Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Feb. 05, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ARWR | |
Entity Registrant Name | ARROWHEAD RESEARCH CORP | |
Entity Central Index Key | 879,407 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 59,627,499 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 62,165,088 | $ 81,214,354 |
Prepaid expenses | 3,783,344 | 3,293,285 |
Other current assets | 1,903,884 | 823,620 |
Short term investments | 14,431,498 | 17,539,902 |
TOTAL CURRENT ASSETS | 82,283,814 | 102,871,161 |
Property and equipment, net | 4,666,411 | 4,526,848 |
Intangible assets, net | 24,385,125 | 24,824,116 |
Other assets | 45,789 | 45,789 |
TOTAL ASSETS | 111,381,139 | 132,267,914 |
CURRENT LIABILITIES | ||
Accounts payable | 5,288,922 | 5,031,706 |
Accrued expenses | 3,920,312 | 5,376,119 |
Accrued payroll and benefits | 1,419,423 | 3,824,062 |
Deferred revenue | 109,375 | 103,125 |
Derivative liabilities | 1,325,128 | 1,301,604 |
Capital lease obligation | 218,447 | 217,548 |
Other current liabilities | 46,407 | 46,407 |
TOTAL CURRENT LIABILITIES | 12,328,014 | 15,900,571 |
LONG-TERM LIABILITIES | ||
Capital lease obligation, net of current portion | 485,842 | 540,792 |
Contingent consideration obligations | 5,862,464 | 5,862,464 |
Other non-current liabilities | 336,427 | 342,453 |
TOTAL LONG-TERM LIABILITIES | $ 6,684,733 | $ 6,745,709 |
Commitments and contingencies | ||
Arrowhead Research Corporation stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 15,652 shares issued and outstanding as of December 31, 2015 and September 30, 2015 | $ 16 | $ 16 |
Common stock, $0.001 par value; 145,000,000 shares authorized; 59,627,499 and 59,544,677 shares issued and outstanding as of December 31, 2015 and September 30, 2015, respectively | 151,997 | 151,914 |
Additional paid-in capital | 428,838,629 | 426,873,358 |
Accumulated other comprehensive income (loss) | (90,607) | (136,425) |
Accumulated deficit | (335,976,455) | (316,712,041) |
Total Arrowhead Research Corporation stockholders' equity | 92,923,580 | 110,176,822 |
Noncontrolling interest | (555,188) | (555,188) |
TOTAL STOCKHOLDERS’ EQUITY | 92,368,392 | 109,621,634 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 111,381,139 | $ 132,267,914 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Sep. 30, 2015 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 15,652 | 15,652 |
Preferred stock, shares outstanding | 15,652 | 15,652 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 145,000,000 | 145,000,000 |
Common stock, shares issued | 59,627,499 | 59,544,677 |
Common stock, shares outstanding | 59,627,499 | 59,544,677 |
Consolidated Statements of Oper
Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
REVENUE | $ 43,750 | $ 170,750 |
OPERATING EXPENSES | ||
Research and development | 10,338,833 | 17,744,312 |
Salaries and payroll-related costs | 3,919,886 | 3,150,617 |
General and administrative expenses | 1,951,609 | 2,086,202 |
Stock-based compensation | 2,380,343 | 2,014,856 |
Depreciation and amortization | 794,349 | 290,039 |
TOTAL OPERATING EXPENSES | 19,385,020 | 25,286,026 |
OPERATING LOSS | (19,341,270) | (25,115,276) |
OTHER INCOME (EXPENSE) | ||
Gain (loss) on sale of fixed assets, net | (26,381) | |
Interest income (expense), net | 100,380 | 237,417 |
Change in value of derivatives | (23,524) | 2,382,142 |
Other income (expense) | (53,184) | |
TOTAL OTHER INCOME (EXPENSE) | 76,856 | 2,539,994 |
LOSS BEFORE INCOME TAXES | (19,264,414) | (22,575,282) |
NET LOSS | (19,264,414) | (22,575,282) |
NET LOSS ATTRIBUTABLE TO ARROWHEAD | $ (19,264,414) | $ (22,575,282) |
NET LOSS PER SHARE ATTRIBUTABLE TO ARROWHEAD SHAREHOLDERS - BASIC AND DILUTED: | $ (0.32) | $ (0.41) |
Weighted average shares outstanding - basic and diluted | 59,548,672 | 54,692,392 |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | ||
Foreign Currency Translation Adjustments | $ 45,818 | |
COMPREHENSIVE LOSS ATTRIBUTABLE TO ARROWHEAD | $ (19,218,596) | $ (22,575,282) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (unaudited) - 3 months ended Dec. 31, 2015 - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (loss) | Accumulated Deficit | Noncontrolling Interest |
Beginning Balance Amount at Sep. 30, 2015 | $ 109,621,634 | $ 16 | $ 151,914 | $ 426,873,358 | $ (136,425) | $ (316,712,041) | $ (555,188) |
Beginning Balance Shares at Sep. 30, 2015 | 15,652 | 59,544,677 | |||||
Stock options exercised, Amount | $ 25,544 | $ 5 | 25,539 | ||||
Stock options exercised | 4,687 | 4,687 | |||||
Stock-based compensation | $ 2,380,343 | 2,380,343 | |||||
Common stock-RSU vesting, Amount | (440,533) | $ 78 | (440,611) | ||||
Common stock-RSU vesting, Shares | 78,135 | ||||||
Foreign Currency Translation Adjustments | 45,818 | 45,818 | |||||
Net loss | (19,264,414) | (19,264,414) | |||||
Ending Balance Amount at Dec. 31, 2015 | $ 92,368,392 | $ 16 | $ 151,997 | $ 428,838,629 | $ (90,607) | $ (335,976,455) | $ (555,188) |
Ending Balance Shares at Dec. 31, 2015 | 15,652 | 59,627,499 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (19,264,414) | $ (22,575,282) |
(Gain) loss on disposal of fixed assets | 26,381 | |
Change in value of derivatives | 23,524 | (2,382,142) |
Stock-based compensation | 2,380,343 | 2,014,856 |
Depreciation and amortization | 794,349 | 290,039 |
Amortization of note premiums | 108,403 | 347,703 |
Changes in operating assets and liabilities: | ||
Receivables | (1,054,719) | (136,506) |
Prepaid expenses | (490,057) | (3,874,051) |
Accounts payable | 257,216 | 3,415,473 |
Accrued expenses | (3,945,503) | (1,325,675) |
Other | 42,789 | (802) |
NET CASH USED IN OPERATING ACTIVITIES | (21,148,069) | (24,200,006) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (406,612) | (554,945) |
Proceeds from sale of fixed assets | 500 | |
Proceeds from sale of marketable securities | 3,000,000 | 3,054,774 |
Cash paid for acquisitions | (7,000,000) | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 2,593,388 | (4,499,671) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on capital leases and notes payable | (54,051) | (103,168) |
Payments of taxes for net share settled restricted stock unit issuances | (440,534) | |
Proceeds from the exercise of warrants and stock options | 283,466 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (494,585) | 180,298 |
NET INCREASE (DECREASE) IN CASH | (19,049,266) | (28,519,379) |
CASH AT BEGINNING OF PERIOD | 81,214,354 | 132,510,610 |
CASH AT END OF PERIOD | 62,165,088 | 103,991,231 |
Supplementary disclosures: | ||
Interest paid | $ 3,054 | $ 3,938 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization and Significant Accounting Policies | NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Arrowhead Research develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the industry’s 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. RNA interference (RNAi) is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. Deemed to be one of the most important recent discoveries in life science with the potential to transform medicine, the discoverers of RNAi were awarded a Nobel Prize in 2006 for their w ork. Arrowhead’s RNAi-based therapeutics leverage this natural pathway o f gene silencing to target and shut down specific disease causing genes . Liquidity Historically, the Company’s primary source of financing has been through the sale of its securities . Research and d evelopment activities have required significant capital investment since the Company’s inception . W e expect our operations to continue to requir e cash investment to pursue our research and development goal s, including 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 December 31 , 2015 , the Company had $ 62.2 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 12 months . These bonds p rovide a source of liquidity, though the Company plans to hold them until maturity. At December 31 , 2015 , the Company had invested $ 1 4.4 million in bonds. During the three months ended December 31 , 2015 , the Company’s cash position de creased by $ 19.0 million which was primarily the result of cash outflows related to operating activities of $ 21. 1 million , partially offset by maturities of fixed income investments totaling $ 3.0 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 Compa ny’s research and development facilities are 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 o f 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 December 31 , 2015 and September 30, 201 5 . 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 institution . 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 —T he 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 December 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 A mortization—At December 31 , 2015 , intangible assets s ubject 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 n ot 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 pr oduct sales levels. The Company record s a contingent consideration obligation for such contingent payments at fair v alue on the acquisition date. The Company estimate s 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 va lue at the balance sheet date . Changes in the fair value of the contingent consideration obligat ions are recognized within the Company’s Consolidated S tatements of O perations and Comprehensive Loss . 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. S ubstantial 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 record s 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 colle ction 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 months ended December 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 ba sed on estimated fair values. The Company use s the Black-Scholes option valuation model t o 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. For restricted stock units, the value of the award is based on the Company’s stock price at the grant date. Fo r performance-based restricted stock unit awards , the value of the award is based on the Company’s stock price at the grant date, with consideration given to the probability of the performance condition being achieved . The Company use s historical data and other information to estimate the expected price volatility for stock option awards and the expected forfeiture rate for all awards . Expense is recognized over the vesting period for all awards, and commences at the grant date for time-based awards and upon our determination that the achievement of such performance conditions is probable for performance-based awards. T his determination requires significant judgment by management. Derivative Assets and Liabilities – The Company account s 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 a dditional paid-in capital on the Company’s Consolidated Balance S heet . 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 li abilities are recorded on the Company’s Consolidated Balance S heet 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 recorde d as other income or expense. The Company estimate s 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. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Dec. 31, 2015 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | NOTE 2 . PROPERTY AND EQUIPMENT The following table summarizes our major classes of property and equipment: December 31, 2015 September 30, 201 5 Computers, office equipment and furniture $ 413,565 $ 404,964 Research equipment 6,783,831 6,354,584 Software 110,428 110,428 Leasehold improvements 3, 167,053 3,117,537 Total gross fixed assets 10, 474,877 9,987,513 Less: Accumulated depreciation and amortization (5 , 808,466 ) (5,460,665 ) Property and equipment, net $ 4, 666 , 411 $ 4,526,848 |
Investments
Investments | 3 Months Ended |
Dec. 31, 2015 | |
Investments All Other Investments [Abstract] | |
Investments | NOTE 3 . INVESTMENTS The Company invests a portion of its excess cash balances in short-term and long-term debt securities. Investments at December 31 , 2015 consisted of corporate bonds with maturities remaining of less than one year . The Company may also invest excess cash balances in certificates of deposit, money market accounts, U . S . Treasuries, U . S . 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 December 31 , 2015 , all investments were classified as held-to-maturity securities. The following table s summarize the Company’s short - and long-term investments as of December 31 , 2015 , and Septem ber 30, 2015 . As of December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial notes (due within one year) ......... $ 14,431,498 $ — $ ( 159,605 ) $ 14,271,893 Commercial notes (due after one year through two years) $ — — $ — $ — Total ................................ $ 14,431,498 $ — $ ( 159,605 ) $ 14,271,893 As of September 30, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial notes (due within one year) $ 17,539,902 $ — $ (304,942 ) $ 17,234,960 Commercial notes (due after one year through two years) $ — — $ — $ — Total $ 17,539,902 $ — $ (304,942 ) $ 17,234,960 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 4 . 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 w ill likely be written off and the Company w ould record an impairment loss. Intangible assets not subject to amortization include IPR&D capitalized as part of a business combination from the acquisition of the Roche RNAi business in 2011 . Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition in March 2015 and license agreements capitalized from the acquisition of the Roche RNAi busines s in 2011 . 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 $ 123,671 . The license agreements associated with the acquisition of the Roche RNAi business were amortized over the estimated life remaining at the time of acquisition , which was 4 years, and the accumulated amortization of the assets is approximately $ 2 30,000 . These assets have been fully amortized as of December 31, 2015. 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 $ 1,293,353 . Amortization expense for the three months ended December 31 , 2015 and 2014 was $ 438 , 991 and $ 13,66 4 , respectively. Amortization expense is expected to be approximately $ 1,275,322 for the remainder of fiscal year 201 6 , $ 1, 700,429 in 2017 , $ 1,700,429 in 2018 , $ 1,700,429 in 2019 , $ 1,700,429 in 2020 , $ 1,700,429 in 2021 , and $ 1 3,662,723 thereafter . The following table provides details on the Company’s intangible asset balances: Intangible assets not subject to amortization Intangible assets subject to amortization Total Intangible assets Balance at September 30, 2015 ................. $ 944,935 $ 23,879,181 $ 24,824,116 Amortization ................................. - ( 438,991 ) ( 438,991 ) Balance at December 31 , 2015 ..................... $ 944,935 $ 23,440,190 $ 24,385,125 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 5 . STOCKHOLDERS’ EQUITY At December 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 December 31 , 2015 , 5 9, 627,499 shares of Common Stock were outstanding . Additionally, 1 5, 6 5 2 shares of Series C Preferred Stock were outstanding , which are convertible into 2,670,990 shares of Common Stock . At December 31 , 2015 , 7,945,090 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. The following table summarizes information about warrants outstanding at December 31 , 2015 : Exercise prices Number of Warrants Remaining Life in Years $ 70.60 ...................... 94,897 1 . 4 $ 5.00 ...................... 364,375 0.5 $ 5.09 ...................... 239,53 4 0.5 $ 4.16 ...................... 1,000 1. 0 $ 3.25 ...................... 334,347 0.6 $ 2.12 ...................... 75,000 2.0 $ 1.83 ...................... 277,284 2. 0 $ 7.14 ...................... 80,000 2.5 Total warrants outstanding 1, 466,437 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6 . COMMITMENTS AND CONTINGENCIES Leases The Company leases approximately 8,500 square feet of office space for its corporate headquarters in Pasadena, California. The lease will expire in September 2019 . Rental costs are approximately $ 24 ,000 per month, increasing approximately 3 % annually. As of December 31, 2015, t he Company’s research facility in Madison, Wisconsin is leased through February 28, 2019 . Monthly rental expense is approximately $ 2 6 ,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 . The Company lease d additional research facility space in Middleton, Wisconsin, and this space is leased through May 2016 . Monthly rental expense for the additional space is approximately $ 4,000 . Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $ 2,000 per month. Facility rent expense for the three months ended December 31 , 2015 and 2014 was $ 1 98,6 00 and $ 171,500 , respectively. As of December 31, 2015, future minimum lease payments due in fiscal years under capitalized leases are as follows: 201 6 (remainder of) .................................... $ 171,315 201 7 .............................................. 228,420 201 8 .............................................. 228,420 201 9 .............................................. 95,17 5 2020 .............................................. - 2021 and thereafter ..................................... - Less interest ......................................... ( 19,0 41 ) Principal ............................................ 704,289 Less current portion .................................... ( 218,447 ) Noncurrent portion ..................................... $ 485,842 As of December 31 , 2015 , future minimum lease payments due in fiscal years under operating leases are as follows: 201 6 (remainder of) ....................................... $ 470,846 201 7 ................................................ 613,664 201 8 ................................................ 637,897 201 9 ................................................ 459,633 2020 ................................................ - 2021 and thereafter ....................................... - Total ................................................. $ 2, 182,040 In January 2016 , the Company entered into a new lease for a Madison, Wisconsin research facility. This lease will replace the Company’s current research facility office leases. The increased capacity of this new facility compared to the current research facilities will accommodate increased research and development personnel for the Company’s expanding pipeline of current and future drug candidates. See Footnote 9 – Subsequent Events for additional discussion of this new lease agreement. Litigation The Company and certain of its officers and directors have been named as defendants in a consolidated class action pending before 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. The consolidated class action, initially filed as Wang v. Arrowhead Research Corp., et al. , No. 2:14-cv-07890 (C.D. Cal., filed Oct. 10, 2014), and Eskinazi v. Arrowhead Research Corp., et al. , No. 2:14-cv-07911 (C.D. Cal., filed Oct. 13, 2014), asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seeks damages in an unspecified amount. Additionally, three putative stockholder derivative actions captioned Weisman v. Anzalone et al ., No. 2:14-cv-08982 (C.D. Cal., filed Nov. 20, 2014), Bernstein (Backus) v. Anzalone, et al. , No. 2:14-cv-09247 (C.D. Cal., filed Dec. 2, 2014); and Johnson v. Anzalone, et al. , No. 2:15-cv-00446 (C.D. Cal., filed Jan. 22, 2015), were 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. An additional consolidated derivative action asserting similar claims is pending in Los Angeles County Superior Court, initially filed as Bacchus v. Anzalone, et al. , (L.A. Super., filed Mar. 5, 2015); and Jackson v. Anzalone, et al. (L.A. Super., filed Mar. 16, 2015). Each of these 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 on November 11, 2014 and captioned William Marsh Rice University vs. Unidym, Inc. and Arrowhead Research Corporation , No. 2014-66088, 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 costs 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 December 31 , 2015 , these future commitments were approximately $ 47.5 million, of which approximately $ 25.2 million is expected to be i ncurred in the remainder of fiscal 2016 , and $ 23.3 million is expected t o be incurred beyond fiscal 2016 . 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 . |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | NOTE 7 . STOCK-BASED COMPENSATION Arrowhead has two plans that provide for equity-ba sed compensation. Under the 2004 Equity Incentive Plan and 2013 Incentive Plan , as of December 31 , 2015 , 2, 537,018 and 5 , 084,284 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 award to employees, consultants and others. No further grants may be made under the 2004 Equity Incentive Plan. As of December 31 , 2015 , there were options granted and outstanding to purchase 2,5 37,018 and 2, 384,144 shares of Common Stock under the 200 4 Equity Incentive Plan and the 2013 Incentive Plan, respectively , and there were 87 7,5 00 restricted stock units granted and outstanding under the 2013 Incentive Plan . Also, as of December 31 , 201 5 , there were 54 4,6 22 shares reserved for options and 46,667 restricted stock units issued as inducement grants to new employees outside of equity compensation plans. During the thr ee months ended December 31 , 2015 , n o options or restricted stock units were granted under the 2004 Equity Incentive Plan, 82 ,000 options and 0 restricted stock units were granted under the 2013 Incentive Plan, and no options and restricted stock units were grant ed as inducement awards to new employees outside of equity incentive plans . The following tables summarize information about stock options: Number of Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Balance At September 30, 201 5 ................. 5,435,640 6. 71 Granted ...................................... 82 ,000 5.96 Cancelled .................................... ( 47,169 ) 8.56 Exercised .................................... (4,687 ) 5.45 Balance At December 31 , 2015 ...................... 5, 465,784 $ 6.69 7.6 years $ 6,925,846 Exercisable At December 31 , 2015 2 ,956,400 $ 6.12 6.8 years $ 4,766,553 Stock-based compensation expense related to stock options for the three months ended December 31, 2015 and 2014 was $ 1, 2 17,217 and $ 981,399 , 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, t he loss creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance. The grant date fair value of the options granted by Arrowhead for the three months ended December 31 , 2015 and 2014 is estimated at $ 365,876 and $ 3,596,618 , respectively . The intrinsic value of the options exercised during the three months ended December 31 , 2015 and 2014 was $ 3,515 and $ 23,774 , respectively. As of December 31 , 2015 , the pre-tax compensation expense for all outstanding unvested stock options in the amount of approximately $ 1 0,850,029 will be recognized in the Company’s results of operations over a weighted average period of 2. 5 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: Three months ended December 31 , 201 5 201 4 Dividend yield .................................. — — Risk-free interest rate .............................. 1. 47 – 1.81 % 1.61 – 1.8 5 % Volatility ...................................... 89 % 75 % Expected life (in years) ............................. 6.25 6.2 5 Weighted average grant date fair value per share of options granted $ 4.46 $3.66 The dividend yield is zero as the Company currently does not pay a dividend. The risk-free interest rate is based on that of the U.S. Treasury bond. Volatility is estimated based on volatility average of the Company’s Common Stock price. Restricted Stock Units Restricted stock u nits (RSUs) , including time-based and performance-based awards, were granted under the Company’s 2013 Incentive Plan and as inducement grants granted outside of the Plan. During the three months ended December 31 , 2015 and 2014 , the Company issued 0 restricted stock units and 30,000 restricted stock units, respectively, to certain members of management. Of the restricted stock units granted during the three months ended December 31, 2014 , 30,000 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 RSUs Weighted- Average Grant Date Fair Value Unvested at September 30, 201 5 ................... 934,167 $ 9.18 Granted ........................................ — — Vested ........................................ ( 10,000 ) 5.22 Forfeited ....................................... — — Unvested at December 31 , 2015 ........................ 924 , 167 $ 9.2 2 The Company recorded $ 1, 163,126 and $ 1,033,457 of expense relating to restricted stock units during the three months ended December 31 , 2015 and 2014 , respectively . S uch expense is included in stock-based compensation expense in the Company’s Consolidated Statement of Operations and Comprehensive Loss . For restricted stock units, the grant date fair value of the award is based on the Company’s closing stock price at the grant date , with consideration given to the probability of achieving performance conditions for performance based awards . As of December 31 , 2015 , the pre-tax compensation expense for all unvested restricted stock units in the amount of approximately $ 2,529,700 will be recognized in the Company’s results of operations over a weighted average period of 1 .7 years. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 8 . 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 December 31 , 2015 and September 30, 2015 for assets and liabilities measured at fair value on a recurring basis: December 31 , 2015 : Level 1 Level 2 Level 3 Total Cash and cash equivalents .................. $ 62,165,088 $ — $ — $ 62,165,088 Derivative liabilities ...................... $ — $ — $ 1,325,128 $ 1,325,128 Acquisition-related contingent consideration obligations $ — $ — $ 5,862,464 $ 5,862,464 September 30, 2015 : Level 1 Level 2 Level 3 Total Cash and cash equivalents .................. $ 81,214,354 $ — $ — $ 81,214,354 Derivative liabilities ...................... $ — $ — $ 1,301,604 $ 1,301,604 Acquisition-related contingent consideration obligations $ — $ — $ 5,862,464 $ 5,862,464 The Company invests its excess cash balances in short - and long-term corporate bonds, generally with remai ning maturities of less than one year . At December 31 , 2015 , the Company had short-term investments of $ 14,431,498 . The fair value of its investment at December 31 , 2015 was $ 14,271,893 . 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 a financing in December 2012, Arrowhead issued warrants to purchase up to 912,543 shares of Common Stock (the “2012 Warrants”) of which 265,161 warrants were outstanding at December 31 , 2015 . Further, as part of a financing in January 2013, Arrowhead issued warrants to purchase up to 833,530 shares of Common Stock (the “2013 Warrants” and, together with the 2012 Warrants, the “Warrants” ) of which 12,123 W arrants were outstanding at December 31 , 2015 . Each of the Warrants 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 and Comprehensive Loss . During the three months ended December 31 , 2015 and 2014 , the Company recorded a non-cash gain /(loss) from the change in fair value of the derivative liability of $ (2 1,574 ) and $ 2 , 179,651 , respect ively. Additionally, As part of an equity financing in June 2010, Arrowhead issued warrants to purchase up to 329,649 shares of Common Stock (the “2010 Warrants”), and the remaining unexercised 24,324 of these warrants expired during the three months ended December 31, 2015. The assumptions used in valuing the derivative liability were as follows: 2012 Warrants December 31 , 2015 September 30, 201 5 Risk- free interest rate 1 . 0 6 % 0.6 % Expected life 2.0 Years 2 .2 Years Dividend yield — — Volatility 89 % 75 % 2013 Warrants December 31 , 2015 September 30, 201 5 Risk- free interest rate 1 . 06 % 0.6 % Expected life 2.1 Years 2 .3 Years Dividend yield — — Volatility 89 % 75 % The following is a reconciliation of the derivative liability related to these warrants: Value at September 30, 2015 .............................. $ 1,272,802 Issuance of instruments ...................................... — Change in value ........................................... 21,574 Net settlements ............................................ — Value at December 31 , 2015 ................................... $ 1, 294,376 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 December 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 Consoli dated Balance S heet 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 and Comprehensive Loss . During the three months ended December 31 , 2015 and 2014 , the Company recorded a non-cash gain/( loss ) from the change in fair value of the derivative liability of $ (1 ,9 50) and $ 202,491 , respectively. The assumptions used in valuing the derivat ive liability were as follows: December 31, 2015 September 30, 2015 Risk- free interest rate .................................. 1.00 % 1.00 % Expected life ........................................ 2.2 Years 2.5 Years Dividend yield ....................................... — — Volatility .......................................... 89 % 75 % The following is a reconciliation of the derivative liability related to these exchange rights: Value at September 30, 201 5 .............................. $ 28,802 Issuance of instruments ...................................... — Change in value ........................................... 1,950 Net settlements ............................................ — Value at December 31 , 2015 ................................... $ 30 , 752 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 December 31 , 2015 , the Company has liabilities for contingent consideration related to its acquisition of the Roche RNAi business completed in 2011 . 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 tim ing 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 app roval and commercial success, the Company utilize s data regarding similar milestone events from several sources, in cluding 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 cont ingent consideration expense the Company record s in any given period. Changes in the fair value of the contingent consideration obligations are recorded in the Company’s Consolidated Statement of O perations and Comprehensive Loss . The following is a reconciliation of contingent consideration fair value. Value at September 30, 201 5 ...................................... $ 5,862,464 Purchase price contingent consideration ............................... — Contingent consideration payments .................................. — Change in fair value of contingent consideration .......................... — Value at December 31, 2015 ....................................... $ 5,862,464 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 c arrying value of the Company’s other long-term liabilities approximates fair value based on market interest rates. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 9. SUBSEQUENT EVENTS On January 8, 2016, the Company entered into a new lease for a Madison, Wisconsin research facility. The 10 -year of fice building lease between the Company’s subsidiary, Arrowhead Madison Inc. and University Research Park, Incorporated is for approximately 60,000 square feet of office and laboratory space located at 502 South Rosa Road, Madison, Wisconsin, and this lease will replace the Company’s current research facility lease also with University Research Park, Incorporated for property located at 465 Science Drive, Madison Wisconsin. The increased capacity of t his new facility compared to the Company’s current research facilities will accommodate increased research a nd development personnel for the Company’s expanding pipeline of current and future drug candidates. The initial term of the lease commenced on January 1, 2016 with expected occupancy in late 2016 , after certain leasehold improvements have been completed. The lease payments, which begin on October 1, 2016, will be approximately $ 15.4 million over the initial 10-year term. We also estimate payments for the Company’s pro rata share of certain real estate taxes, operating expenses and common area maintenance expenses to be approximately $ 0.9 million for the first year of the lease, and these payments will continue throughout the initial 10-year term. The Company expects to pay approximately $ 7.3 million for leasehold improvements, net of tenant improvement allowances. Pursuant to the lease, within six months of the expiration of the initial 10-year term, the Company has the option to extend the lease for up to two additional five -year terms, with certain annual increases in base rent. Additionally, on January 8, 2016 a nd in conjunction with signing the new lease agreement as discussed above, the Company entered into an amendment to the Compa ny’s current research facility lease for property located at 465 Science Drive Suite C, Madison, Wisconsin with University Research Park, Incorporated that provides for an early termination of such lease effective on October 31, 2016. |
Organization and Significant 16
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business Arrowhead Research develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the industry’s 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. RNA interference (RNAi) is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. Deemed to be one of the most important recent discoveries in life science with the potential to transform medicine, the discoverers of RNAi were awarded a Nobel Prize in 2006 for their w ork. Arrowhead’s RNAi-based therapeutics leverage this natural pathway o f gene silencing to target and shut down specific disease causing genes . |
Liquidity | Liquidity Historically, the Company’s primary source of financing has been through the sale of its securities . Research and d evelopment activities have required significant capital investment since the Company’s inception . W e expect our operations to continue to requir e cash investment to pursue our research and development goal s, including 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 December 31 , 2015 , the Company had $ 62.2 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 12 months . These bonds p rovide a source of liquidity, though the Company plans to hold them until maturity. At December 31 , 2015 , the Company had invested $ 1 4.4 million in bonds. During the three months ended December 31 , 2015 , the Company’s cash position de creased by $ 19.0 million which was primarily the result of cash outflows related to operating activities of $ 21. 1 million , partially offset by maturities of fixed income investments totaling $ 3.0 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 Compa ny’s research and development facilities are 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 o f 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 December 31 , 2015 and September 30, 201 5 . |
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 institution . 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 —T he 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 December 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 A mortization—At December 31 , 2015 , intangible assets s ubject 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 n ot 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 pr oduct sales levels. The Company record s a contingent consideration obligation for such contingent payments at fair v alue on the acquisition date. The Company estimate s 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 va lue at the balance sheet date . Changes in the fair value of the contingent consideration obligat ions are recognized within the Company’s Consolidated S tatements of O perations and Comprehensive Loss . 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. S ubstantial 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 record s 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 colle ction 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 months ended December 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 ba sed on estimated fair values. The Company use s the Black-Scholes option valuation model t o 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. For restricted stock units, the value of the award is based on the Company’s stock price at the grant date. Fo r performance-based restricted stock unit awards , the value of the award is based on the Company’s stock price at the grant date, with consideration given to the probability of the performance condition being achieved . The Company use s historical data and other information to estimate the expected price volatility for stock option awards and the expected forfeiture rate for all awards . Expense is recognized over the vesting period for all awards, and commences at the grant date for time-based awards and upon our determination that the achievement of such performance conditions is probable for performance-based awards. T his determination requires significant judgment by management. |
Derivative Assets and Liabilities | Derivative Assets and Liabilities – The Company account s 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 a dditional paid-in capital on the Company’s Consolidated Balance S heet . 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 li abilities are recorded on the Company’s Consolidated Balance S heet 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 recorde d as other income or expense. The Company estimate s 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. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Property Plant And Equipment [Abstract] | |
Summary of Property and Equipment | The following table summarizes our major classes of property and equipment: December 31, 2015 September 30, 201 5 Computers, office equipment and furniture $ 413,565 $ 404,964 Research equipment 6,783,831 6,354,584 Software 110,428 110,428 Leasehold improvements 3, 167,053 3,117,537 Total gross fixed assets 10, 474,877 9,987,513 Less: Accumulated depreciation and amortization (5 , 808,466 ) (5,460,665 ) Property and equipment, net $ 4, 666 , 411 $ 4,526,848 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Summary of Short and Long-term Investments | The following table s summarize the Company’s short - and long-term investments as of December 31 , 2015 , and Septem ber 30, 2015 . As of December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial notes (due within one year) ......... $ 14,431,498 $ — $ ( 159,605 ) $ 14,271,893 Commercial notes (due after one year through two years) $ — — $ — $ — Total ................................ $ 14,431,498 $ — $ ( 159,605 ) $ 14,271,893 As of September 30, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial notes (due within one year) $ 17,539,902 $ — $ (304,942 ) $ 17,234,960 Commercial notes (due after one year through two years) $ — — $ — $ — Total $ 17,539,902 $ — $ (304,942 ) $ 17,234,960 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Dec. 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 not subject to amortization Intangible assets subject to amortization Total Intangible assets Balance at September 30, 2015 ................. $ 944,935 $ 23,879,181 $ 24,824,116 Amortization ................................. - ( 438,991 ) ( 438,991 ) Balance at December 31 , 2015 ..................... $ 944,935 $ 23,440,190 $ 24,385,125 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Summary of Information About Warrants | The following table summarizes information about warrants outstanding at December 31 , 2015 : Exercise prices Number of Warrants Remaining Life in Years $ 70.60 ...................... 94,897 1 . 4 $ 5.00 ...................... 364,375 0.5 $ 5.09 ...................... 239,53 4 0.5 $ 4.16 ...................... 1,000 1. 0 $ 3.25 ...................... 334,347 0.6 $ 2.12 ...................... 75,000 2.0 $ 1.83 ...................... 277,284 2. 0 $ 7.14 ...................... 80,000 2.5 Total warrants outstanding 1, 466,437 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Future Minimum Lease Payments Under Capitalized Leases | As of December 31, 2015, future minimum lease payments due in fiscal years under capitalized leases are as follows: 201 6 (remainder of) .................................... $ 171,315 201 7 .............................................. 228,420 201 8 .............................................. 228,420 201 9 .............................................. 95,17 5 2020 .............................................. - 2021 and thereafter ..................................... - Less interest ......................................... ( 19,0 41 ) Principal ............................................ 704,289 Less current portion .................................... ( 218,447 ) Noncurrent portion ..................................... $ 485,842 |
Future Minimum Lease Payments Under Operating Leases | As of December 31 , 2015 , future minimum lease payments due in fiscal years under operating leases are as follows: 201 6 (remainder of) ....................................... $ 470,846 201 7 ................................................ 613,664 201 8 ................................................ 637,897 201 9 ................................................ 459,633 2020 ................................................ - 2021 and thereafter ....................................... - Total ................................................. $ 2, 182,040 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 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 Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Balance At September 30, 201 5 ................. 5,435,640 6. 71 Granted ...................................... 82 ,000 5.96 Cancelled .................................... ( 47,169 ) 8.56 Exercised .................................... (4,687 ) 5.45 Balance At December 31 , 2015 ...................... 5, 465,784 $ 6.69 7.6 years $ 6,925,846 Exercisable At December 31 , 2015 2 ,956,400 $ 6.12 6.8 years $ 4,766,553 |
Assumptions Used to Value Stock Options | The assumptions used to value stock options are as follows: Three months ended December 31 , 201 5 201 4 Dividend yield .................................. — — Risk-free interest rate .............................. 1. 47 – 1.81 % 1.61 – 1.8 5 % Volatility ...................................... 89 % 75 % Expected life (in years) ............................. 6.25 6.2 5 Weighted average grant date fair value per share of options granted $ 4.46 $3.66 |
Summary of Share Activity Related to Restricted Stock Units | The following table summarizes the activity of the Company’s Restricted Stock Units: Number of RSUs Weighted- Average Grant Date Fair Value Unvested at September 30, 201 5 ................... 934,167 $ 9.18 Granted ........................................ — — Vested ........................................ ( 10,000 ) 5.22 Forfeited ....................................... — — Unvested at December 31 , 2015 ........................ 924 , 167 $ 9.2 2 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 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 December 31 , 2015 and September 30, 2015 for assets and liabilities measured at fair value on a recurring basis: December 31 , 2015 : Level 1 Level 2 Level 3 Total Cash and cash equivalents .................. $ 62,165,088 $ — $ — $ 62,165,088 Derivative liabilities ...................... $ — $ — $ 1,325,128 $ 1,325,128 Acquisition-related contingent consideration obligations $ — $ — $ 5,862,464 $ 5,862,464 September 30, 2015 : Level 1 Level 2 Level 3 Total Cash and cash equivalents .................. $ 81,214,354 $ — $ — $ 81,214,354 Derivative liabilities ...................... $ — $ — $ 1,301,604 $ 1,301,604 Acquisition-related contingent consideration obligations $ — $ — $ 5,862,464 $ 5,862,464 |
Change in Fair Value of Contingent Consideration Obligations | The following is a reconciliation of contingent consideration fair value. Value at September 30, 201 5 ...................................... $ 5,862,464 Purchase price contingent consideration ............................... — Contingent consideration payments .................................. — Change in fair value of contingent consideration .......................... — Value at December 31, 2015 ....................................... $ 5,862,464 |
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 derivat ive liability were as follows: December 31, 2015 September 30, 2015 Risk- free interest rate .................................. 1.00 % 1.00 % Expected life ........................................ 2.2 Years 2.5 Years Dividend yield ....................................... — — Volatility .......................................... 89 % 75 % |
Reconciliation of Derivative Liability | The following is a reconciliation of the derivative liability related to these exchange rights: Value at September 30, 201 5 .............................. $ 28,802 Issuance of instruments ...................................... — Change in value ........................................... 1,950 Net settlements ............................................ — Value at December 31 , 2015 ................................... $ 30 , 752 |
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: 2012 Warrants December 31 , 2015 September 30, 201 5 Risk- free interest rate 1 . 0 6 % 0.6 % Expected life 2.0 Years 2 .2 Years Dividend yield — — Volatility 89 % 75 % 2013 Warrants December 31 , 2015 September 30, 201 5 Risk- free interest rate 1 . 06 % 0.6 % Expected life 2.1 Years 2 .3 Years Dividend yield — — Volatility 89 % 75 % |
Reconciliation of Derivative Liability | The following is a reconciliation of the derivative liability related to these warrants: Value at September 30, 2015 .............................. $ 1,272,802 Issuance of instruments ...................................... — Change in value ........................................... 21,574 Net settlements ............................................ — Value at December 31 , 2015 ................................... $ 1, 294,376 |
Organization and Significant 24
Organization and Significant Accounting Policies - Additional Information (Detail) - USD ($) | 3 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule Of Investments [Line Items] | ||||
Cash and cash equivalents | $ 62,165,088 | $ 103,991,231 | $ 81,214,354 | $ 132,510,610 |
Investments | 14,431,498 | 17,539,902 | ||
Net increase (decrease) in cash | (19,049,266) | (28,519,379) | ||
Cash outflow related to continuing operating activities | (21,148,069) | (24,200,006) | ||
Proceeds from sale of marketable securities | 3,000,000 | $ 3,054,774 | ||
Restricted Cash | 0 | $ 0 | ||
Amount insured in FDIC per account | $ 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 12 months |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Property Plant And Equipment [Abstract] | ||
Computers, office equipment and furniture | $ 413,565 | $ 404,964 |
Research equipment | 6,783,831 | 6,354,584 |
Software | 110,428 | 110,428 |
Leasehold improvements | 3,167,053 | 3,117,537 |
Total gross fixed assets | 10,474,877 | 9,987,513 |
Less: Accumulated depreciation and amortization | (5,808,466) | (5,460,665) |
Property and equipment, net | $ 4,666,411 | $ 4,526,848 |
Investments - Summary of Short
Investments - Summary of Short and Long-term Investments (Detail) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Schedule Of Held To Maturity Securities [Line Items] | ||
Commercial notes (due within one year), amortized cost | $ 14,431,498 | $ 17,539,902 |
Total | 14,431,498 | 17,539,902 |
Gross Unrealized Losses | (159,605) | (304,942) |
Fair Value | 14,271,893 | 17,234,960 |
Commercial Notes Due Within One Year | ||
Schedule Of Held To Maturity Securities [Line Items] | ||
Gross Unrealized Losses | (159,605) | (304,942) |
Fair Value | $ 14,271,893 | $ 17,234,960 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 438,991 | $ 13,664 |
Amortization of license agreements remainder of fiscal year 2016 | 1,275,322 | |
Amortization of license agreements in 2017 | 1,700,429 | |
Amortization of license agreements in 2018 | 1,700,429 | |
Amortization of license agreements in 2019 | 1,700,429 | |
Amortization of license agreements in 2020 | 1,700,429 | |
Amortization of license agreements in 2021 | 1,700,429 | |
Amortization of license agreements, thereafter | $ 13,662,723 | |
Novartis | Licensing Agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Amortization period of intangible assets | 21 years | |
Finite-lived intangible assets, accumulated amortization | $ 123,671 | |
Novartis | Patents | ||
Finite Lived Intangible Assets [Line Items] | ||
Amortization period of intangible assets | 14 years | |
Finite-lived intangible assets, accumulated amortization | $ 1,293,353 | |
Roche RNAi | Licensing Agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Amortization period of intangible assets | 4 years | |
Finite-lived intangible assets, accumulated amortization | $ 230,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets Net Excluding Goodwill [Abstract] | ||
Intangible assets not subject to amortization, beginning balance | $ 944,935 | |
Intangible assets not subject to amortization, ending balance | 944,935 | |
Intangible assets subject to amortization, beginning balance | 23,879,181 | |
Intangible assets subject to amortization, Amortization | (438,991) | $ (13,664) |
Intangible assets subject to amortization, ending balance | 23,440,190 | |
Total Intangible assets, beginning balance | 24,824,116 | |
Total Intangible assets, ending balance | $ 24,385,125 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - $ / shares | Dec. 31, 2015 | Sep. 30, 2015 |
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 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares outstanding | 59,627,499 | 59,544,677 |
Preferred stock, shares outstanding | 15,652 | 15,652 |
Threshold percentage of common stock ownership upon preferred stock conversion | 9.99% | |
Series C Preferred Stock | ||
Class Of Stock [Line Items] | ||
Common stock, issued upon conversion of preferred stock | 2,670,990 | |
Preferred stock, shares outstanding | 15,652 | |
2004 Equity Incentive Plan, 2013 Equity Incentive Plan, and Inducement Grants | ||
Class Of Stock [Line Items] | ||
Common Stock, Share reserve for issuance | 7,945,090 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Information About Warrants (Detail) | 3 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Class Of Warrant Or Right [Line Items] | |
Warrants outstanding | 1,466,437 |
Warrant 1 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 70.60 |
Warrants outstanding | 94,897 |
Remaining Life in Years | 1 year 4 months 24 days |
Warrant 2 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 5 |
Warrants outstanding | 364,375 |
Remaining Life in Years | 6 months |
Warrant 3 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 5.09 |
Warrants outstanding | 239,534 |
Remaining Life in Years | 6 months |
Warrant 4 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 4.16 |
Warrants outstanding | 1,000 |
Remaining Life in Years | 1 year |
Warrant 5 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 3.25 |
Warrants outstanding | 334,347 |
Remaining Life in Years | 7 months 6 days |
Warrant 6 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 2.12 |
Warrants outstanding | 75,000 |
Remaining Life in Years | 2 years |
Warrant 7 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 1.83 |
Warrants outstanding | 277,284 |
Remaining Life in Years | 2 years |
Warrant 8 | |
Class Of Warrant Or Right [Line Items] | |
Exercise prices | $ / shares | $ 7.14 |
Warrants outstanding | 80,000 |
Remaining Life in Years | 2 years 6 months |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 3 Months Ended | |
Dec. 31, 2015USD ($)ft² | Dec. 31, 2014USD ($) | |
Other Commitments [Line Items] | ||
Facility rent expense | $ 198,600 | $ 171,500 |
Provision for recorded liabilities | 0 | |
Future commitments | 47,500,000 | |
Commitments expected to be incurred in fiscal 2016 | 25,200,000 | |
Commitments expected to be incurred beyond fiscal 2016 | 23,300,000 | |
Corporate Headquarters In Pasadena | ||
Other Commitments [Line Items] | ||
Rental expense | $ 24,000 | |
Operating lease expiration month and year | 2019-09 | |
Percentage of increase in annual rental cost | 3.00% | |
Office space leases, in square feet | ft² | 8,500 | |
Research Facility in Madison | ||
Other Commitments [Line Items] | ||
Rental expense | $ 26,000 | |
Operating lease expiration date | Feb. 28, 2019 | |
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 | |
Research Facility in Middleton | ||
Other Commitments [Line Items] | ||
Rental expense | $ 4,000 | |
Operating lease expiration month and year | 2016-05 | |
Other rental expenses including common area maintenance and real estate taxes | $ 2,000 |
Commitments and Contingencies32
Commitments and Contingencies - Future Minimum Lease Payments Under Capitalized Leases (Detail) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Leases [Abstract] | ||
2016 (remainder of) | $ 171,315 | |
2,017 | 228,420 | |
2,018 | 228,420 | |
2,019 | 95,175 | |
Less interest | (19,041) | |
Principal | 704,289 | |
Less current portion | (218,447) | $ (217,548) |
Noncurrent portion | $ 485,842 | $ 540,792 |
Commitments and Contingencies33
Commitments and Contingencies - Future Minimum Lease Payments Under Operating Leases (Detail) | Dec. 31, 2015USD ($) |
Leases [Abstract] | |
2016 (remainder of) | $ 470,846 |
2,017 | 613,664 |
2,018 | 637,897 |
2,019 | 459,633 |
Total | $ 2,182,040 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Options Outstanding | 5,465,784 | 5,435,640 | |
Number of Options Outstanding, Granted | 82,000 | ||
Stock-based compensation expense | $ 2,380,343 | $ 2,014,856 | |
Share-based compensation, description | 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. | ||
Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 1,217,217 | 981,399 | |
Grant date fair value of the options granted | 365,876 | 3,596,618 | |
Intrinsic value of options exercised | 3,515 | $ 23,774 | |
Unrecognized pre-tax compensation expense | $ 10,850,029 | ||
Weighted average period to recognize pre-tax compensation expense | 2 years 6 months | ||
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 | 0 | 30,000 | |
Stock-based compensation expense | $ 1,163,126 | $ 1,033,457 | |
Weighted average period to recognize pre-tax compensation expense | 1 year 8 months 12 days | ||
Unrecognized pre-tax compensation expense | $ 2,529,700 | ||
2004 Equity Incentive Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares reserve for issuance | 2,537,018 | ||
2004 Equity Incentive Plan | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Options Outstanding | 2,537,018 | ||
Number of Options Outstanding, Granted | 0 | ||
2004 Equity Incentive Plan | Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted stock units outstanding, granted | 0 | ||
2013 Incentive Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares reserve for issuance | 5,084,284 | ||
2013 Incentive Plan | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Options Outstanding | 2,384,144 | ||
Number of Options Outstanding, Granted | 82,000 | ||
2013 Incentive Plan | Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted stock units outstanding | 877,500 | ||
Number of restricted stock units outstanding, granted | 0 | ||
Outside Of Equity Compensation Plans | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares reserve for issuance | 544,622 | ||
Outside Of Equity Compensation Plans | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Options Outstanding, Granted | 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 | 46,667 | ||
Number of restricted stock units outstanding, granted | 0 | ||
Units granted outside of Equity Incentive plans | 30,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summarize Information about Stock Options (Detail) | 3 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Number of Options Outstanding, beginning balance | shares | 5,435,640 |
Number of Options Outstanding, Granted | shares | 82,000 |
Number of Options Outstanding, Cancelled | shares | (47,169) |
Number of Options Outstanding, Exercised | shares | (4,687) |
Number of Options Outstanding, ending balance | shares | 5,465,784 |
Number of Options Outstanding, Exercisable | shares | 2,956,400 |
Weighted Average Exercise Price Per Share, beginning balance | $ / shares | $ 6.71 |
Weighted Average Exercise Price Per Share, Granted | $ / shares | 5.96 |
Weighted Average Exercise Price Per Share, Cancelled | $ / shares | 8.56 |
Weighted Average Exercise Price Per Share, Exercised | $ / shares | 5.45 |
Weighted Average Exercise Price Per Share, ending balance | $ / shares | 6.69 |
Weighted Average Exercise Price Per Share, Exercisable | $ / shares | $ 6.12 |
Weighted Average Remaining Contractual Term | 7 years 7 months 6 days |
Weighted Average Remaining Contractual Term, Exercisable | 6 years 9 months 18 days |
Aggregate Intrinsic Value | $ | $ 6,925,846 |
Aggregate Intrinsic Value, Exercisable | $ | $ 4,766,553 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Value Stock Options (Detail) - $ / shares | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | ||
Risk-free interest rate, minimum | 1.47% | 1.61% |
Risk-free interest rate, maximum | 1.81% | 1.85% |
Volatility | 89.00% | 75.00% |
Expected life (in years) | 6 years 3 months | 6 years 3 months |
Weighted average grant date fair value per share of options granted | $ 4.46 | $ 3.66 |
Stock-Based Compensation - Su37
Stock-Based Compensation - Summary of Restricted Stock Activity (Detail) - Restricted Stock Units (RSUs) - $ / shares | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Shares, Unvested, beginning of period | 934,167 | |
Number of restricted stock units outstanding, granted | 0 | 30,000 |
Shares, Vested | (10,000) | |
Shares, Unvested, End of period | 924,167 | |
Weighted average grant date fair value, beginning balance | $ 9.18 | |
Weighted average grant date fair value, Vested | 5.22 | |
Weighted average grant date fair value, ending balance | $ 9.22 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ 1,325,128 | $ 1,301,604 |
Acquisition-related contingent consideration obligations | 5,862,464 | 5,862,464 |
Fair Value, Measurements, Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 62,165,088 | 81,214,354 |
Derivative liabilities | 1,325,128 | 1,301,604 |
Acquisition-related contingent consideration obligations | 5,862,464 | 5,862,464 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 62,165,088 | 81,214,354 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 1,325,128 | 1,301,604 |
Acquisition-related contingent consideration obligations | $ 5,862,464 | $ 5,862,464 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) | Sep. 30, 2011shares | Sep. 30, 2015USD ($) | Jan. 31, 2013shares | Dec. 31, 2012shares | Jun. 30, 2010shares | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Short term investments | $ | $ 14,431,498 | $ 17,539,902 | |||||
Fair value of investment | $ | $ 14,271,893 | $ 17,234,960 | |||||
Warrants outstanding | 1,466,437 | ||||||
Non-cash gain (loss) from change in fair value of the derivative liability | $ | $ (21,574) | $ 2,179,651 | |||||
Ablaris Therapeutics | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Warrants outstanding | 500,000 | ||||||
Non-cash gain (loss) from change in fair value of the derivative liability | $ | $ (1,950) | $ 202,491 | |||||
Duration of exchange rights | 7 years | ||||||
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 | ||||||
2010 Warrants | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Warrants issued to acquire Common Stock | 329,649 | ||||||
Warrants expired | 24,324 | ||||||
2012 Warrants | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Warrants issued to acquire Common Stock | 912,543 | ||||||
Warrants outstanding | 265,161 | ||||||
2013 Warrants | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Warrants issued to acquire Common Stock | 833,530 | ||||||
Warrants outstanding | 12,123 |
Fair Value Measurements - Assum
Fair Value Measurements - Assumptions Used in Valuing Derivative Liabilities (Detail) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2015 | |
2012 Warrants | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 1.06% | 0.60% |
Expected life | 2 years | 2 years 2 months 12 days |
Volatility | 89.00% | 75.00% |
2013 Warrants | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 1.06% | 0.60% |
Expected life | 2 years 1 month 6 days | 2 years 3 months 18 days |
Volatility | 89.00% | 75.00% |
Exchange rights | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Risk-free interest rate | 1.00% | 1.00% |
Expected life | 2 years 2 months 12 days | 2 years 6 months |
Volatility | 89.00% | 75.00% |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Derivative Liability (Detail) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Change in value | $ (21,574) | $ 2,179,651 |
Exchange rights | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Value, Beginning balance | 28,802 | |
Change in value | 1,950 | |
Value, Ending balance | 30,752 | |
Warrant | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Value, Beginning balance | 1,272,802 | |
Change in value | 21,574 | |
Value, Ending balance | $ 1,294,376 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in Fair Value of Contingent Consideration Obligations (Detail) | Dec. 31, 2015USD ($) |
Business Combinations [Abstract] | |
Contingent consideration obligations, Beginning balance | $ 5,862,464 |
Contingent consideration obligations, Ending balance | $ 5,862,464 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - Research Facility in Madison $ in Millions | Jan. 08, 2016USD ($)ft²Option | Dec. 31, 2015 |
Subsequent Event [Line Items] | ||
Operating lease available for occupancy year | late 2,016 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Operating lease initial term | 10 years | |
Area of operating leased property | ft² | 60,000 | |
Operating lease commencement date | Jan. 1, 2016 | |
Operating lease payments during initial term | $ 15.4 | |
Estimated payment for real estate taxes, operating expenses and common area maintenance expenses | 0.9 | |
Estimated payments for leasehold improvements net of tenant improvement allowances | $ 7.3 | |
Number of renewal options | Option | 2 | |
Operating leases renewal term | 5 years |