Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2016	Apr. 30, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Entity Registrant Name	Arbutus Biopharma Corp
Entity Central Index Key	0001447028
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		54,625,703
Entity Current Reporting Status	Yes
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 144,772	$ 166,779
Short-term investments	27,802	14,525
Accounts receivable	340	1,008
Accrued revenue	128	128
Investment tax credits receivable	246	246
Prepaid expenses and other assets	1,469	1,196
Total current assets	174,757	183,882
Long-term investments	10,099	10,070
Property and equipment	13,167	12,912
Less accumulated depreciation	(9,925)	(9,729)
Property and equipment, net of accumulated depreciation	3,242	3,183
Intangible assets	352,642	352,642
Goodwill	162,514	162,514
Total assets	703,254	712,291
Current liabilities:
Accounts payable and accrued liabilities	7,711	8,827
Deferred revenue	924	868
Liability-classified options	1,755	0
Warrants	722	883
Total current liabilities	11,112	10,578
Deferred revenue, net of current portion	0	213
Contingent consideration	7,741	7,497
Deferred tax liability	146,324	146,324
Total liabilities	165,177	164,612
Stockholders’ equity:
Common shares, issued and outstanding: 54,625,691 (December 31, 2015 - 54,570,691)	840,475	834,240
Additional paid-in capital	30,243	30,206
Deficit	(282,859)	(266,985)
Accumulated other comprehensive loss	(49,782)	(49,782)
Total stockholders' equity	538,077	547,679
Total liabilities and stockholders' equity	$ 703,254	$ 712,291

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common shares, no par value (in USD per share)	$ 0	$ 0
Common shares, shares issued	54,625,691	54,570,691
Common shares, shares outstanding	54,625,691	54,570,691

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue
Collaborations and contracts	$ 107	$ 3,520
Licensing fees, milestone and royalty payments	496	1,162
Total revenue	603	4,682
Expenses
Research, development, collaborations and contracts	13,144	10,557
General and administrative	7,219	2,716
Depreciation of property and equipment	217	120
Acquisition costs	0	9,295
Total expenses	20,580	22,688
Loss from operations	(19,977)	(18,006)
Other income (losses)
Interest income	244	202
Foreign exchange gains	2,942	7,038
Gain on disposition of financial instrument	1,000	0
Decrease (increase) in fair value of warrant liability	161	(1,223)
Increase in fair value of contingent consideration	(244)	0
Total other income (losses)	4,103	6,017
Net loss	$ (15,874)	$ (11,989)
Loss per common share
Loss per common share basic and diluted (in USD per share)	$ (0.31)	$ (0.40)
Weighted average number of common shares
Weighted average number of common shares basic and diluted (in shares)	51,400,485	30,208,136
Comprehensive loss
Cumulative translation adjustment	$ 0	$ (9,174)
Comprehensive loss	$ (15,874)	$ (21,163)

Condensed Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Deficit	Accumulated other comprehensive loss
Beginning balance (in shares) at Dec. 31, 2015		54,570,691
Beginning balance at Dec. 31, 2015	$ 547,679	$ 834,240	$ 30,206	$ (266,985)	$ (49,782)
Stock-based compensation	7,912	$ 5,971	1,941
Reclassification of equity to liability stock option awards	(1,755)		(1,755)
Issuance of common shares pursuant to exercise of options (in shares)		55,000
Issuance of common shares pursuant to exercise of options	115	$ 264	(149)
Issuance of common shares pursuant to exercise of warrants (in shares)		0
Issuance of common shares pursuant to exercise of warrants	0	$ 0
Net loss	(15,874)			(15,874)
Ending balance (in shares) at Mar. 31, 2016		54,625,691
Ending balance at Mar. 31, 2016	$ 538,077	$ 840,475	$ 30,243	$ (282,859)	$ (49,782)

Condensed Consolidated Statements of Cash Flow - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES
Net loss for the period	$ (15,874,000)	$ (11,989,000)
Items not involving cash:
Depreciation of property and equipment	217,000	120,000
Unrealized foreign exchange (gains) losses	(3,006,000)	(7,057,000)
Change in fair value of warrant liability	(161,000)	1,223,000
Change in fair value of contingent consideration	244,000	0
Net change in non-cash operating items:
Accounts receivable	668,000	(2,886,000)
Accrued revenue	0	(1,126,000)
Prepaid expenses and other assets	(273,000)	221,000
Accounts payable and accrued liabilities	(1,116,000)	2,008,000
Deferred revenue	(157,000)	(1,291,000)
Net cash used in operating activities	(11,546,000)	(17,843,000)
INVESTING ACTIVITIES
Disposition (acquisition) of short and long-term investments	(13,306,000)	37,363,000
Cash acquired through acquisition	0	324,000
Acquisition of property and equipment	(276,000)	(141,000)
Net cash provided by (used) in investing activities	(13,582,000)	37,546,000
FINANCING ACTIVITIES
Proceeds from issuance of common shares, net of issuance costs	0	142,175,000
Issuance of common shares pursuant to exercise of options	115,000	620,000
Issuance of common shares pursuant to exercise of warrants	0	25,000
Net cash provided by financing activities	115,000	142,820,000
Effect of foreign exchange rate changes on cash and cash equivalents	3,006,000	(2,434,000)
(Decrease) Increase in cash and cash equivalents	(22,007,000)	160,089,000
Cash and cash equivalents, beginning of period	166,779,000	72,187,000
Cash and cash equivalents, end of period	144,772,000	232,276,000
Non-cash transactions:
Acquisition of Arbutus Inc. excluding cash acquired	0	381,618,000
Research, development, collaborations and contracts expenses
Items not involving cash:
Stock-based compensation	2,947,000	2,157,000
General and administrative expenses
Items not involving cash:
Stock-based compensation	$ 4,965,000	$ 777,000

Nature of Business and Future Operations	3 Months Ended
Nature of Business and Future Operations	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of business and future operations	Nature of business and future operations Arbutus Biopharma Corporation (the “Company” or “Arbutus”) is a biopharmaceutical business dedicated to discovering, developing, and commercializing a cure for patients suffering from chronic hepatitis B infection (“HBV”), a disease of the liver caused by hepatitis B virus (“HBV”). The success of the Company is dependent on obtaining the necessary regulatory approvals to bring its products to market and achieve profitable operations. The continuation of the research and development activities and the commercialization of its products are dependent on the Company’s ability to successfully complete these activities and to obtain adequate financing through a combination of financing activities and operations. It is not possible to predict either the outcome of future research and development programs or the Company’s ability to continue to fund these programs in the future.

Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Significant accounting policies

Basis of presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”) for interim financial statements and accordingly, do not include all disclosures required for annual financial statements. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2015 and included in the Company’s 2015 annual report on Form 10-K. The unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments and reclassifications necessary to present fairly the financial position, results of operations and cash flows at March 31, 2016 and for all periods presented. The results of operations for the three months ended March 31, 2016 and March 31, 2015 are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2015, except as described below.

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and two of its wholly-owned subsidiaries, Arbutus Biopharma Inc. ("Arbutus Inc.") and Protiva Biotherapeutics Inc. ("Protiva"). All intercompany transactions and balances have been eliminated on consolidation.

In addition to Arbutus Inc. and Protiva, the Company's wholly-owned subsidiary, Protiva Agricultural Development Company Inc. ("PADCo"), was previously recorded by the Company using the equity method. On March 4, 2016, Monsanto exercised its option to acquire 100% of the outstanding shares of PADCo, as described in note 3.

Foreign currency translation and functional currency conversion

Prior to January 1, 2016, the Company's functional currency was the Canadian dollar. Translation gains and losses from the application of the U.S. dollar as the reporting currency while the Canadian dollar was the functional currency are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders' equity under accumulated other comprehensive loss.

The Company assessed its functional currency and determined as at January 1, 2016, its functional currency changed from the Canadian dollar to the U.S. dollar based on management's analysis of changes in the primary economic environment in which the Company operates. The change in functional currency is accounted for prospectively from January 1, 2016 and financial statements prior to and including the period ended December 31, 2015 have not been restated for the change in functional currency.

For periods prior to January 1, 2016, the effects of exchange rate fluctuations on translating foreign currency monetary assets and liabilities into Canadian dollars were included in the statement of operations and comprehensive loss as foreign exchange gain/loss. Revenue and expense transactions were translated into the U.S. dollar reporting currency at the balance sheet date at average exchange rates during the period, and assets and liabilities were translated at end of period exchange rates, except for equity transactions, which were translated at historical exchange rates. Translation gains and losses from the application of the U.S. dollar as the reporting currency while the Canadian dollar was the functional currency are included as part of the cumulative foreign currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss.

For periods commencing January 1, 2016, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities incurred after January 1, 2016 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transaction. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains.

Income or loss per share

Income or loss per share is calculated based on the weighted average number of common shares outstanding. Diluted loss per share does not differ from basic loss per share since the effect of the Company’s stock options, liability-classified stock option awards, and warrants is anti-dilutive. During the three months ended March 31, 2016, potential common shares of 7,371,193 (March 31, 2015 – 6,542,852) were excluded from the calculation of income per common share because their inclusion would be anti-dilutive, of which 3,021,180 (March 31, 2015 - 3,625,411) relates to shares issued subject to repurchase provisions as part of consideration paid for the acquisition of Arbutus Inc.

Fair value of financial instruments

The Company measures certain financial instruments and other items at fair value.

To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The three levels of inputs that may be used to measure fair value are as follows:


•	Level 1 inputs are quoted market prices for identical instruments available in active markets.


•	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the asset or liability has a contractual term, the input must be observable for substantially the full term. An example includes quoted market prices for similar assets or liabilities in active markets.


•	Level 3 inputs are unobservable inputs for the asset or liability and will reflect management’s assumptions about market assumptions that would be used to price the asset or liability.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, in thousands, and indicates the fair value hierarchy of the valuation techniques used to determine such fair value:



	Level 1		Level 2		Level 3		March 31, 2016
Assets
Cash and cash equivalents	$	144,772	—		—		$	144,772
Guaranteed investment certificate	27,802		—		—		27,802
Term deposit	10,099		—		—		10,099
Total	$	182,673	—		—		$	182,673
Liabilities
Liability-classified options	—		$	—	$	1,755	$	1,755
Warrants	—		—		722		722
Contingent consideration	—		—		7,741		7,741
Total	—		—		$	10,218	$	10,218



	Level 1		Level 2	Level 3		December 31, 2015
Assets
Cash and cash equivalents	$	166,779	—	—		$	166,779
Guaranteed investment certificates	14,525		—	—		14,525
Term deposit	10,070		—	—		10,070
Total	$	191,374	—	—		$	191,374
Liabilities
Warrants	—		—	$	883	$	883
Contingent consideration	—		—	7,497		7,497
Financial instrument	—		—	—		—
Total	—		—	$	8,380	$	8,380

The following table presents the changes in fair value of the Company’s warrants, in thousands:



	Liability at beginning of the period		Fair value of warrants exercised in the period			Increase (decrease) in fair value of warrants			Foreign exchange (gain) loss			Liability at end of the period
Three months ended March 31, 2015	$	5,099	$	(250	)	$	1,223		$	(449	)	$	5,623
Three months ended March 31, 2016	$	883	$	—		$	(161	)	$	—		$	722

The change in fair value of warrant liability for the three months ended March 31, 2016 is recorded in the statement of operations and comprehensive loss.

The weighted average Black-Scholes option-pricing assumptions and the resultant fair values, in thousands, for warrants outstanding at March 31, 2016 and at December 31, 2015 are as follows:



	March 31, 2016			December 31, 2015
Dividend yield	—		%	—		%
Expected volatility	67.25		%	49.07		%
Risk-free interest rate	0.53		%	0.48		%
Expected average term	0.5 years			0.6 years
Fair value of warrants outstanding	$	1.90		$	2.33
Aggregate fair value of warrants outstanding	$	722		$	883
Number of warrants outstanding	379,500			379,500

Contingent consideration is a liability assumed by the Company from its acquisition of Arbutus Inc. in March 2015. To determine the fair value of the contingent consideration, the Company uses a probability weighted assessment of the likelihood the milestones would be met and the estimated timing of such payments, and then the potential contingent payments were discounted to their present value using a probability adjusted discount rate that reflects the early stage nature of the development program, time to complete the program development, and overall biotech indices, as in note 7. The Company revalues the contingent consideration at the end of each reporting period and records any change in value to the statement of operations and comprehensive loss.



	Liability at beginning of the period¹		Increase in fair value of Contingent Consideration		Liability at end of the period
Three months ended March 31, 2015	$	4,736	$	—	$	4,736
Three months ended March 31, 2016	$	7,497	$	244	$	7,741


1.	Contingent consideration was assumed by the Company as part of its acquisition from Arbutus Inc. As such, the beginning balance for the three-months ended March 31, 2015 was the fair value as at the acquisition date of March 4, 2015. The beginning balance for the three-months ended March 31, 2016 was the fair value as at December 31, 2015.

Liability-classified stock option awards

The Company accounts for liability-classified stock option awards ("liability options") under ASC 718 - Compensation - Stock Compensation, under which awards of options that provide for an exercise price that is not denominated in: (a) the currency of a market in which a substantial portion of the Company's equity securities trades, (b) the currency in which the employee's pay is denominated, or (c ) the Company's functional currency, are required to be classified as liabilities. Due to the change in functional currency as of January 1, 2016, certain stock option awards with exercise prices denominated in Canadian dollars changed from equity classification to liability classification. As such, the historic equity classification of these stock option awards changed to liability classification effective January 1, 2016. The change in classification resulted in reclassification of these awards from, additional paid-in capital to liability-classified options.

Liability options are re-measured to their fair values at each reporting date with changes in the fair value recognized in share-based compensation expense or additional paid-in capital until settlement or cancellation.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The standard is intended to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS by creating a new Topic 606, Revenue from Contracts with Customers. This guidance supersedes the revenue recognition requirements in ASC 605, Revenue Recognition, and supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The core principle of the accounting standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good or services. The amendments should be applied by either (1) retrospectively to each prior reporting period presented; or (2) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer the effective date of Update 2014-9 for all entities by one year. The new guidance would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. Entities are permitted to adopt in accordance with the original effective date if they choose. The Company has not yet determined the extent of the impact of adoption.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, a clarification of ASU 2014-09 (see above). The amendments in this update do not change the core principle of the guidance, but are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. Under these amendments, an entity must determine whether it is a principal or agent for each specified good or service promised to the customer, an entity must determine the nature of each specified good or service, and when another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that is combines with other goods or services to provide the specified good or service to the customer. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of Update 2014-09, which would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. The Company has not yet determined the extent of the impact of adoption.

In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, a clarification of ASU 2014-09 (see above). The amendments in this update are expected to reduce the cost and complexity of applying the guidance on identifying promised goods or services. An entity is not required to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. An entity is permitted, as an accounting policy election, to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service. The amendments in this update are also intended to improve the operability and understandability of the licensing implementation guidance by providing clarification. An entity’s promise to grant a customer a license to intellectual property that has a significant standalone functionality does not include supporting or maintaining that intellectual property during the license period (i.e. drug formulas). In contrast, an entity’s promise to grant a customer a license to a symbolic intellectual property includes supporting or maintaining that intellectual property during the license period. Also, an entity should not split a sales-based or usage-based royalty into a portion subject to the recognition guidance on sales-based and usage-based royalties and a portion that is not subject to that guidance. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of Update 2014-09, which would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. The Company has not yet determined the extent of the impact of adoption.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification of the statement of cash flows. Under this update, there are five simplifications for public companies. All excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. Excess tax benefits should be classified along with other tax cash flows as an operating activity. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. Cash paid by an employee when directly withholding shares for tax withholding purposes should be classified as financing activity. The amendments in this update would be effective for annual periods beginning after December 15, 2016, which for the Company means January 1, 2017. Early application is permitted. The Company does not plan to early adopt this update. The extent of the impact of this adoption has not yet been determined.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842): Recognition and Measurement of Financial Assets and Financial Liabilities. The update supersedes Topic 840, Leases and requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Topic 842 retains a distinction between finance leases and operating leases, with cash payments from operating leases classified within operating activities in the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 15, 2018 for public business entities, which for the Company means January 1, 2019. The Company does not plan to early adopt this update. The extent of the impact of this adoption has not yet been determined.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The update is intended to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Under amendments to GAAP, the assessment period is within one year after the date that the financial statements are issued (or available to be issued). The amendments are effective for the annual period ending after December 15, 2016, which for the Company means January 1, 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not plan to early adopt this update. The extent on the impact of this adoption has not yet been determined.

Collaborations, Contracts and Licensing Agreements

3 Months Ended

Mar. 31, 2016

Deferred Revenue Disclosure [Abstract]

Collaborations, contracts and licensing agreements

The following tables set forth revenue recognized under collaborations, contracts and licensing agreements, in thousands:



	Three months ended March 31,
	2016		2015
Collaborations and contracts
DoD (a)	$	—	$	3,045
Monsanto (b)	—		248
Dicerna (d)	107		227
Total research and development collaborations and contracts	107		3,520
Licensing fees, milestone and royalty payments
Monsanto licensing fees and milestone payments (b)	—		842
Acuitas milestone payments (c)	255		—
Dicerna licensing fee (d)	213		263
Spectrum royalty payments (e)	28		57
Total licensing fees, milestone and royalty payments	496		1,162
Total revenue	$	603	$	4,682

The following table sets forth deferred collaborations and contracts revenue:



	March 31, 2016		December 31, 2015
DoD (a)	$	15	$	15
Dicerna current portion (d)	909		853
Deferred revenue, current portion	924		868
Dicerna long-term portion (d)	—		213
Total deferred revenue	$	924	$	1,081

(a) Contract with United States Government’s Department of Defense (“DoD”) to develop TKM-Ebola

On July 14, 2010, the Company signed a contract with the DoD to advance TKM-Ebola, an RNAi therapeutic utilizing the Company’s lipid nanoparticle technology to treat Ebola virus infection.

On October 1, 2015, the Company received formal notification from the DoD that, due to the unclear development path for TKM-Ebola and TKM-Ebola-Guinea, the Ebola-Guinea Manufacturing and the Ebola-Guinea IND submission statements of work had been terminated, subject to the completion of certain post-termination obligations. The TKM-Ebola portion of the contract was completed in November 2015. The Company is currently conducting contract close out procedures with the DoD.

(b) Option and Services Agreements with Monsanto Company (“Monsanto”)

On January 13, 2014, the Company and Monsanto signed an Option Agreement and a Services Agreement (together, the “Agreements”). Under the Agreements, Monsanto had an option to obtain a license to use the Company’s proprietary delivery technology and related intellectual property for use in agriculture.

Under the Agreements, the Company established a wholly-owned subsidiary, PADCo. The Company determined that PADCo was a variable interest entity (“VIE”); however, Monsanto is the primary beneficiary of the arrangement. PADCo was established to perform research and development activities, which were funded by Monsanto in return for a call option to acquire the equity or all of the assets of PADCo. On March 4, 2016, Monsanto exercised its option to acquire 100% of the outstanding shares of PADCo and paid the Company an option exercise fee of $1,000,000. From the acquisition of PADCo, Monsanto received a worldwide, exclusive right to use the Company’s proprietary delivery technology in the field of agriculture. The Company recorded the exercise fee received as gain on disposition of financial instrument on its consolidated statement of operations and comprehensive loss for the three months ended March 31, 2016.

(c) License and collaboration with Alnylam Pharmaceuticals, Inc. (“Alnylam”) and Acuitas Therapeutics Inc. (“Acuitas”, formerly AlCana Technologies Inc.)

Arbitration with Alnylam and Ascletis Pharmaceuticals (Hangzhou) Co. Ltd. (“Ascletis”)

The Company and Alnylam have now completed arbitration proceedings as provided for under the agreement. In a two to one decision, the arbitrators found that the milestone is not payable by Alnylam at this time.

(d) License and Development and Supply Agreement with Dicerna Pharmaceuticals, Inc. (“Dicerna”)

On November 16, 2014, the Company signed a License Agreement and a Development and Supply Agreement (together, the “Agreements”) with Dicerna to develop, manufacture, and commercialize products directed to the treatment of Primary Hyperoxaluria 1 (“PH1”). In consideration for the rights granted under the Agreements, Dicerna paid the Company an upfront cash payment of $2,500,000. The Company is also entitled to receive payments from Dicerna on manufacturing and services provided, as well as further payments with the achievement of development and regulatory milestones of up to $22,000,000, in aggregate, and potential commercial royalties. Further, under the Agreements, a joint development committee has been established to provide guidance and direction on the progression of the collaboration.

The Company determined the deliverables under the Agreements included the rights granted, participation in the joint development committee, materials manufactured and other services provided, as directed under the joint development committee. The license and participation in the joint development committee have been determined by the Company to not have standalone value due to the uniqueness of the subject matter under the Agreements. Therefore, these deliverables are treated as one unit of accounting and recognized as revenue over the performance period, which the Company has estimated to be approximately 28 months as at March 31, 2016, that is, completion is expected to occur in March 2017.

The Company has determined that manufacturing services and other services provided have standalone value, as a separate statement of work is executed and invoiced for each manufacturing or service work order. The relative fair values are determined as a batch price or fee is estimated upon the execution of each work order, with actual expenditures charged at comparable market rates with embedded margins on each work order.

Manufacturing work orders are invoiced at the time of execution of the work order, at the initiation of manufacture, and at the release of materials. The Company has deferred the recognition of revenue on all cash deposit payments received for manufacturing work orders until acceptance of inventory. Revenue from service work orders is recognized as the services are performed.

The Company believes the development and regulatory milestones are substantive, due to the existence of substantive uncertainty upon the execution of the arrangement, and that the achievement of the development and regulatory events are based in part on the Company’s performance and the occurrence of a specific outcome resulting from performance. The Company has not received any milestone payments to date.

(e) Agreements with Spectrum Pharmaceuticals, Inc. (“Spectrum”)

On May 6, 2006, the Company signed a number of agreements with Talon Therapeutics, Inc. (“Talon”, formerly Hana Biosciences, Inc.) including the grant of worldwide licenses (the “Talon License Agreement”) for three of the Company’s chemotherapy products, Marqibo®, Alocrest ™ (Optisomal Vinorelbine) and Brakiva ™ (Optisomal Topotecan).

On August 9, 2012, the Company announced that Talon had received accelerated approval for Marqibo from the FDA for the treatment of adult patients with Philadelphia chromosome negative acute lymphoblastic leukemia in second or greater relapse or whose disease has progressed following two or more anti-leukemia therapies. Marqibo is a liposomal formulation of the chemotherapy drug vincristine. In the year ended December 31, 2012, the Company received a milestone of $1,000,000 based on the FDA's approval of Marqibo and will receive royalty payments based on Marqibo's commercial sales. There are no further milestones related to Marqibo but the Company is eligible to receive total milestone payments of up to $18,000,000 on Alocrest and Brakiva.

Talon was acquired by Spectrum in July 2013. The acquisition does not affect the terms of the license between Talon and the Company. On September 3, 2013, Spectrum announced that they had shipped the first commercial orders of Marqibo. For the three months ended March 31, 2016, the Company recorded $28,000 in Marqibo royalty revenue (three months ended March 31, 2015 -$57,000). For the three months ended March 31, 2016, the Company accrued 2.5% in royalties due to TPC in respect of the Marqibo royalty earned by the Company – see note 7, contingencies and commitments.

Accounts Payable and Accrued Liabilities

3 Months Ended

Mar. 31, 2016

Payables and Accruals [Abstract]

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities is comprised of the following, in thousands:



	March 31, 2016		December 31, 2015
Trade accounts payable	$	3,993	$	2,610
Research and development accruals	2,257		2,358
License fee accruals	—		—
Professional fee accruals	919		640
Deferred lease inducements	284		297
Payroll accruals	211		2,331
Other accrued liabilities	47		591
	$	7,711	$	8,827

Share Capital

3 Months Ended

Mar. 31, 2016

Stockholders' Equity Note [Abstract]

Share Capital

(a) Financing

On March 25, 2015, the Company announced that it had completed an underwritten public offering of 7,500,000 common shares, at a price of $20.25 per share, representing gross proceeds of $151,875,000. The Company also granted the underwriters a 30 day option to purchase an additional 1,125,000 shares for an additional $22,781,000 to cover any over-allotments. The underwriters did not exercise the option. The cost of financing, including commissions and professional fees, was $9,700,000, resulting in net proceeds of $142,175,000.

(b) Liability-classified stock options

Valuation assumptions

Liability options are re-measured to their fair values at each reporting date, using the Black-Scholes valuation model. The methodology and assumptions prevailing at the re-measurement date used to estimate the fair values of liability options remain unchanged from the date of grant of equity classified stock option awards. Assumptions about the Company’s expected stock-price volatility are based on the historical volatility of the Company’s publicly traded stock. The risk-free interest rate used for each grant is equal to the zero coupon rate for instruments with a similar expected life. Expected life assumptions are based on the Company’s historical data. The weighted average Black-Scholes option-pricing assumptions and the resultant fair values as at the reclassification date of January 1, 2016, and as at March 31, 2016, are presented in the following table:



	March 31,			January 1,
	2016			2016
Dividend yield	—		%	—		%
Expected volatility	96.84		%	97.78		%
Risk-free interest rate	0.78		%	0.86		%
Expected average term (years)	5.2 years			5.3 years
Fair value of options outstanding	$	2.98		$	3.33
Aggregate fair value of options outstanding (in thousands)	$1,755			$1,909
Number of options outstanding	694,500			718,333

Stock option activity for liability options



	Number of optioned common shares		Weighted average exercise price (C$)		Weighted average exercise price (US$)		Aggregate intrinsic value (US$)
Balance, January 1, 2016	718,333		$	7.24	$	5.23	$	604
Options forfeited, canceled or expired	(23,833	)	5.94		4.58		—
Balance, March 31, 2016	694,500		$	7.28	$	5.61	$	438

Liability options expire at various dates from August 2, 2016 to May 22, 2024.

The following table summarizes information pertaining to liability options outstanding at March 31, 2016:



			Options outstanding March 31, 2016				Options exercisable March 31, 2016
Range of Exercise prices (US$)			Number of options outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price (US$)		Number of options exercisable	Weighted average exercise price (US$)
$1.31	to	$1.85	120,000	4.8	$	1.53	120,000	$	1.53
$2.31	to	$3.58	100,000	2.4	2.95		100,000	2.95
$3.97	to	$4.43	124,000	6.5	4.20		115,071	4.19
$5.01	to	$6.39	95,000	6.4	6.10		66,875	5.98
$7.02	to	$7.02	150,000	7.5	7.02		123,750	7.02
$9.64	to	$14.28	105,500	7.9	11.95		71,481	11.74
$1.31	to	$14.28	694,500	6.1	$	5.61	597,177	$	5.14

At March 31, 2016, there were 597,177 liability options exercisable with a weighted average exercise price of $5.14 (C$6.67). The weighted average remaining contractual life of exercisable liability options as at March 31, 2016 was 5.8 years. The aggregate intrinsic value of in-the-money liability options exercisable at March 31, 2016 was $438,000.

A summary of the Company's non-vested liability stock option activity and related information at March 31, 2016 is as follows:



	Number of optioned common shares		Weighted average fair value (US$)
Non-vested at January 1, 2016	134,000		$	3.61
Options vested	(36,677	)	3.29
Non-vested options forfeited	—		—
Non-vested at March 31, 2016	97,323		$	3.27

The weighted average remaining contractual life for liability options expected to vest at March 31, 2016 was 7.7 years and the weighted average exercise price for these options was $8.48 (C$11.01) per share.

The total fair value of liability options that vested during the three months ended March 31, 2016 was $200,000.

- 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://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

+ Details

Concentrations of Credit Risk	3 Months Ended
Concentrations of Credit Risk	Mar. 31, 2016
Risks and Uncertainties [Abstract]
Concentrations of credit risk	Concentrations of credit risk Credit risk is defined by the Company as an unexpected loss in cash and earnings if a collaborative partner is unable to pay its obligations on a timely basis. The Company’s main source of credit risk is related to its accounts receivable balance which principally represents temporary financing provided to collaborative partners in the normal course of operations. The Company does not currently maintain a provision for bad debts as the majority of accounts receivable are from collaborative partners or government agencies and are considered low risk. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at March 31, 2016 was the accounts receivable balance of $340,000 (December 31, 2015 -$1,008,000). All accounts receivable balances were current as at March 31, 2016 and at December 31, 2015.

Contingencies and Commitments	3 Months Ended
Contingencies and Commitments	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Contingencies and commitments	Contingencies and commitments Product development partnership with the Canadian Government The Company entered into a Technology Partnerships Canada ("TPC") agreement with the Canadian Federal Government on November 12, 1999. Under this agreement, TPC agreed to fund 27% of the costs incurred by the Company, prior to March 31, 2004, in the development of certain oligonucleotide product candidates up to a maximum contribution from TPC of $7,179,000 (C$9,323,000). As at March 31, 2016, a cumulative contribution of $2,851,000 (C$3,702,000) has been received and the Company does not expect any further funding under this agreement. In return for the funding provided by TPC, the Company agreed to pay royalties on the share of future licensing and product revenue, if any, that is received by the Company on certain non-siRNA oligonucleotide product candidates covered by the funding under the agreement. These royalties are payable until a certain cumulative payment amount is achieved or until a pre-specified date. In addition, until a cumulative amount equal to the funding actually received under the agreement has been paid to TPC, the Company agreed to pay 2.5% royalties on any royalties the Company receives for Marqibo. For the three months ended March 31, 2016, the Company earned royalties on Marqibo sales in the amount of $28,000 (three months ended March 31, 2015 – $57,000) (see note 3(e)), resulting in $1,000 being recorded by the Company as royalty payable to TPC (March 31, 2015 -$1,000). The cumulative amount paid or accrued up to March 31, 2016 was $12,000, resulting in the contingent amount due to TPC being $2,838,000 (C$3,686,000) License agreement with Marina Biotech, Inc. (“Marina”) On November 29, 2012 the Company announced a worldwide, non-exclusive license to a novel RNAi payload technology called Unlocked Nucleobase Analog (“UNA”) from Marina for the development of RNAi therapeutics. UNA technology can be used in the development of RNAi therapeutics, which treats disease by silencing specific disease causing genes. UNAs can be incorporated into RNAi drugs and have the potential to improve them by increasing their stability and reducing off-target effects. Under the license agreement the Company paid Marina an upfront fee of $300,000. A further license payment of $200,000 was paid in 2013 and the Company will make milestone payments of up to $3,250,000 and royalties on each product developed by the Company that uses Marina’s UNA technology. The payments to Marina are expensed to research, development, collaborations and contracts expense. Effective August 9, 2013, Marina’s UNA technology was acquired by Arcturus Therapeutics, Inc. (“Arcturus”) and the UNA license agreement between the Company and Marina was assigned to Arcturus. The terms of the license are otherwise unchanged. On December 22, 2014, the Company received clearance from Health Canada to conduct a Phase I Clinical Study with ARB-1467, which utilizes Arcturus’ UNA technology. The dosing of first subject in the Phase I clinical trial of ARB-1467 occurred in January 2015, which resulted in a milestone payment of $250,000 to Arcturus. Arbitration with the University of British Columbia (“UBC”) Certain early work on lipid nanoparticle delivery systems and related inventions was undertaken at UBC. These inventions are licensed to the Company by UBC under a license agreement, initially entered in 1998 as amended in 2001, 2006 and 2007. The Company has granted sublicenses under the UBC license to Alnylam as well as to Spectrum. Alnylam has in turn sublicensed back to the Company under the licensed UBC patents for discovery, development and commercialization of RNAi products. In 2009, the Company entered into a supplemental agreement with UBC, Alnylam and Acuitas, in relation to a separate research collaboration to be conducted among UBC, Alnylam and Acuitas to which the Company has license rights. The settlement agreement signed in late 2012 to resolve the litigation among the Company, Alnylam, and Acuitas, provided for the effective termination of all obligations under such supplemental agreement as between and among all litigants. On November 10, 2014, UBC filed a notice of arbitration against the Company and on January 16, 2015, filed a Statement of Claim, which alleges entitlement to $3,500,000 in allegedly unpaid royalties based on publicly available information, and an unspecified amount based on non-public information. UBC also seeks interest and costs, including legal fees. The Company is currently disputing UBC’s allegations, and no dates have been scheduled for this arbitration. However, the Company notes that arbitration is subject to inherent uncertainty and an arbitrator could rule against the Company. The Company has not recorded an estimate of the possible loss associated with this arbitration, due to the uncertainties related to both the likelihood and amount of any possible loss or range of loss. However, the defense of arbitration and related matters are costly and may divert the attention of the Company’s management and other resources that would otherwise be engaged in other activities. Costs related to the arbitration have been recorded by the Company as incurred. Contingent consideration from Arbutus Inc. acquisition of Enantigen and License Agreements between Enantigen and the Baruch S. Blumberg Institute (“Blumberg”) and Drexel University (“Drexel”) In October 2014, Arbutus Inc. acquired all of the outstanding shares of Enantigen pursuant to a stock purchase agreement. Through this transaction, Arbutus Inc. acquired a HBV surface antigen secretion inhibitor program and a capsid assembly inhibitor program, each of which are now assets of Arbutus, following the Company’s merger with Arbutus Inc. Under the stock purchase agreement, Arbutus Inc. agreed to pay up to a total of $21,000,000 to Enantigen’s selling stockholders upon the achievement of certain triggering events related to Enantigen’s two programs in pre-clinical development related to HBV therapies. The first triggering event is the enrollment of first patient in Phase 1b clinical trial in HBV patients, which the Company does not expect to occur in the next twelve-month period. The regulatory, development and sales milestone payments have an estimated fair value of approximately $6,727,000 as at the date of acquisition of Arbutus Inc., and have been treated as contingent consideration payable in the purchase price allocation, based on information available at the date of acquisition, using a probability weighted assessment of the likelihood the milestones would be met and the estimated timing of such payments, and then the potential contingent payments were discounted to their present value using a probability adjusted discount rate that reflects the early stage nature of the development program, time to complete the program development, and overall biotech indices. Contingent consideration is recorded as a financial liability, and measured at its fair value at each reporting period with any changes in fair value from the previous reporting period recorded in the statement of operations and comprehensive loss (see note 2). Drexel and Blumberg In February 2014, Arbutus Inc. entered into a license agreement with Blumberg and Drexel that granted an exclusive, worldwide, sub-licensable license to three different compound series: cccDNA inhibitors, capsid assembly inhibitors and HCC inhibitors. In partial consideration for this license, Arbutus Inc. paid a license initiation fee of $150,000 and issued warrants to Blumberg and Drexel. Under this license agreement, Arbutus Inc. also agreed to pay up to $3,500,000 in development and regulatory milestones per licensed compound series, up to $92,500,000 in sales performance milestones per licensed product, and royalties in the mid-single digits based upon the proportionate net sales of licensed products in any commercialized combination. The Company is obligated to pay Blumberg and Drexel a double digit percentage of all amounts received from the sub-licensees, subject to customary exclusions. In November 2014, Arbutus Inc. entered into an additional license agreement with Blumberg and Drexel pursuant to which it received an exclusive, worldwide, sub-licensable license under specified patents and know-how controlled by Blumberg and Drexel covering epigenetic modifiers of cccDNA and STING agonists. In consideration for these exclusive licenses, Arbutus Inc. made an upfront payment of $50,000. Under this agreement, the Company is required to pay up to $1,000,000 for each licensed product upon the achievement of a specified regulatory milestone and a low single digit royalty, based upon the proportionate net sales of compounds covered by this intellectual property in any commercialized combination. The Company is also obligated to pay Blumberg and Drexel a double digit percentage of all amounts received from its sub-licensees, subject to exclusions. Research Collaboration and Funding Agreement with Blumberg In October 2014, Arbutus Inc. entered into a research collaboration and funding agreement with Blumberg under which the Company will provide $1,000,000 per year of research funding for three years, renewable at the Company’s option for an additional three years, for Blumberg to conduct research projects in HBV and liver cancer pursuant to a research plan to be agreed upon by the parties. Blumberg has exclusivity obligations to Arbutus with respect to HBV research funded under the agreement. In addition, the Company has the right to match any third party offer to fund HBV research that falls outside the scope of the research being funded under the agreement. Blumberg has granted the Company the right to obtain an exclusive, royalty bearing, worldwide license to any intellectual property generated by any funded research project. If the Company elects to exercise its right to obtain such a license, the Company will have a specified period of time to negotiate and enter into a mutually agreeable license agreement with Blumberg. This license agreement will include the following pre negotiated upfront, milestone and royalty payments: an upfront payment in the amount of $100,000; up to $8,100,000 upon the achievement of specified development and regulatory milestones; up to $92,500,000 upon the achievement of specified commercialization milestones; and royalties at a low single to mid-single digit rates based upon the proportionate net sales of licensed products from any commercialized combination. NeuroVive Pharmaceutical AB (“NeuroVive”) In September 2014, Arbutus Inc. entered into a license agreement with NeuroVive that granted them an exclusive, worldwide, sub-licensable license to develop, manufacture and commercialize, for the treatment of HBV, oral dosage form sanglifehrin based cyclophilin inhibitors (including OCB-30). Under this license agreement, the Company has been granted a non-exclusive, royalty free right and license and right of reference to NeuroVive’s relevant regulatory approvals and filings for the sole purpose of developing, manufacturing and commercializing licensed products for the treatment of HBV. Under this license agreement, the Company has (1) an option to expand its exclusive license to include treatment of viral diseases other than HBV and (2) an option, exercisable upon specified conditions, to expand its exclusive license to include development, manufacture and commercialization of non-oral variations of licensed products for treatment of viral diseases other than HBV. NeuroVive retains all rights with respect to development, manufacture and commercialization of licensed products and non-oral variations of licensed products for all indications (other than HBV) for which the Company has not exercised its option. In partial consideration for this license, Arbutus Inc. paid NeuroVive a license fee of $1,000,000. In 2015, the Company decided to discontinue the OCB-30 development program based on extensive research and analysis. Otherwise, the license agreement and ongoing relationship with NeuroVive remains in full effect at this time. Cytos Biotechnology Ltd (“Cytos”) On December 30, 2014, Arbutus Inc. entered into an exclusive, worldwide, sub-licensable (subject to certain restrictions with respect to licensed viral infections other than hepatitis) license to six different series of compounds. The licensed compounds are Qbeta-derived virus-like particles that encapsulate TLR9, TLR7 or RIG-I agonists and may or may not be conjugated with antigens from the hepatitis virus or other licensed viruses. The Company has an option to expand this license to include additional viral infections other than influenza and Cytos will retain all rights for influenza, all non-viral infections, and all viral infections (other than hepatitis) for which it has not exercised its option. In partial consideration for this license, the Company is obligated to pay Cytos up to a total of $67,000,000 for each of the six licensed compound series upon the achievement of specified development and regulatory milestones; for hepatitis and each additional licensed viral infection, up to a total of $110,000,000 upon the achievement of specified sales performance milestones; and tiered royalty payments in the high-single to low-double digits, based upon the proportionate net sales of licensed products in any commercialized combination.

Subsequent Event	3 Months Ended
Subsequent Event	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent event	Subsequent event Included in the total consideration transferred for the acquisition of Arbutus Inc. in March 2015 are common shares issued as replacement awards, which are subject to repurchase provisions. The total fair value of these common shares attributed to the post acquisition period is approximately $56,934,000 and is being recognized as compensation expense over the expiry period of repurchase provision rights subsequent to the acquisition date. As at March 31, 2016, the total unrecognized compensation expense related to the expiry of repurchase provisions was $33,988,000. On April 30, 2016 and May 6, 2016, two of the four shareholders of these common shares subject to repurchase provision departed, or will depart, from the Company, resulting in accelerated expiry of the repurchase provision. These departures will trigger the recognition of an incremental compensation expense of $14,008,000 in the three months ended June 30, 2016.

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Basis of presentation

Principles of Consolidation

Foreign currency translation and functional currency conversion

Income or loss per share

Fair value of financial instruments

The Company measures certain financial instruments and other items at fair value.


•	Level 1 inputs are quoted market prices for identical instruments available in active markets.


•	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the asset or liability has a contractual term, the input must be observable for substantially the full term. An example includes quoted market prices for similar assets or liabilities in active markets.


•	Level 3 inputs are unobservable inputs for the asset or liability and will reflect management’s assumptions about market assumptions that would be used to price the asset or liability.

Liability-classified stock option awards

Recent accounting pronouncements

Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Assets and liabilities measured at fair value on a recurring basis



	Level 1		Level 2		Level 3		March 31, 2016
Assets
Cash and cash equivalents	$	144,772	—		—		$	144,772
Guaranteed investment certificate	27,802		—		—		27,802
Term deposit	10,099		—		—		10,099
Total	$	182,673	—		—		$	182,673
Liabilities
Liability-classified options	—		$	—	$	1,755	$	1,755
Warrants	—		—		722		722
Contingent consideration	—		—		7,741		7,741
Total	—		—		$	10,218	$	10,218



	Level 1		Level 2	Level 3		December 31, 2015
Assets
Cash and cash equivalents	$	166,779	—	—		$	166,779
Guaranteed investment certificates	14,525		—	—		14,525
Term deposit	10,070		—	—		10,070
Total	$	191,374	—	—		$	191,374
Liabilities
Warrants	—		—	$	883	$	883
Contingent consideration	—		—	7,497		7,497
Financial instrument	—		—	—		—
Total	—		—	$	8,380	$	8,380

Changes in fair value of warrants

The following table presents the changes in fair value of the Company’s warrants, in thousands:



	Liability at beginning of the period		Fair value of warrants exercised in the period			Increase (decrease) in fair value of warrants			Foreign exchange (gain) loss			Liability at end of the period
Three months ended March 31, 2015	$	5,099	$	(250	)	$	1,223		$	(449	)	$	5,623
Three months ended March 31, 2016	$	883	$	—		$	(161	)	$	—		$	722

Schedule of weighted average Black-Scholes warrant pricing assumptions and the resultant fair values

The weighted average Black-Scholes option-pricing assumptions and the resultant fair values, in thousands, for warrants outstanding at March 31, 2016 and at December 31, 2015 are as follows:



	March 31, 2016			December 31, 2015
Dividend yield	—		%	—		%
Expected volatility	67.25		%	49.07		%
Risk-free interest rate	0.53		%	0.48		%
Expected average term	0.5 years			0.6 years
Fair value of warrants outstanding	$	1.90		$	2.33
Aggregate fair value of warrants outstanding	$	722		$	883
Number of warrants outstanding	379,500			379,500

The weighted average Black-Scholes option-pricing assumptions and the resultant fair values as at the reclassification date of January 1, 2016, and as at March 31, 2016, are presented in the following table:



	March 31,			January 1,
	2016			2016
Dividend yield	—		%	—		%
Expected volatility	96.84		%	97.78		%
Risk-free interest rate	0.78		%	0.86		%
Expected average term (years)	5.2 years			5.3 years
Fair value of options outstanding	$	2.98		$	3.33
Aggregate fair value of options outstanding (in thousands)	$1,755			$1,909
Number of options outstanding	694,500			718,333

Schedule of changes in fair value of contingent consideration



	Liability at beginning of the period¹		Increase in fair value of Contingent Consideration		Liability at end of the period
Three months ended March 31, 2015	$	4,736	$	—	$	4,736
Three months ended March 31, 2016	$	7,497	$	244	$	7,741


1.	Contingent consideration was assumed by the Company as part of its acquisition from Arbutus Inc. As such, the beginning balance for the three-months ended March 31, 2015 was the fair value as at the acquisition date of March 4, 2015. The beginning balance for the three-months ended March 31, 2016 was the fair value as at December 31, 2015.

Collaborations, Contracts and Licensing Agreements (Tables)

3 Months Ended

Mar. 31, 2016

Deferred Revenue Disclosure [Abstract]

Schedule of revenue recognized under collaborations, contracts and licensing agreements

The following tables set forth revenue recognized under collaborations, contracts and licensing agreements, in thousands:



	Three months ended March 31,
	2016		2015
Collaborations and contracts
DoD (a)	$	—	$	3,045
Monsanto (b)	—		248
Dicerna (d)	107		227
Total research and development collaborations and contracts	107		3,520
Licensing fees, milestone and royalty payments
Monsanto licensing fees and milestone payments (b)	—		842
Acuitas milestone payments (c)	255		—
Dicerna licensing fee (d)	213		263
Spectrum royalty payments (e)	28		57
Total licensing fees, milestone and royalty payments	496		1,162
Total revenue	$	603	$	4,682

Schedule of deferred collaborations and contracts revenue

The following table sets forth deferred collaborations and contracts revenue:



	March 31, 2016		December 31, 2015
DoD (a)	$	15	$	15
Dicerna current portion (d)	909		853
Deferred revenue, current portion	924		868
Dicerna long-term portion (d)	—		213
Total deferred revenue	$	924	$	1,081

Accounts Payable and Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

Accounts payable and accrued liabilities is comprised of the following, in thousands:



	March 31, 2016		December 31, 2015
Trade accounts payable	$	3,993	$	2,610
Research and development accruals	2,257		2,358
License fee accruals	—		—
Professional fee accruals	919		640
Deferred lease inducements	284		297
Payroll accruals	211		2,331
Other accrued liabilities	47		591
	$	7,711	$	8,827