,255 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $162,378,458 | $182,816,756 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 15,652 | 18,300 |
Preferred stock, shares outstanding | 15,652 | 18,300 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 145,000,000 | 145,000,000 |
Common stock, shares issued | 59,435,862 | 54,656,936 |
Common stock, shares outstanding | 59,435,862 | 54,656,936 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||||
REVENUE | $43,750 | $43,750 | $214,500 | $87,500 |
OPERATING EXPENSES | ||||
Research and development | 11,640,794 | 5,216,446 | 29,387,524 | 8,349,460 |
Acquired in-process research and development | 10,142,786 | 10,142,786 | ||
Salaries and payroll-related costs | 3,541,652 | 3,097,902 | 6,692,268 | 5,179,693 |
General and administrative expenses | 1,696,623 | 1,347,677 | 3,782,826 | 2,261,461 |
Stock-based compensation | 2,205,079 | 1,198,444 | 4,219,935 | 1,719,582 |
Depreciation and amortization | 449,559 | 395,779 | 739,598 | 799,184 |
TOTAL OPERATING EXPENSES | 29,676,493 | 11,256,248 | 54,964,937 | 18,309,380 |
OPERATING LOSS | -29,632,743 | -11,212,498 | -54,750,437 | -18,221,880 |
OTHER INCOME (EXPENSE) | ||||
Equity in income (loss) of unconsolidated affiliates | -9,597 | -148,053 | ||
Gain (loss) on sale of fixed assets, net | 45,576 | -5,316 | 19,195 | -58,878 |
Interest income (expense), net | 198,113 | 119,390 | 435,530 | 159,968 |
Change in value of derivatives | 168,974 | -2,951,225 | 2,551,116 | -6,470,803 |
Other income (expense) | 536,087 | 76,546 | 482,902 | 71,215 |
TOTAL OTHER INCOME (EXPENSE) | 948,750 | -2,770,202 | 3,488,743 | -6,446,551 |
LOSS BEFORE INCOME TAXES | -28,683,993 | -13,982,700 | -51,261,694 | -24,668,431 |
NET LOSS | -28,683,993 | -13,982,700 | -51,261,694 | -24,668,431 |
Net loss attributable to noncontrolling interests | 40,179 | 97,600 | ||
NET LOSS ATTRIBUTABLE TO ARROWHEAD | -28,683,993 | -13,942,521 | -51,261,694 | -24,570,831 |
NET LOSS PER SHARE ATTRIBUTABLE TO ARROWHEAD SHAREHOLDERS - BASIC AND DILUTED: | ($0.51) | ($0.31) | ($0.93) | ($0.60) |
Weighted average shares outstanding - basic and diluted | 55,719,923 | 44,321,847 | 55,200,512 | 40,941,903 |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | ||||
Foreign Currency Translation Adjustments | -63,965 | -63,965 | ||
COMPREHENSIVE LOSS ATTRIBUTABLE TO ARROWHEAD | ($28,747,958) | ($13,942,521) | ($51,325,659) | ($24,570,831) |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (unaudited) (USD $) | Total | Common stock issued @ $5.86 | Common stock issued @ $18.95 | Preferred stock issued at $1,000 per share | Common Stock Issued to Galloway | Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share | Preferred Stock | Preferred Stock | Common Stock | Common Stock | Common Stock | Common Stock | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital | Additional Paid-in Capital | Additional Paid-in Capital | Additional Paid-in Capital | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Accumulated Deficit during Development Stage | Noncontrolling Interest |
Preferred stock issued at $1,000 per share | Common stock issued @ $5.86 | Common stock issued @ $18.95 | Common Stock Issued to Galloway | Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share | Common stock issued @ $5.86 | Common stock issued @ $18.95 | Preferred stock issued at $1,000 per share | Common Stock Issued to Galloway | Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share | |||||||||||||
Beginning Balance Amount at Sep. 30, 2013 | $25,734,789 | $10 | $124,859 | $193,514,766 | ($166,140,969) | ($1,763,877) | ||||||||||||||||
Beginning Balance Shares at Sep. 30, 2013 | 9,900 | 32,489,444 | ||||||||||||||||||||
Exercise of warrants, Amount | 10,148,044 | 2,911 | 10,145,133 | |||||||||||||||||||
Exercise of warrants | 2,911,919 | |||||||||||||||||||||
Stock options exercised, Amount | 2,730,000 | 455 | 2,729,545 | |||||||||||||||||||
Stock options exercised | 454,863 | 454,863 | ||||||||||||||||||||
Stock-based compensation | 5,696,173 | 5,696,173 | ||||||||||||||||||||
Stock issuances | 14,060,112 | 112,581,559 | 46,000,000 | 500,000 | 46 | 3,072 | 6,325 | 132 | 14,057,040 | 112,575,234 | 45,999,954 | 499,868 | ||||||||||
Stock issuances, Shares | 46,000 | 3,071,672 | 6,325,000 | 131,579 | ||||||||||||||||||
Settlements related to derivative liability | 5,956,079 | 5,956,079 | ||||||||||||||||||||
Preferred stock converted to common stock, Amount | -38 | 9,272 | -9,234 | |||||||||||||||||||
Preferred stock converted to common stock, Shares | -37,600 | 9,272,459 | ||||||||||||||||||||
Deconsolidation of Calando Pharmaceuticals, Inc. | 1,303,911 | 1,303,911 | ||||||||||||||||||||
Net loss | -58,725,412 | -58,630,190 | -95,222 | |||||||||||||||||||
Ending Balance Amount at Sep. 30, 2014 | 165,985,255 | 18 | 147,026 | 391,164,558 | -224,771,159 | -555,188 | ||||||||||||||||
Ending Balance Shares at Sep. 30, 2014 | 18,300 | 54,656,936 | ||||||||||||||||||||
Exercise of warrants, Amount | 270,625 | 54 | 270,571 | |||||||||||||||||||
Exercise of warrants | 53,578 | |||||||||||||||||||||
Stock options exercised, Amount | 43,126 | 18 | 43,108 | |||||||||||||||||||
Stock options exercised | 17,500 | 17,500 | ||||||||||||||||||||
Stock-based compensation | 4,219,935 | 4,219,935 | ||||||||||||||||||||
Exercise of exchange rights, Amount | 3,072 | 5 | 3,067 | |||||||||||||||||||
Exercise of exchange rights, Shares | 5,250 | |||||||||||||||||||||
Stock issuances | 25,000,000 | 3,321 | 24,996,679 | |||||||||||||||||||
Stock issuances, Shares | 3,321,383 | |||||||||||||||||||||
Preferred stock converted to common stock, Amount | -2 | 1,316 | -1,314 | |||||||||||||||||||
Preferred stock converted to common stock, Shares | -2,648 | 1,316,215 | ||||||||||||||||||||
Common stock-RSU vesting, Amount | 65 | -65 | ||||||||||||||||||||
Common stock-RSU vesting, Shares | 65,000 | |||||||||||||||||||||
Net loss | -51,261,694 | -51,261,694 | ||||||||||||||||||||
Foreign Currency Translation Adjustments | -63,965 | -63,965 | ||||||||||||||||||||
Ending Balance Amount at Mar. 31, 2015 | $144,196,354 | $16 | $151,805 | $420,696,539 | ($63,965) | ($276,032,853) | ($555,188) | |||||||||||||||
Ending Balance Shares at Mar. 31, 2015 | 15,652 | 59,435,862 |
Consolidated_Statement_of_Stoc1
Consolidated Statement of Stockholders' Equity (unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Mar. 31, 2015 |
Common stock issued @ $5.86 | ||
Common stock issued, price per share | $5.86 | |
Common stock issued @ $18.95 | ||
Common stock issued, price per share | $18.95 | |
Preferred stock issued at $1,000 per share | ||
Common stock issued, price per share | $1,000 | |
Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share | ||
Common stock issued, price per share | $7.53 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (unaudited) (USD $) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($51,261,694) | ($24,668,431) |
Net loss attributable to noncontrolling interests | 97,600 | |
NET LOSS ATTRIBUTABLE TO ARROWHEAD | -51,261,694 | -24,570,831 |
(Gain) loss on disposal of fixed assets | -19,195 | 58,878 |
Change in value of derivatives | -2,551,116 | 6,470,803 |
Acquired in-process research and development | 10,142,786 | |
Stock-based compensation | 4,219,935 | 1,719,582 |
Depreciation and amortization | 739,598 | 799,184 |
Amortization of note premiums | 668,364 | 269,313 |
Non-controlling interest | -97,600 | |
Changes in operating assets and liabilities: | ||
Receivables | 75,000 | |
Other receivables | -279,500 | -611,360 |
Other current assets | -3,223,118 | -206,011 |
Accounts payable | 2,402,381 | 1,311,947 |
Accrued expenses | -1,442,450 | 275,370 |
Other | 34,425 | -214,329 |
NET CASH USED IN OPERATING ACTIVITIES | -40,569,584 | -14,720,054 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for acquisitions | -7,000,000 | |
Purchases of property and equipment | -852,063 | -607,772 |
Proceeds from sale of fixed assets | 500 | |
Purchase of marketable securities | -46,365,528 | |
Proceeds from sale of marketable securities | 12,150,774 | 5,010,238 |
NET CASH USED IN INVESTING ACTIVITIES | 4,299,211 | -41,963,062 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on capital leases and notes payable | -106,554 | -204,448 |
Proceeds from issuance of common stock and preferred stock, net | 172,641,671 | |
Proceeds from the exercise of warrants and stock options | 313,618 | 7,979,309 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 207,064 | 180,416,532 |
NET INCREASE (DECREASE) IN CASH | -36,063,309 | 123,733,416 |
CASH AT BEGINNING OF PERIOD | 132,510,610 | 19,114,444 |
CASH AT END OF PERIOD | 96,447,301 | 142,847,860 |
Supplementary disclosures: | ||
Interest paid | 7,655 | 17,105 |
Common stock issued to Novartis for asset acquisition | $25,000,000 |
Organization_and_Significant_A
Organization and Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization and Significant Accounting Policies | NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES |
Nature of Business | |
Arrowhead Research Corporation develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the broadest portfolio of RNA chemistries and efficient modes of delivery, Arrowhead therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. Arrowhead’s most advanced drug candidate in clinical development is ARC-520, which is designed to treat chronic hepatitis B infection by inhibiting the production of all HBV gene products. The goal is to reverse the immune suppression that prevents the body from controlling the virus and clearing the disease. Arrowhead’s second clinical candidate is ARC-AAT, a treatment for a rare liver disease associated with a genetic disorder that causes alpha-1 antitrypsin deficiency. | |
Liquidity | |
Historically, the Company’s primary source of financing has been through the sale of securities of Arrowhead. Research and development activities have required significant capital investment since the Company’s inception. We expect our operations to continue to require cash investment as the Company pursues its research and development goals, as well as clinical trials and related drug manufacturing. Based upon the Company’s current cash resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months. | |
At March 31, 2015, the Company had $96.4 million in cash to fund operations. In addition to its cash resources, the Company has invested excess cash in investment grade commercial bonds maturing in less than 24 months. These bonds provide a source of liquidity, though the Company plans to hold them until maturity. At March 31, 2015, the Company had invested $31.9 million in bonds. During the six months ended March 31, 2015, the Company’s cash position decreased by $36.1 million which was primarily the result of cash outflows related to operating activities of $40.6 million, cash paid for the acquisition of certain RNAi assets from Novartis Institutes for Biomedical Research Inc. of $7.0 million (see footnote 2) and capital expenditures of $0.9 million, partially offset by maturities of fixed income investments totaling $12.2 million and proceeds from the exercise of warrants and options of $0.3 million. | |
Summary of Significant Accounting Policies | |
Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation. | |
Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Actual results could materially differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. | |
Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no restricted cash at March 31, 2015 and September 30, 2014. | |
Concentration of Credit Risk—The Company maintains several bank accounts for its operations at two financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held. | |
Investments—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposits, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper. The Company accounts for its investment in marketable securities in accordance with FASB ASC 320, Investments – Debt and Equity Securities. This statement requires certain securities to be classified into three categories: | |
Held-to-maturity—Debt securities that the entity has the positive intent and ability to hold to maturity are reported at amortized cost. | |
Trading Securities—Debt and equity securities that are bought and held primarily for the purpose of selling in the near term are reported at fair value, with unrealized gains and losses included in earnings. | |
Available-for-Sale—Debt and equity securities not classified as either securities held-to-maturity or trading securities are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity. | |
The Company classifies its investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities. At March 31, 2015, the Company classified all of its investments as held-to-maturity. | |
Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary. | |
Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. | |
Intangible Assets Subject to Amortization—At March 31, 2015, intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. | |
In-Process Research & Development (IPR&D)—IPR&D assets represent capitalized on-going research projects that were acquired through business combinations. Such assets are initially measured at their acquisition date fair values. The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of R&D efforts associated with the project. Upon successful completion of a project, Arrowhead will make a determination as to the then remaining useful life of the intangible asset and begin amortization. Arrowhead tests its indefinite-lived assets for impairment at least annually, through a two-step process. The first step is a qualitative assessment to determine if it is more likely than not that the indefinite lived assets are impaired. Arrowhead considers relevant events and circumstances that could affect the inputs used to determine the fair value of the intangible assets. If the qualitative assessment indicates that it is more likely than not that the intangible assets are impaired, a second step is performed which is a quantitative test to determine the fair value of the intangible asset. If the carrying amount of the intangible assets exceeds its fair value, an impairment loss is recorded in the amount of that excess. If circumstances determine that it is appropriate, the Company may also elect to bypass step one, and proceed directly to the second step. | |
Contingent Consideration - The consideration for the Company’s acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of our contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. | |
Revenue Recognition—Revenue from license fees are recorded when persuasive evidence of an arrangement exists, title has passed or services have been rendered, a price is fixed and determinable, and collection is reasonably assured. The Company may generate revenue from product sales, technology licenses, collaborative research and development arrangements, and research grants. Revenue under technology licenses and collaborative agreements typically consists of nonrefundable and/or guaranteed technology license fees, collaborative research funding and various milestone and future product royalty or profit-sharing payments. | |
Payments under collaborative research and development agreements are recognized as revenue ratably over the relevant periods specified in the agreement, generally the period during which research and development is conducted. Revenue from up-front license fees, milestones and product royalties are recognized as earned based on the completion of the milestones and product sales, as defined in the respective agreements. Payments received in advance of recognition as revenue are recorded as deferred revenue. | |
Allowance for Doubtful Accounts—The Company accrues an allowance for doubtful accounts based on estimates of uncollectible revenues by analyzing historical collections, accounts receivable aging and other factors. Accounts receivable are written off when all collection attempts have failed. | |
Research and Development—Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses. | |
Earnings (Loss) per Share—Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and restricted stock units issued to employees and warrants to purchase Common Stock of the Company. All outstanding stock options, restricted stock units and warrants for the three and six months ended March 31, 2015 and 2014 have been excluded from the calculation of Diluted earnings (loss) per share due to their anti-dilutive effect. | |
Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate. For performance-based stock awards, the value of the awards is measured at the grant date. Expense is recognized over the vesting period, commencing at the time the Company determines the achievement of such performance conditions is probable. This determination requires significant judgment by management. | |
Derivative Assets and Liabilities – The Company accounts for warrants and other derivative financial instruments as either equity or assets/liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on the Company’s Consolidated Balance Sheet. Some of the Company’s warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on the Company’s Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. The Company estimates the fair value of these assets/liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. | |
Income Taxes—The Company accounts for income taxes under the liability method, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period. |
Acquisitions
Acquisitions | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Asset Acquisition [Abstract] | |||||
Acquisitions | NOTE 2. ACQUISITIONS | ||||
On March 3, 2015, the Company entered into an Asset Purchase and Exclusive License Agreement (the “RNAi Purchase Agreement”) with Novartis Institutes for BioMedical Research, Inc., a Delaware corporation (“Novartis”), pursuant to which the Company acquired Novartis’ RNAi assets and rights thereunder. Pursuant to the RNAi Purchase Agreement, the Company acquired or licensed certain patents and patent applications owned or controlled by Novartis related to RNAi therapeutics, assignment of a third-party license, rights to three pre-clinical RNAi candidates, and other related assets (collectively, the “Purchased Assets”). The acquisition of the Purchased Assets closed on March 3, 2015, concurrent with execution of the RNAi Purchase Agreement (the “Closing”). | |||||
In consideration for the Purchased Assets, the Company made certain payments to Novartis, including: (a) an initial payment of $10,000,000 in cash of which $7,000,000 was paid during the Company’s first fiscal quarter of 2015 to secure an exclusivity period whereby the Company was able to exclusively examine the Novartis RNAi assets prior to finalizing the purchase, and the remaining $3,000,000 was paid in April, and 3,321,383 shares of the Company’s common stock (the “Shares”) were issued during the Company’s second fiscal quarter; (b) escalating royalties in the single digits based upon annual net sales thresholds for certain RNAi products sold by the Company; and (c) milestone payments tied to the achievement of certain development and sales milestones for each target being developed by the Company. | |||||
Pursuant to the RNAi Purchase Agreement, prior to initiation of a phase 2 Clinical Trial for a given RNAi Product or Arrowhead RNAi Product directed to an Initial Target, Novartis has an exclusive right to negotiate a license under any Intellectual Property Rights owned or exclusively licensed to the Company to make, sell or otherwise commercially exploit such RNAi Product or Arrowhead RNAi Product (as such italicized terms are defined in the RNAi Purchase Agreement). After initiation of a phase 2 Clinical Trial for a given Arrowhead RNAi Product (“ROFN Candidiate”), Novartis shall have a right of first negotiation on the ROFN Candidate developed by the Company and its affiliates relating to the purchased assets. If the Company proposes to out-license, or enters into substantive negotiations to out-license, any ROFN Candidate, the Company must give notice of the ROFN Candidate it proposes to out-license and negotiate exclusively and in good faith with Novartis for a period of time regarding the applicable out-license. | |||||
In addition to the consideration paid by the Company at the closing of the Transaction, the Company is obligated to make certain royalty and milestone payments to Novartis upon the occurrence of certain events. For sales of any RNAi Products for which Novartis and the Company do not enter into a licensing arrangement, the Company will be obligated to pay royalty rates ranging in the low to mid-single digits on Net Sales depending upon the type of RNAi Product provided that the royalty rate may be reduced or offset in certain circumstances. The obligation to pay royalties on such candidates will last until the later of (i) the expiration of the last to Valid Claim Covering such RNAi Product in such country and (ii) 11 years after the first commercial sale of such RNAi Product (as such italicized terms are defined in the RNAi Purchase Agreement). | |||||
The Company will also be obligated to make cash payments to Novartis upon the achievement of various milestones for any RNAi Products for which Novartis and the Company do not enter into a licensing arrangement. These milestones include the initiation of a phase 2 and 3 clinical trials, US and other regulatory approvals, and annual sales milestones. These milestone payments could amount to the mid to upper double digit millions of dollars. | |||||
The following table summarizes the estimated fair values of the assets acquired at the date of acquisition: | |||||
Intangible assets - patents | $ | 21,728,334 | |||
Intangible assets – license | 3,128,880 | ||||
Acquired in-process research and development - Pre-Clinical Candidates | 10,142,786 | ||||
Total purchase consideration | $ | 35,000,000 | |||
The purchase consideration was composed of the following: | |||||
Cash Paid Prior to March 31, 2015 | $ | 7,000,000 | |||
Cash Paid After March 31, 2015 | 3,000,000 | ||||
Value of Shares Issued to Novartis during the three months ended March 31, 2015 | 25,000,000 | ||||
Total purchase consideration | $ | 35,000,000 | |||
The Company accounted for this transaction as an acquisition of RNAi assets, including patents, a third-party license and in process research and development for the pre-clinical candidates. The allocation of the purchase price to each asset was determined by estimating the relative fair value of each asset acquired and applying that to the total cost of the acquisition for the Company. The Company capitalized the patents and license acquired as Intangible Assets as they require no future development and will have alternative future uses as the Company expands its RNAi capabilities (see footnote 5 for additional discussion of the useful lives and amortization of these Intangible Assets). The Company expensed the portion of the purchase consideration allocated to the pre-clinical candidates as they will require future development in order to be commercialized. This expense is recorded in the “Acquired in-process research and development” line item of the Consolidated Statements of Operations. |
Property_and_Equipment
Property and Equipment | 6 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property Plant And Equipment [Abstract] | ||||||||
Property and Equipment | NOTE 3. PROPERTY AND EQUIPMENT | |||||||
The following table summarizes our major classes of property and equipment: | ||||||||
March 31, | 30-Sep-14 | |||||||
2015 | ||||||||
Computers, office equipment and furniture | $ | 372,401 | $ | 334,162 | ||||
Research equipment | 5,284,178 | 4,614,176 | ||||||
Software | 94,848 | 69,623 | ||||||
Leasehold improvements | 3,117,537 | 3,045,022 | ||||||
Total gross fixed assets | 8,868,964 | 8,062,983 | ||||||
Less: Accumulated depreciation and amortization | (4,741,598 | ) | (4,190,230 | ) | ||||
Property and equipment, net | $ | 4,127,366 | $ | 3,872,753 | ||||
Investments
Investments | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Investments All Other Investments [Abstract] | ||||||||||||||||
Investments | NOTE 4. INVESTMENTS | |||||||||||||||
The Company invests a portion of its excess cash balances in short-term and long-term debt securities. Investments at March 31, 2015 consisted of corporate bonds with maturities remaining of less than two years. The Company may also invest excess cash balances in certificates of deposit, money market accounts, US Treasuries, US government agency obligations, corporate debt securities, and/or commercial paper. The Company accounts for its investments in accordance with FASB ASC 320, Investments – Debt and Equity Securities. At March 31, 2015, all investments were classified as held-to-maturity securities. | ||||||||||||||||
The following tables summarize the Company’s short- and long-term investments as of March 31, 2015, and September 30, 2014. | ||||||||||||||||
As of March 31, 2015 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Commercial notes (due within one year) | $ | 19,561,172 | $ | 784 | $ | (285,310 | ) | $ | 19,276,646 | |||||||
Commercial notes (due after one year through two years) | $ | 12,361,068 | — | $ | (127,628 | ) | $ | 12,233,440 | ||||||||
Total | $ | 31,922,240 | $ | 784 | $ | (412,938 | ) | $ | 31,510,086 | |||||||
As of September 30, 2014 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Commercial notes (due within one year) | $ | 21,653,032 | $ | — | $ | (189,830 | ) | $ | 21,463,202 | |||||||
Commercial notes (due after one year through two years) | $ | 23,088,346 | — | $ | (217,693 | ) | $ | 22,870,653 | ||||||||
Total | $ | 44,741,378 | $ | — | $ | (407,523 | ) | $ | 44,333,855 | |||||||
Intangible_Assets
Intangible Assets | 6 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||
Intangible Assets | NOTE 5. INTANGIBLE ASSETS | |||||||||||
Intangible assets consist of in-process research and development (“IPR&D”) not subject to amortization, and patents and license agreements subject to amortization, which were capitalized as a part of an asset acquisition or business combination. | ||||||||||||
IPR&D represents projects that have not yet received regulatory approval and are required to be classified as indefinite assets until the successful completion or the abandonment of the associated R&D efforts. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until approval is obtained in one or more jurisdictions which, individually or combined, are expected to generate a significant portion of the total revenue expected to be earned by an IPR&D project. At that time, the Company will determine the useful life of the asset, reclassify the asset out of IPR&D and begin amortization. If the associated R&D effort is abandoned the related IPR&D assets will likely be written off and the Company would record an impairment loss. Intangible assets not subject to amortization include IPR&D capitalized as part of a business combination from the acquisition of Roche Madison. | ||||||||||||
Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition and a business combination from the acquisition of Roche Madison. The license agreement associated with the Novartis RNAi asset acquisition is being amortized over the estimated life remaining at the time of acquisition which was 21 years, and the accumulated amortization of the asset is approximately $12,367. The license agreements associated with the acquisition of Roche Madison are being amortized over the estimated life remaining at the time of acquisition, which was 4 years, and the accumulated amortization of the assets is approximately $188,790. The patents associated with the Novartis RNAi asset acquisition are being amortized over the estimated life remaining at the time of acquisition which was 14 years, and the accumulated amortization of the assets is approximately $129,335. Amortization expense for the three and six months ended March 31, 2015 was $155,366 and $169,030, respectively. Amortization expense for the three and six months ended March 31, 2014 was $13,663 and $27,327, respectively. Amortization expense is expected to be approximately $877,541 for the remainder of fiscal year 2015, $1,714,313 in 2016, $1,700,429 in 2017, $1,700,429 in 2018, $1,700,429 in 2019, $1,700,429 in 2020, and $15,363,152 thereafter. | ||||||||||||
The following table provides details on the Company’s intangible asset balances: | ||||||||||||
Intangible assets | Intangible assets | Total | ||||||||||
not subject to | subject to | Intangible assets | ||||||||||
amortization | amortization | |||||||||||
Balance at September 30, 2013 | $ | 3,117,322 | $ | 123,191 | $ | 3,240,513 | ||||||
Impairment | (2,172,387 | ) | - | (2,172,387 | ) | |||||||
Amortization | - | (54,653 | ) | (54,653 | ) | |||||||
Balance at September 30, 2014 | $ | 944,935 | $ | 68,538 | $ | 1,013,473 | ||||||
Acquisition of Novartis RNAi Assets | - | 24,857,214 | 24,857,214 | |||||||||
Amortization | - | (169,030 | ) | (169,030 | ) | |||||||
Balance at March 31, 2015 | $ | 944,935 | $ | 24,756,722 | $ | 25,701,657 | ||||||
Stockholders_Equity
Stockholders' Equity | 6 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Equity [Abstract] | |||||||||||
Stockholders' Equity | NOTE 6. STOCKHOLDERS’ EQUITY | ||||||||||
At March 31, 2015, the Company had a total of 150,000,000 shares of capital stock authorized for issuance, consisting of 145,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share. | |||||||||||
At March 31, 2015, 59,435,862 shares of Common Stock were outstanding. Additionally, 15,652 shares of Series C Preferred Stock were outstanding, which are convertible into 2,670,990 shares of Common Stock. At March 31, 2015, 8,192,654 shares of Common Stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under Arrowhead’s 2004 Equity Incentive Plan and 2013 Incentive Plan, as well as for inducement grants made to new employees. | |||||||||||
The Preferred Stock is convertible to Common Stock by its holder at its stated conversion price, though it is not convertible to the extent the holder would beneficially own more than 9.99% of the number of shares of outstanding Common Stock immediately after the conversion. The holders of Preferred Stock are eligible to vote with the Common Stock of the Company on an as-converted basis, but only to the extent they are eligible for conversion without exceeding the 9.99% ownership limitation. The Preferred Stock does not carry a coupon, but it is entitled to receive dividends on a pari passu basis with Common Stock, when and if declared. In any liquidation or dissolution of the Company, the holders of Preferred Stock are entitled to participate in the distribution of the assets, to the extent legally available for distribution, on a pari passu basis with the Common Stock. | |||||||||||
On October 11, 2013, the Company sold 3,071,672 shares of Common Stock, at a price of $5.86 per share, and 46,000 shares of Series C Preferred Stock, at a price of $1,000 per share. The Preferred Shares are convertible into shares of common stock at a conversion price of $5.86. The aggregate purchase price paid by the purchasers for the Common Stock and Series C Preferred Stock was $64,000,000 and the Company received net proceeds of approximately $60,000,000, after advisory fees and offering expenses. | |||||||||||
On February 24, 2014, the Company sold 6,325,000 shares of Common Stock, at a public offering price of $18.95 per share. Net proceeds were approximately $112.6 million after underwriting commissions and discounts and other offering expenses. | |||||||||||
The following table summarizes information about warrants outstanding at March 31, 2015: | |||||||||||
Exercise prices | Number of | Remaining | |||||||||
Warrants | Life in Years | ||||||||||
$ | 70.6 | 94,897 | 2.1 | ||||||||
$ | 5 | 390,625 | 0.5 | ||||||||
$ | 5.09 | 239,534 | 0.2 | ||||||||
$ | 1.38 | 24,324 | 0.7 | ||||||||
$ | 4.16 | 1,000 | 1.7 | ||||||||
$ | 3.25 | 334,347 | 1.4 | ||||||||
$ | 2.12 | 75,000 | 2.7 | ||||||||
$ | 1.83 | 277,284 | 2.7 | ||||||||
Total warrants outstanding | 1,437,011 | ||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | |||
Mar. 31, 2015 | ||||
Commitments And Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | NOTE 7. COMMITMENTS AND CONTINGENCIES | |||
Leases | ||||
The Company leases office space for its corporate headquarters in Pasadena, California. In March 2014, the Company signed a lease addendum to expand its corporate headquarters, and the new space became available in September 2014. The leases for the expansion space and the current space will expire in September 2019. Rental costs, including the expansion space, are approximately $23,000 per month, increasing approximately 3% annually. | ||||
The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $26,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $18,000 per month. Utilities costs are approximately $16,000 per month. Total monthly costs are approximately $79,000 per month, including monthly payments recorded under a capital lease of approximately $19,000. | ||||
Facility rent expense for the three and six months ended March 31, 2015 was $191,000 and $362,000, respectively. Facility rent expense for the three and six months ended March 31, 2014 was $134,000 and $264,000, respectively. | ||||
As of March 31, 2015, future minimum lease payments due in fiscal years under capitalized leases are as follows: | ||||
2015 (remainder of) | $ | 114,210 | ||
2016 | 228,420 | |||
2017 | 228,420 | |||
2018 | 228,420 | |||
2019 | 95,178 | |||
2020 and thereafter | - | |||
Less interest | (28,872 | ) | ||
Principal | 865,776 | |||
Less current portion | (215,762 | ) | ||
Noncurrent portion | $ | 650,014 | ||
As of March 31, 2015, future minimum lease payments due in fiscal years under operating leases are as follows: | ||||
2015 (remainder of) | $ | 292,119 | ||
2016 | 596,877 | |||
2017 | 613,664 | |||
2018 | 637,897 | |||
2019 | 459,633 | |||
2020 and thereafter | - | |||
Total | $ | 2,600,190 | ||
Litigation | ||||
The Company, its Chief Executive Officer and its Chief Operating Officer have been named as defendants in two securities class actions filed in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s hepatitis B drug research. Both actions assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seek damages in an unspecified amount. Two actions with similar claims under California State law are currently pending in Los Angeles Superior Court. Additionally, three putative stockholder derivative actions have been filed in the United States District Court for the Central District of California, alleging breach of fiduciary duty by the Company’s Board of Directors in connection with the facts underlying the Securities Claims. Each of these seven suits seeks damages in unspecified amounts and some seek various forms of injunctive relief. | ||||
The Company and two of its former executives have been named as defendants in a complaint filed by William Marsh Rice University (“Rice University”) currently pending in the United States District Court for the Southern District of Texas relating to alleged breaches of a license agreement between Rice University and the Company’s former subsidiary, Unidym, Inc. The plaintiff has alleged that the Company and its former executives acted fraudulently with respect to Unidym’s license from Rice University and seeks injunctive relief, damages, including unspecified compensatory and punitive damages, and attorneys’ fees. | ||||
The Company believes it has meritorious defenses and intends to vigorously defend itself in each of the above matters. The Company makes provisions for liabilities when it is both probable that a liability has been incurred and the amount can be reasonably estimated. No such liability has been recorded related to these matters. The Company does not expect these matters to have any material effect on its Consolidated Financial Statements. With regard to legal fees, such as attorney fees related to these matters or any other legal matters, the Company’s accounting policy is to recognize such cost as incurred. | ||||
Purchase Commitments | ||||
In the normal course of business, we enter into various purchase commitments for the manufacture of drug components, toxicology studies, and for clinical studies. As of March 31, 2015, these future commitments were approximately $49.7 million, of which approximately $29.5 million is expected to be incurred in the remainder of fiscal 2015, and $20.2 million is expected to be incurred beyond fiscal 2015. | ||||
Technology License Commitments | ||||
The Company has licensed from third parties the rights to use certain technologies that it uses in its research and development activities, as well as in any products the Company may develop using these licensed technologies. These agreements and other similar agreements often require milestone and royalty payments. Milestone payments, for example, may be required as the research and development process progresses through various stages of development, such as when clinical candidates enter or progress through clinical trials, upon NDA and upon certain sales level milestones. These milestone payments could amount to the mid to upper double digit millions of dollars. In certain agreements, the Company may be required to make mid to high single digit percentage royalty payments based on a percentage of the sales of the relevant products. |
StockBased_Compensation
Stock-Based Compensation | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||||||||||||||
Stock-Based Compensation | NOTE 8. STOCK-BASED COMPENSATION | |||||||||||||||
Arrowhead has two plans that provide for equity-based compensation. Under the 2004 Equity Incentive Plan and 2013 Incentive Plan, as of March 31, 2015, 2,546,018 and 5,094,314 shares, respectively, of Arrowhead’s Common Stock are reserved for the grant of stock options, stock appreciation rights, restricted stock awards and performance unit/share awards by the Board of Directors to employees, consultants and others. No further grants may be made under the 2004 Equity Incentive Plan. As of March 31, 2015, there were options granted and outstanding to purchase 2,546,018 and 2,306,000 shares of Common Stock under the 2004 Equity Incentive Plan and the 2013 Incentive Plan, respectively, and there were 1,080,000 restricted stock units granted and outstanding under the 2013 Incentive Plan. Also, as of March 31, 2015, there were 547,322 shares reserved for options and 70,000 restricted stock units issued as inducement grants to new employees outside of equity compensation plans. During the three months ended March 31, 2015, no options were granted under the 2004 Equity Incentive Plan, 625,000 options and 675,000 restricted stock units were granted under the 2013 Incentive Plan, and no options and restricted stock units were granted as inducement awards to new employees outside of equity incentive plans. During the six months ended March 31, 2015, no options were granted under the 2004 Equity Incentive Plan, 1,489,000 options and 675,000 restricted stock units were granted under the 2013 Incentive Plan, and 120,000 options and 30,000 restricted stock units were granted as inducement awards to new employees outside of equity incentive plans. Additionally, the Company’s 2000 Stock Option Plan and the 38,000 stock options that were outstanding under the 2000 Stock Option Plan expired during the six months ended March 31, 2015. | ||||||||||||||||
The following tables summarize information about stock options: | ||||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||||
Options | Average | Average | Intrinsic | |||||||||||||
Outstanding | Exercise | Remaining | Value | |||||||||||||
Price | Contractual | |||||||||||||||
Per Share | Term | |||||||||||||||
Balance At September 30, 2013 | 3,419,285 | $ | 4.68 | |||||||||||||
Granted | 1,039,000 | 14.05 | ||||||||||||||
Cancelled | -152,582 | 6.05 | ||||||||||||||
Exercised | -454,863 | 6 | ||||||||||||||
Balance At September 30, 2014 | 3,850,840 | 6.99 | ||||||||||||||
Granted | 1,609,000 | 6.34 | ||||||||||||||
Cancelled | -43,000 | 17.01 | ||||||||||||||
Exercised | -17,500 | 2.46 | ||||||||||||||
Balance At March 31, 2015 | 5,399,340 | $ | 6.73 | 8.3 years | $ | 9,160,725 | ||||||||||
Exercisable At March 31, 2015 | 2,117,387 | $ | 5.98 | 7.2 years | $ | 4,617,497 | ||||||||||
Stock-based compensation expense related to stock options for the three and six months ended March 31, 2015 was $1,198,891 and $2,180,290, respectively and for the three and six months ended March 31, 2014 was $627,737 and $1,148,875, respectively. The Company does not recognize an income tax benefit as the Company is currently operating at a loss and an actual income tax benefit may not be realized. For non-qualified stock options, the loss creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance. | ||||||||||||||||
The fair value of the options granted by Arrowhead for the three and six months ended March 31, 2015 is estimated at $2,114,074 and $5,703,692, respectively, and for the three and six months ended March 31, 2014 was estimated at $7,085,676 and $7,617,186, respectively. | ||||||||||||||||
The intrinsic value of the options exercised during the three and six months ended March 31, 2015 was $89,954 and $113,728, respectively, and for the three and six months ended March 31, 2014 was $2,903,309 and $3,218,167, respectively. | ||||||||||||||||
As of March 31, 2015, the pre-tax compensation expense for all outstanding unvested stock options in the amount of approximately $13,982,343 will be recognized in our results of operations over a weighted average period of 3.1 years. | ||||||||||||||||
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by our stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. | ||||||||||||||||
The assumptions used to value stock options are as follows: | ||||||||||||||||
Six months ended March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Dividend yield | — | — | ||||||||||||||
Risk-free interest rate | 1.55 – 1.85% | 1.9 – 2.26% | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
Expected life (in years) | 6 - 6.25 | 5.5 - 6.25 | ||||||||||||||
Weighted average grant date fair value per share of options granted | $3.54 | $9.08 | ||||||||||||||
The dividend yield is zero as the Company currently does not pay a dividend. | ||||||||||||||||
The risk-free interest rate is based on the U.S. Treasury bond. | ||||||||||||||||
Volatility is estimated based on volatility average of the Company’s Common Stock price. | ||||||||||||||||
Restricted Stock Units | ||||||||||||||||
Restricted Stock Units (RSUs) were granted under the Company’s 2013 Incentive Plan and as inducement grants granted outside of the Plan. During the three and six months ended March 31, 2015, the Company issued 675,000 and 705,000 restricted stock units, respectively, to certain members of management and during the three and six months ended March 31, 2014, the Company issued 470,000 and 470,000 restricted stock units, respectively. Of the restricted stock units granted during the six months ended March 31, 2015 and 2014, 30,000 and 0, respectively, were granted outside of the Plan as an inducement grant to a new employee. At vesting each RSU will be exchanged for one share of the Company’s Common Stock. Restricted stock unit awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets. | ||||||||||||||||
The following table summarizes the activity of the Company’s Restricted Stock Units: | ||||||||||||||||
Number of | Weighted- | |||||||||||||||
RSUs | Average | |||||||||||||||
Grant | ||||||||||||||||
Date | ||||||||||||||||
Fair Value | ||||||||||||||||
Unvested at September 30, 2013 | — | $ | — | |||||||||||||
Granted | 510,000 | 14.58 | ||||||||||||||
Vested | — | — | ||||||||||||||
Forfeited | — | — | ||||||||||||||
Unvested at September 30, 2014 | 510,000 | $ | 14.58 | |||||||||||||
Granted | 705,000 | 6.77 | ||||||||||||||
Vested | (267,500 | ) | 14.54 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Unvested at March 31, 2015 | 947,500 | $ | 8.78 | |||||||||||||
The Company recorded $1,006,188 and $2,039,645 of expense relating to restricted stock units during the three and six months ended March 31, 2015, respectively, and $570,707 and $570,707 during the three and six months March 31, 2014, respectively. Such expense is included in stock-based compensation expense in the Company’s Consolidated Statement of Operations. | ||||||||||||||||
As of March 31, 2015, the pre-tax compensation expense for all unvested restricted stock units in the amount of approximately $6,147,120 will be recognized in the Company’s results of operations over a weighted average period of 1.8 years. |
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements | NOTE 9. FAIR VALUE MEASUREMENTS | |||||||||||||||
The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows: | ||||||||||||||||
Level 1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. | ||||||||||||||||
Level 2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. | ||||||||||||||||
Level 3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date. | ||||||||||||||||
The following table summarizes fair value measurements at March 31, 2015 and September 30, 2014 for assets and liabilities measured at fair value on a recurring basis: | ||||||||||||||||
March 31, 2015: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 96,447,301 | $ | — | $ | — | $ | 96,447,301 | ||||||||
Derivative liabilities | $ | — | $ | — | $ | 1,619,755 | $ | 1,619,755 | ||||||||
Acquisition-related contingent consideration obligations | $ | — | $ | — | $ | 3,970,931 | $ | 3,970,931 | ||||||||
September 30, 2014: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 132,510,610 | $ | — | $ | — | $ | 132,510,610 | ||||||||
Derivative liabilities | $ | — | $ | — | $ | 4,173,943 | $ | 4,173,943 | ||||||||
Acquisition-related contingent consideration obligations | $ | — | $ | — | $ | 3,970,931 | $ | 3,970,931 | ||||||||
The Company invests its excess cash balances in short- and long-term corporate bonds, generally with remaining maturities of less than two years. At March 31, 2015, the Company had short-term investments of $19,561,172, and long-term investments of $12,361,068, for a total of $31,922,240. The fair value of its investment at March 31, 2015 was $31,510,086. The Company expects to hold such investments until maturity, and thus unrealized gains and losses from the fluctuations in the fair value of the securities are not likely to be realized. | ||||||||||||||||
As part of an equity financing in June 2010, Arrowhead issued warrants to acquire up to 329,649 shares of Common Stock (the “2010 Warrants”), of which 24,324 warrants were outstanding at March 31, 2015. Similarly, as part of a financing in December 2012, Arrowhead issued warrants to acquire up to 912,543 shares of Common Stock (the “2012 Warrants”) of which 265,161 warrants were outstanding at March 31, 2015. Further, as part of a financing in January 2013, Arrowhead issued warrants to acquire up to 833,530 shares of Common Stock (the “2013 Warrants”) of which 12,123 warrants were outstanding at March 31, 2015 (collectively the “Warrants”). Each of the Warrants discussed above contains a mechanism to adjust the strike price upon the issuance of certain dilutive equity securities. If during the terms of the Warrants, the Company issues Common Stock at a price lower than the exercise price for the Warrants, the exercise price would be reduced to the amount equal to the issuance price of the Common Stock. As a result of these features, the Warrants are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the Warrants on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the Warrants is estimated at the end of each reporting period and the change in the fair value of the Warrants is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. During the three and six months ended March 31, 2015, the Company recorded a non-cash gain from the change in fair value of the derivative liability of $191,910 and $2,371,561, respectively. During the three and six months ended March 31, 2014, the Company recorded a non-cash loss of $2,910,116 and $6,417,612, respectively. | ||||||||||||||||
The assumptions used in valuing the derivative liability were as follows: | ||||||||||||||||
2010 Warrants | 31-Mar-15 | September 30, 2014 | ||||||||||||||
Risk-free interest rate | 0.26% | 0.13% | ||||||||||||||
Expected life | 0.7 Years | 1.2 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
2012 Warrants | 31-Mar-15 | 30-Sep-14 | ||||||||||||||
Risk-free interest rate | 0.89% | 1.07% | ||||||||||||||
Expected life | 2.7 Years | 3.2 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
2013 Warrants | 31-Mar-15 | 30-Sep-14 | ||||||||||||||
Risk-free interest rate | 0.89% | 1.07% | ||||||||||||||
Expected life | 2.8 Years | 3.3 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
The following is a reconciliation of the derivative liability related to these warrants: | ||||||||||||||||
Value at September 30, 2013 | $ | 4,091,797 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | 5,821,796 | |||||||||||||||
Net settlements | (5,956,079 | ) | ||||||||||||||
Value at September 30, 2014 | $ | 3,957,514 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | -2,371,561 | |||||||||||||||
Net settlements | — | |||||||||||||||
Value at March 31, 2015 | $ | 1,585,953 | ||||||||||||||
In conjunction with the financing of Ablaris in fiscal 2011, Arrowhead sold exchange rights to certain investors whereby the investors have the right to exchange their shares of Ablaris for a prescribed number of Arrowhead shares of Common Stock based upon a predefined ratio. The exchange rights have a seven-year term. During the first year, the exchange right allows the holder to exchange one Ablaris share for 0.06 Arrowhead shares. This ratio declines to 0.04 in the second year, 0.03 in the third year and 0.02 in the fourth year. In the fifth year and beyond the exchange ratio is 0.01. Exchange rights for 675,000 Ablaris shares were sold in fiscal 2011, and 500,000 remain outstanding at March 31, 2015. The exchange rights are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the exchange rights on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the exchange rights is estimated at the end of each reporting period and the change in the fair value of the exchange rights is recorded as a non-operating gain or loss in the Company’s Consolidated Statement of Operations. During the three and six months ended March 31, 2015, the Company recorded a non-cash loss and gain from the change in fair value of the derivative liability of $22,936 and $179,555, respectively. During the three and six months ended March 31, 2014, the Company recorded a non-cash loss of $41,109 and $53,191, respectively. | ||||||||||||||||
The assumptions used in valuing the derivative liability were as follows: | ||||||||||||||||
31-Mar-15 | September 30, 2014 | |||||||||||||||
Risk-free interest rate | 1.00% | 1.07% | ||||||||||||||
Expected life | 3.0 Years | 3.3 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 100% | ||||||||||||||
The following is a reconciliation of the derivative liability related to these exchange rights: | ||||||||||||||||
Value at September 30, 2013 | $ | 4,569 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | 211,860 | |||||||||||||||
Net settlements | — | |||||||||||||||
Value at September 30, 2014 | $ | 216,429 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | (179,555 | ) | ||||||||||||||
Net settlements | -3,072 | |||||||||||||||
Value at March 31, 2015 | $ | 33,802 | ||||||||||||||
The derivative assets/liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price. Other inputs have a comparatively insignificant effect. | ||||||||||||||||
As of March 31, 2015, the Company has a liability for contingent consideration related to its acquisition of Roche Madison Inc. The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s assumptions and experience. Estimating timing to complete the development and obtain approval of products is difficult, and there are inherent uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, the Company utilizes data regarding similar milestone events from several sources, including industry studies and its own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. Changes in the fair value of the contingent consideration obligations are recorded in the Company’s Consolidated Statement of Operations. | ||||||||||||||||
The following is a reconciliation of contingent consideration fair value. | ||||||||||||||||
Value at September 30, 2013 | $ | 1,595,273 | ||||||||||||||
Purchase price contingent consideration | — | |||||||||||||||
Contingent consideration payments | — | |||||||||||||||
Change in fair value of contingent consideration | 2,375,658 | |||||||||||||||
Value at September 30, 2014 | $ | 3,970,931 | ||||||||||||||
Purchase price contingent consideration | — | |||||||||||||||
Contingent consideration payments | — | |||||||||||||||
Change in fair value of contingent consideration | — | |||||||||||||||
Value at March 31, 2015 | $ | 3,970,931 | ||||||||||||||
The fair value of contingent consideration obligations is estimated through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. Each of these assumptions can have a significant impact on the calculation of contingent consideration. | ||||||||||||||||
The carrying amounts of the Company’s other financial instruments, which include accounts receivable, accounts payable, and accrued expenses approximate their respective fair values due to the relatively short-term nature of these instruments. The carrying value of the Company’s debt obligations approximates fair value based on market interest rates. |
Organization_and_Significant_A1
Organization and Significant Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business |
Arrowhead Research Corporation develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the broadest portfolio of RNA chemistries and efficient modes of delivery, Arrowhead therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. Arrowhead’s most advanced drug candidate in clinical development is ARC-520, which is designed to treat chronic hepatitis B infection by inhibiting the production of all HBV gene products. The goal is to reverse the immune suppression that prevents the body from controlling the virus and clearing the disease. Arrowhead’s second clinical candidate is ARC-AAT, a treatment for a rare liver disease associated with a genetic disorder that causes alpha-1 antitrypsin deficiency. | |
Liquidity | Liquidity |
Historically, the Company’s primary source of financing has been through the sale of securities of Arrowhead. Research and development activities have required significant capital investment since the Company’s inception. We expect our operations to continue to require cash investment as the Company pursues its research and development goals, as well as clinical trials and related drug manufacturing. Based upon the Company’s current cash resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months. | |
At March 31, 2015, the Company had $96.4 million in cash to fund operations. In addition to its cash resources, the Company has invested excess cash in investment grade commercial bonds maturing in less than 24 months. These bonds provide a source of liquidity, though the Company plans to hold them until maturity. At March 31, 2015, the Company had invested $31.9 million in bonds. During the six months ended March 31, 2015, the Company’s cash position decreased by $36.1 million which was primarily the result of cash outflows related to operating activities of $40.6 million, cash paid for the acquisition of certain RNAi assets from Novartis Institutes for Biomedical Research Inc. of $7.0 million (see footnote 2) and capital expenditures of $0.9 million, partially offset by maturities of fixed income investments totaling $12.2 million and proceeds from the exercise of warrants and options of $0.3 million. | |
Principles of Consolidation | Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Actual results could materially differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. |
Cash and Cash Equivalents | Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no restricted cash at March 31, 2015 and September 30, 2014. |
Concentration of Credit Risk | Concentration of Credit Risk—The Company maintains several bank accounts for its operations at two financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held. |
Investments | Investments—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposits, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper. The Company accounts for its investment in marketable securities in accordance with FASB ASC 320, Investments – Debt and Equity Securities. This statement requires certain securities to be classified into three categories: |
Held-to-maturity—Debt securities that the entity has the positive intent and ability to hold to maturity are reported at amortized cost. | |
Trading Securities—Debt and equity securities that are bought and held primarily for the purpose of selling in the near term are reported at fair value, with unrealized gains and losses included in earnings. | |
Available-for-Sale—Debt and equity securities not classified as either securities held-to-maturity or trading securities are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity. | |
The Company classifies its investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities. At March 31, 2015, the Company classified all of its investments as held-to-maturity. | |
Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary. | |
Property and Equipment | Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. |
Intangible Assets subject to amortization | Intangible Assets Subject to Amortization—At March 31, 2015, intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. |
In-Process Research & Development (IPR&D) | In-Process Research & Development (IPR&D)—IPR&D assets represent capitalized on-going research projects that were acquired through business combinations. Such assets are initially measured at their acquisition date fair values. The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of R&D efforts associated with the project. Upon successful completion of a project, Arrowhead will make a determination as to the then remaining useful life of the intangible asset and begin amortization. Arrowhead tests its indefinite-lived assets for impairment at least annually, through a two-step process. The first step is a qualitative assessment to determine if it is more likely than not that the indefinite lived assets are impaired. Arrowhead considers relevant events and circumstances that could affect the inputs used to determine the fair value of the intangible assets. If the qualitative assessment indicates that it is more likely than not that the intangible assets are impaired, a second step is performed which is a quantitative test to determine the fair value of the intangible asset. If the carrying amount of the intangible assets exceeds its fair value, an impairment loss is recorded in the amount of that excess. If circumstances determine that it is appropriate, the Company may also elect to bypass step one, and proceed directly to the second step. |
Contingent Consideration | Contingent Consideration - The consideration for the Company’s acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of our contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. |
Revenue Recognition | Revenue Recognition—Revenue from license fees are recorded when persuasive evidence of an arrangement exists, title has passed or services have been rendered, a price is fixed and determinable, and collection is reasonably assured. The Company may generate revenue from product sales, technology licenses, collaborative research and development arrangements, and research grants. Revenue under technology licenses and collaborative agreements typically consists of nonrefundable and/or guaranteed technology license fees, collaborative research funding and various milestone and future product royalty or profit-sharing payments. |
Payments under collaborative research and development agreements are recognized as revenue ratably over the relevant periods specified in the agreement, generally the period during which research and development is conducted. Revenue from up-front license fees, milestones and product royalties are recognized as earned based on the completion of the milestones and product sales, as defined in the respective agreements. Payments received in advance of recognition as revenue are recorded as deferred revenue. | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts—The Company accrues an allowance for doubtful accounts based on estimates of uncollectible revenues by analyzing historical collections, accounts receivable aging and other factors. Accounts receivable are written off when all collection attempts have failed. |
Research and Development | Research and Development—Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses. |
Earnings (Loss) per Share | Earnings (Loss) per Share—Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and restricted stock units issued to employees and warrants to purchase Common Stock of the Company. All outstanding stock options, restricted stock units and warrants for the three and six months ended March 31, 2015 and 2014 have been excluded from the calculation of Diluted earnings (loss) per share due to their anti-dilutive effect. |
Stock-Based Compensation | Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate. For performance-based stock awards, the value of the awards is measured at the grant date. Expense is recognized over the vesting period, commencing at the time the Company determines the achievement of such performance conditions is probable. This determination requires significant judgment by management. |
Derivative Assets and Liabilities | Derivative Assets and Liabilities – The Company accounts for warrants and other derivative financial instruments as either equity or assets/liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on the Company’s Consolidated Balance Sheet. Some of the Company’s warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on the Company’s Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. The Company estimates the fair value of these assets/liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. |
Income Taxes | Income Taxes—The Company accounts for income taxes under the liability method, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period. |
Acquisitions_Tables
Acquisitions (Tables) | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Asset Acquisition [Abstract] | |||||
Summary of Estimated Fair Values at Date of Acquisition | The following table summarizes the estimated fair values of the assets acquired at the date of acquisition: | ||||
Intangible assets - patents | $ | 21,728,334 | |||
Intangible assets – license | 3,128,880 | ||||
Acquired in-process research and development - Pre-Clinical Candidates | 10,142,786 | ||||
Total purchase consideration | $ | 35,000,000 | |||
Summary of Purchase Consideration | The purchase consideration was composed of the following: | ||||
Cash Paid Prior to March 31, 2015 | $ | 7,000,000 | |||
Cash Paid After March 31, 2015 | 3,000,000 | ||||
Value of Shares Issued to Novartis during the three months ended March 31, 2015 | 25,000,000 | ||||
Total purchase consideration | $ | 35,000,000 | |||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property Plant And Equipment [Abstract] | ||||||||
Summary of Property and Equipment | The following table summarizes our major classes of property and equipment: | |||||||
March 31, | 30-Sep-14 | |||||||
2015 | ||||||||
Computers, office equipment and furniture | $ | 372,401 | $ | 334,162 | ||||
Research equipment | 5,284,178 | 4,614,176 | ||||||
Software | 94,848 | 69,623 | ||||||
Leasehold improvements | 3,117,537 | 3,045,022 | ||||||
Total gross fixed assets | 8,868,964 | 8,062,983 | ||||||
Less: Accumulated depreciation and amortization | (4,741,598 | ) | (4,190,230 | ) | ||||
Property and equipment, net | $ | 4,127,366 | $ | 3,872,753 | ||||
Investments_Tables
Investments (Tables) | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Equity [Abstract] | ||||||||||||||||
Summary of Short and Long-term Investments | The following tables summarize the Company’s short- and long-term investments as of March 31, 2015, and September 30, 2014. | |||||||||||||||
As of March 31, 2015 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Commercial notes (due within one year) | $ | 19,561,172 | $ | 784 | $ | (285,310 | ) | $ | 19,276,646 | |||||||
Commercial notes (due after one year through two years) | $ | 12,361,068 | — | $ | (127,628 | ) | $ | 12,233,440 | ||||||||
Total | $ | 31,922,240 | $ | 784 | $ | (412,938 | ) | $ | 31,510,086 | |||||||
As of September 30, 2014 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Commercial notes (due within one year) | $ | 21,653,032 | $ | — | $ | (189,830 | ) | $ | 21,463,202 | |||||||
Commercial notes (due after one year through two years) | $ | 23,088,346 | — | $ | (217,693 | ) | $ | 22,870,653 | ||||||||
Total | $ | 44,741,378 | $ | — | $ | (407,523 | ) | $ | 44,333,855 | |||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||
Schedule of Intangible Assets | The following table provides details on the Company’s intangible asset balances: | |||||||||||
Intangible assets | Intangible assets | Total | ||||||||||
not subject to | subject to | Intangible assets | ||||||||||
amortization | amortization | |||||||||||
Balance at September 30, 2013 | $ | 3,117,322 | $ | 123,191 | $ | 3,240,513 | ||||||
Impairment | (2,172,387 | ) | - | (2,172,387 | ) | |||||||
Amortization | - | (54,653 | ) | (54,653 | ) | |||||||
Balance at September 30, 2014 | $ | 944,935 | $ | 68,538 | $ | 1,013,473 | ||||||
Acquisition of Novartis RNAi Assets | - | 24,857,214 | 24,857,214 | |||||||||
Amortization | - | (169,030 | ) | (169,030 | ) | |||||||
Balance at March 31, 2015 | $ | 944,935 | $ | 24,756,722 | $ | 25,701,657 | ||||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 6 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Equity [Abstract] | |||||||||||
Summary of Information About Warrants | The following table summarizes information about warrants outstanding at March 31, 2015: | ||||||||||
Exercise prices | Number of | Remaining | |||||||||
Warrants | Life in Years | ||||||||||
$ | 70.6 | 94,897 | 2.1 | ||||||||
$ | 5 | 390,625 | 0.5 | ||||||||
$ | 5.09 | 239,534 | 0.2 | ||||||||
$ | 1.38 | 24,324 | 0.7 | ||||||||
$ | 4.16 | 1,000 | 1.7 | ||||||||
$ | 3.25 | 334,347 | 1.4 | ||||||||
$ | 2.12 | 75,000 | 2.7 | ||||||||
$ | 1.83 | 277,284 | 2.7 | ||||||||
Total warrants outstanding | 1,437,011 | ||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 6 Months Ended | |||
Mar. 31, 2015 | ||||
Leases [Abstract] | ||||
Future Minimum Lease Payments Under Capitalized Leases | As of March 31, 2015, future minimum lease payments due in fiscal years under capitalized leases are as follows: | |||
2015 (remainder of) | $ | 114,210 | ||
2016 | 228,420 | |||
2017 | 228,420 | |||
2018 | 228,420 | |||
2019 | 95,178 | |||
2020 and thereafter | - | |||
Less interest | (28,872 | ) | ||
Principal | 865,776 | |||
Less current portion | (215,762 | ) | ||
Noncurrent portion | $ | 650,014 | ||
Future Minimum Lease Payments Under Operating Leases | As of March 31, 2015, future minimum lease payments due in fiscal years under operating leases are as follows: | |||
2015 (remainder of) | $ | 292,119 | ||
2016 | 596,877 | |||
2017 | 613,664 | |||
2018 | 637,897 | |||
2019 | 459,633 | |||
2020 and thereafter | - | |||
Total | $ | 2,600,190 | ||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||||||||||||||
Summarized Information about Stock Options | The following tables summarize information about stock options: | |||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||||
Options | Average | Average | Intrinsic | |||||||||||||
Outstanding | Exercise | Remaining | Value | |||||||||||||
Price | Contractual | |||||||||||||||
Per Share | Term | |||||||||||||||
Balance At September 30, 2013 | 3,419,285 | $ | 4.68 | |||||||||||||
Granted | 1,039,000 | 14.05 | ||||||||||||||
Cancelled | -152,582 | 6.05 | ||||||||||||||
Exercised | -454,863 | 6 | ||||||||||||||
Balance At September 30, 2014 | 3,850,840 | 6.99 | ||||||||||||||
Granted | 1,609,000 | 6.34 | ||||||||||||||
Cancelled | -43,000 | 17.01 | ||||||||||||||
Exercised | -17,500 | 2.46 | ||||||||||||||
Balance At March 31, 2015 | 5,399,340 | $ | 6.73 | 8.3 years | $ | 9,160,725 | ||||||||||
Exercisable At March 31, 2015 | 2,117,387 | $ | 5.98 | 7.2 years | $ | 4,617,497 | ||||||||||
Assumptions Used to Value Stock Options | The assumptions used to value stock options are as follows: | |||||||||||||||
Six months ended March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Dividend yield | — | — | ||||||||||||||
Risk-free interest rate | 1.55 – 1.85% | 1.9 – 2.26% | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
Expected life (in years) | 6 - 6.25 | 5.5 - 6.25 | ||||||||||||||
Weighted average grant date fair value per share of options granted | $3.54 | $9.08 | ||||||||||||||
Summary of Share Activity Related to Restricted Stock Units | The following table summarizes the activity of the Company’s Restricted Stock Units: | |||||||||||||||
Number of | Weighted- | |||||||||||||||
RSUs | Average | |||||||||||||||
Grant | ||||||||||||||||
Date | ||||||||||||||||
Fair Value | ||||||||||||||||
Unvested at September 30, 2013 | — | $ | — | |||||||||||||
Granted | 510,000 | 14.58 | ||||||||||||||
Vested | — | — | ||||||||||||||
Forfeited | — | — | ||||||||||||||
Unvested at September 30, 2014 | 510,000 | $ | 14.58 | |||||||||||||
Granted | 705,000 | 6.77 | ||||||||||||||
Vested | (267,500 | ) | 14.54 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Unvested at March 31, 2015 | 947,500 | $ | 8.78 | |||||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 6 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||||||||||||||||
Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes fair value measurements at March 31, 2015 and September 30, 2014 for assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||
March 31, 2015: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 96,447,301 | $ | — | $ | — | $ | 96,447,301 | ||||||||
Derivative liabilities | $ | — | $ | — | $ | 1,619,755 | $ | 1,619,755 | ||||||||
Acquisition-related contingent consideration obligations | $ | — | $ | — | $ | 3,970,931 | $ | 3,970,931 | ||||||||
September 30, 2014: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 132,510,610 | $ | — | $ | — | $ | 132,510,610 | ||||||||
Derivative liabilities | $ | — | $ | — | $ | 4,173,943 | $ | 4,173,943 | ||||||||
Acquisition-related contingent consideration obligations | $ | — | $ | — | $ | 3,970,931 | $ | 3,970,931 | ||||||||
Change in Fair Value of Contingent Consideration Obligations | The following is a reconciliation of contingent consideration fair value. | |||||||||||||||
Value at September 30, 2013 | $ | 1,595,273 | ||||||||||||||
Purchase price contingent consideration | — | |||||||||||||||
Contingent consideration payments | — | |||||||||||||||
Change in fair value of contingent consideration | 2,375,658 | |||||||||||||||
Value at September 30, 2014 | $ | 3,970,931 | ||||||||||||||
Purchase price contingent consideration | — | |||||||||||||||
Contingent consideration payments | — | |||||||||||||||
Change in fair value of contingent consideration | — | |||||||||||||||
Value at March 31, 2015 | $ | 3,970,931 | ||||||||||||||
Exchange rights | ||||||||||||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||||||||||||||||
Assumptions Used in Valuing Derivative Liabilities | The assumptions used in valuing the derivative liability were as follows: | |||||||||||||||
31-Mar-15 | September 30, 2014 | |||||||||||||||
Risk-free interest rate | 1.00% | 1.07% | ||||||||||||||
Expected life | 3.0 Years | 3.3 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 100% | ||||||||||||||
Reconciliation of Derivative Liability | The following is a reconciliation of the derivative liability related to these exchange rights: | |||||||||||||||
Value at September 30, 2013 | $ | 4,569 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | 211,860 | |||||||||||||||
Net settlements | — | |||||||||||||||
Value at September 30, 2014 | $ | 216,429 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | (179,555 | ) | ||||||||||||||
Net settlements | -3,072 | |||||||||||||||
Value at March 31, 2015 | $ | 33,802 | ||||||||||||||
Warrant | ||||||||||||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||||||||||||||||
Assumptions Used in Valuing Derivative Liabilities | The assumptions used in valuing the derivative liability were as follows: | |||||||||||||||
2010 Warrants | 31-Mar-15 | September 30, 2014 | ||||||||||||||
Risk-free interest rate | 0.26% | 0.13% | ||||||||||||||
Expected life | 0.7 Years | 1.2 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
2012 Warrants | 31-Mar-15 | 30-Sep-14 | ||||||||||||||
Risk-free interest rate | 0.89% | 1.07% | ||||||||||||||
Expected life | 2.7 Years | 3.2 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
2013 Warrants | 31-Mar-15 | 30-Sep-14 | ||||||||||||||
Risk-free interest rate | 0.89% | 1.07% | ||||||||||||||
Expected life | 2.8 Years | 3.3 Years | ||||||||||||||
Dividend yield | None | None | ||||||||||||||
Volatility | 75% | 69% | ||||||||||||||
Reconciliation of Derivative Liability | The following is a reconciliation of the derivative liability related to these warrants: | |||||||||||||||
Value at September 30, 2013 | $ | 4,091,797 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | 5,821,796 | |||||||||||||||
Net settlements | (5,956,079 | ) | ||||||||||||||
Value at September 30, 2014 | $ | 3,957,514 | ||||||||||||||
Issuance of instruments | — | |||||||||||||||
Change in value | -2,371,561 | |||||||||||||||
Net settlements | — | |||||||||||||||
Value at March 31, 2015 | $ | 1,585,953 | ||||||||||||||
Organization_and_Significant_A2
Organization and Significant Accounting Policies - Additional Information (Detail) (USD $) | 6 Months Ended | 3 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | |
Schedule Of Investments [Line Items] | ||||||
Cash to fund operations | $96,447,301 | $142,847,860 | $96,447,301 | $132,510,610 | $19,114,444 | |
Investments | 31,922,240 | 31,922,240 | 44,741,378 | |||
Net increase (decrease) in cash | -36,063,309 | 123,733,416 | ||||
Cash outflow related to continuing operating activities | -40,569,584 | -14,720,054 | ||||
Cash payment for acquisition | 7,000,000 | |||||
Capital expenditures | 852,063 | 607,772 | ||||
Proceeds from sale of marketable securities | 12,150,774 | 5,010,238 | ||||
Proceeds from the exercise of warrants and stock options | 313,618 | 7,979,309 | ||||
Restricted Cash | 0 | 0 | 0 | |||
Amount insured in FDIC per account | 250,000 | 250,000 | ||||
Minimum | ||||||
Schedule Of Investments [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||
Maximum | ||||||
Schedule Of Investments [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||
Commercial bonds | ||||||
Schedule Of Investments [Line Items] | ||||||
Maturity description | less than 24 months | |||||
Investments | 31,922,240 | 31,922,240 | ||||
Novartis | ||||||
Schedule Of Investments [Line Items] | ||||||
Cash payment for acquisition | $10,000,000 | $7,000,000 |
Acquisitions_Additional_Inform
Acquisitions - Additional Information (Detail) (USD $) | 6 Months Ended | 3 Months Ended | 1 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Apr. 30, 2015 | |
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | $7,000,000 | |||
Novartis | ||||
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | 10,000,000 | 7,000,000 | ||
Value of Shares Issued to Novartis | 3,321,383 | |||
Obligation to pay royalties | In addition to the consideration paid by the Company at the closing of the Transaction, the Company is obligated to make certain royalty and milestone payments to Novartis upon the occurrence of certain events. For sales of any RNAi Products for which Novartis and the Company do not enter into a licensing arrangement, the Company will be obligated to pay royalty rates ranging in the low to mid-single digits on Net Sales depending upon the type of RNAi Product provided that the royalty rate may be reduced or offset in certain circumstances. The obligation to pay royalties on such candidates will last until the later of (i) the expiration of the last to Valid Claim Covering such RNAi Product in such country and (ii) 11 years after the first commercial sale of such RNAi Product (as such italicized terms are defined in the RNAi Purchase Agreement). | |||
Subsequent Event | Novartis | ||||
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | $3,000,000 |
Acquisitions_Summary_of_Estima
Acquisitions - Summary of Estimated Fair Values at Date of Acquisition (Detail) (USD $) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2015 | Mar. 31, 2015 | |
Asset Acquisition [Line Items] | ||
Assets acquired | $24,857,214 | |
Acquired in-process research and development | 10,142,786 | 10,142,786 |
Novartis | ||
Asset Acquisition [Line Items] | ||
Assets acquired | 35,000,000 | |
Acquired in-process research and development | 10,142,786 | |
Novartis | Patents [Member] | ||
Asset Acquisition [Line Items] | ||
Assets acquired | 21,728,334 | |
Novartis | License [Member] | ||
Asset Acquisition [Line Items] | ||
Assets acquired | $3,128,880 |
Acquisitions_Summary_of_Purcha
Acquisitions - Summary of Purchase Consideration (Detail) (USD $) | 6 Months Ended | 3 Months Ended | 1 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Apr. 30, 2015 | |
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | $7,000,000 | |||
Novartis | ||||
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | 10,000,000 | 7,000,000 | ||
Value of Shares Issued to Novartis during the three months ended March 31, 2015 | 25,000,000 | |||
Total purchase consideration | 35,000,000 | |||
Novartis | Subsequent Event | ||||
Asset Acquisition [Line Items] | ||||
Cash payment for acquisition | $3,000,000 |
Property_and_Equipment_Summary
Property and Equipment - Summary of Property and Equipment (Detail) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
Property Plant And Equipment [Abstract] | ||
Computers, office equipment and furniture | $372,401 | $334,162 |
Research equipment | 5,284,178 | 4,614,176 |
Software | 94,848 | 69,623 |
Leasehold improvements | 3,117,537 | 3,045,022 |
Total gross fixed assets | 8,868,964 | 8,062,983 |
Less: Accumulated depreciation and amortization | -4,741,598 | -4,190,230 |
Property and equipment, net | $4,127,366 | $3,872,753 |
Investments_Summary_of_Short_a
Investments - Summary of Short and Long-term Investments (Detail) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
Schedule Of Held To Maturity Securities [Line Items] | ||
Gross Unrealized Gains | $784 | |
Gross Unrealized Losses | -412,938 | -407,523 |
Fair Value | 31,510,086 | 44,333,855 |
Commercial notes (due within one year), amortized cost | 19,561,172 | 21,653,032 |
Commercial notes (due after one year through two years), amortized cost | 12,361,068 | 23,088,346 |
Total | 31,922,240 | 44,741,378 |
Commercial Notes Due Within One Year | ||
Schedule Of Held To Maturity Securities [Line Items] | ||
Gross Unrealized Gains | 784 | |
Gross Unrealized Losses | -285,310 | -189,830 |
Fair Value | 19,276,646 | 21,463,202 |
Commercial Notes Due After One Year Through Two Years | ||
Schedule Of Held To Maturity Securities [Line Items] | ||
Gross Unrealized Losses | -127,628 | -217,693 |
Fair Value | $17,540,073 | $22,870,653 |
Intangible_Assets_Additional_I
Intangible Assets - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Finite Lived Intangible Assets [Line Items] | |||||
Amortization expense | $155,366 | $13,663 | $169,030 | $27,327 | $54,653 |
Amortization of license agreements remainder of fiscal year 2015 | 877,541 | 877,541 | |||
Amortization of license agreements in 2016 | 1,714,313 | 1,714,313 | |||
Amortization of license agreements in 2017 | 1,700,429 | 1,700,429 | |||
Amortization of license agreements in 2018 | 1,700,429 | 1,700,429 | |||
Amortization of license agreements in 2019 | 1,700,429 | 1,700,429 | |||
Amortization of license agreements in 2020 | 1,700,429 | 1,700,429 | |||
Amortization of license agreements, thereafter | 15,363,152 | 15,363,152 | |||
Novartis RNAi [Member] | Licensing Agreements | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Amortization period of intangible assets | 21 years | ||||
Finite-lived intangible assets, accumulated amortization | 12,367 | 12,367 | |||
Novartis RNAi [Member] | Patents [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Amortization period of intangible assets | 14 years | ||||
Finite-lived intangible assets, accumulated amortization | 129,335 | 129,335 | |||
Roche Madison [Member] | Licensing Agreements | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Amortization period of intangible assets | 4 years | ||||
Finite-lived intangible assets, accumulated amortization | $188,790 | $188,790 |
Intangible_Assets_Schedule_of_
Intangible Assets - Schedule of Intangible Assets (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |||||
Intangible assets not subject to amortization, beginning balance | $944,935 | $3,117,322 | $3,117,322 | ||
Intangible assets not subject to amortization, Impairment | -2,172,387 | ||||
Intangible assets not subject to amortization, ending balance | 944,935 | 944,935 | 944,935 | ||
Intangible assets subject to amortization, beginning balance | 68,538 | 123,191 | 123,191 | ||
Intangible assets subject to amortization, Acquisition of Novartis RNAi Assets | 24,857,214 | ||||
Intangible assets subject to amortization, Amortization | -155,366 | -13,663 | -169,030 | -27,327 | -54,653 |
Intangible assets subject to amortization, ending balance | 24,756,722 | 24,756,722 | 68,538 | ||
Total Intangible assets, beginning balance | 1,013,473 | 3,240,513 | 3,240,513 | ||
Total Intangible assets, Impairment | -2,172,387 | ||||
Total Intangible assets, ending balance | $25,701,657 | $25,701,657 | $1,013,473 |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 0 Months Ended | |||
Feb. 24, 2014 | Oct. 11, 2013 | Mar. 31, 2015 | Sep. 30, 2014 | |
Class Of Stock [Line Items] | ||||
Capital stock authorized for issuance | 150,000,000 | |||
Common stock, shares authorized | 145,000,000 | 145,000,000 | ||
Common stock, par value | $0.00 | $0.00 | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Preferred stock, par value | $0.00 | $0.00 | ||
Common stock, shares outstanding | 59,435,862 | 54,656,936 | ||
Preferred stock, shares outstanding | 15,652 | 18,300 | ||
Threshold percentage of common stock ownership upon preferred stock conversion | 9.99% | |||
Stock issuances, Shares | 6,325,000 | 3,071,672 | ||
Sale of stock, price per share | $18.95 | $5.86 | ||
Conversion price | $5.86 | |||
Proceeds from issuance of common stock, net | $112,600,000 | $60,000,000 | ||
Series C Preferred Stock | ||||
Class Of Stock [Line Items] | ||||
Common stock equivalent of preferred stock | 2,670,990 | |||
Preferred stock, shares outstanding | 15,652 | |||
Stock issuances, Shares | 46,000 | |||
Sale of stock, price per share | $1,000 | |||
Aggregate price on issuance or Sale of equity | $64,000,000 | |||
2004 Equity Incentive Plan, 2013 Equity Incentive Plan, and Inducement Grants | ||||
Class Of Stock [Line Items] | ||||
Common Stock, Share reserve for issuance | 8,192,654 |
Stockholders_Equity_Summary_of
Stockholders' Equity - Summary of Information About Warrants (Detail) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Class Of Warrant Or Right [Line Items] | |
Warrants outstanding | 1,437,011 |
Warrant 1 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $70.60 |
Warrants outstanding | 94,897 |
Remaining Life in Years | 2 years 1 month 6 days |
Warrant 2 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $5 |
Warrants outstanding | 390,625 |
Remaining Life in Years | 6 months |
Warrant 3 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $5.09 |
Warrants outstanding | 239,534 |
Remaining Life in Years | 2 months 12 days |
Warrant 4 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $1.38 |
Warrants outstanding | 24,324 |
Remaining Life in Years | 8 months 12 days |
Warrant 5 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $4.16 |
Warrants outstanding | 1,000 |
Remaining Life in Years | 1 year 8 months 12 days |
Warrant 6 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $3.25 |
Warrants outstanding | 334,347 |
Remaining Life in Years | 1 year 4 months 24 days |
Warrant 7 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $2.12 |
Warrants outstanding | 75,000 |
Remaining Life in Years | 2 years 8 months 12 days |
Warrant 8 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $1.83 |
Warrants outstanding | 277,284 |
Remaining Life in Years | 2 years 8 months 12 days |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Other Commitments [Line Items] | ||||
Facility and equipment rent expense | $191,000 | $134,000 | $362,000 | $264,000 |
Provision for recorded liabilities | 0 | 0 | ||
Future commitments | 49,700,000 | 49,700,000 | ||
Commitments expected to be incurred in fiscal 2015 | 29,500,000 | 29,500,000 | ||
Commitments expected to be incurred beyond fiscal 2015 | 20,200,000 | 20,200,000 | ||
Corporate Headquarters In Pasadena | ||||
Other Commitments [Line Items] | ||||
Rental expense | 23,000 | |||
Operating lease expiration date | 30-Sep-19 | |||
Percentage of increase in annual rental cost | 3.00% | |||
Research Facility in Madison | ||||
Other Commitments [Line Items] | ||||
Rental expense | 26,000 | |||
Operating lease expiration date | 28-Feb-19 | |||
Other rental expenses including common area maintenance and real estate taxes | 18,000 | |||
Utilities costs per month | 16,000 | |||
Monthly payments under capital lease | 19,000 | |||
Total Monthly Facility Expense - Madison facility | $79,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Future Minimum Lease Payments Under Capitalized Leases (Detail) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
Leases [Abstract] | ||
2015 (remainder of) | $114,210 | |
2016 | 228,420 | |
2017 | 228,420 | |
2018 | 228,420 | |
2019 | 95,178 | |
Less interest | -28,872 | |
Principal | 865,776 | |
Capital lease obligation | 215,762 | 213,991 |
Capital lease obligation, net of current portion | $650,014 | $758,340 |
Commitments_and_Contingencies_3
Commitments and Contingencies - Future Minimum Lease Payments Under Operating Leases (Detail) (USD $) | Mar. 31, 2015 |
Leases [Abstract] | |
2015 (remainder of) | $292,119 |
2016 | 596,877 |
2017 | 613,664 |
2018 | 637,897 |
2019 | 459,633 |
Total | $2,600,190 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Sep. 30, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of Options Outstanding | 5,399,340 | 3,850,840 | 5,399,340 | 3,419,285 | ||
Number of Options Outstanding, Granted | 1,609,000 | 1,039,000 | ||||
Stock options outstanding expired | 43,000 | 152,582 | ||||
Share-based compensation, description | At vesting each RSU will be exchanged for one share of the Companybs Common Stock. Restricted stock unit awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets. | |||||
Employee Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock-based compensation expense | 2,180,290 | $1,198,891 | $627,737 | $1,148,875 | ||
Fair value of the options granted | 5,703,692 | 2,114,074 | 7,085,676 | 7,617,186 | ||
Intrinsic value of options exercised | 113,728 | 89,954 | 2,903,309 | 3,218,167 | ||
Unrecognized pre-tax compensation expense | 13,982,343 | 13,982,343 | ||||
Weighted average period to recognize pre-tax compensation expense | 3 years 1 month 6 days | |||||
Dividend yield | 0.00% | |||||
Restricted Stock Units (RSUs) | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of restricted stock units outstanding, granted | 705,000 | 510,000 | 675,000 | 470,000 | 470,000 | |
Stock-based compensation expense | 2,039,645 | 1,006,188 | 570,707 | 570,707 | ||
Weighted average period to recognize pre-tax compensation expense | 1 year 9 months 18 days | |||||
Unrecognized pre-tax compensation expense | 6,147,120 | $6,147,120 | ||||
2004 Equity Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Shares reserve for issuance | 2,546,018 | 2,546,018 | ||||
2004 Equity Incentive Plan | Employee Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of Options Outstanding | 2,546,018 | 2,546,018 | ||||
Number of Options Outstanding, Granted | 0 | 0 | ||||
2013 Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Shares reserve for issuance | 5,094,314 | 5,094,314 | ||||
2013 Incentive Plan | Employee Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of Options Outstanding | 2,306,000 | 2,306,000 | ||||
Number of Options Outstanding, Granted | 1,489,000 | 625,000 | ||||
2013 Incentive Plan | Restricted Stock Units (RSUs) | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of restricted stock units outstanding, granted | 1,080,000 | 675,000 | ||||
Number of restricted stock units outstanding | 1,080,000 | 1,080,000 | ||||
Number of Options Outstanding, Granted | 675,000 | |||||
Outside Of Equity Compensation Plans | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Shares reserve for issuance | 547,322 | 547,322 | ||||
Outside Of Equity Compensation Plans | Employee Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Units granted outside of Equity Incentive plans | 120,000 | 0 | ||||
Outside Of Equity Compensation Plans | Restricted Stock Units (RSUs) | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of restricted stock units outstanding, granted | 70,000 | |||||
Units granted outside of Equity Incentive plans | 30,000 | 0 | 0 | |||
2000 Stock Option Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock options outstanding expired | 38,000 |
StockBased_Compensation_Summar
Stock-Based Compensation - Summarize Information about Stock Options (Detail) (USD $) | 6 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Sep. 30, 2014 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Number of Options Outstanding, beginning balance | 3,850,840 | 3,419,285 |
Number of Options Outstanding, Granted | 1,609,000 | 1,039,000 |
Number of Options Outstanding, Cancelled | -43,000 | -152,582 |
Number of Options Outstanding, Exercised | -17,500 | -454,863 |
Number of Options Outstanding, ending balance | 5,399,340 | 3,850,840 |
Number of Options Outstanding, Exercisable | 2,117,387 | |
Weighted Average Exercise Price Per Share, beginning balance | $6.99 | $4.68 |
Weighted Average Exercise Price Per Share, Granted | $6.34 | $14.05 |
Weighted Average Exercise Price Per Share, Cancelled | $17.01 | $6.05 |
Weighted Average Exercise Price Per Share, Exercised | $2.46 | $6 |
Weighted Average Exercise Price Per Share, ending balance | $6.73 | $6.99 |
Weighted Average Exercise Price Per Share, Exercisable | $5.98 | |
Weighted Average Remaining Contractual Term | 8 years 3 months 18 days | |
Weighted Average Remaining Contractual Term, Exercisable | 7 years 2 months 12 days | |
Aggregate Intrinsic Value | $9,160,725 | |
Aggregate Intrinsic Value, Exercisable | $4,617,497 |
StockBased_Compensation_Assump
Stock-Based Compensation - Assumptions Used to Value Stock Options (Detail) (USD $) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Risk-free interest rate, minimum | 1.55% | 1.90% |
Risk-free interest rate, maximum | 1.85% | 2.26% |
Volatility | 75.00% | 69.00% |
Weighted average grant date fair value per share of options granted | $3.54 | $9.08 |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected life (in years) | 6 years | 5 years 6 months |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected life (in years) | 6 years 3 months | 6 years 3 months |
StockBased_Compensation_Summar1
Stock-Based Compensation - Summary of Restricted Stock Activity (Detail) (Restricted Stock Units (RSUs), USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Restricted Stock Units (RSUs) | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares, Unvested, beginning of period | 510,000 | ||||
Number of restricted stock units outstanding, granted | 675,000 | 470,000 | 705,000 | 470,000 | 510,000 |
Shares, Vested | -267,500 | ||||
Shares, Unvested, End of period | 947,500 | 947,500 | 510,000 | ||
Weighted average grant date fair value, beginning balance | $14.58 | ||||
Weighted average grant date fair value, Granted | $6.77 | $14.58 | |||
Weighted average grant date fair value, Vested | $14.54 | ||||
Weighted average grant date fair value, ending balance | $8.78 | $8.78 | $14.58 |
Fair_Value_Measurements_Fair_V
Fair Value Measurements - Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Derivative liabilities | $1,619,755 | $4,173,943 | |
Acquisition-related contingent consideration obligations | 3,970,931 | 3,970,931 | 1,595,273 |
Fair Value, Measurements, Recurring | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 96,447,301 | 132,510,610 | |
Derivative liabilities | 1,619,755 | 4,173,943 | |
Acquisition-related contingent consideration obligations | 3,970,931 | 3,970,931 | |
Fair Value, Measurements, Recurring | Level 1 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 96,447,301 | 132,510,610 | |
Fair Value, Measurements, Recurring | Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Derivative liabilities | 1,619,755 | 4,173,943 | |
Acquisition-related contingent consideration obligations | $3,970,931 | $3,970,931 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||||||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2010 | Dec. 31, 2012 | Jan. 31, 2013 | |
Fair Value Measurements Disclosure [Line Items] | ||||||||
Short term investments | $19,561,172 | $19,561,172 | $21,653,032 | |||||
Investments | 12,361,068 | 12,361,068 | 23,088,346 | |||||
Total investments | 31,922,240 | 31,922,240 | 44,741,378 | |||||
Fair value of investment | 31,510,086 | 31,510,086 | 44,333,855 | |||||
Warrants outstanding | 1,437,011 | 1,437,011 | ||||||
Non-cash gain (loss) from change in fair value of the derivative liability | 191,910 | -2,910,116 | 2,371,561 | -6,417,612 | ||||
Duration of exchange rights | 7 years | |||||||
2010 Warrants | ||||||||
Fair Value Measurements Disclosure [Line Items] | ||||||||
Warrants issued to acquire Common Stock | 329,649 | |||||||
Warrants outstanding | 24,324 | 24,324 | ||||||
2012 Warrants | ||||||||
Fair Value Measurements Disclosure [Line Items] | ||||||||
Warrants issued to acquire Common Stock | 912,543 | |||||||
Warrants outstanding | 265,161 | 265,161 | ||||||
2013 Warrants | ||||||||
Fair Value Measurements Disclosure [Line Items] | ||||||||
Warrants issued to acquire Common Stock | 833,530 | |||||||
Warrants outstanding | 12,123 | 12,123 | ||||||
Ablaris Therapeutics | ||||||||
Fair Value Measurements Disclosure [Line Items] | ||||||||
Warrants outstanding | 500,000 | 500,000 | ||||||
Non-cash gain (loss) from change in fair value of the derivative liability | ($22,936) | ($41,109) | $179,555 | ($53,191) | ||||
Exchange right convertible conversion ratio for first year | 0.06 | |||||||
Exchange right convertible conversion ratio for second year | 0.04 | |||||||
Exchange right convertible conversion ratio for third year | 0.03 | |||||||
Exchange right convertible conversion ratio for fourth year | 0.02 | |||||||
Exchange right convertible conversion ratio for fifth year and beyond | 0.01 | |||||||
Number of exchange right sold | 675,000 |
Fair_Value_Measurements_Assump
Fair Value Measurements - Assumptions Used in Valuing Derivative Liabilities (Detail) | 6 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Sep. 30, 2014 | |
2010 Warrants | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 0.26% | 0.13% |
Expected life | 8 months 12 days | 1 year 2 months 12 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 75.00% | 69.00% |
2012 Warrants | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 0.89% | 1.07% |
Expected life | 2 years 8 months 12 days | 3 years 2 months 12 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 75.00% | 69.00% |
2013 Warrants | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 0.89% | 1.07% |
Expected life | 2 years 9 months 18 days | 3 years 3 months 18 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 75.00% | 69.00% |
Exchange rights | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 1.00% | 1.07% |
Expected life | 3 years | 3 years 3 months 18 days |
Volatility | 75.00% | 100.00% |
Fair_Value_Measurements_Reconc
Fair Value Measurements - Reconciliation of Derivative Liability (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | |||||
Change in value | $191,910 | ($2,910,116) | $2,371,561 | ($6,417,612) | |
Exchange rights | |||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | |||||
Value, Beginning balance | 216,429 | 4,569 | 4,569 | ||
Change in value | -179,555 | 211,860 | |||
Net settlements | -3,072 | ||||
Value, Ending balance | 33,802 | 33,802 | 216,429 | ||
Warrant | |||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | |||||
Value, Beginning balance | 3,957,514 | 4,091,797 | 4,091,797 | ||
Change in value | -2,371,561 | 5,821,796 | |||
Net settlements | -5,956,079 | ||||
Value, Ending balance | $1,585,953 | $1,585,953 | $3,957,514 |
Fair_Value_Measurements_Change
Fair Value Measurements - Change in Fair Value of Contingent Consideration Obligations (Detail) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Mar. 31, 2015 | |
Business Combinations [Abstract] | ||
Contingent consideration obligations, Beginning balance | $1,595,273 | $3,970,931 |
Change in fair value of contingent consideration | 2,375,658 | |
Contingent consideration obligations, Ending balance | $3,970,931 | $3,970,931 |