0001628280-22-030869 | 10-K | XBRL Viewer | Arrowhead Pharmaceuticals INC

Intangible Assets

12 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

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 following table presents the components of intangible asset:


	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Useful Lives
	(amounts in thousands)								(in years)
As of September 30, 2022
Patents	$	21,728	$	11,770	$	—	$	9,958	14
License	3,129		1,125		—		2,004		21
Total intangible assets, net	$	24,857	$	12,895	$	—	$	11,962

As of September 30, 2021
Patents	$	21,728	$	10,217	$	—	$	11,511	14
License	3,129		977		—		2,152		21
Total intangible assets, net	$	24,857	$	11,194	$	—	$	13,663

Intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist. No impairment indicators were identified during 2022 and 2021.

Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. Intangible assets amortization expense in each of 2022, 2021, and 2020 was $1.7 million. None of the intangible assets with definite useful lives are anticipated to have a residual value.

The following table presents the estimated future amortization expense related to intangible assets as of September 30, 2022:


	Amortization Expense
Year Ending September 30,	(in thousands)
2023	$	1,700
2024	1,700
2025	1,700
2026	1,700
2027	1,700
Thereafter	3,462
Total	$	11,962

Collaboration and License Agreements - Amgen, Inc. (Details) $ in Thousands		12 Months Ended
	Sep. 28, 2016 USD ($) agreement	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Jul. 31, 2020 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Proceeds from the issuance of common stock		$ 0	$ 0	$ 250,479
Revenues		243,231	138,287	$ 87,992
Contract liabilities		74,099	111,055
Amgen \| Collaboration and License agreements
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Number of agreements \| agreement	2
Amgen \| Olpasiran Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Cash received as due under collaboration agreement	$ 35,000
Proceeds from the issuance of common stock	21,500
Milestone payments	$ 30,000
Amgen \| Olpasiran Agreement \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Additional remaining development regulatory and sales milestones payments		400,000
Amgen \| Olpasiran and ARO-AMG1 Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payments					$ 20,000
Revenues		0	$ 0
Contract liabilities		0
Contract assets		$ 0

Income Taxes - Narrative (Details) - USD ($)	12 Months Ended
Income Taxes - Narrative (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Valuation allowance against deferred tax assets	100.00%
Gross federal net operating loss carry forwards	$ 504,800,000
Gross state net operating loss carry forwards	626,500,000
Unrecognized tax benefits	3,481,000	$ 0	$ 0	$ 0
Unrecognized tax benefits, penalties related to uncertain tax positions	1,400,000	0
Unrecognized tax benefits, interest related to uncertain tax positions	$ 1,400,000	$ 0

Income Taxes (Tables)

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Provisions for Income Taxes

The provision for income taxes consisted of the following components:


	September 30,
	2022		2021
	(in thousands)
Federal:
Current	$	—	$	—
Deferred	—		—
	—		—
State:
Current	304		2
Deferred	—		—
	304		2
Foreign:
Current	3,481		—
Deferred	—		—
	3,481		—
Total:
Current	3,785		2
Deferred	—		—
Income tax provision	$	3,785	$	2

Summary of Effective Income Tax Rate Reconciliation

The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations:


	September 30,
	2022		2021		2020
At U.S. federal statutory rate	-21.0	%	-21.0	%	-21.0	%
State taxes, net of federal effect	-8.6	%	-7.0	%	-7.0	%
Stock compensation	1.7	%	-1.3	%	-13.3	%
Valuation allowance	28.4	%	29.3	%	43.3	%
Other	1.7	%	0.0	%	-2.0	%
Effective income tax rate	2.2	%	0.0	%	0.0	%

Components of the Net Deferred Tax Assets and Liabilities

The following table presents the significant components of the Company’s net deferred tax assets and liabilities:


	September 30,
	2022		2021
	(in thousands)
Deferred tax assets:
Accrued Compensation	$	2,961	$	2,371
Stock Compensation	41,479		22,454
Capitalized Research & Development	324		324
California Alternative Minimum Tax	483		179
Net Operating Losses	171,319		185,431
Intangible Assets	2,973		3,562
Deferred Revenue	38,810		—
Right of Use Assets/Lease Liabilities	2,844		1,938
Capital Loss	1,679		—
Total gross deferred tax assets	$	262,872	$	216,259

Valuation allowance	$	(242,394)	$	(194,255)

Deferred tax liabilities:
Fixed Assets	$	(1,088)	$	(6,360)
State taxes	(19,390)		(15,644)
Total gross deferred tax liability	$	(20,478)	$	(22,004)

Net deferred tax assets (liabilities)	$	—	$	—

Schedule of Gross Unrecognized Tax Benefits

The following table summarizes the Company’s gross unrecognized tax benefits:


	Year Ended September 30,
	2022		2021		2020
	(in thousands)
Beginning balance of unrecognized tax benefits	$	—	$	—	$	—
Increase for prior period tax positions	3,481		—		—
Ending balance of unrecognized tax benefits	$	3,481	$	—	$	—

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Sep. 30, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	145,000,000	145,000,000
Common stock, shares issued (in shares)	105,960,000	104,327,000
Common stock, shares outstanding (in shares)	105,960,000	104,327,000

Collaboration and License Agreements - Janssen Pharmaceuticals, Inc. (Details)		12 Months Ended
	Oct. 03, 2018 USD ($) obligation	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	May 31, 2021 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Proceeds from the issuance of common stock		$ 0	$ 0	$ 250,479,000
Deferred revenue		74,099,000	111,055,000
Revenues		243,231,000	138,287,000	$ 87,992,000
Collaboration and License agreements
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Initial transaction price	$ 252,700,000
Janssen \| Collaboration and License agreements
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Cash received as due under collaboration agreement	175,000,000
JJDC \| Common Stock Purchase Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Proceeds from the issuance of common stock	75,000,000
Janssen
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payment	73,000,000
Development, regulatory and sales milestones payments		4,900,000,000
Janssen \| License Agreement \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Development, regulatory and sales milestones payments	1,600,000,000
Janssen \| Collaboration Agreement \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Development, regulatory and sales milestones payments	600,000,000
Janssen \| J N J3989 A R O H B V Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payment	$ 25,000,000
Number of distinct performance obligations \| obligation	1
Contract assets		0
Deferred revenue		0
Janssen \| JNJ-75220795 (ARO-JNJ1)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payment			10,000,000		$ 10,000,000
Contract assets		100,000
Deferred revenue		0
Revenues		$ 3,400,000	$ 500,000

Cover Page - USD ($) $ in Billions	12 Months Ended
Cover Page - USD ($) $ in Billions	Sep. 30, 2022	Nov. 16, 2022	Mar. 31, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Sep. 30, 2022
Current Fiscal Year End Date	--09-30
Document Transition Report	false
Entity File Number	001-38042
Entity Registrant Name	ARROWHEAD PHARMACEUTICALS, INC.
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	46-0408024
City Area Code	626
Local Phone Number	304-3400
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
Security12b Title	Common Stock, $0.001 par value
Trading Symbol	ARWR
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 4.1
Entity Common Stock Shares Outstanding		106,005,722
Documents Incorporated by Reference	Portions of the Definitive Proxy Statement to be filed for Arrowhead Pharmaceuticals Inc.’s 2023 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Entity Central Index Key	0000879407
Amendment Flag	false

Leases - Summary of Maturities of Operating Lease Liabilities on an Undiscounted Basis (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
2023	$ 5,802
2024	8,094
2025	11,800
2026	12,138
2027	11,297
2028 and thereafter	102,813
Total	151,944
Less imputed interest	(70,368)
Total operating lease liabilities	$ 81,576

Leases (Tables)

12 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Lease Assets and Liabilities and Lease Cost

The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:


		September 30,
Lease Assets and Liabilities	Classification	2022		2021
		(in thousands)

Operating lease assets	Right-of-use assets	$	58,291	$	17,346

Current operating lease liabilities	Lease liabilities	2,776		2,250
Non-current operating lease liabilities	Lease liabilities, net of current portion	78,800		23,295

The components of lease cost along with its classification on the Company’s consolidated statements of operations were as follows:


		Year Ended September 30,
Lease Cost	Classification	2022		2021		2020
		(in thousands)

Operating lease cost	Research and development	$	7,278	$	3,649	$	925
	General and administrative expense	1,757		1,498		1,474

Variable lease cost	Research and development	728		814		802
	General and administrative expense	—		1		—

Total		$	9,763	$	5,962	$	3,201

Summary of Maturities of Operating Lease Liabilities on an Undiscounted Basis

The following table presents maturities of operating lease liabilities on an undiscounted basis as of September 30, 2022:


Year	Amounts
	(in thousands)
2023	$	5,802
2024	8,094
2025	11,800
2026	12,138
2027	11,297
2028 and thereafter	102,813
Total	$	151,944
Less imputed interest	(70,368)
Total operating lease liabilities	$	81,576

Supplemental cash flow and other information related to leases was as follows:


	Year Ended September 30,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)	$	4,500		$	3,100

Weighted-average remaining lease term (in years)	7			8
Weighted-average discount rate	8.5		%	8.5		%

Stock-Based Compensation - Assumptions Used to Value Stock Options (Details) - $ / shares	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Share-Based Payment Arrangement [Abstract]
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate, minimum		0.40%	0.40%
Risk-free interest rate, maximum		1.10%	1.80%
Volatility, minimum		86.20%	90.00%
Volatility, maximum		90.40%	92.00%
Expected term (in years)		6 years 3 months	6 years 3 months
Weighted-average grant date fair value per share		$ 48.64	$ 36.35

Income Taxes - Provisions for Income Taxes (Details) - USD ($)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Federal:
Current	$ 0	$ 0
Deferred	0	0
Total Federal	0	0
State:
Current	304,000	2,000
Deferred	0	0
Total State	304,000	2,000
Foreign:
Current	3,481,000	0
Deferred	0	0
Total Foreign	3,481,000	0
Total:
Current	3,785,000	2,000
Deferred	0	0
Income tax provision	$ 3,785,000	$ 2,000	$ 2,000

Organization and Significant Accounting Policies (Details) - USD ($)		1 Months Ended	12 Months Ended
	Apr. 25, 2022	Apr. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Organization And Significant Accounting Policies [Line Items]
Cash, cash equivalents and restricted cash			$ 108,005,000	$ 184,434,000	$ 143,583,000	$ 221,804,000
Restricted cash			7,300,000	2,400,000
Short-term investments			268,391,000	56,627,000
Long-term investments			105,872,000	245,595,000
Net increase (decrease) in cash and investments			131,100,000
Proceeds from upfront capital			60,000,000	0	$ 0
Proceeds from sale of marketable debt securities		$ 122,300,000
Intangible assets subject to amortization, impairment			0	0
Fair value of contingent consideration obligation due to discontinuation of clinical trials			$ 0	$ 0
Minimum
Organization And Significant Accounting Policies [Line Items]
Property and equipment, useful life			3 years
Maximum
Organization And Significant Accounting Policies [Line Items]
Amount insured in FDIC per account			$ 250,000
Property and equipment, useful life			7 years
Visirna Therapeutics, Inc. \| Variable Interest Entity, Primary Beneficiary
Organization And Significant Accounting Policies [Line Items]
Proceeds from upfront capital	$ 60,000,000		$ 60,000,000
GSK
Organization And Significant Accounting Policies [Line Items]
Upfront milestone payment received			120,000,000
Janssen
Organization And Significant Accounting Policies [Line Items]
Development regulatory and sales milestones payments			$ 4,900,000,000

Stockholders' Equity (Tables)

12 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of Shares of Common Stock and Preferred Stock

The following table summarizes the Company’s shares of common stock and preferred stock:


			Shares
	Par Value		Authorized	Issued	Outstanding
			(in thousands)
As of September 30, 2022
Common stock	$	0.001	145,000	105,960	105,960
Preferred stock	$	0.001	50,000	—	—

As of September 30, 2021
Common stock	$	0.001	145,000	104,327	104,327
Preferred stock	$	0.001	50,000	—	—

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

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+ Details

Property and Equipment (Tables)

12 Months Ended

Sep. 30, 2022

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,
	2022		2021
	(in thousands)
Computers, software, office equipment and furniture	$	2,182	$	2,170
Land	2,996		—
Research equipment	38,283		27,500
Leasehold improvements	42,017		41,524
Construction in progress	56,373		345
	141,851		71,539
Less: Accumulated depreciation and amortization	(31,554)		(22,864)
Property and equipment, net	$	110,297	$	48,675

Property and Equipment

12 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

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


	September 30,
	2022		2021
	(in thousands)
Computers, software, office equipment and furniture	$	2,182	$	2,170
Land	2,996		—
Research equipment	38,283		27,500
Leasehold improvements	42,017		41,524
Construction in progress	56,373		345
	141,851		71,539
Less: Accumulated depreciation and amortization	(31,554)		(22,864)
Property and equipment, net	$	110,297	$	48,675

Depreciation and amortization expense for property and equipment for the years ended September 30, 2022, 2021, and 2020 was $8.7 million, $6.6 million and $4.2 million respectively.

The increase in the construction in progress during 2022 was mainly due to the developments of manufacturing, laboratory and office facilities in Verona, Wisconsin as well as a new laboratory and office facility in San Diego, California. See Note 7.

Income Taxes - Gross Unrecognized Tax Benefits (Details) - USD ($)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning balance of unrecognized tax benefits	$ 0	$ 0	$ 0
Increase for prior period tax positions	3,481,000	0	0
Ending balance of unrecognized tax benefits	$ 3,481,000	$ 0	$ 0

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Non- controlling Interest
Beginning balance at Sep. 30, 2019	$ 244,036	$ 188	$ 664,086	$ (392)	$ (419,291)	$ (555)
Beginning balance (in shares) at Sep. 30, 2019		95,506,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	43,383		43,383
Exercise of stock options	7,469	$ 1	7,468
Exercise of stock options (in shares)		1,111,000
Common stock - restricted stock units vesting	0	$ 1	(1)
Common stock - restricted stock units vesting (in shares)		1,159,000
Common stock - issued for cash	250,479	$ 5	250,474
Common stock - issued for cash (in shares)		4,600,000
Foreign currency translation adjustments	410			410
Deconsolidation of Ablaris Therapeutics, Inc.	555					555
Net loss	(84,553)				(84,553)
Ending balance at Sep. 30, 2020	461,779	$ 195	965,410	18	(503,844)	0
Ending balance (in shares) at Sep. 30, 2020		102,376,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	76,673		76,673
Exercise of stock options	11,305	$ 1	11,304
Exercise of stock options (in shares)		1,052,000
Common stock - restricted stock units vesting	0	$ 1	(1)
Common stock - restricted stock units vesting (in shares)		899,000
Foreign currency translation adjustments	(87)			(87)
Net loss	(140,848)				(140,848)
Ending balance at Sep. 30, 2021	408,822	$ 197	1,053,386	(69)	(644,692)	0
Ending balance (in shares) at Sep. 30, 2021		104,327,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	120,893		120,893
Exercise of stock options	$ 5,185		5,185
Exercise of stock options (in shares)	606,220	606,000
Common stock - restricted stock units vesting	$ 0	$ 1	(1)
Common stock - restricted stock units vesting (in shares)		1,027,000
Foreign currency translation adjustments	(67)			(67)
Interest in joint venture	60,000		39,750			20,250
Net loss	(176,494)				(176,063)	(431)
Ending balance at Sep. 30, 2022	$ 418,339	$ 198	$ 1,219,213	$ (136)	$ (820,755)	$ 19,819
Ending balance (in shares) at Sep. 30, 2022		105,960,000

Leases - Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 4,500	$ 3,100
Weighted-average remaining lease term (in years)	7 years	8 years
Weighted-average discount rate	8.50%	8.50%

Commitments and Contingencies - Additional Information (Details) ft² in Thousands		12 Months Ended
	Dec. 20, 2021 USD ($) a ft²	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Other Commitments [Line Items]
Contingent liabilities		$ 0
Tax increment financing award	$ 16,000,000
State income tax credits	2,500,000
Technology License Commitments \| ARO-ENaC and ARO-HIF2 Candidates
Other Commitments [Line Items]
Milestone payments		$ 0	$ 2,400,000	$ 0
Facilities \| Minimum
Other Commitments [Line Items]
Amount intends to invest for buildout of facilities	200,000,000
Facilities \| Maximum
Other Commitments [Line Items]
Amount intends to invest for buildout of facilities	$ 260,000,000
Wisconsin \| Verona Technology Park
Other Commitments [Line Items]
Land purchased (in acres) \| a	13
Wisconsin \| Drug Manufacturing Facility
Other Commitments [Line Items]
Planned area of site (in sq ft) \| ft²	160
Wisconsin \| Laboratory And Office Facility
Other Commitments [Line Items]
Planned area of site (in sq ft) \| ft²	140

Collaboration and License Agreements	12 Months Ended
Collaboration and License Agreements	Sep. 30, 2022
Collaboration And License Agreements [Abstract]
Collaboration and License Agreements	COLLABORATION AND LICENSE AGREEMENTSGlaxosmithkline Intellectual Property (No. 3) Limited (“GSK”) On November 22, 2021, GSK and the Company entered into an Exclusive License Agreement (the “GSK License Agreement”). Under the GSK License Agreement, GSK has received an exclusive license for ARO-HSD. The exclusive license is worldwide with the exception of greater China, for which the Company retained rights to develop and commercialize ARO-HSD. The Company has completed its Phase 1/2 study of ARO-HSD, and GSK is now wholly responsible for all clinical development and commercialization of ARO-HSD in its territory. Under the terms of the agreement, the Company has received an upfront payment of $120.0 million and is eligible for additional payments of $30.0 million at the start of Phase 2 and $100.0 million upon achieving a successful Phase 2 trial readout and the first patient dosed in a Phase 3 trial. Furthermore, should the Phase 3 trial readout positively, and the potential new medicine receives regulatory approval in major markets, the deal provides for commercial milestone payments to the Company of up to $190.0 million at first commercial sale, and up to $590.0 million in sales-related milestone payments. The Company is further eligible to receive tiered royalties on net product sales in a range of mid-teens to twenty percent. At the inception of the GSK License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study, (the “GSK R&D Services”). Due to the specialized and unique nature of the GSK R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. Beyond the GSK R&D Services, which are the responsibility of the Company, GSK will be responsible for managing future clinical development and commercialization in its territory. The Company determined the initial transaction price totaled $120.0 million, including the upfront payment, which was collected in January 2022. The Company has excluded any future estimated milestones or royalties from this transaction price to date. The Company has allocated the total $120.0 million initial transaction price to its one distinct performance obligation for the ARO-HSD license and the associated GSK R&D Services. As the Company has completed its performance obligation related to this agreement, the upfront payment of $120.0 million was fully recognized as of September 30, 2022. There were $0 in contract assets recorded as accounts receivable and $0 in contract liabilities recorded as deferred revenue as of September 30, 2022. The Company has also performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for GSK pursuant to the GSK License Agreement, for which the Company has been reimbursed for its costs. The Company recognized $4.8 million in connection with these efforts for the year ended September 30, 2022. There were $4.8 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue as of September 30, 2022. Horizon Therapeutics Ireland DAC (“Horizon”) On June 18, 2021, Horizon and the Company entered into a collaboration and license agreement (the “Horizon License Agreement”). Under the terms of the Horizon License Agreement, Horizon received a worldwide exclusive license for ARO-XDH, a previously undisclosed discovery-stage investigational RNAi therapeutic being developed by the Company as a potential treatment for people with uncontrolled gout. The Company conducted all activities through the preclinical stages of development of ARO-XDH, and Horizon is now wholly responsible for clinical development and commercialization of ARO-XDH. In July 2021, the Company received $40.0 million as an upfront payment and is eligible to receive up to $660.0 million in potential development, regulatory and sales milestones. The Company is also eligible to receive royalties in the low- to mid-teens range on net product sales. At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of ARO-XDH (the “Horizon R&D Services”). Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. Beyond the Horizon R&D Services, which are the responsibility of the Company, Horizon will be responsible for managing future clinical development and commercialization of ARO-XDH. The Company determined the initial transaction price totaled $40.0 million, including the upfront payment. The Company has excluded any future estimated milestones or royalties from this transaction price to date. The Company allocates the total $40.0 million initial transaction price to its one distinct performance obligation for the ARO-XDH license and the associated Horizon R&D Services. Revenue is recognized on a straight-line basis over the estimated timeframe for completing the Horizon R&D Services. The Company determined that the straight-line basis was appropriate as its efforts will be expended evenly over the course of completing its performance obligation. Revenue for the years ended September 30, 2022 and 2021 were $26.7 million and $6.7 million, respectively. There were $0 in contract assets recorded as accounts receivable and $6.7 million in contract liabilities recorded as deferred revenue as of September 30, 2022. In addition, the Company has performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for Horizon pursuant to the Horizon License Agreement. The Company recognized $2.5 million and $0 in connection with these efforts for the years ended September 30, 2022 and 2021, respectively. There were $1.3 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue as of September 30, 2022. Takeda Pharmaceutical Company Limited (“Takeda”) On October 7, 2020, Takeda and the Company entered into an Exclusive License and Co-Funding Agreement (the “Takeda License Agreement”). Under the Takeda License Agreement, Takeda and the Company will co-develop its ARO-AAT program, the Company’s second-generation subcutaneously administered RNAi therapeutic candidate being developed as a treatment for liver disease associated with alpha-1 antitrypsin deficiency. Within the United States, ARO-AAT, if approved, will be co-commercialized under a 50/50 profit sharing structure. Outside the United States, Takeda will lead the global commercialization strategy and will receive an exclusive license to commercialize ARO-AAT, while the Company will be eligible to receive tiered royalties of 20% to 25% on net sales. In January 2021, the Company received $300.0 million as an upfront payment and is eligible to receive potential development, regulatory and commercial milestones of up to $595.0 million. At the inception of the Takeda License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study and to ensure certain manufacturing of ARO-AAT drug product is completed and delivered to Takeda (the “Takeda R&D Services”). Due to the specialized and unique nature of these Takeda 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. Beyond the Takeda R&D Services, which are the responsibility of the Company, Takeda will be responsible for managing future clinical development and commercialization outside the United States. Within the United States, the Company will also participate in co-development and co-commercialization efforts and will co-fund these efforts with Takeda as part of the 50/50 profit sharing structure within the United States. The Company considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of account within Topic 808, and as such, these co-funding amounts are recorded as research and development expenses or general and administrative expenses, as appropriate. The Company determined the initial transaction price totaled $300.0 million, which includes the upfront payment. The Company has excluded any future milestones or royalties from this transaction price to date. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the ARO-AAT license and the associated Takeda R&D Services. Revenue is recognized using a proportional performance method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies). The Company recognized $85.8 million and $90.8 million in connection with these efforts for the years ended September 30, 2022 and 2021, respectively. There were $0 of contract assets recorded as accounts receivable and $123.4 million of contract liabilities recorded as deferred revenue, of which $67.4 million was classified as current deferred revenue, as of September 30, 2022. The Company also recorded $8.6 million as accrued expenses that was primarily driven by co-development and co-commercialization activities. Janssen Pharmaceuticals, Inc. (“Janssen”) On October 3, 2018, Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson, and the Company entered into a License Agreement (the “Janssen License Agreement”) and a Research Collaboration and Option Agreement (the “Janssen Collaboration Agreement”). The Company also entered into a stock purchase agreement with JJDC, Inc. (“JJDC”), Johnson & Johnson's venture capital arm (“JJDC Stock Purchase Agreement”). 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 potential therapy for patients with chronic hepatitis B virus infection. Beyond the Company’s Phase 1/2 study of JNJ-3989 (ARO-HBV), which the Company was responsible for completing, Janssen is wholly responsible for clinical development and commercialization of JNJ-3989 (ARO-HBV). Under the Janssen Collaboration Agreement, Janssen was able to select three new targets against which the Company would develop clinical candidates. These candidates were subject to certain restrictions and did not include candidates that already were in the Company’s pipeline. The Company was obligated to perform discovery, optimization and preclinical research and development, entirely funded by Janssen, which on its own or in combination with Janssen development work, would have been sufficient to allow the filing of a U.S. Investigational New Drug Application (“IND”) or equivalent, at which time Janssen would have the option to take an exclusive license. If the option was exercised, Janssen would have been wholly responsible for clinical development and commercialization of each optioned candidate. Under the terms of the agreements taken together, the Company has received $175.0 million as an upfront payment, $75.0 million in the form of an equity investment by JJDC in the Company’s common stock under the JJDC Stock Purchase Agreement, and milestone and option payments totaling $73.0 million, and the Company may receive up to $1.6 billion in development and sales milestone payments for the Janssen License Agreement, and up to $0.6 billion in development and sales milestone payments for the remaining target covered under the Janssen Collaboration Agreement. The Company is further eligible to receive tiered royalties on product sales up to mid-teens under the Janssen License Agreement and up to low teens under the Janssen Collaboration Agreement. During 2022, Janssen’s option period expired unexercised for two of the three candidates (ARO-JNJ2 and ARO-JNJ3) under the Janssen Collaboration Agreement. At the inception of Janssen License Agreement and Janssen Collaboration Agreement, the Company 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 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 is accounted for separately. The Company determined the transaction price totaled approximately $252.7 million, which includes the upfront payment, the premium paid by JJDC for its equity investment in the Company, two $25.0 million milestone payments related to JNJ-3989 (ARO-HBV), and estimated payments for reimbursable Janssen R&D Services to be performed. The Company has allocated the total $252.7 million initial transaction price to its one distinct performance obligation for the JNJ-3989 (ARO-HBV) license and the associated Janssen R&D Services. The Company has recognized this transaction price in its entirety as of September 30, 2021, as its performance obligations were substantially completed. Future milestones and royalties achieved will be recognized in their entirety when earned. There were no contract assets and liabilities recorded as of September 30, 2022. The Company has conducted its discovery, optimization and preclinical research and development of JNJ-75220795 (ARO-JNJ1), ARO-JNJ2, and ARO-JNJ3 under the Janssen Collaboration Agreement. All costs and labor hours spent by the Company have been entirely funded by Janssen. Janssen’s option period expired unexercised for two of the three candidates (ARO-JNJ2 and ARO-JNJ3) under the Janssen Collaboration Agreement during 2022. In May 2021, Janssen exercised its option right for JNJ-75220795 (ARO-JNJ1), which resulted in a $10.0 million milestone payment to the Company. This $10.0 million milestone payment was recognized entirely as of September 30, 2021. The Company recognized $3.4 million and $0.5 million of revenue associated with these efforts during September 30, 2022 and 2021, respectively. There were $0.1 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue as of September 30, 2022. Amgen Inc. (“Amgen”) On September 28, 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement. Under the Second Collaboration and License Agreement (the “Olpasiran Agreement”), Amgen has received a worldwide, exclusive license to the Company’s novel RNAi Olpasiran (previously referred to as AMG 890 or 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 prior collaboration and license agreement (the “First Collaboration and License Agreement” or the “ARO-AMG1 Agreement”), Amgen received an option to a worldwide, exclusive license to ARO-AMG1, an RNAi therapy for an undisclosed genetically validated cardiovascular target. Under both agreements, Amgen is wholly responsible for clinical development and commercialization. Under the Olpasiran Agreement and the ARO-AMG1 Agreement, the Company has received $35.0 million in upfront payments, $21.5 million in the form of an equity investment by Amgen in the Company’s common stock, and $30.0 million in milestone payments, and may receive up to an additional $400.0 million in remaining 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 Olpasiran Agreement. The Company has substantially completed its performance obligations under the Olpasiran Agreement and the ARO-AMG1 Agreement. In July 2019, Amgen informed the Company that it would not be exercising its option for an exclusive license for ARO-AMG1, and as such, there will be no further milestone or royalty payments under the ARO-AMG1 Agreement. In July 2020, Amgen initiated a Phase 2 clinical study of Olpasiran, which resulted in a $20.0 million milestone payment to the Company. There were no revenue recorded associated with the Company’s agreement with Amgen for the years ended September 30, 2022 and 2021. There were no contract assets and liabilities recorded as of September 30, 2022. Joint Venture and License Agreement with Visirna Therapeutics, Inc. (“Visirna”) On April 25, 2022, the Company entered into a License Agreement with Visirna (the “Visirna License Agreement”), pursuant to which Visirna received an exclusive license to develop, manufacture and commercialize four of the Company’s RNAi-based investigational cardiometabolic medicines in Greater China (including the People’s Republic of China, Hong Kong, Macau and Taiwan). Pursuant to a Share Purchase Agreement entered into simultaneously with the Visirna License Agreement (the “Visirna SPA”), the Company acquired a majority stake in Visirna (after accounting for shares reserved for Visirna’s employee stock ownership plan) as partial consideration for the Visirna License Agreement. Under the Visirna SPA, entities affiliated with Vivo Capital also acquired a minority stake in Visirna in exchange for $60.0 million in upfront capital to support the operations of Visirna. As further consideration under the Visirna License Agreement, the Company is also eligible to receive potential royalties on commercial sales.

Subsequent Events - Additional Information (Details) - Royalty Pharma Agreement - Subsequent Event $ in Millions	Nov. 09, 2022 USD ($)
Subsequent Event [Line Items]
Cash received as due under collaboration agreement	$ 250.0
Milestone payment receivable	160.0
Milestone payment receivable upon achievement of enrollment in phase 3 clinical trial	50.0
Milestone payment receivable upon FDA approval	50.0
Milestone payment receivable upon receipt of royalty payments	60.0
Royalty payment threshold	70.0
Maximum
Subsequent Event [Line Items]
Initial transaction price	$ 410.0

Organization and Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Company's Current Pipeline

The following table presents the Company’s current pipeline:


Therapeutic Area	Name	Stage	Product Rights
Cardiometabolic	ARO-APOC3	Two Phase 2b and one Phase 3	Arrowhead
	ARO-ANG3	Two Phase 2b	Arrowhead
	Olpasiran	Phase 3	Amgen
Pulmonary	ARO-ENAC2	Pre-Clinical	Arrowhead
	ARO-RAGE	Phase 1/2	Arrowhead
	ARO-MUC5AC	Phase 1/2a	Arrowhead
	ARO-MMP7	Phase 1/2	Arrowhead
Liver	ARO-HSD	Phase 1/2	GSK
	ARO-AAT	Phase 2	Takeda and Arrowhead
	JNJ-3989	Phase 2	Janssen
	ARO-XDH	Phase 1	Horizon
	ARO-C3	Phase 1/2	Arrowhead
	JNJ-75220795	Phase 1	Janssen
Muscle	ARO-DUX4	Pre-Clinical	Arrowhead

Collaboration and License Agreements - Joint Venture and License Agreement with Visirna Therapeutics, Inc. (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 25, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Proceeds from upfront capital		$ 60,000	$ 0	$ 0
Visirna Therapeutics, Inc. \| Variable Interest Entity, Primary Beneficiary
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Proceeds from upfront capital	$ 60,000	$ 60,000

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions			12 Months Ended
	Jul. 08, 2022	Jan. 01, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Mar. 18, 2021
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Intrinsic value of options exercised			$ 27.6	$ 66.9	$ 44.1
Stock-based compensation expense			10.8	12.4	9.7
Unrecognized pre-tax compensation expense			$ 12.0
Weighted average period to recognize pre-tax compensation expense			1 year 6 months
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense			$ 113.6	$ 64.2	$ 33.7
Weighted average period to recognize pre-tax compensation expense			2 years 4 months 24 days
Granted (in shares)			1,396,170
Share-based payment award (in shares)			4,069,431	3,831,850
Unrecognized pre-tax compensation expense			$ 140.7
Restricted Stock Units (RSUs) \| Chief Executive Officer
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	99,521
Restricted Stock Units, Market-Based \| Chief Executive Officer
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted (in shares)		800,000
Equity award value	$ 38.4
Performance-Based Restricted Stock Units \| Chief Executive Officer
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	149,282
2004 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares reserve for issuance (in shares)			175,083
2004 Plan \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)			0
2013 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares reserve for issuance (in shares)			4,072,137
Number of shares forfeited (in shares)			131,897
2013 Plan \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)			3,145,886
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares authorized (in shares)			7,190,077			8,000,000
2021 Plan \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)			923,545
Outside Of Equity Compensation Plans \| Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares reserve for issuance (in shares)			778,425
Outside Of Equity Compensation Plans \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares reserve for issuance (in shares)			838,625

Subsequent Events	12 Months Ended
Subsequent Events	Sep. 30, 2022
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS On November 9, 2022, the Company and Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) entered into a Royalty Purchase Agreement (the “Royalty Pharma Agreement”), pursuant to which Royalty Pharma agreed to pay up to $410.0 million in cash to the Company in consideration for the Company’s future royalty interest in Olpasiran, a small interfering RNA (siRNA) originally developed by the Company and licensed to Amgen in 2016 under the Olpasiran Agreement. Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid $250.0 million upfront and agreed to pay up to an additional $160.0 million in aggregate one-time milestone payments due if and when the following milestone events occur: (i) $50.0 million on completion of enrollment in the planned OCEAN Phase 3 clinical trial for Olpasiran, (ii) $50.0 million upon receipt of FDA approval of Olpasiran for an approved indication (reduction in the risk of myocardial infarction, urgent coronary revascularization, or coronary heart disease death in adults with established cardiovascular disease and elevated Lp(a)), and (iii) $60.0 million upon Royalty Pharma’s receipt of at least $70.0 million of royalty payments under the Royalty Pharma Agreement in any single calendar year. In consideration for the payment of the foregoing amounts under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement. The Company remains eligible to receive any milestone payments potentially payable by Amgen under the Olpasiran Agreement. The Royalty Pharma Agreement contains other customary terms and conditions, including representations and warranties, covenants, and indemnification obligations in favor of each party. The above description of the Royalty Pharma Agreement is a summary of the material terms, does not purport to be complete and is qualified in its entirety by reference to the Royalty Pharma Agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2022.

Income Taxes

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income Tax Provision

The provision for income taxes consisted of the following components:


	September 30,
	2022		2021
	(in thousands)
Federal:
Current	$	—	$	—
Deferred	—		—
	—		—
State:
Current	304		2
Deferred	—		—
	304		2
Foreign:
Current	3,481		—
Deferred	—		—
	3,481		—
Total:
Current	3,785		2
Deferred	—		—
Income tax provision	$	3,785	$	2

The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations:


	September 30,
	2022		2021		2020
At U.S. federal statutory rate	-21.0	%	-21.0	%	-21.0	%
State taxes, net of federal effect	-8.6	%	-7.0	%	-7.0	%
Stock compensation	1.7	%	-1.3	%	-13.3	%
Valuation allowance	28.4	%	29.3	%	43.3	%
Other	1.7	%	0.0	%	-2.0	%
Effective income tax rate	2.2	%	0.0	%	0.0	%

Deferred Income Taxes

The following table presents the significant components of the Company’s net deferred tax assets and liabilities:


	September 30,
	2022		2021
	(in thousands)
Deferred tax assets:
Accrued Compensation	$	2,961	$	2,371
Stock Compensation	41,479		22,454
Capitalized Research & Development	324		324
California Alternative Minimum Tax	483		179
Net Operating Losses	171,319		185,431
Intangible Assets	2,973		3,562
Deferred Revenue	38,810		—
Right of Use Assets/Lease Liabilities	2,844		1,938
Capital Loss	1,679		—
Total gross deferred tax assets	$	262,872	$	216,259

Valuation allowance	$	(242,394)	$	(194,255)

Deferred tax liabilities:
Fixed Assets	$	(1,088)	$	(6,360)
State taxes	(19,390)		(15,644)
Total gross deferred tax liability	$	(20,478)	$	(22,004)

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 the Company’s estimates could result in material differences in the realization of these assets. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax asset. 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, 2022, the Company had available gross federal net operating loss (“NOL”) carry forwards of $504.8 million and gross state NOL carry forwards of $626.5 million. The NOLs expire at various dates through 2042.

Uncertainty in Income Taxes

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 following table summarizes the Company’s gross unrecognized tax benefits:


	Year Ended September 30,
	2022		2021		2020
	(in thousands)
Beginning balance of unrecognized tax benefits	$	—	$	—	$	—
Increase for prior period tax positions	3,481		—		—
Ending balance of unrecognized tax benefits	$	3,481	$	—	$	—

Included in the balance of unrecognized tax benefits at September 30, 2022, 2021 and 2020 were $3.5 million, $0 and $0 respectively, that if the Company recognized, would affect its effective tax rate.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. During the years ended September 30, 2022 and 2021, the Company recognized $1.4 million and $0, respectively, of accrued interest and penalties related to gross unrecognized tax benefits.

The Company does not foresee any material changes to its gross unrecognized tax benefits within the next twelve months.

The Company and its subsidiaries file income tax returns with the Internal Revenue Service, the state of California and certain other taxing jurisdictions. The Company is subject to income tax examinations by the Internal Revenue Service and by state tax authorities until the net operating losses are settled. The Company is under examination by the state of California for the years 2018 and 2019.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Sep. 30, 2022
Retirement Benefits [Abstract]
Employee Benefit Plans	EMPLOYEE BENEFIT PLANS The Company sponsors a defined contribution retirement plan which is under Section 401(k) of the Internal Revenue Code and is designed to adhere to ERISA Fiduciary standards. Substantially all of the Company’s employees are eligible to participate this plan. Under the terms of the plan, an eligible employee may elect to contribute a portion of their salary on a pre-tax basis, subject to federal statutory limitations. The plan allows for a discretionary match in an amount up to 100% of each participant’s first 3% of compensation contributed plus 50% of each participant’s next 2% of compensation contributed. For the years ended September 30, 2022, 2021, and 2020, the Company recorded expenses for the matching contributions under this plan of $1.7 million, $1.3 million and $0.9 million, respectively. The Company also provides certain employee benefit plans, including those which provide health and life insurance benefits to employees.

Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Abstract]
Computers, software, office equipment and furniture	$ 2,182	$ 2,170
Land	2,996	0
Research equipment	38,283	27,500
Leasehold improvements	42,017	41,524
Construction in progress	56,373	345
Total gross fixed assets	141,851	71,539
Less: Accumulated depreciation and amortization	(31,554)	(22,864)
Property and equipment, net	$ 110,297	$ 48,675

Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Revenue	$ 243,231,000	$ 138,287,000	$ 87,992,000
Operating expenses:
Research and development	297,307,000	206,342,000	128,875,000
General and administrative	124,431,000	80,981,000	52,276,000
Total operating expenses	421,738,000	287,323,000	181,151,000
Operating loss	(178,507,000)	(149,036,000)	(93,159,000)
Other income (expense):
Interest income, net	5,033,000	6,120,000	9,191,000
Other income (expense), net	765,000	2,070,000	(583,000)
Total other income	5,798,000	8,190,000	8,608,000
Loss before income tax expense and noncontrolling interest	(172,709,000)	(140,846,000)	(84,551,000)
Income tax expense	3,785,000	2,000	2,000
Net loss including noncontrolling interest	(176,494,000)	(140,848,000)	(84,553,000)
Net loss attributable to noncontrolling interest, net of tax	(431,000)	0	0
Net loss attributable to Arrowhead Pharmaceuticals, Inc.	$ (176,063,000)	$ (140,848,000)	$ (84,553,000)
Net loss per share attriutable to Arrowhead Pharmaceuticals, Inc.:
Basic (in dollars per share)	$ (1.67)	$ (1.36)	$ (0.84)
Diluted (in dollars per share)	$ (1.67)	$ (1.36)	$ (0.84)
Weighted-average shares used in calculating
Basic (in shares)	105,426	103,745	100,722
Diluted (in shares)	105,426	103,745	100,722
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	$ (67,000)	$ (87,000)	$ 410,000
Comprehensive loss	$ (176,561,000)	$ (140,935,000)	$ (84,143,000)

Stock-Based Compensation

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

The Company has three plans that provide for equity-based compensation. Under the 2004 Equity Incentive Plan (the “2004 Plan”) and 2013 Incentive Plan (the “2013 Plan”), 175,083 and 4,072,137 shares, respectively, of the Company’s common stock are reserved for the grant of stock options, stock appreciation rights, restricted stock awards and performance unit/share awards to employees, consultants and others as of September 30, 2022.

On March 18, 2021, the Company’s Board of Directors approved the Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan (the “2021 Plan”), which authorizes 8,000,000 shares (subject to certain adjustments) to be awarded for grants of stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock. The maximum number of shares authorized under the 2021 Plan will be (i) reduced by any shares subject to awards made under the 2013 Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash. As of September 30, 2022, the total number of shares reserved for issuance under the 2021 Incentive Plan was 7,190,077 shares, which includes 131,897 shares that were forfeited under the 2013 Plan.

In addition, there were 778,425 shares reserved for options and 838,625 shares reserved for restricted stock units issued as inducement grants to new employees granted outside of the Company’s equity-based compensation plans under Rule 5635(c)(4) of the Nasdaq Listing Rules.

The following table presents a summary of awards outstanding:


	As of September 30, 2022
	2004 Plan	2013 Plan	2021 Plan	Total
Granted and outstanding awards:
Options	175,083	2,543,301	3,000	2,721,384
Restricted stock units	—	3,145,886	923,545	4,069,431
Total	175,083	5,689,187	926,545	6,790,815

Stock Option Awards

The following table presents a summary of the stock option activity for the year ended September 30, 2022:


	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2021	3,456,239	$	19.60
Granted	—	—
Cancelled or expired	(128,635)	47.73
Exercised	(606,220)	8.55
Outstanding at September 30, 2022	2,721,384	$	20.73	4.9	$	48,114,746
Exercisable at September 30, 2022	2,351,641	$	16.93	4.5	$	46,889,825

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the Company’s closing stock price and the stock option exercise price) that would have been received by the stock option holders had all stock options been exercised on September 30, 2022. The total intrinsic value of the options exercised during the years ended September 30, 2022, 2021, and 2020 was $27.6 million, $66.9 million and $44.1 million, respectively.

Stock-based compensation expense related to stock options for the years ended September 30, 2022, 2021, and 2020 was $10.8 million, $12.4 million and $9.7 million, respectively.

As of September 30, 2022, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $12.0 million will be recognized in the Company’s results of operations over a weighted average period of 1.5 years.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by 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, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:


	Year Ended September 30,
	2022(5)	2021		2020
Expected dividend yield(1)	—	—		—
Risk-free interest rate(2)	N/A	0.4 – 1.1%		0.40 – 1.8%
Expected volatility(3)	N/A	86.2 – 90.4%		90.0 – 92.0%
Expected term (in years)(4)	N/A	6.25		6.25
Weighted-average grant date fair value per share	N/A	$	48.64	$	36.35

(1) The dividend yield is zero as the Company currently does not pay a dividend.

(2) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant..

(3) Volatility is estimated based on volatility average of the Company’s common stock price.

(4) The expected term represents the period of time that stock options granted are expected to be outstanding, by using historical exercise patterns and post-vesting termination behavior.

(5) No options were granted during the year ended September 30, 2022.

Restricted Stock Units

Restricted stock units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans and as inducements grants granted outside of the Company’s equity-based compensation plans. At vesting, each outstanding RSU will be exchanged for one share of the Company’s common

stock. 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
Outstanding as of September 30, 2021	3,831,850	$	61.24
Granted	1,396,170	57.18
Vested	(1,027,088)	49.88
Forfeited	(131,501)	64.44
Outstanding as of September 30, 2022	4,069,431	$	62.96

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.

On July 8, 2022, the Company revised the equity award made to its Chief Executive Officer on January 1, 2022 consisting of 800,000 shares, equal in value of $38.4 million, that was 100% market-based awards. The revised awards consist of 99,521 RSUs and 149,282 performance-based RSUs. No incremental expense resulted from the modification. The fair values of these awards were estimated on the date of grant using a closed-form valuation model (Monte-Carlo).

For the years ended September 30, 2022, 2021 and 2020, the Company recorded stock-based compensation expense of $113.6 million, $64.2 million and $33.7 million, respectively, related to shares of RSUs. As of September 30, 2022, there was $140.7 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 2.4 years.

Leases

12 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

LEASES

On November 19, 2021, the Company entered into a new 15-year lease for approximately 144,000 square feet of office and research and development laboratory space under construction in San Diego, California. This facility will replace the Company’s current office and research facility sublease located in San Diego, California. The increased capacity of this new facility compared to the Company’s current research facility in San Diego will accommodate increased personnel for its expanding pipeline of current and future drug candidates. The estimated rent commencement date for the new lease is in April 2023 after construction and leasehold improvements have been completed. The lease payments, which begin on the rent commencement date, will be approximately $119.0 million over the initial 15-year term. The Company also estimates payments for operating expenses to be approximately $3.0 million for the first year of the lease, and these payments will continue throughout the initial 15-year term. The Company expects to pay approximately $31.0 million for leasehold improvements, net of tenant improvement allowances. Pursuant to the lease, within twelve months of the expiration of the initial 15-year term, the Company has the option to extend the lease for up to one additional ten-year term, with certain annual increases in base rent.

Other Significant Leases

Pasadena, California: The Company leases office space located at 177 Colorado Blvd for its corporate headquarters from 177 Colorado Owner, LLC. The lease began on September 30, 2019 and expires on April 30, 2027. The lease contains an option to renew for one term of five years. On October 23, 2020, the Company entered into a lease expansion to add an additional approximately 24,000 square feet of office with a lease expiration date of April 30, 2027.

San Diego, California: The Company subleases space from Halozyme, Inc. for additional research and development facility in San Diego, California. The term of this sublease commenced on April 1, 2020 and will end on January 14, 2023.

Madison, Wisconsin: The Company leases space for office and laboratory facilities, which had an expiration date of September 30, 2026. The lease was amended in January 2019 and May 2020 to expand the rentable square feet by an additional 40,000 square feet and to extend the lease expiration date to September 30, 2031. The lease contains two options to renew for two terms of five years. In November 2020 and December 2020, the Company entered into amendments to expand the rentable square space by an additional 10,743 square feet for the remainder of the term.

The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:


		September 30,
Lease Assets and Liabilities	Classification	2022		2021
		(in thousands)

Operating lease assets	Right-of-use assets	$	58,291	$	17,346

Current operating lease liabilities	Lease liabilities	2,776		2,250
Non-current operating lease liabilities	Lease liabilities, net of current portion	78,800		23,295

The components of lease cost along with its classification on the Company’s consolidated statements of operations were as follows:


		Year Ended September 30,
Lease Cost	Classification	2022		2021		2020
		(in thousands)

Operating lease cost	Research and development	$	7,278	$	3,649	$	925
	General and administrative expense	1,757		1,498		1,474

Variable lease cost	Research and development	728		814		802
	General and administrative expense	—		1		—

Total		$	9,763	$	5,962	$	3,201

Variable lease cost primarily related to operating expenses associated with the Company’s operating leases. There was $0.3 million and $0 short-term lease cost during the years ended September 30, 2022, and 2021, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of September 30, 2022:


Year	Amounts
	(in thousands)
2023	$	5,802
2024	8,094
2025	11,800
2026	12,138
2027	11,297
2028 and thereafter	102,813
Total	$	151,944
Less imputed interest	(70,368)
Total operating lease liabilities	$	81,576

Supplemental cash flow and other information related to leases was as follows:


	Year Ended September 30,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)	$	4,500		$	3,100

Weighted-average remaining lease term (in years)	7			8
Weighted-average discount rate	8.5		%	8.5		%

Investments - Summary of Short-term, Long-term Investments and Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Schedule Of Held To Maturity Securities And Marketable Securities [Line Items]
Short-term investments, Held to maturity, Adjusted Bases	$ 268,391	$ 56,627
Short-term investments, Held to maturity, Gross Unrealized Gains	0	803
Short-term investments, Held to maturity, Gross Unrealized Losses	(3,661)	0
Short-term investments, Held to maturity, Fair Value	264,730	57,430
Long-term investments, Held to maturity, Adjusted Basis	105,872	245,595
Long-term investments, Held to maturity, Gross Unrealized Gains	0	1,151
Long-term investments, Held to maturity, Gross Unrealized Losses	(5,569)	(103)
Long-term investments, Held to maturity, Fair Value	100,303	246,643
Marketable debt securities, Adjusted Basis	0	127,481
Marketable debt securities, Gross Unrealized Gains	0	0
Marketable debt securities, Gross Unrealized Losses	0	(753)
Marketable debt securities, Fair Value	0	126,728
Debt securities
Schedule Of Held To Maturity Securities And Marketable Securities [Line Items]
Short-term investments, Held to maturity, Adjusted Bases	218,391	56,627
Short-term investments, Held to maturity, Gross Unrealized Gains	0	803
Short-term investments, Held to maturity, Gross Unrealized Losses	(3,661)	0
Short-term investments, Held to maturity, Fair Value	214,730	57,430
Long-term investments, Held to maturity, Adjusted Basis	105,872	195,595
Long-term investments, Held to maturity, Gross Unrealized Gains	0	1,151
Long-term investments, Held to maturity, Gross Unrealized Losses	(5,569)	(103)
Long-term investments, Held to maturity, Fair Value	100,303	196,643
Certificate of deposits
Schedule Of Held To Maturity Securities And Marketable Securities [Line Items]
Short-term investments, Held to maturity, Adjusted Bases	50,000
Short-term investments, Held to maturity, Gross Unrealized Gains	0
Short-term investments, Held to maturity, Gross Unrealized Losses	0
Short-term investments, Held to maturity, Fair Value	$ 50,000
Long-term investments, Held to maturity, Adjusted Basis		50,000
Long-term investments, Held to maturity, Gross Unrealized Gains		0
Long-term investments, Held to maturity, Gross Unrealized Losses		0
Long-term investments, Held to maturity, Fair Value		$ 50,000

Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Employee benefits costs	$ 1.7	$ 1.3	$ 0.9
Employee Contributions up to 3%
Defined Benefit Plan Disclosure [Line Items]
Discretionary match percentage	100.00%
Percentage of compensation	3.00%
Employee Contributions Next 2%
Defined Benefit Plan Disclosure [Line Items]
Discretionary match percentage	50.00%
Percentage of compensation	2.00%

Fair Value Measurements

12 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date using the exit price. Accordingly, when market observable data are not readily available, the Company’s own assumptions are used to reflect those that market participants would be presumed to use in pricing the asset or liability at the measurement date.

Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the level of judgment associated with inputs used to measure their fair values and the level of market price observability, as follows:

Level 1 Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs are other than quoted prices in active markets, which are based on the following:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets or liabilities in non-active markets; or

• Either directly or indirectly observable inputs as of the reporting date.

Level 3 Pricing inputs are unobservable and significant to the overall fair value measurement, and the determination of fair value requires significant management judgment or estimation.

In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.

The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused

the transfer. At September 30, 2022 and 2021, the Company did not have any financial assets or financial liabilities based on Level 3 measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation techniques utilized by the Company:


	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)

U.S. government bonds	$	1,973	$	—	$	—	$	1,973
Commercial notes	—		41,727		—		41,727
Corporate debt securities	—		271,333		—		271,333
Certificate of deposits	50,000		—		—		50,000
Money market instruments	39,262		—		—		39,262


	September 30, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)

Corporate debt securities	$	—	$	254,073	$	—	$	254,073
Certificate of deposits	50,000		—		—		50,000
Money market instruments	160,032		—		—		160,032
Marketable debt securities	126,728		—		—		126,728

There were no transfers between Levels 1, 2, and 3 of the fair value hierarchy during the years ended September 30, 2022 and 2021.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses of the Company approximate fair value based on the short maturities of these instruments. At September 30, 2022, the Company did not have any nonrecurring fair value measurements of nonfinancial assets or nonfinancial liabilities.

- 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

Intangible Assets - Expected Future Amortization (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 1,700,000
2024	1,700,000
2025	1,700,000
2026	1,700,000
2027	1,700,000
Thereafter	3,462,000
Net Carrying Amount	$ 11,962,000	$ 13,663,000

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Finite Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 11,962,000	$ 13,663,000
Amortization expense	1,700,000	1,700,000	$ 1,700,000
Novartis
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	24,857,000	24,857,000
Accumulated Amortization	12,895,000	11,194,000
Impairment	0	0
Net Carrying Amount	11,962,000	13,663,000
Novartis \| Patents
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	21,728,000	21,728,000
Accumulated Amortization	11,770,000	10,217,000
Impairment	0	0
Net Carrying Amount	$ 9,958,000	$ 11,511,000
Useful Lives	14 years	14 years
Novartis \| License
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,129,000	$ 3,129,000
Accumulated Amortization	1,125,000	977,000
Impairment	0	0
Net Carrying Amount	$ 2,004,000	$ 2,152,000
Useful Lives	21 years	21 years

Organization and Significant Accounting Policies

12 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Organization and Significant Accounting Policies

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

General

Arrowhead Pharmaceuticals, Inc. and its subsidiaries (referred to herein collectively as the “Company”) are primarily engaged in developing medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and efficient modes of delivery, the Company’s therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. RNA interference (“RNAi”) is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. The Company’s RNAi-based therapeutics may leverage this natural pathway of gene silencing to target and shut down specific disease-causing genes.

The following table presents the Company’s current pipeline:


Therapeutic Area	Name	Stage	Product Rights
Cardiometabolic	ARO-APOC3	Two Phase 2b and one Phase 3	Arrowhead
	ARO-ANG3	Two Phase 2b	Arrowhead
	Olpasiran	Phase 3	Amgen
Pulmonary	ARO-ENAC2	Pre-Clinical	Arrowhead
	ARO-RAGE	Phase 1/2	Arrowhead
	ARO-MUC5AC	Phase 1/2a	Arrowhead
	ARO-MMP7	Phase 1/2	Arrowhead
Liver	ARO-HSD	Phase 1/2	GSK
	ARO-AAT	Phase 2	Takeda and Arrowhead
	JNJ-3989	Phase 2	Janssen
	ARO-XDH	Phase 1	Horizon
	ARO-C3	Phase 1/2	Arrowhead
	JNJ-75220795	Phase 1	Janssen
Muscle	ARO-DUX4	Pre-Clinical	Arrowhead

The Company operates lab facilities in San Diego, California and Madison, Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place. The Company’s principal executive offices are located in Pasadena, California.

Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of Arrowhead Pharmaceuticals, Inc. and its subsidiaries (wholly-owned subsidiaries and a variable interest entity that the Company is the primary beneficiary in). Subsidiaries refer to Arrowhead Madison, Inc., Visirna Therapeutics, Inc. (“Visirna”), and Arrowhead Australia Pty Ltd. For subsidiaries in which the Company owns or is exposed to less than 100% of the economics, the Company records net loss attributable to noncontrolling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interests retained in such entity by the respective noncontrolling party.

The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform with the current period presentation.

Liquidity

The Company’s primary sources of financing have been through the sale of its securities and revenue from its licensing and collaboration agreements. Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have both expanded significantly. Additionally, significant capital investment will be required as the Company’s pipeline matures into later stage clinical trials and as the Company plans to increase its internal manufacturing capabilities.

At September 30, 2022, the Company had $108.0 million in cash and cash equivalents (including $7.3 million in restricted cash), $268.4 million in short-term investments and $105.9 million in long-term investments to fund operations. During the year ended September 30, 2022, the Company’s cash and cash equivalents and investments balance decreased by $131.1 million which was primarily cash being used to fund the Company’s operations, offset by the $120.0 million upfront payment received from Glaxosmithkline Intellectual Property Limited (Note 2) and $60.0 million cash infusion from the formation of Visirna (Note 2).

In total, the Company is eligible to receive up to $4.9 billion in developmental, regulatory and sales milestones, and may receive various royalties on net sales from its licensing and collaboration agreements, subject to the terms and conditions of those agreements. The revenue recognition for these collaboration agreements is discussed further in Note 2.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP 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. On an ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results could materially differ from those estimates.

Variable Interest Entity (“VIE”)

A VIE is an entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) has equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.

On April 25, 2022, the Company entered into a license agreement with Visirna (Note 2) and consolidated Visirna’s financial statements in which the Company has a direct controlling financial interest based on the VIE model.

The Company considers all the facts and circumstances, including its role in establishing Visirna and its ongoing rights and responsibilities to assess whether the Company has the power to direct the activities of Visirna. In general, the parties that make the most significant decisions affecting a VIE and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.

The Company also considers all of its economic interests to assess whether the Company has the obligation to absorb losses of Visirna or the right to receive benefits from it that could potentially be significant to Visirna. This assessment requires the Company to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to Visirna. Factors considered in assessing the significance include: the design of the Visirna, including its capitalization structure, subordination of interests, payment priority, and the reasons why the interests are held by the Company.

At Visirna’s inception, the Company determined whether it was the primary beneficiary and if Visirna should be consolidated based on the facts and circumstances. The Company has determined that Visirna, in which the Company is the primary beneficiary, meets the definition of a business. The Company performs ongoing reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation is required.

Cash, Cash Equivalents and Restricted Cash

All highly liquid interest-bearing investments with short-term are classified as cash equivalents. These investments mainly include commercial paper with maturities of three months or less when purchased. The carrying value of these cash equivalents approximate fair value.

There were $7.3 million and $2.4 million restricted cash at September 30, 2022 and September 30, 2021, respectively, that are primarily held as collateral associated with letters of credit for the Company’s facility leases. The increase in 2022 was mainly due to the Company’s expansion plan in Verona, Wisconsin and San Diego, California.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash and cash equivalents and investments. As of September 30, 2022 and 2021, the Company’s investments were primarily invested in money market funds, certificates of deposit, commercial paper, and corporate debt securities through highly rated financial institutions. The Company also maintains several bank accounts primarily at three 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

Investment securities are mainly held-to-maturity investments and marketable securities.

These held-to-maturity investments may consist of investment-grade interest bearing instruments, primarily certificates of deposit, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper, which are stated at amortized cost. The Company does not intend to sell these investment securities and the contractual maturities are not greater than 36 months. Those with maturities less than twelve months are included in short-term investments on the Company’s consolidated balance sheets, while those with remaining maturities in excess of twelve months are included in long-term investments on its consolidated balance sheets. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security, and no gains or losses on held-to-maturity investment are realized until they are sold.

The Company’s marketable debt securities consisted of mutual funds that primarily invest in U.S. government bonds, U.S. government agency bonds, and corporate bonds. Dividends from these funds were automatically re-invested. These securities were recorded at fair value, and all unrealized gains/losses were recorded in the Company’s consolidated statement of operations and comprehensive loss. In April 2022, the Company sold all marketable debt securities for $122.3 million.

The Company monitors its investments closely. If an unrealized loss is determined to be other-than-temporary, it is written off as a realized loss through the consolidated statements of operations and comprehensive loss. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors, including the length of time to maturity and the extent to which the fair value has been less than the cost, recoverability of future cash flows as compared to carrying value of the security, the financial condition and the near-term prospects of the issuer, and the Company’s ability and intent to hold the security. If a decline in fair value of investments is determined to be other-than-temporary, the securities are written down to fair value as the new cost basis and the amount of the write down is accounted for as realized losses. The Company did not recognize any other-then-temporary impairments of its investment for the years ended September 30, 2022, 2021, and 2020.

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.

The Company periodically assesses long-lived assets or asset groups, including property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the Company identifies an indicator of impairment, the Company assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. There were no impairment charges during 2022, 2021, and 2020.

Intangible Assets Subject to Amortization

Intangible assets subject to amortization include certain patents and license agreements. The Company qualitatively evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount of intangible assets may exceed their implied fair values. As of September 30, 2022 and 2021, intangible impairment assessments indicated that there was no impairment.

Leases

The Company determines whether a contract is, or contains, a lease at inception. All of the Company’s leases are classified as operating leases. Leases with terms greater than one-year are recognized on the Company’s consolidated balance sheets as right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are

recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term minus the present value of any incentives, rebates or abatement expected to be received from the lessor. The Company did not include the extension option in the lease term.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment. The Company records expense to recognize fixed lease payments on a straight-line basis over the expected lease term. Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.

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 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, 2022 and 2021.

Revenue Recognition

On October 1, 2018, the Company adopted Financial Accounting Standards Board (“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 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 its ongoing licensing and collaboration agreements. See Note 2.

The 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 it determines are within the scope of the 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 its 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 the Company’s consolidated statements of operation and comprehensive 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 preclinical 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 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 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 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 either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Labor hours, costs incurred or patient visits in clinical trials 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 its consolidated balance sheets.

Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term (less than one year) and long-term (over one year) deferred revenue based on its best estimate of when such revenue will be recognized. This estimate is based on the Company’s current operating plan and, the Company may recognize a different amount of deferred revenue over the next 12-month period if its plan changes in the future.

Collaborative Arrangements

The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of FASB Topic 808 - Collaborative Arrangements. For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Topic 606. For units of account that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. For collaborative arrangements that are within the scope of Topic 808,

the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate.

Research and Development

Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses.

Earnings per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is 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, 2022, 2021 and 2020, 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

Share-based compensation expenses for all grants are based on their estimated grant-date fair value. The fair value of stock option awards is estimated using the Black-Scholes option valuation model which 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

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting basis and the respective tax basis of the Company’s assets and liabilities, and expected benefits of utilizing net operating loss, capital loss, and tax-credit carryforwards. The Company assesses the likelihood that its deferred tax assets will be realized and, to the extent management does not believe these assets are more likely than not to be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in earnings in the period that includes the enactment date.

Recent Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the incremental approach for intra-period allocation, deferred tax recognition requirement for changes in equity method investments and foreign subsidiaries, and methodology for calculating income taxes in an interim period. The guidance also simplifies certain aspects of the accounting for franchise taxes, the accounting for step-up in the tax basis of goodwill, and accounting for change in tax laws or rates. The Company adopted the new standard which became effective for fiscal years and interim periods within those years that begin after December 15, 2020. The adoption of the new standard did not have any material impact on the Company’s Consolidated Financial Statements.

Investments (Tables)

12 Months Ended

Sep. 30, 2022

Debt Securities, Held-to-Maturity, Amortized Cost, before Allowance for Credit Loss [Abstract]

Summary of Short-term, Long-term Investments and Marketable Securities

The Company’s investments consisted of the following:


	As of September 30, 2022
	(In thousands)
	Adjusted Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Short-term investments (due within one year)
Held to maturity debt securities	$	218,391	$	—	$	(3,661)	$	214,730
Held to maturity certifiate of deposit	50,000		—		—		50,000
Total short-term investments	$	268,391	$	—	$	(3,661)	$	264,730

Long-term investments (Due within one through three years)
Held to maturity debt securities	105,872		—		(5,569)		100,303
Total long-term investments	$	105,872	$	—	$	(5,569)	$	100,303

Marketable debt securities	$	—	$	—	$	—	$	—


	As of September 30, 2021
	(In thousands)
	Adjusted Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Short-term investments (due within one year)
Held to maturity debt securities	$	56,627	$	803	$	—	$	57,430
Total short-term investments	$	56,627	$	803	$	—	$	57,430

Long-term investments (Due within one through three years)
Held to maturity debt securities	$	195,595	$	1,151	$	(103)	$	196,643
Held to maturity certificate of deposit	50,000		—		—		50,000
Total long-term investments	$	245,595	$	1,151	$	(103)	$	246,643

Marketable debt securities	$	127,481	$	—	$	(753)	$	126,728

Fair Value Measurements - Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable debt securities	$ 0	$ 126,728,000
Fair Value, Measurements, Recurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable debt securities		126,728,000
Fair Value, Measurements, Recurring \| Money market instruments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market instruments	39,262,000	160,032,000
Fair Value, Measurements, Recurring \| U.S. government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	1,973,000
Fair Value, Measurements, Recurring \| Commercial notes
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	41,727,000
Fair Value, Measurements, Recurring \| Corporate debt securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	271,333,000	254,073,000
Fair Value, Measurements, Recurring \| Certificate of deposits
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	50,000,000	50,000,000
Fair Value, Measurements, Recurring \| Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable debt securities		126,728,000
Fair Value, Measurements, Recurring \| Level 1 \| Money market instruments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market instruments	39,262,000	160,032,000
Fair Value, Measurements, Recurring \| Level 1 \| U.S. government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	1,973,000
Fair Value, Measurements, Recurring \| Level 1 \| Commercial notes
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0
Fair Value, Measurements, Recurring \| Level 1 \| Corporate debt securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Certificate of deposits
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	50,000,000	50,000,000
Fair Value, Measurements, Recurring \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable debt securities		0
Fair Value, Measurements, Recurring \| Level 2 \| Money market instruments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market instruments	0	0
Fair Value, Measurements, Recurring \| Level 2 \| U.S. government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0
Fair Value, Measurements, Recurring \| Level 2 \| Commercial notes
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	41,727,000
Fair Value, Measurements, Recurring \| Level 2 \| Corporate debt securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	271,333,000	254,073,000
Fair Value, Measurements, Recurring \| Level 2 \| Certificate of deposits
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0	0
Fair Value, Measurements, Recurring \| Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable debt securities		0
Fair Value, Measurements, Recurring \| Level 3 \| Money market instruments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market instruments	0	0
Fair Value, Measurements, Recurring \| Level 3 \| U.S. government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0
Fair Value, Measurements, Recurring \| Level 3 \| Commercial notes
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0
Fair Value, Measurements, Recurring \| Level 3 \| Corporate debt securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	0	0
Fair Value, Measurements, Recurring \| Level 3 \| Certificate of deposits
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Held to maturity securities	$ 0	$ 0

Stockholders' Equity (Details) - USD ($)	1 Months Ended
Stockholders' Equity (Details) - USD ($)	Aug. 31, 2020	Sep. 30, 2022	Sep. 30, 2021
Class Of Stock [Line Items]
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Common stock, shares authorized (in shares)		145,000,000	145,000,000
Common stock, shares issued (in shares)		105,960,000	104,327,000
Common stock, shares outstanding (in shares)		105,960,000	104,327,000
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)		50,000,000	50,000,000
Preferred stock, shares issued (in shares)		0	0
Preferred stock, shares outstanding (in shares)		0	0
ATM Agreement
Class Of Stock [Line Items]
Shares issued		0
ATM Agreement \| Maximum
Class Of Stock [Line Items]
Common stock shares value reserved for future issuance	$ 250,000,000
Percentage of commission to sales agent	3.00%
2004 Equity Incentive Plan, 2013 Equity Incentive Plan, 2021 Equity Incentive Plan and Inducement Grants
Class Of Stock [Line Items]
Common stock reserved for issuance (in shares)		14,000,392	15,228,479

Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis


	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)

U.S. government bonds	$	1,973	$	—	$	—	$	1,973
Commercial notes	—		41,727		—		41,727
Corporate debt securities	—		271,333		—		271,333
Certificate of deposits	50,000		—		—		50,000
Money market instruments	39,262		—		—		39,262


	September 30, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)

Corporate debt securities	$	—	$	254,073	$	—	$	254,073
Certificate of deposits	50,000		—		—		50,000
Money market instruments	160,032		—		—		160,032
Marketable debt securities	126,728		—		—		126,728

Collaboration and License Agreements - Horizon Therapeutics Ireland DAC (Details)		12 Months Ended
	Jun. 18, 2021 USD ($) bundle obligation	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Jul. 31, 2021 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenues		$ 243,231,000	$ 138,287,000	$ 87,992,000
Contract liabilities		74,099,000	111,055,000
Horizon Therapeutics Ireland DAC \| ARO-XDH
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Cash received as due under collaboration agreement					$ 40,000,000
Number of distinct performance obligations \| obligation	1
Initial transaction price	$ 40,000,000
Revenues		26,700,000	6,700,000
Contract assets		0
Contract liabilities		6,700,000
Horizon Therapeutics Ireland DAC \| License Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Number of distinct bundle \| bundle	1
Number of distinct performance obligations \| obligation	1
Horizon Therapeutics Ireland DAC \| ARO-XDH Supply Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenues		2,500,000	$ 0
Contract assets		1,300,000
Contract liabilities		$ 0
Horizon Therapeutics Ireland DAC \| Maximum \| ARO-XDH
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Development regulatory and sales milestones payments	$ 660,000,000

Leases - Components of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Lease Assets and Liabilities
Right-of-use assets	$ 58,291	$ 17,346
Lease liabilities	2,776	2,250
Lease liabilities, net of current portion	78,800	23,295
Lease Cost
Total	9,763	5,962	$ 3,201
Research and development
Lease Cost
Operating lease cost	7,278	3,649	925
Variable lease cost	728	814	802
General and administrative expense
Lease Cost
Operating lease cost	1,757	1,498	1,474
Variable lease cost	$ 0	$ 1	$ 0

Stock-Based Compensation - Summary of Granted and Outstanding Shares (Details) - shares	Sep. 30, 2022	Sep. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options (in shares)	2,721,384	3,456,239
Total (in shares)	6,790,815
2004 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options (in shares)	175,083
Total (in shares)	175,083
2013 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options (in shares)	2,543,301
Total (in shares)	5,689,187
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options (in shares)	3,000
Total (in shares)	926,545
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	4,069,431	3,831,850
Restricted Stock Units (RSUs) \| 2004 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	0
Restricted Stock Units (RSUs) \| 2013 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	3,145,886
Restricted Stock Units (RSUs) \| 2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award (in shares)	923,545

Leases - Narrative (Details) $ in Thousands		2 Months Ended	12 Months Ended		17 Months Ended
Leases - Narrative (Details) $ in Thousands	Nov. 19, 2021 USD ($) ft² option	Dec. 31, 2020 ft²	Sep. 30, 2022 USD ($) option	Sep. 30, 2021 USD ($)	May 31, 2020 ft²	Sep. 30, 2019 ft² option
Lessee Lease Description [Line Items]
Estimated lease payments			$ 151,944
Short-term lease cost			$ 300	$ 0
Research Facility in San Diego \| California
Lessee Lease Description [Line Items]
Lease term	15 years
Office space leases (in sq ft) \| ft²	144,000
Estimated lease payments	$ 119,000
Estimated payments for operating expenses year one	3,000
Payments for leasehold improvements, net of tenant improvement allowances	$ 31,000
Operating lease renewal term	10 years
Research Facility in San Diego \| California \| Maximum
Lessee Lease Description [Line Items]
Number of options to renew \| option	1
Corporate Headquarters In Pasadena \| California
Lessee Lease Description [Line Items]
Office space leases (in sq ft) \| ft²						24,000
Corporate Headquarters In Pasadena \| California \| Colorado Owner, LLC
Lessee Lease Description [Line Items]
Number of options to renew \| option						1
Operating lease renewal term						5 years
Research Facility in Madison \| Wisconsin
Lessee Lease Description [Line Items]
Number of options to renew \| option			2
Operating lease renewal term			5 years
Additional office space for lease (in sq ft) \| ft²		10,743			40,000

Stockholders' Equity

12 Months Ended

Sep. 30, 2022

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITYThe following table summarizes the Company’s shares of common stock and preferred stock:


			Shares
	Par Value		Authorized	Issued	Outstanding
			(in thousands)
As of September 30, 2022
Common stock	$	0.001	145,000	105,960	105,960
Preferred stock	$	0.001	50,000	—	—

As of September 30, 2021
Common stock	$	0.001	145,000	104,327	104,327
Preferred stock	$	0.001	50,000	—	—

14,000,392 and 15,228,479 shares of common stock at September 30, 2022 and 2021, respectively, were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2004 Equity Incentive Plan, 2013 Incentive Plan, and 2021 Incentive Plan, as well as for inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

In August 2020, the Company entered into an Open Market Sale Agreement (the “ATM Agreement”), pursuant to which the Company may, from time to time, sell up to $250,000,000 in shares of the Company’s common stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering (“ATM Offering”). The Company is not required to sell shares under the ATM Agreement. The Company will pay Jefferies LLC a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement. Unless otherwise terminated, the ATM Agreement continues until the earlier of selling all shares available under the ATM Agreement or December 2, 2022. At September 30, 2022, no shares have been issued under the ATM Agreement

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 13
-Subparagraph (b)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 505
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Income Taxes - Summary of Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Income Tax Disclosure [Abstract]
At U.S. federal statutory rate	(21.00%)	(21.00%)	(21.00%)
State taxes, net of federal effect	(8.60%)	(7.00%)	(7.00%)
Stock compensation	1.70%	(1.30%)	(13.30%)
Valuation allowance	28.40%	29.30%	43.30%
Other	1.70%	0.00%	(2.00%)
Effective income tax rate	2.20%	(0.00%)	(0.00%)

Income Taxes - Components of the Net Deferred Tax (Liability) and Asset (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Deferred tax assets:
Accrued Compensation	$ 2,961,000	$ 2,371,000
Stock Compensation	41,479,000	22,454,000
Capitalized Research & Development	324,000	324,000
California Alternative Minimum Tax	483,000	179,000
Net Operating Losses	171,319,000	185,431,000
Intangible Assets	2,973,000	3,562,000
Deferred Revenue	38,810,000	0
Right of Use Assets/Lease Liabilities	2,844,000	1,938,000
Capital Loss	1,679,000	0
Total gross deferred tax assets	262,872,000	216,259,000
Valuation allowance	(242,394,000)	(194,255,000)
Deferred tax liabilities:
Fixed Assets	(1,088,000)	(6,360,000)
State taxes	(19,390,000)	(15,644,000)
Total gross deferred tax liability	(20,478,000)	(22,004,000)
Net deferred tax assets (liabilities)	$ 0	$ 0

Collaboration and License Agreements - Glaxosmithkline Intellectual Property (No. 3) Limited (Details) - USD ($)			12 Months Ended
	Nov. 22, 2021	Oct. 03, 2018	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Deferred revenue			$ 74,099,000	$ 111,055,000
Revenue			243,231,000	$ 138,287,000	$ 87,992,000
Collaboration and License agreements
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Initial transaction price		$ 252,700,000
GSK \| Collaboration and License agreements
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payment	$ 120,000,000
Milestone payment receivable at start of phase two	30,000,000
Milestone payment receivable upon achievement of phase two and first patient dosed in phase three	100,000,000
Initial transaction price	120,000,000
Contract assets			4,800,000
Deferred revenue			0
Revenue			4,800,000
GSK \| Collaboration and License agreements \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Commercial milestone payments at first commercial sale	190,000,000
Sales-related milestone payments	$ 590,000,000
GSK \| A R O H S D Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contract assets			0
Deferred revenue			$ 0

Property and Equipment - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense for property and equipment	$ 8.7	$ 6.6	$ 4.2

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIES Litigation From time to time, the Company may be subject to various claims and legal proceedings in the ordinary course of business. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount is reasonably estimable, the Company will accrue a liability for the estimated loss. There were no contingent liabilities recorded as of the year ended September 30, 2022. Commitments On December 20, 2021, the Company completed a purchase of 13 acres of land in the Verona Technology Park in Verona, Wisconsin, which is being developed into an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility which will support the Company’s process development and analytical activities. The Company intends to invest between $200.0 million and $260.0 million into the build out of the facilities. As part of this acquisition, the Company entered into a development agreement with the City of Verona to construct certain infrastructure improvements within the tax incremental district and will be reimbursed up to $16.0 million by the City of Verona by future tax increment revenue generated from the developed property. The total amount of funding that City of Verona will pay under the Tax Incremental Financing program is not guaranteed and will depend on future tax revenues generated from the developed property. The Company will also receive up to $2.5 million of refundable Wisconsin state income tax credits from the Wisconsin Economic Development Corporation (WEDC) as incentives to invest in the local community and create new jobs. 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 it 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/or certain sales level milestones. The Company made milestone payments of $0, $2.4 million, $0 for the years ended September 30, 2022, 2021, and 2020, respectively. The Company did not reach any milestones during the years of 2022 and 2020. During 2021, the Company triggered the milestone related to the progression of the ARO-ENaC and ARO-HIF2 candidates.

Stock-Based Compensation - Summary of RSUs Activity (Details) - Restricted Stock Units (RSUs)	12 Months Ended
	Sep. 30, 2022 $ / shares shares
Number of RSUs
Beginning of period (in shares) \| shares	3,831,850
Granted (in shares) \| shares	1,396,170
Vested (in shares) \| shares	(1,027,088)
Forfeited (in shares) \| shares	(131,501)
End of period (in shares) \| shares	4,069,431
Weighted- Average Grant Date Fair Value
Beginning balance (in dollars per share) \| $ / shares	$ 61.24
Granted (in dollars per share) \| $ / shares	57.18
Vested (in dollars per share) \| $ / shares	49.88
Forfeited (in dollars per share) \| $ / shares	64.44
Ending balance (in dollars per share) \| $ / shares	$ 62.96

Stock-Based Compensation - Summarize Information about Stock Options (Details)	12 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Shares
Beginning balance (in shares) \| shares	3,456,239
Granted (in shares) \| shares	0
Cancelled (in shares) \| shares	(128,635)
Exercised (in shares) \| shares	(606,220)
Ending balance (in shares) \| shares	2,721,384
Number of Options Outstanding, Exercisable (in shares) \| shares	2,351,641
Weighted- Average Exercise Price Per Share
Beginning balance (in dollars per share) \| $ / shares	$ 19.60
Granted (in dollars per share) \| $ / shares	0
Cancelled (in dollars per share) \| $ / shares	47.73
Exercised (in dollars per share) \| $ / shares	8.55
Ending balance (in dollars per share) \| $ / shares	20.73
Weighted-Average Exercise Price Per Share, Exercisable (in dollars per share) \| $ / shares	$ 16.93
Weighted-Average Remaining Contractual Term, Outstanding	4 years 10 months 24 days
Weighted-Average Remaining Contractual Term, Exercisable	4 years 6 months
Aggregate Intrinsic Value, Outstanding \| $	$ 48,114,746
Aggregate Intrinsic Value, Exercisable \| $	$ 46,889,825

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss including noncontrolling interest	$ (176,494,000)	$ (140,848,000)	$ (84,553,000)
Adjustments to reconcile net loss to net cash flow from operating activities:
Stock-based compensation	120,893,000	76,673,000	43,383,000
Net loss (gain) from investments	4,432,000	(1,708,000)	(20,000)
Depreciation and amortization	10,421,000	8,267,000	5,942,000
Amortization of note premiums	2,910,000	266,000	525,000
Changes in operating assets and liabilities:
Accounts receivable	8,845,000	(9,409,000)	(184,000)
Prepaid expenses and other current assets	(19,291,000)	(360,000)	(387,000)
Accounts payable	(6,589,000)	2,628,000	(821,000)
Accrued expenses	17,750,000	9,522,000	1,989,000
Deferred revenue	(112,501,000)	223,258,000	(63,514,000)
Operating lease liabilities	13,428,000	3,192,000	1,124,000
Other	65,000	(169,000)	715,000
Net cash (used in) provided by operating activities	(136,131,000)	171,312,000	(95,801,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(52,777,000)	(23,567,000)	(11,952,000)
Purchases of investments	(223,391,000)	(240,703,000)	(278,964,000)
Proceeds from sale of investments	270,751,000	122,592,000	50,138,000
Net cash used in investing activities	(5,417,000)	(141,678,000)	(240,778,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercises of stock options	5,186,000	11,305,000	7,469,000
Proceeds from the issuance of common stock	0	0	250,479,000
Proceeds from investment in joint venture	60,000,000	0	0
Net cash provided by financing activities	65,186,000	11,305,000	257,948,000
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(76,362,000)	40,939,000	(78,631,000)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS	(67,000)	(88,000)	410,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	184,434,000	143,583,000	221,804,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD	108,005,000	184,434,000	143,583,000
Supplementary disclosures:
Interest paid	0	0	0
Income Taxes (Paid) Refunded	$ (2,000)	$ (2,000)	$ 103,000

Organization and Significant Accounting Policies (Policies)	12 Months Ended
	Sep. 30, 2022
Accounting Policies [Abstract]
Basis of Presentation and Use of Estimates	Use of EstimatesThe preparation of financial statements in conformity with GAAP 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. On an ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results could materially differ from those estimates.
Variable Interest Entity	Variable Interest Entity (“VIE”) A VIE is an entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) has equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE. On April 25, 2022, the Company entered into a license agreement with Visirna (Note 2) and consolidated Visirna’s financial statements in which the Company has a direct controlling financial interest based on the VIE model. The Company considers all the facts and circumstances, including its role in establishing Visirna and its ongoing rights and responsibilities to assess whether the Company has the power to direct the activities of Visirna. In general, the parties that make the most significant decisions affecting a VIE and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. The Company also considers all of its economic interests to assess whether the Company has the obligation to absorb losses of Visirna or the right to receive benefits from it that could potentially be significant to Visirna. This assessment requires the Company to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to Visirna. Factors considered in assessing the significance include: the design of the Visirna, including its capitalization structure, subordination of interests, payment priority, and the reasons why the interests are held by the Company. At Visirna’s inception, the Company determined whether it was the primary beneficiary and if Visirna should be consolidated based on the facts and circumstances. The Company has determined that Visirna, in which the Company is the primary beneficiary, meets the definition of a business. The Company performs ongoing reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation is required.
Cash and Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash All highly liquid interest-bearing investments with short-term are classified as cash equivalents. These investments mainly include commercial paper with maturities of three months or less when purchased. The carrying value of these cash equivalents approximate fair value. There were $7.3 million and $2.4 million restricted cash at September 30, 2022 and September 30, 2021, respectively, that are primarily held as collateral associated with letters of credit for the Company’s facility leases. The increase in 2022 was mainly due to the Company’s expansion plan in Verona, Wisconsin and San Diego, California.
Concentration of Credit Risk	Concentration of Credit RiskFinancial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash and cash equivalents and investments. As of September 30, 2022 and 2021, the Company’s investments were primarily invested in money market funds, certificates of deposit, commercial paper, and corporate debt securities through highly rated financial institutions. The Company also maintains several bank accounts primarily at three 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 Investment securities are mainly held-to-maturity investments and marketable securities. These held-to-maturity investments may consist of investment-grade interest bearing instruments, primarily certificates of deposit, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper, which are stated at amortized cost. The Company does not intend to sell these investment securities and the contractual maturities are not greater than 36 months. Those with maturities less than twelve months are included in short-term investments on the Company’s consolidated balance sheets, while those with remaining maturities in excess of twelve months are included in long-term investments on its consolidated balance sheets. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security, and no gains or losses on held-to-maturity investment are realized until they are sold. The Company’s marketable debt securities consisted of mutual funds that primarily invest in U.S. government bonds, U.S. government agency bonds, and corporate bonds. Dividends from these funds were automatically re-invested. These securities were recorded at fair value, and all unrealized gains/losses were recorded in the Company’s consolidated statement of operations and comprehensive loss. In April 2022, the Company sold all marketable debt securities for $122.3 million. The Company monitors its investments closely. If an unrealized loss is determined to be other-than-temporary, it is written off as a realized loss through the consolidated statements of operations and comprehensive loss. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors, including the length of time to maturity and the extent to which the fair value has been less than the cost, recoverability of future cash flows as compared to carrying value of the security, the financial condition and the near-term prospects of the issuer, and the Company’s ability and intent to hold the security. If a decline in fair value of investments is determined to be other-than-temporary, the securities are written down to fair value as the new cost basis and the amount of the write down is accounted for as realized losses. The Company did not recognize any other-then-temporary impairments of its investment for the years ended September 30, 2022, 2021, and 2020.
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. The Company periodically assesses long-lived assets or asset groups, including property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the Company identifies an indicator of impairment, the Company assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. There were no impairment charges during 2022, 2021, and 2020.
Intangible Assets subject to amortization	Intangible Assets Subject to Amortization Intangible assets subject to amortization include certain patents and license agreements. The Company qualitatively evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount of intangible assets may exceed their implied fair values. As of September 30, 2022 and 2021, intangible impairment assessments indicated that there was no impairment.
Leases	Leases The Company determines whether a contract is, or contains, a lease at inception. All of the Company’s leases are classified as operating leases. Leases with terms greater than one-year are recognized on the Company’s consolidated balance sheets as right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term minus the present value of any incentives, rebates or abatement expected to be received from the lessor. The Company did not include the extension option in the lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment. The Company records expense to recognize fixed lease payments on a straight-line basis over the expected lease term. Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.
Contingent Consideration	Contingent ConsiderationThe 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 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, 2022 and 2021.
Revenue Recognition	Revenue Recognition On October 1, 2018, the Company adopted Financial Accounting Standards Board (“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 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 its ongoing licensing and collaboration agreements. See Note 2. The 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 it determines are within the scope of the 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 its 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 the Company’s consolidated statements of operation and comprehensive 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 preclinical 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 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 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 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 either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Labor hours, costs incurred or patient visits in clinical trials 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 its consolidated balance sheets. Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term (less than one year) and long-term (over one year) deferred revenue based on its best estimate of when such revenue will be recognized. This estimate is based on the Company’s current operating plan and, the Company may recognize a different amount of deferred revenue over the next 12-month period if its plan changes in the future.
Collaborative Arrangement	Collaborative Arrangements The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of FASB Topic 808 - Collaborative Arrangements. For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Topic 606. For units of account that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. For collaborative arrangements that are within the scope of Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate.
Research and Development	Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses.
Earnings per Share	Earnings per Share Basic earnings per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is 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, 2022, 2021 and 2020, 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 CompensationShare-based compensation expenses for all grants are based on their estimated grant-date fair value. The fair value of stock option awards is estimated using the Black-Scholes option valuation model which 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 Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting basis and the respective tax basis of the Company’s assets and liabilities, and expected benefits of utilizing net operating loss, capital loss, and tax-credit carryforwards. The Company assesses the likelihood that its deferred tax assets will be realized and, to the extent management does not believe these assets are more likely than not to be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in earnings in the period that includes the enactment date.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the incremental approach for intra-period allocation, deferred tax recognition requirement for changes in equity method investments and foreign subsidiaries, and methodology for calculating income taxes in an interim period. The guidance also simplifies certain aspects of the accounting for franchise taxes, the accounting for step-up in the tax basis of goodwill, and accounting for change in tax laws or rates. The Company adopted the new standard which became effective for fiscal years and interim periods within those years that begin after December 15, 2020. The adoption of the new standard did not have any material impact on the Company’s Consolidated Financial Statements.

Collaboration and License Agreements - Takeda Pharmaceutical Company Limited (Details) $ in Thousands		12 Months Ended
	Oct. 07, 2020 USD ($) bundle obligation	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Jan. 31, 2021 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenues		$ 243,231	$ 138,287	$ 87,992
Deferred revenue, net of current portion		55,950	131,495
Deferred revenue		74,099	111,055
Takeda License Agreement \| License and Co-Funding Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Cash received as due under collaboration agreement					$ 300,000
Number of distinct bundle \| bundle	1
Number of distinct performance obligations \| obligation	1
Initial transaction price	$ 300,000
Revenues		85,800	$ 90,800
Contract assets		0
Takeda License Agreement \| License and Co-Funding Agreement \| Deferred Revenue
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Deferred revenue, net of current portion		123,400
Deferred revenue		67,400
Takeda License Agreement \| License and Co-Funding Agreement \| Accrued Expenses
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Deferred revenue		$ 8,600
Takeda License Agreement \| License and Co-Funding Agreement \| Minimum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Percentage of eligible to receive tiered royalties on net sales	20.00%
Takeda License Agreement \| License and Co-Funding Agreement \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Percentage of eligible to receive tiered royalties on net sales	25.00%
Development regulatory and sales milestones payments					$ 595,000

Investments

12 Months Ended

Sep. 30, 2022

Debt Securities, Held-to-Maturity, Amortized Cost, before Allowance for Credit Loss [Abstract]

Investments

INVESTMENTS

The Company’s investments consisted of the following:


	As of September 30, 2022
	(In thousands)
	Adjusted Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Short-term investments (due within one year)
Held to maturity debt securities	$	218,391	$	—	$	(3,661)	$	214,730
Held to maturity certifiate of deposit	50,000		—		—		50,000
Total short-term investments	$	268,391	$	—	$	(3,661)	$	264,730

Long-term investments (Due within one through three years)
Held to maturity debt securities	105,872		—		(5,569)		100,303
Total long-term investments	$	105,872	$	—	$	(5,569)	$	100,303

Marketable debt securities	$	—	$	—	$	—	$	—


	As of September 30, 2021
	(In thousands)
	Adjusted Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Short-term investments (due within one year)
Held to maturity debt securities	$	56,627	$	803	$	—	$	57,430
Total short-term investments	$	56,627	$	803	$	—	$	57,430

Long-term investments (Due within one through three years)
Held to maturity debt securities	$	195,595	$	1,151	$	(103)	$	196,643
Held to maturity certificate of deposit	50,000		—		—		50,000
Total long-term investments	$	245,595	$	1,151	$	(103)	$	246,643

Marketable debt securities	$	127,481	$	—	$	(753)	$	126,728

Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The following table presents the components of intangible asset:


	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Useful Lives
	(amounts in thousands)								(in years)
As of September 30, 2022
Patents	$	21,728	$	11,770	$	—	$	9,958	14
License	3,129		1,125		—		2,004		21
Total intangible assets, net	$	24,857	$	12,895	$	—	$	11,962

As of September 30, 2021
Patents	$	21,728	$	10,217	$	—	$	11,511	14
License	3,129		977		—		2,152		21
Total intangible assets, net	$	24,857	$	11,194	$	—	$	13,663

Schedule of Intangible Assets Future Amortization Expense

The following table presents the estimated future amortization expense related to intangible assets as of September 30, 2022:


	Amortization Expense
Year Ending September 30,	(in thousands)
2023	$	1,700
2024	1,700
2025	1,700
2026	1,700
2027	1,700
Thereafter	3,462
Total	$	11,962

Stock-Based Compensation (Tables)

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Awards Outstanding

The following table presents a summary of awards outstanding:


	As of September 30, 2022
	2004 Plan	2013 Plan	2021 Plan	Total
Granted and outstanding awards:
Options	175,083	2,543,301	3,000	2,721,384
Restricted stock units	—	3,145,886	923,545	4,069,431
Total	175,083	5,689,187	926,545	6,790,815

Summarized Information about Stock Options

The following table presents a summary of the stock option activity for the year ended September 30, 2022:


	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2021	3,456,239	$	19.60
Granted	—	—
Cancelled or expired	(128,635)	47.73
Exercised	(606,220)	8.55
Outstanding at September 30, 2022	2,721,384	$	20.73	4.9	$	48,114,746
Exercisable at September 30, 2022	2,351,641	$	16.93	4.5	$	46,889,825

Assumptions Used to Value Stock Options

The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:


	Year Ended September 30,
	2022(5)	2021		2020
Expected dividend yield(1)	—	—		—
Risk-free interest rate(2)	N/A	0.4 – 1.1%		0.40 – 1.8%
Expected volatility(3)	N/A	86.2 – 90.4%		90.0 – 92.0%
Expected term (in years)(4)	N/A	6.25		6.25
Weighted-average grant date fair value per share	N/A	$	48.64	$	36.35

(1) The dividend yield is zero as the Company currently does not pay a dividend.

(2) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant..

(3) Volatility is estimated based on volatility average of the Company’s common stock price.

(4) The expected term represents the period of time that stock options granted are expected to be outstanding, by using historical exercise patterns and post-vesting termination behavior.

(5) No options were granted during the year ended September 30, 2022.

Summary of Share Activity Related to RSUs

The following table summarizes the activity of the Company’s RSUs:


	Number of RSUs	Weighted- Average Grant Date Fair Value
Outstanding as of September 30, 2021	3,831,850	$	61.24
Granted	1,396,170	57.18
Vested	(1,027,088)	49.88
Forfeited	(131,501)	64.44
Outstanding as of September 30, 2022	4,069,431	$	62.96

Audit Information	12 Months Ended
Audit Information	Sep. 30, 2022
Audit Information [Abstract]
Auditor Name	Rose, Snyder & Jacobs LLP
Auditor Location	Encino, California
Auditor Firm ID	468

Consolidated Balance Sheets - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Current assets:
Cash, cash equivalents and restricted cash	$ 108,005,000	$ 184,434,000
Accounts receivable	1,410,000	10,255,000
Short-term investments	268,391,000	56,627,000
Marketable securities	0	126,728,000
Prepaid expenses	7,289,000	4,362,000
Other current assets	20,204,000	2,191,000
Total current assets	405,299,000	384,597,000
Property and equipment, net	110,297,000	48,675,000
Intangible assets, net	11,962,000	13,663,000
Long-term investments	105,872,000	245,595,000
Right-of-use assets	58,291,000	17,346,000
Other assets	218,000	272,000
Total Assets	691,939,000	710,148,000
Current liabilities:
Accounts payable	2,868,000	9,457,000
Accrued expenses	46,856,000	14,001,000
Accrued payroll and benefits	12,251,000	9,773,000
Lease liabilities	2,776,000	2,250,000
Deferred revenue	74,099,000	111,055,000
Total current liabilities	138,850,000	146,536,000
Long-term liabilities:
Lease liabilities, net of current portion	78,800,000	23,295,000
Deferred revenue, net of current portion	55,950,000	131,495,000
Total long-term liabilities	134,750,000	154,790,000
Commitments and contingencies (Note 7)
Noncontrolling interest and stockholders' equity:
Common stock, $0.001 par value: Authorized 145,000 shares; issued and outstanding 105,960 and 104,327 shares	198,000	197,000
Additional paid-in capital	1,219,213,000	1,053,386,000
Accumulated other comprehensive loss	(136,000)	(69,000)
Accumulated deficit	(820,755,000)	(644,692,000)
Total Arrowhead Pharmaceuticals, Inc. stockholders' equity	398,520,000	408,822,000
Noncontrolling interest	19,819,000	0
Total noncontrolling interest and stockholders' equity	418,339,000	408,822,000
Total Liabilities, Noncontrolling Interest and Stockholders' Equity	$ 691,939,000	$ 710,148,000