Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Sep. 30, 2019	Nov. 20, 2019	Mar. 31, 2019
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Trading Symbol	ARWR
Entity Registrant Name	ARROWHEAD PHARMACEUTICALS, INC.
Entity Central Index Key	0000879407
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		95,708,027
Entity Public Float			$ 1.7
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock
Security Exchange Name	NASDAQ
Entity File Number	001-38042
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-0408024
Entity Address, Address Line One	177 E. Colorado Blvd
Entity Address, Address Line Two	Suite 700
Entity Address, City or Town	Pasadena
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91105
City Area Code	626
Local Phone Number	304-3400
Document Annual Report	true
Document Transition Report	false
Documents Incorporated by Reference	Portions of the Definitive Proxy Statement to be filed for Arrowhead Pharmaceuticals Inc.’s 2020 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Sep. 30, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 221,804,128	$ 30,133,213
Accounts receivable	661,361	327,375
Prepaid expenses	3,317,999	1,267,717
Other current assets	2,563,435	640,117
Short-term investments	36,899,894	46,400,176
TOTAL CURRENT ASSETS	265,246,817	78,768,598
Property and equipment, net	23,214,899	13,935,425
Intangible assets, net	17,063,580	18,764,010
Long-term investments	44,175,993
Other assets	144,148	141,918
TOTAL ASSETS	349,845,437	111,609,951
CURRENT LIABILITIES
Accounts payable	7,649,921	2,806,098
Accrued expenses	6,504,729	5,043,087
Accrued payroll and benefits	4,955,887	3,937,605
Deferred rent	173,952	307,334
Deferred revenue	77,769,629	600
Note payable		223,820
Other current liabilities	16,561	46,407
TOTAL CURRENT LIABILITIES	97,070,679	12,364,951
LONG-TERM LIABILITIES
Deferred rent, net of current portion	3,703,364	1,702,801
Deferred revenue, net of current portion	5,035,142
Note payable, net of current portion		2,101,198
Other non-current liabilities		200,000
TOTAL LONG-TERM LIABILITIES	8,738,506	4,003,999
Commitments and contingencies (Note 7)
Arrowhead Pharmaceuticals, Inc. stockholders' equity:
Common stock, $0.001 par value; 145,000,000 shares authorized; 95,506,271 and 88,505,302 shares issued and outstanding as of September 30, 2019 and September 30, 2018, respectively	187,876	180,875
Additional paid-in capital	664,086,155	582,902,694
Accumulated other comprehensive income (loss)	(391,624)	(21,564)
Accumulated deficit	(419,290,967)	(487,265,816)
Total Arrowhead Pharmaceuticals, Inc. stockholders' equity	244,591,440	95,796,189
Noncontrolling interest	(555,188)	(555,188)
TOTAL STOCKHOLDERS’ EQUITY	244,036,252	95,241,001
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 349,845,437	$ 111,609,951

Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
REVENUE	$ 168,795,577	$ 16,142,321	$ 31,407,709
Type of Revenue [Extensible List]	arwr:TechnologyLicensesCollaborativeResearchAndDevelopmentArrangementsResearchGrantsAndProductSalesMember	arwr:TechnologyLicensesCollaborativeResearchAndDevelopmentArrangementsResearchGrantsAndProductSalesMember	arwr:TechnologyLicensesCollaborativeResearchAndDevelopmentArrangementsResearchGrantsAndProductSalesMember
OPERATING EXPENSES
Research and development	$ 81,048,686	$ 52,968,505	$ 50,904,466
General and administrative expenses	26,556,257	19,110,051	17,499,152
TOTAL OPERATING EXPENSES	107,604,943	72,078,556	68,403,618
OPERATING INCOME (LOSS)	61,190,634	(55,936,235)	(36,995,909)
OTHER INCOME (EXPENSE)
Interest income (expense), net	6,957,768	1,048,523	415,128
Change in value of derivatives		432,141	890,362
Other income (expense)		7,493	1,312,524
TOTAL OTHER INCOME (EXPENSE)	6,957,768	1,488,157	2,618,014
INCOME (LOSS) BEFORE INCOME TAXES	68,148,402	(54,448,078)	(34,377,895)
Provision for income taxes	(173,553)	(2,400)	(2,400)
NET INCOME (LOSS)	$ 67,974,849	$ (54,450,478)	$ (34,380,295)
NET INCOME (LOSS) PER SHARE - BASIC	$ 0.72	$ (0.65)	$ (0.47)
NET INCOME (LOSS) PER SHARE - DILUTED	$ 0.69	$ (0.65)	$ (0.47)
Weighted average shares outstanding - basic	93,858,857	83,638,469	73,898,598
Weighted average shares outstanding - diluted	98,607,815	83,638,469	73,898,598
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign Currency Translation Adjustments	$ (370,060)	$ (54,796)	$ 25,783
COMPREHENSIVE INCOME (LOSS)	$ 67,604,789	$ (54,505,274)	$ (34,354,512)

Consolidated Statement of Stockholders' Equity - USD ($)	Total	Amgen	Preferred Stock	Common Stock	Common Stock Amgen	Additional Paid-In Capital	Additional Paid-In Capital Amgen	Accumulated Other Comprehensive Income (loss)	Accumulated Deficit	Non-controlling Interest
Beginning Balance, Amount at Sep. 30, 2016	$ 95,024,259		$ 16	$ 162,116		$ 493,844,909		$ 7,449	$ (398,435,043)	$ (555,188)
Beginning Balance, Shares at Sep. 30, 2016			15,652	69,746,685
Stock-based compensation	7,891,595					7,891,595
Exercise of stock options, Amount	271,931			$ 136		271,795
Exercise of stock options, Shares				135,730
Common stock- Restricted Stock Units vesting, Amount	(403,261)			$ 481		(403,742)
Common stock- Restricted Stock Units vesting, Shares				481,212
Common stock issued		$ 12,420,000			$ 1,746		$ 12,418,254
Common stock issued, Shares					1,745,810
Preferred stock converted to common stock, Amount			$ (16)	$ 2,671		(2,655)
Preferred stock converted to common stock, Shares			(15,652)	2,670,989
Exercise of exchange rights, Amount	17,150			$ 5		17,145
Exercise of exchange rights, Shares				5,000
Foreign currency translation adjustments	25,783							25,783
Net income (loss)	(34,380,295)								(34,380,295)
Ending Balance, Amount at Sep. 30, 2017	80,867,162			$ 167,155		514,037,301		33,232	(432,815,338)	(555,188)
Ending Balance, Shares at Sep. 30, 2017				74,785,426
Stock-based compensation	8,454,607					8,454,607
Exercise of stock options, Amount	2,656,710			$ 605		2,656,105
Exercise of stock options, Shares				604,611
Exercise of warrants, Amount	1,237,429			$ 288		1,237,141
Exercise of warrants, Shares				288,473
Common stock- Restricted Stock Units vesting, Amount	(54,668)			$ 1,327		(55,995)
Common stock- Restricted Stock Units vesting, Shares				1,326,792
Common stock issued	56,585,035			$ 11,500		56,573,535
Common stock issued, Shares				11,500,000
Foreign currency translation adjustments	(54,796)							(54,796)
Net income (loss)	(54,450,478)								(54,450,478)
Ending Balance, Amount at Sep. 30, 2018	95,241,001			$ 180,875		582,902,694		(21,564)	(487,265,816)	(555,188)
Ending Balance, Shares at Sep. 30, 2018				88,505,302
Stock-based compensation	12,393,323					12,393,323
Exercise of stock options, Amount	$ 8,275,410			$ 1,543		8,273,867
Exercise of stock options, Shares	1,542,795			1,542,795
Common stock- Restricted Stock Units vesting, Amount				$ 2,197		(2,197)
Common stock- Restricted Stock Units vesting, Shares				2,197,305
Common stock issued	$ 60,521,729			$ 3,261		60,518,468
Common stock issued, Shares				3,260,869
Foreign currency translation adjustments	(370,060)							(370,060)
Net income (loss)	67,974,849								67,974,849
Ending Balance, Amount at Sep. 30, 2019	$ 244,036,252			$ 187,876		$ 664,086,155		$ (391,624)	$ (419,290,967)	$ (555,188)
Ending Balance, Shares at Sep. 30, 2019				95,506,271

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 67,974,849	$ (54,450,478)	$ (34,380,295)
Change in value of derivatives		(432,141)	(890,362)
Stock-based compensation	12,393,323	8,454,607	7,891,595
Depreciation and amortization	4,439,144	4,699,275	4,690,440
Amortization/(accretion) of note premiums	1,069,070	383,075	(43,519)
Changes in operating assets and liabilities:
Accounts receivable	(333,986)	(259,578)	7,203
Prepaid expenses and other current assets	(3,710,515)	319,166	2,814,509
Deferred revenue	82,804,171	(5,269,140)	157,981
Accounts payable	4,843,825	(1,270,416)	(3,509,995)
Accrued expenses	2,450,079	1,016,506	(401,777)
Other	1,104,963	(414,293)	(274,752)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	173,034,923	(47,223,417)	(23,938,972)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(12,001,225)	(1,421,252)	(7,918,198)
Purchases of marketable securities	(90,266,001)	(52,083,131)	(44,974,736)
Proceeds from sale of marketable securities	54,521,219	46,069,420	4,248,716
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(47,746,007)	(7,434,963)	(48,644,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable	(2,415,150)	(208,506)	(197,790)
Payments of taxes for net share settled restricted stock unit issuances		(54,667)	(438,838)
Proceeds from the exercises of warrants and stock options	8,275,410	3,631,164	272,818
Proceeds from the issuance of common stock	60,521,739	56,585,035	12,419,119
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	66,381,999	59,953,026	12,055,309
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	191,670,915	5,294,646	(60,527,881)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	30,133,213	24,838,567	85,366,448
CASH AND CASH EQUIVALENTS AT END OF PERIOD	221,804,128	30,133,213	24,838,567
Supplementary disclosures:
Interest Paid	(27,437)	(173,381)	(187,647)
Income Tax Credits Refunded			3,635,016
Income Tax Paid	$ (302,400)	$ (2,400)	$ (2,400)

Organization and Significant Accounting Policies

12 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Organization and Significant Accounting Policies

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Recent Developments

Arrowhead Pharmaceuticals, Inc. develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad 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, or RNAi, is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. Arrowhead’s RNAi-based therapeutics leverage this natural pathway of gene silencing. The company's pipeline includes ARO-AAT for liver disease associated with alpha-1 antitrypsin deficiency (AATD), ARO-APOC3 for hypertriglyceridemia, ARO-ANG3 for dyslipidemia, ARO-HSD for liver disease, ARO-ENaC for cystic fibrosis, and ARO-HIF2 for renal cell carcinoma. ARO-JNJ1 is being developed for an undisclosed liver-expressed target under a license and collaboration agreement with Janssen Pharmaceuticals, Inc. ARO-HBV (JNJ-3989) for chronic hepatitis B virus was out-licensed to Janssen Pharmaceuticals, Inc. (“Janssen”) in October 2018. ARO-LPA (AMG 890)for cardiovascular disease was out-licensed to Amgen Inc. (“Amgen”) in 2016.

Arrowhead operates a lab facility in Madison, Wisconsin, where the Company’s research and development activities, including the development of RNAi therapeutics, are based. The Company’s principal executive offices are located in Pasadena, California.

During fiscal 2019, the Company has continued to develop its pipeline and partnered candidates. In April 2019, the Company presented clinical data for JNJ-3989 (ARO-HBV) and ARO-AAT at the International Liver Congress, and in April 2019, the Company received FDA clearance to commence a Phase 2/3 study of ARO-AAT that has the potential to serve as a pivotal registrational study. In June 2019, the Company received the Fast Track Designation for ARO-AAT from the FDA. In December 2018 and January 2019, Clinical Trial Applications (CTAs) were filed for ARO-ANG3 and ARO-APOC3, respectively, and dosing has commenced for both trials. In June 2019 and July 2019, the Company received the Orphan Drug Designations for ARO-APOC3 and ARO-ANG3, respectively, from the FDA. In September 2019, the Company presented clinical and preclinical data on ARO-APOC3 and ARO-ANG3 at the Global Summit on Cardiology and Heart Diseases. The Company also continues to work on optimizing its other extra-hepatic preclinical pipeline candidates including ARO-ENaC and ARO-HIF2, its hepatic preclinical pipeline candidate, ARO-HSD, and its partnered pipeline candidate, ARO-JNJ1. Amgen is currently progressing its phase 1 clinical study of AMG-890 (ARO-LPA) and Janssen is currently progressing its phase 2b clinical study of JNJ-3989 (ARO-HBV).

The Company also made significant progress on the business development front. In October 2018, the Company entered into a License Agreement (“Janssen License Agreement”) and a Research Collaboration and Option Agreement (“Janssen Collaboration Agreement”) with Janssen Pharmaceuticals, Inc. (“Janssen”) part of the Janssen Pharmaceutical Companies of Johnson & Johnson. The Company also entered into a Stock Purchase Agreement (“JJDC Stock Purchase Agreement”) with Johnson & Johnson Innovation-JJDC, Inc. (“JJDC”), a New Jersey corporation. Under the Janssen License Agreement, Janssen has received a worldwide, exclusive license to the Company’s JNJ-3989 (ARO-HBV) program, the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potentially curative therapy for patients with chronic hepatitis B virus infection. Beyond the Company’s ongoing Phase 1 / 2 study of JNJ-3989 (ARO-HBV), Janssen will be wholly responsible for clinical development and commercialization. Under the Janssen Collaboration Agreement, Janssen will be able to select three new targets against which Arrowhead will develop clinical candidates. These candidates are subject to certain restrictions and will not include candidates in the Company’s current pipeline. The Company will perform discovery, optimization and preclinical development, entirely funded by Janssen, sufficient to allow the filing of a U.S. Investigational New Drug application or equivalent, at which time Janssen will have the option to take an exclusive license. If the option is exercised, Janssen will be wholly responsible for clinical development and commercialization. Under the JJDC Stock Purchase Agreement, in October 2018 the Company sold 3,260,869 shares of common stock to JJDC at a price of $23.00 per share. Under the terms of the agreements taken together, the Company has received $175 million as an upfront payment, $75 million in the form of an equity investment by JJDC in Arrowhead common stock, and may receive up to $1.6 billion in development and sales milestones payments for the Janssen License Agreement, and up to $1.9 billion in development and sales milestone payments for the three additional targets covered under the Janssen Collaboration Agreement. The Company is further eligible to receive tiered royalties up to mid teens under the Janssen License Agreement and up to low teens under the Janssen Collaboration Agreement on product sales. In April 2019, the Company earned a $25 million milestone payment from Janssen following the initiation of dosing in a new triple combination cohort (cohort 12) in the Company’s ongoing Phase 1 / 2 study of JNJ-3989 (ARO-HBV). In August 2019, the Company earned an additional $25 million milestone payment from Janssen following the initiation of dosing in its phase 2b study of JNJ-3989 (ARO-HBV). The revenue recognition for these milestone payments and the Janssen License Agreement and the Janssen Collaboration Agreement are discussed further in Note 2 below.

The Company’s license agreement with Amgen for AMG 890 (ARO-LPA) continues to progress. The Company has received $35 million in upfront payments and $21.5 million in the form of an equity investment by Amgen in the Company’s Common Stock. Upon signing the collaboration agreements with Amgen, the Company was eligible to receive up to $617 million in option payments and development, regulatory and sales milestone payments. The Company remains eligible to receive up to $420 million in development, regulatory and sales milestone payments. The Company is further eligible to receive up to low double-digit royalties for sales of products under the AMG 890 (ARO-LPA) Agreement. On August 1, 2018, the Company announced that it had earned a $10 million milestone payment from Amgen following the administration of the first dose of AMG 890 (ARO-LPA) in a phase 1 clinical study. This milestone payment was recognized as Revenue in its entirety during the year ended September 30, 2018. In July 2019, Amgen informed the Company that it would not be exercising its option to an exclusive license for ARO-AMG1, and as such, there will be no further milestone or royalty payments under the ARO-AMG1 Agreement.

Liquidity

The Consolidated Financial Statements have been prepared in conformity with the accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. Historically, the Company’s primary source of financing has been through the sale of its securities. Research and development activities have required significant capital investment since the Company’s inception. The Company expects its operations to continue to require cash investment to pursue its research and development goals, including clinical trials and related drug manufacturing.

At September 30, 2019, the Company had $221.8 million in cash and cash equivalents, $36.9 million in short-term investments, and $44.2 million in long-term investments to fund operations. During the year ended September 30, 2019, the Company’s cash and investments balance increased by $226.3 million, which was primarily the result of the $75 million equity investment from JJDC and the $175 million upfront payment and $50 million of milestone payments from Janssen, respectively, as discussed further in Note 2 below. These cash inflows were partially offset by cash outflows related to operating activities and investing activities.

Summary of Significant Accounting Policies

Principles of Consolidation—The Consolidated Financial Statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation.

Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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. Included within Cash and cash equivalents on the Consolidated Balance Sheets is $1.0 million and $0 restricted cash at September 30, 2019 and September 30, 2018, respectively. Amounts included in restricted cash are primarily held as collateral associated with a letter of credit for the Company’s new lease for its corporate headquarters in Pasadena, California.

Concentration of Credit Risk—The Company maintains several bank accounts primarily at two financial institutions for its operations. 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—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposit, 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 debt 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 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 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. During the years ended September 30, 2019, 2018 and 2017, respectively, all of the Company’s investments were classified as held-to-maturity.

Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary.

Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

Intangible Assets Subject to Amortization—Intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable and are also reviewed annually to determine whether any impairment is necessary.

Contingent Consideration - The consideration for the Company’s acquisitions may include future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at an estimated fair value at the balance sheet date. Changes in the fair value of the contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations and Comprehensive Income (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. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. The Company determined the fair value of its contingent consideration obligation to be $0 at September 30, 2019 and September 30, 2018.

Revenue Recognition— On October 1, 2018, the Company adopted FASB Topic 606 – Revenue for Contracts from Customers which amended revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries. The Company’s adoption of the new revenue standard did not have a material impact on its Consolidated Financial Statements. The Company has not yet achieved commercial sales of its drug candidates to date, however, the new standard is applicable to the Company’s ongoing licensing and collaboration agreements, including those with Amgen and Janssen, and the analysis of the impact of this guidance on those agreements is discussed further in Note 2 below.

The new revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of the new revenue standard, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when (or as) each performance obligation is satisfied.

The Company recognizes the transaction price allocated to upfront license payments as revenue upon delivery of the license to the customer and resulting ability of the customer to use and benefit from the license, if the license is determined to be distinct from the other performance obligations identified in the contract. These other performance obligations are typically to perform research and development services for the customer, often times relating to the candidate that the customer is licensing. If the license is not considered to be distinct from other performance obligations, the Company assesses the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied at a point in time or over time. If the performance obligation is satisfied over time, the Company then determines the appropriate method of measuring progress for purposes of recognizing revenue from license payments. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition.

Typically, the Company’s collaboration agreements entitle it to additional payments upon the achievement of milestones or royalties on sales. The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a Clinical Trial Application (CTA) or a New Drug Application (NDA) in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas. The Company evaluates whether it is probable that the consideration associated with each milestone or royalty will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for our milestones and royalties, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in our Consolidated Statement of Operations and Comprehensive Income (Loss). Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or pre-clinical program. Milestones or royalties achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.

The new revenue standard requires the Company to assess whether a significant financing component exists in determining the transaction price. The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment. Additionally, future royalty payments are not substantially within the control of the Company or the customer.

The new revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated. The relative standalone selling price is defined in the new revenue standard as the price at which an entity would sell a promised good or service separately to a customer. If other observable transactions in which the Company has sold the same performance obligation separately are not available, the Company estimates the standalone selling price of each performance obligation. Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

Whenever the Company determines that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using the proportional performance method. Labor hours are typically used as the measure of performance. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on the Company’s Consolidated Balance Sheets.

Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months, and long-term deferred revenue consists of amounts that the Company does not expect will be recognized in the next 12 months. This estimate is based on the Company’s current operating plan and, if the Company’s operating plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.

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 saccordance 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.

Net Income (Loss) per Share—Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (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. During the years ended September 30, 2019, 2018 and 2017, the calculation of the effect of dilutive stock options and restricted stock units was 4,748,958 shares, 0 shares and 0 shares, respectively. During the year ended September 30, 2019, the calculation of the effect of dilutive stock options and restricted stock units excluded 1,007,500 stock options and 11,500 restricted stock units due to their anti-dilutive effect. During the years ended September 30, 2018 and 2017, the calculation of the effect of dilutive stock options and restricted stock units excluded all stock options and restricted stock units granted and outstanding during the period due to their anti-dilutive effect.

Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. For restricted stock units, the value of the award is based on the Company’s stock price at the grant date. For 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 uses 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 the Company’s determination that the achievement of such performance conditions is probable for performance-based awards. This determination requires significant judgment by management.

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.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (Topic 606), which will supersede nearly all existing revenue recognition guidance under GAAP. ASU No. 2014-09 provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption and became effective for the Company in the first quarter of fiscal 2019. In April 2016, the FASB issued an amendment to ASU No. 2014-09 with update ASU 2016-10 which provided more specific guidance around the identification of performance obligations and licensing arrangements. On October 1, 2018, the Company adopted this standard using the modified retrospective method. The Company’s implementation approach included reviewing the status of each of its ongoing license agreements and collaboration agreements and designing appropriate internal controls to enable the preparation of financial information. The Company completed its assessment of the impact of the new revenue recognition guidance and determined that there will be no material impact. The Company’s existing performance obligations under its ongoing license and collaboration agreements as of October 1, 2018 and prior were substantially completed prior to September 30, 2018. For these agreements that were ongoing as of October 1, 2018, any future option, milestone or royalty payments received will be accounted for under the sales-based royalty exception provided for under this new revenue recognition guidance. Additionally, there will be no impact to cash from or used in operating, financing or investing activities on the Company’s Consolidated Statement of Cash Flows as a result of the adoption of the new standard.

In March 2016, the FASB issued ASU No. 2016-02, Leases. Under ASU 2016-02, lessees will be required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). ASU 2016-02 becomes effective for the Company in the first quarter of fiscal 2020. The Company is assessing the impact of the adoption of this update and it expects the adoption to have a material effect on its Consolidated Balance Sheets, including classification and disclosure of its leased facilities.

In May 2017, the FASB issued ASU No. 2017-09, which is an update to Topic 718, Compensation - Stock Compensation. The update provides guidance on determining which changes to the terms and conditions of share-based payment awards, including stock options, require an entity to apply modification accounting under Topic 718. ASU 2017-09 became effective for the Company in the first quarter of fiscal 2019. The adoption of this update has not had a material impact on the Company's results of operations and Consolidated Financial Statements.

In November 2018, the FASB issued ASU No. 2018-18 Collaborative Arrangements (Topic 808). This update provides clarification on the interaction between Revenue Recognition (Topic 606) and Collaborative Arrangements (Topic 808) including the alignment of unit of account guidance between the two topics/ ASU 2018-18 becomes effective for the Company in the first quarter of fiscal 2021 with early adoption permitted. The Company does not expect the adoption of this update to have a material effect on its Consolidated Financial Statements.

Collaboration and License Agreements

12 Months Ended

Sep. 30, 2019

Collaboration And License Agreements [Abstract]

Collaboration and License Agreements

NOTE 2. COLLABORATION AND LICENSE AGREEMENTS

Amgen Inc.

On September 28, 2016, the Company entered into two Collaboration and License agreements, and a Common Stock Purchase Agreement with Amgen Inc., a Delaware corporation (“Amgen”). Under one of the license agreements (the “Second Collaboration and License Agreement” or “AMG 890 (ARO-LPA) Agreement”), Amgen has received a worldwide, exclusive license to Arrowhead’s novel, RNAi ARO-LPA program. These RNAi molecules are designed to reduce elevated lipoprotein(a), which is a genetically validated, independent risk factor for atherosclerotic cardiovascular disease. Under the other license agreement (the “First Collaboration and License Agreement” or “ARO-AMG1 Agreement”), Amgen received an option to a worldwide, exclusive license for ARO-AMG1, an RNAi therapy for an undisclosed genetically validated cardiovascular target. In both agreements, Amgen is wholly responsible for clinical development and commercialization. Under the Common Stock Purchase Agreement, the Company has sold 3,002,793 shares of Common Stock to Amgen at a price of $7.16 per share. Under the terms of the agreements taken together, the Company has received $35 million in upfront payments and $21.5 million in the form of an equity investment by Amgen in the Company’s Common Stock. Upon signing the collaboration agreements with Amgen, the Company was eligible to receive up to $617 million in Option payments, and development, regulatory and sales milestone payments. The Company remains eligible to receive up to $420 million in development, regulatory and sales milestone payments. The Company is further eligible to receive up to low double-digit royalties for sales of products under the AMG 890 (ARO-LPA) Agreement.

The Company has evaluated these agreements in accordance with the new revenue recognition standard that became effective for the Company on October 1, 2018. The adoption of the new revenue standard did not have a material impact on the balances reported when evaluated under the superseded revenue standard. During the year ended September 30, 2018, the Company substantially completed its performance obligations under the AMG 890 (ARO-LPA) Agreement and the ARO-AMG1 Agreement. Future milestones and royalties achieved will be recognized in their entirety when earned. During the years ended September 30, 2019, 2018 and 2017, the Company recognized $0.3 million, $16.1 million and $31.3 million of Revenue associated with its agreements with Amgen, respectively. As of September 30, 2019, there were $0 contract assets recorded as Accounts Receivable, and $0 contract liabilities recorded as Deferred Revenue on the Company’s Consolidated Balance Sheets associated with these agreements.

Regarding the ARO-AMG1 Agreement, in August 2018, the Company delivered to Amgen a candidate that met or exceeded the activity and safety requirements stipulated in the ARO-AMG1 Agreement. The option period expired on August 7, 2019, and Amgen advised the Company that it did not intend to exercise its option. As such, there will be no further milestone or royalty payments under the ARO-AMG1 Agreement.

Janssen Pharmaceuticals, Inc.

On October 3, 2018, the Company entered into a License Agreement (“Janssen License Agreement”) and a Research Collaboration and Option Agreement (“Janssen Collaboration Agreement”) with Janssen Pharmaceuticals, Inc. (“Janssen”) part of the Janssen Pharmaceutical Companies of Johnson & Johnson. The Company also entered into a Stock Purchase Agreement (“JJDC Stock Purchase Agreement”) with Johnson & Johnson Innovation-JJDC, Inc. (“JJDC”), a New Jersey corporation. Under the Janssen License Agreement, Janssen has received a worldwide, exclusive license to the Company’s ARO-HBV program, the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potentially curative therapy for patients with chronic hepatitis B virus infection. Beyond the Company’s ongoing Phase 1 / 2 study of ARO-HBV, Janssen will be wholly responsible for clinical development and commercialization. Under the Janssen Collaboration Agreement, Janssen will be able to select three new targets against which Arrowhead will develop clinical candidates. These candidates are subject to certain restrictions and will not include candidates in the Company’s current pipeline. The Company will perform discovery, optimization and preclinical development, entirely funded by Janssen, sufficient to allow the filing of a U.S. Investigational New Drug application or equivalent, at which time Janssen will have the option to take an exclusive license. If the option is exercised, Janssen will be wholly responsible for clinical development and commercialization. Under the JJDC Stock Purchase Agreement, in October 2018 the Company sold 3,260,869 shares of common stock to JJDC at a price of $23.00 per share. Under the terms of the agreements taken together, the Company has received $175 million as an upfront payment, $75 million in the form of an equity investment by JJDC in Arrowhead common stock, and may receive up to $1.6 billion in development and sales milestones payments for the Janssen License Agreement, and up to $1.9 billion in development and sales milestone payments for the three additional targets covered under the Janssen Collaboration Agreement. The Company is further eligible to receive tiered royalties up to mid teens under the license agreement and up to low teens under the collaboration and option agreement on product sales.

The Company has evaluated these agreements in accordance with the new revenue recognition requirements that became effective for the Company on October 1, 2018. The adoption of the new revenue standard did not have a material impact on the balances reported when evaluated under the superseded revenue standard. At the inception of these agreements, the Company has identified one distinct performance obligation. Regarding the Janssen License Agreement, the Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibility to complete the ongoing Phase 1 / 2 study of JNJ-3989 (ARO-HBV) and the Company’s responsibility to ensure certain manufacturing of JNJ-3989 (ARO-HBV) drug product is completed and delivered to Janssen (the “Janssen R&D Services”). Due to the specialized and unique nature of these Janssen R&D services, and their direct relationship with the license, the Company determined that these deliverables represent one distinct bundle and thus, one performance obligation. The Company also determined that Janssen’s option to require the Company to develop up to three new targets is not a material right, and thus, not a performance obligation at the onset of the agreement. The consideration for this option will be accounted for when it is exercised.

The Company determined the transaction price totaled approximately $252.6 million which includes the upfront payment, the premium paid by JJDC for its equity investment in the Company, the two $25 million milestone payments earned and estimated payments for reimbursable Janssen R&D services to be performed. The Company has allocated the total $252.6 million initial transaction price to its one distinct performance obligation for the ARO-HBV license and the associated Janssen R&D Services. This revenue will be recognized using a proportional performance method (based on actual labor hours versus estimated total labor hours) beginning in October 2018 and ending as the Company’s efforts in overseeing the ongoing phase 1 / 2 clinical trial are completed. During the year ended September 30, 2019, the Company recognized approximately $167.5 million of Revenue associated with this performance obligation. As of September 30, 2019 there were $0 contract assets recorded as Accounts Receivable, $77.8 million of contract liabilities recorded as current Deferred Revenue, and $5.0 million of contract liabilities recorded as and long-term Deferred Revenue on the Company’s Consolidated Balance Sheets. The $77.8 million of current Deferred Revenue and $5.0 million of long-term Deferred Revenue is driven by the upfront payment and premium paid by JJDC for its equity investment in the Company as well as the two $25 million milestones paid by Janssen, net of revenue recognized in the period.

During the year ended September 30, 2019, Janssen selected the first of the three targets under the Janssen Collaboration Agreement, now referred to as ARO-JNJ1, and the Company has begun to conduct its discovery, optimization and preclinical development of ARO-JNJ1. All costs and labor hours spent by the Company will be entirely funded by Janssen. During the year ended September 30, 2019, the Company recognized $1.0 million of Revenue associated with its efforts on the ARO-JNJ1 candidate. As of September 30, 2019 there were $0.7 million of contract assets recorded as Accounts Receivable, and $0 of contract liabilities.

Property and Equipment

12 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 3. PROPERTY AND EQUIPMENT

The following table summarizes the Company’s major classes of property and equipment:


	September 30, 2019			September 30, 2018
Computers, office equipment and furniture	$	637,577		$	600,334
Research equipment		12,932,304			10,751,627
Software		147,254			152,676
Leasehold improvements		21,579,415			12,236,150
Total gross fixed assets		35,296,550			23,740,787
Less: Accumulated depreciation and amortization		(12,081,651	)		(9,805,362	)
Property and equipment, net	$	23,214,899		$	13,935,425

Depreciation and amortization expense for Property and Equipment the for the years ended September 30, 2019, 2018 and 2017 was $2,738,715, $2,998,846, and $2,990,010, respectively.

Investments

12 Months Ended

Sep. 30, 2019

Held To Maturity Securities Classified [Abstract]

Investments

NOTE 4. INVESTMENTS

The Company invests a portion of its excess cash balances in short-term debt securities and may, from time to time, also invest in long-term debt securities. Investments at September 30, 2019 consisted of corporate bonds with maturities remaining of less than 36 months. The Company may also invest excess cash balances in certificates of deposits, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper. The Company accounts for its investments in accordance with FASB ASC 320, Investments – Debt and Equity Securities. At September 30, 2019, all investments were classified as held-to-maturity securities.

The following tables summarize the Company’s short-term and long-term investments as of September 30, 2019, and September 30, 2018.

	As of September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Commercial notes (due within one year)	$	36,899,894	$	222,584	$	—	$	37,122,478
Commercial notes (due within three years)	$	44,175,993	$	875,258	$	—	$	45,051,251
Total	$	81,075,887	$	1,097,842	$	—	$	82,173,729

	As of September 30, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial notes (due within one year)	$	46,400,176	$	—	$	(429,050	)	$	45,971,126
Commercial notes (due within three years)	$	—	$	—	$	—		$	—
Total	$	46,400,176	$	—	$	(429,050	)	$	45,971,126

Intangible Assets

12 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

NOTE 5. INTANGIBLE ASSETS

Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition in March 2015. 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 $680,191. 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 $7,113,443. Amortization expense for the years ended September 30, 2019, 2018 and 2017 was $1,700,430, $1,700,429 and $1,700,429, respectively. Amortization expense is expected to be $1,700,429 in 2020, $1,700,429 in 2021, $1,700,429 in 2022, $1,700,429 in 2023, $1,700,429 in 2024, and $8,561,435 thereafter.

The following table provides details on the Company’s intangible asset balances:

	Intangible assets subject to amortization
Balance at September 30, 2018	$	18,764,010
Impairment		-
Amortization		(1,700,430	)
Balance at September 30, 2019	$	17,063,580

Commitments and Contingencies

12 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 7. COMMITMENTS AND CONTINGENCIES

Leases

In April 2019, the Company entered a new lease for its corporate headquarters in Pasadena, California. The 91 month office building lease between the Company and 177 Colorado Owner, LLC is for approximately 24,000 square feet of office space located at 177 E. Colorado Blvd, Pasadena, California, and this lease will replace the Company’s current corporate headquarters office lease. The increased capacity of this new office space compared to the Company’s current corporate headquarters will accommodate increased personnel as the Company’s pipeline of drug candidates expands and moves closer to market. Lease payments began on September 30, 2019 and are estimated to total approximately $8.8 million over the term. The Company expects to pay approximately $3.5 million for leasehold improvements, net of tenant improvement allowances. Monthly rental payments are approximately $65,700 per month for the first year and will increase approximately 3% annually.

The Company also leases approximately 61,000 square feet of office and laboratory space for its research facility in Madison, Wisconsin. In January 2019, the Company amended its existing lease to add an additional 13,000 square feet of laboratory and office space to the facility. The amended lease will expire in September 2029. As part of this lease, the Company was provided a primary tenant improvement allowance of $2.1 million which is accounted for as Deferred Rent and a secondary tenant improvement allowance of $2.7 million which was accounted for as a Note Payable on the Company’s Consolidated Balance Sheet. In October 2018, the Company paid off the remaining $2.3 million balance on the note payable. Monthly rental payments are approximately $135,800 per month and will increase approximately 2.5% annually.

Facility rent expense for the years ended September 30, 2019, 2018 and 2017 was $1,654,800, $1,288,000 and $1,441,000, respectively.

As of September 30, 2019, future minimum lease payments due in fiscal years under operating leases are as follows:

2020	$	1,521,451
2021		2,256,379
2022		2,521,446
2023		2,590,558
2024		2,661,512
2025 and thereafter		10,834,206
Total	$	22,385,552

Litigation –

The Company and certain of its officers and directors were named as defendants in a putative consolidated class action in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s hepatitis B drug research. 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), asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and sought 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 alleged facts underlying the securities claims. An additional consolidated derivative action asserting similar claims was filed 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. On October 7, 2016, the federal district court dismissed the consolidated class action with prejudice. Following the dismissal of the consolidated class action, the parties for the Weisman and Johnson actions jointly stipulated to dismiss the actions, with the parties bearing their own fees and costs. The parties to the Bernstein and consolidated derivative action agreed to stay the matters pending the resolution of the Ninth Circuit appeal of the dismissal of the consolidated class action. On February 15, 2018, the Ninth Circuit issued a memorandum affirming the district court’s dismissal of all claims. Plaintiffs in the consolidated derivative action voluntarily dismissed their case. The parties to the Bernstein action filed a stipulation to continue the stay of the action pending resolution of the Ninth Circuit appeal in Meller v. Arrowhead Pharmaceuticals, Inc., Case No. 2:16-cv-08505 (C.D. Cal.). The Bernstein matter was dismissed on September 4, 2019. All actions relating to the Company’s hepatitis B drug research have been dismissed.

The Company and certain executive officers were named as defendants in a putative consolidated class action in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s drug research programs. The consolidated class action, initially filed as Meller v. Arrowhead Pharmaceuticals, Inc., et al., No. 2:16-cv-08505 (C.D. Cal, filed Nov. 15, 2016 ), Siegel v. Arrowhead Pharmaceuticals, Inc., et al., No. 2:16-cv-8954 (C.D. Cal., filed Dec. 2, 2016), and Unz v. Arrowhead Pharmaceuticals, Inc., et al., No.2:17-cv-00310 (C.D. Cal., filed Jan. 13, 2017) asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 regarding certain public statements in connection with the Company’s drug research programs and seek damages in an unspecified amount. Additionally, a putative stockholder derivative action captioned Johnson v. Anzalone, et al., (Los Angeles County Superior Court, filed January 19, 2017) asserting substantially similar claims is pending in Los Angeles County Superior Court and is stayed pending the related consolidated class action. Two additional putative stockholder derivative actions, captioned Lucas v. Anzalone, et al., No. 2:17-cv-03207 (C.D. Cal., filed April 28, 2017), and Singh v. Anzalone, et al., No. 2:17-cv-03160 (C.D. Cal., filed April 27, 2017), alleging breach of fiduciary duty by the Company’s Board of Directors in connection with the alleged facts underlying the securities claims, are pending in the United States District Court for the Central District of California. The Lucas and Singh actions have been consolidated. On December 21, 2017, the federal district court dismissed the consolidated class action with prejudice. On July 23, 2019, the Ninth Circuit issued a memorandum affirming the district court’s dismissal of all claims in the consolidated class action. The Lucas and Singh actions have been voluntarily dismissed. The Johnson action was dismissed on November 13, 2019. All actions relating to public statements in connection with the Company’s drug research programs have been dismissed.

With regard to legal fees, such as attorney fees related to these matters or any other legal matters, the Company recognizes such costs as incurred.

Purchase Commitments

In the normal course of business, we enter into various purchase commitments for the manufacture of drug components, for toxicology studies, and for clinical studies. As of September 30, 2019, these future commitments were estimated at approximately $60.2 million, of which approximately $50.9 million is expected to be incurred in fiscal 2020, and $9.3 is expected to be incurred beyond fiscal 2020.

Technology License Commitments

The Company has licensed from third parties the rights to use certain technologies for 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. During the years ended September 30, 2019, 2018 and 2017, the Company did not trigger any of these milestone payments. 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

12 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE 8. STOCK-BASED COMPENSATION

Arrowhead has two plans that provide for equity-based compensation. Under the 2004 Equity Incentive Plan and 2013 Incentive Plan, as of September 30, 2019, 1,099,337 and 5,226,948 shares, respectively, of Arrowhead’s Common Stock are reserved for the grant of time-based vesting stock options, stock appreciation rights, restricted stock awards and performance unit/share awards to employees, consultants and others. No further grants may be made under the 2004 Equity Incentive Plan. As of September 30, 2019, there were options granted and outstanding to purchase 1,099,337 and 2,831,322 shares of Common Stock under the 2004 Equity Incentive Plan and the 2013 Incentive Plan, respectively, and there were 2,054,333 restricted stock units granted and outstanding under the 2013 Incentive Plan. Also, as of September 30, 2019, there were 843,011 shares reserved for options and 8,500 restricted stock units issued as inducement grants to new employees outside of equity compensation plans. During the year ended September 30, 2019, no options or restricted stock units were granted under the 2004 Equity Incentive Plan, 517,500 options and 1,406,888 restricted stock units were granted under the 2013 Incentive Plan, and 362,000 options and 8,500 restricted stock units were granted as inducement awards to new employees outside of equity incentive plans.

The following table summarizes 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, 2018		5,524,399	$	6.14
Granted		879,500		16.05
Cancelled		(87,434)		8.96
Exercised		(1,542,795)		5.36
Balance At September 30, 2019		4,773,670	$	8.16		6.0 years	$	95,727,301
Exercisable At September 30, 2019		3,515,379	$	6.58		4.9 years	$	75,931,836

Stock-based compensation expense related to stock options for the years ended September 30, 2019, 2018 and 2017 was $3,955,216, $3,265,348 and $4,524,833, respectively. The Company does not recognize an income tax benefit as the Company has historically operated at a loss and an actual income tax benefit may not be realized. For non-qualified stock options, the expense 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 the Company for the years ended September 30, 2019, 2018 and 2017 was $12,137,250, $4,141,318 and $849,816, respectively.

The intrinsic value of the options exercised during the years ended September 30, 2019, 2018 and 2017 was $24,561,189, $5,805,317 and $35,512, respectively.

As of September 30, 2019, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $12,639,567 will be recognized in the Company’s results of operations over a weighted average period of 3.2 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 the Company’s 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:

	Years ended September 30,
	2019	2018	2017
Dividend yield	—	—	—
Risk-free interest rate	1.50 – 3.11%	2.05 – 2.99%	1.34 – 2.31%
Volatility	115%	110%	79%
Expected life (in years)	6.25	6.25	5.85
Weighted average grant date fair value per share of options granted	$13.80	$5.04	$1.33

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 units (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 year ended September 30, 2019, the Company issued 1,406,888 RSUs under the 2013 Incentive Plan and 8,500 RSUs as an inducement award to a new employee outside of the equity incentive plans. At vesting, each outstanding RSU will be exchanged for one share of the Company’s Common Stock. RSU recipients may elect to net share settle upon vesting, in which case the Company pays the employee’s income taxes due upon vesting and withholds a number of shares of Common Stock of equal value. RSU 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 RSUs:

	Number of RSUs			Weighted- Average Grant Date Fair Value
Unvested at September 30, 2018		2,968,500		$	2.99
Granted		1,415,388			12.57
Vested		(2,197,305	)		2.78
Forfeited		(123,750	)		8.98
Unvested at September 30, 2019		2,062,833		$	9.43

During the years ended September 30, 2019, 2018 and 2017, the Company recorded $8,438,107, $5,189,259 and $3,366,762 of expense related to RSUs, respectively. Such expense is included in stock-based compensation expense in the Company’s Consolidated Statement of Operations and Comprehensive Income (Loss). The Company does not recognize an income tax benefit as the Company has historically operated at a loss and an actual income tax benefit may not be realized. For RSUs, the expense creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance.

For RSUs, 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 September 30, 2019, the pre-tax compensation expense for all unvested RSUs in the amount of $9,937,559 will be recognized in the Company’s results of operations over a weighted average period of 2.6 years.

Fair Value Measurements

12 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 9. FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

Level 1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following table summarizes fair value measurements at September 30, 2019 and September 30, 2018 for assets and liabilities measured at fair value on a recurring basis:

September 30, 2019:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	221,804,128	$	—	$	—	$	221,804,128
Short-term investments		37,122,478		—		—		37,122,478
Long-term investments		45,051,251		—		—		45,051,251
Contingent Consideration	$	—	$	—	$	—	$	—

September 30, 2018:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	30,133,213	$	—	$	—	$	30,133,213
Short-term investments		45,971,126		—		—		45,971,126
Long-term investments		—		—		—		—
Contingent Consideration	$	—	$	—	$	—	$	—

The Company had a liability 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 timing to complete the development and obtain approval of products is difficult, and there are inherent uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, the Company utilizes data regarding similar milestone events from several sources, including industry studies and its own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. In November 2016, the Company announced the discontinuation of its clinical trial efforts for ARC-520, ARC-AAT and ARC-521. Given this development, the Company assessed the fair value of its contingent consideration obligation to be $0 at September 30, 2019 and September 30, 2018.

- Definition

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

+ References + Details

Income Taxes

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10. - INCOME TAXES

The Company utilizes the guidance issued by the FASB for accounting for income taxes which requires the recognition of deferred 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 year-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 tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Components of the net deferred tax asset (liability) at September 30, 2019 and 2018 are as follows:

		2019		2018
Deferred tax assets:
Accrued compensation	$	1,310,466		$	1,085,908
Stock compensation		3,609,756			4,188,368
Capitalized research and development		926,026			1,227,137
Fixed Assets		438,882			404,836
Net operating losses		105,372,571			114,142,741
Intangible Assets		3,590,090			3,854,752
California Alternative Minimum Tax		173,553			—
Deferred Rent		821,317			566,535
Capital Loss		709,779			709,779
Total deferred tax assets		116,952,440			126,180,056
Valuation allowance		(108,232,402	)		(116,875,075	)
Deferred tax liabilities:
State taxes		(8,720,038	)		(9,304,981	)
Total deferred tax liability		(8,720,038	)		(9,304,981	)
Net deferred tax assets (liabilities)	$	—		$	—

The Company has concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of all of its deferred tax assets. Accordingly, management has provided a 100% valuation allowance against its deferred tax assets until such time as management believes that its projections of future profits as well as expected future tax rates make the realization of these deferred tax assets more-likely-than-not. Significant judgment is required in the evaluation of deferred tax benefits and differences in future results from our estimates could result in material differences in the realization of these assets. The Company has recorded a full valuation allowance related to all of its deferred tax assets. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax asset in accordance with FASB ASC 740-10, “Accounting for Income Taxes.” This assessment included the evaluation of scheduled reversals of deferred tax liabilities, the availability of carry forwards and estimates of projected future taxable income.

As of September 30, 2019, the Company had available gross federal net operating loss (NOL) carry forwards of approximately $314.8 million and gross state NOL carry forwards of $211.5 million. The NOLs expire at various dates through 2039.

The provisions for income taxes for the years ended September 30, 2019 and 2018 are as follows:

	2019		2018
Federal:
Current	$	—	$	—
Deferred		—		—
Total Federal	$	—	$	—
State:
Current	$	173,553	$	2,400
Deferred		—		—
Total State	$	173,553	$	2,400
Provision from income taxes	$	173,553	$	2,400

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended September 30, 2019 and 2018:

	2019		2018
At U.S. federal statutory rate	21.0	%		21.0	%
State taxes, net of federal effect	7.3			7.9
Stock compensation	(15.0	)		2.6
Mark-to-market adjustments	0.0			0.2
Valuation allowance	(13.0	)		36.2
Federal tax rate change in 2018	—			(67.9	)
Effective income tax rate	0.3	%		0.0	%

In December 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, or TCJA, tax reform legislation. The TCJA makes significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The TCJA reduced the U.S. corporate tax rate from the current rate of 35 percent down to 21 percent starting on January 1, 2018. As a result of the TCJA, the Company was required to revalue deferred tax assets and liabilities at 21 percent during the year ended September 30, 2018. This revaluation resulted in a provision of $37.0 million to income tax expense in continuing operations and a corresponding reduction in the valuation allowance during the year ended September 30, 2018. As a result, there was no impact to our Consolidated Statements of Comprehensive Income (Loss) as a result of the reduction in tax rates. The other provisions of the TCJA did not have a material impact on our Consolidated Financial Statements.

The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. The Company has not recognized any unrecognized tax benefits and does not have any interest or penalties related to uncertain tax positions as of September 30, 2019 and 2018.

The Company files income tax returns with the Internal Revenue Service (“IRS”), the state of California, the Australia Tax Office (“ATO”) and certain other taxing jurisdictions. The Company is subject to income tax examinations by the IRS and by state tax authorities until the net operating losses are settled. During the year ended September 30, 2016, the IRS commenced an audit for the tax year ended September 30, 2015. The IRS audit concluded without any material adjustments.

Unaudited Quarterly Financial Data

12 Months Ended

Sep. 30, 2019

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Financial Data

NOTE 12. UNAUDITED QUARTERLY FINANCIAL DATA

The following table presents selected unaudited quarterly financial data for each full quarterly period of the years ended September 30, 2019 and 2018:

	First		Second		Third		Fourth
Year ended September 30, 2019	Quarter		Quarter		Quarter		Quarter
Revenues	$	34,657,896	$	48,148,275	$	42,696,636	$	43,292,770
Operating Income (Loss)	$	10,946,144	$	22,010,692	$	18,595,749	$	9,638,049
Net Income (Loss)	$	12,037,253	$	23,896,982	$	20,335,708	$	11,704,906
Net Income (Loss) per share - BASIC	$	0.13	$	0.25	$	0.21	$	0.12
Net Income (Loss) per share - DILUTED	$	0.13	$	0.24	$	0.21	$	0.12

	First		Second		Third		Fourth
Year ended September 30, 2018	Quarter		Quarter		Quarter		Quarter
Revenues	$	3,509,821	$	650,125	$	727,375	$	11,255,000
Operating Income (Loss)	$	(13,813,348)	$	(15,034,059)	$	(15,919,719)	$	(11,169,109)
Net Income (Loss)	$	(13,198,878)	$	(14,884,311)	$	(15,606,017)	$	(10,761,272)
Net Income (Loss) per share - BASIC	$	(0.18)	$	(0.18)	$	(0.18)	$	(0.12)
Net Income (Loss) per share - DILUTED	$	(0.18)	$	(0.18)	$	(0.18)	$	(0.12)

Organization and Significant Accounting Policies (Policies)	12 Months Ended
	Sep. 30, 2019
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation—The Consolidated Financial Statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation.
Basis of Presentation and Use of Estimates	Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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. Included within Cash and cash equivalents on the Consolidated Balance Sheets is $1.0 million and $0 restricted cash at September 30, 2019 and September 30, 2018, respectively. Amounts included in restricted cash are primarily held as collateral associated with a letter of credit for the Company’s new lease for its corporate headquarters in Pasadena, California.
Concentration of Credit Risk	Concentration of Credit Risk—The Company maintains several bank accounts primarily at two financial institutions for its operations. 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—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposit, 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 debt 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 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 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. During the years ended September 30, 2019, 2018 and 2017, respectively, all of the Company’s investments were classified as held-to-maturity. Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary.
Property and Equipment	Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.
Intangible Assets subject to amortization	Intangible Assets Subject to Amortization—Intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable and are also reviewed annually to determine whether any impairment is necessary.
Contingent Consideration	Contingent Consideration - The consideration for the Company’s acquisitions may include future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at an estimated fair value at the balance sheet date. Changes in the fair value of the contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations and Comprehensive Income (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. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. The Company determined the fair value of its contingent consideration obligation to be $0 at September 30, 2019 and September 30, 2018.
Revenue Recognition	Revenue Recognition— On October 1, 2018, the Company adopted FASB Topic 606 – Revenue for Contracts from Customers which amended revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries. The Company’s adoption of the new revenue standard did not have a material impact on its Consolidated Financial Statements. The Company has not yet achieved commercial sales of its drug candidates to date, however, the new standard is applicable to the Company’s ongoing licensing and collaboration agreements, including those with Amgen and Janssen, and the analysis of the impact of this guidance on those agreements is discussed further in Note 2 below. The new revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of the new revenue standard, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when (or as) each performance obligation is satisfied. The Company recognizes the transaction price allocated to upfront license payments as revenue upon delivery of the license to the customer and resulting ability of the customer to use and benefit from the license, if the license is determined to be distinct from the other performance obligations identified in the contract. These other performance obligations are typically to perform research and development services for the customer, often times relating to the candidate that the customer is licensing. If the license is not considered to be distinct from other performance obligations, the Company assesses the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied at a point in time or over time. If the performance obligation is satisfied over time, the Company then determines the appropriate method of measuring progress for purposes of recognizing revenue from license payments. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition. Typically, the Company’s collaboration agreements entitle it to additional payments upon the achievement of milestones or royalties on sales. The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a Clinical Trial Application (CTA) or a New Drug Application (NDA) in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas. The Company evaluates whether it is probable that the consideration associated with each milestone or royalty will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for our milestones and royalties, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in our Consolidated Statement of Operations and Comprehensive Income (Loss). Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or pre-clinical program. Milestones or royalties achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue. The new revenue standard requires the Company to assess whether a significant financing component exists in determining the transaction price. The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment. Additionally, future royalty payments are not substantially within the control of the Company or the customer. The new revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated. The relative standalone selling price is defined in the new revenue standard as the price at which an entity would sell a promised good or service separately to a customer. If other observable transactions in which the Company has sold the same performance obligation separately are not available, the Company estimates the standalone selling price of each performance obligation. Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. Whenever the Company determines that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using the proportional performance method. Labor hours are typically used as the measure of performance. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on the Company’s Consolidated Balance Sheets. Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months, and long-term deferred revenue consists of amounts that the Company does not expect will be recognized in the next 12 months. This estimate is based on the Company’s current operating plan and, if the Company’s operating plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.
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 saccordance 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.
Net Income (Loss) per Share	Net Income (Loss) per Share—Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (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. During the years ended September 30, 2019, 2018 and 2017, the calculation of the effect of dilutive stock options and restricted stock units was 4,748,958 shares, 0 shares and 0 shares, respectively. During the year ended September 30, 2019, the calculation of the effect of dilutive stock options and restricted stock units excluded 1,007,500 stock options and 11,500 restricted stock units due to their anti-dilutive effect. During the years ended September 30, 2018 and 2017, the calculation of the effect of dilutive stock options and restricted stock units excluded all stock options and restricted stock units granted and outstanding during the period due to their anti-dilutive effect.
Stock-Based Compensation	Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. For restricted stock units, the value of the award is based on the Company’s stock price at the grant date. For 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 uses 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 the Company’s determination that the achievement of such performance conditions is probable for performance-based awards. This determination requires significant judgment by management.
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.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (Topic 606), which will supersede nearly all existing revenue recognition guidance under GAAP. ASU No. 2014-09 provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption and became effective for the Company in the first quarter of fiscal 2019. In April 2016, the FASB issued an amendment to ASU No. 2014-09 with update ASU 2016-10 which provided more specific guidance around the identification of performance obligations and licensing arrangements. On October 1, 2018, the Company adopted this standard using the modified retrospective method. The Company’s implementation approach included reviewing the status of each of its ongoing license agreements and collaboration agreements and designing appropriate internal controls to enable the preparation of financial information. The Company completed its assessment of the impact of the new revenue recognition guidance and determined that there will be no material impact. The Company’s existing performance obligations under its ongoing license and collaboration agreements as of October 1, 2018 and prior were substantially completed prior to September 30, 2018. For these agreements that were ongoing as of October 1, 2018, any future option, milestone or royalty payments received will be accounted for under the sales-based royalty exception provided for under this new revenue recognition guidance. Additionally, there will be no impact to cash from or used in operating, financing or investing activities on the Company’s Consolidated Statement of Cash Flows as a result of the adoption of the new standard. In March 2016, the FASB issued ASU No. 2016-02, Leases. Under ASU 2016-02, lessees will be required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). ASU 2016-02 becomes effective for the Company in the first quarter of fiscal 2020. The Company is assessing the impact of the adoption of this update and it expects the adoption to have a material effect on its Consolidated Balance Sheets, including classification and disclosure of its leased facilities. In May 2017, the FASB issued ASU No. 2017-09, which is an update to Topic 718, Compensation - Stock Compensation. The update provides guidance on determining which changes to the terms and conditions of share-based payment awards, including stock options, require an entity to apply modification accounting under Topic 718. ASU 2017-09 became effective for the Company in the first quarter of fiscal 2019. The adoption of this update has not had a material impact on the Company's results of operations and Consolidated Financial Statements. In November 2018, the FASB issued ASU No. 2018-18 Collaborative Arrangements (Topic 808). This update provides clarification on the interaction between Revenue Recognition (Topic 606) and Collaborative Arrangements (Topic 808) including the alignment of unit of account guidance between the two topics/ ASU 2018-18 becomes effective for the Company in the first quarter of fiscal 2021 with early adoption permitted. The Company does not expect the adoption of this update to have a material effect on its Consolidated Financial Statements.

Property and Equipment (Tables)

12 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Summary of Property and Equipment

The following table summarizes the Company’s major classes of property and equipment:


	September 30, 2019			September 30, 2018
Computers, office equipment and furniture	$	637,577		$	600,334
Research equipment		12,932,304			10,751,627
Software		147,254			152,676
Leasehold improvements		21,579,415			12,236,150
Total gross fixed assets		35,296,550			23,740,787
Less: Accumulated depreciation and amortization		(12,081,651	)		(9,805,362	)
Property and equipment, net	$	23,214,899		$	13,935,425

Depreciation and amortization expense for Property and Equipment the for the years ended September 30, 2019, 2018 and 2017 was $2,738,715, $2,998,846, and $2,990,010, respectively.

Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Stock issued, price per share	$ 23.00	$ 5.25
Amgen
Stock issued, price per share			$ 7.16

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Sep. 30, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	145,000,000	145,000,000
Common stock, shares issued	95,506,271	88,505,302
Common stock, shares outstanding	95,506,271	88,505,302