Document And Entity Information - USD ($)	12 Months Ended
Document And Entity Information - USD ($)	Dec. 31, 2016	Mar. 14, 2017	Jun. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Arbutus Biopharma Corp
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		55,023,207
Entity Public Float			$ 190,692,659
Amendment Flag	false
Entity Central Index Key	0001447028
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 23,413	$ 166,779
Short-term investments	107,146	14,525
Accounts receivable	273	1,008
Accrued revenue	128	128
Investment tax credits receivable	293	246
Prepaid expenses and other assets	1,311	1,196
Total current assets	132,564	183,882
Restricted investment	12,601	0
Long-term investments	0	10,070
Property and equipment	17,683	12,912
Less accumulated depreciation	(10,738)	(9,729)
Property and equipment, net of accumulated depreciation	6,945	3,183
Intangible assets	99,445	352,642
Goodwill	24,364	162,514
Total assets	275,919	712,291
Current liabilities:
Accounts payable and accrued liabilities	9,910	8,827
Deferred revenue	15	868
Liability-classified options	553	0
Warrants	107	883
Total current liabilities	10,585	10,578
Deferred revenue, net of current portion	0	213
Loan payable	12,001	0
Contingent consideration	9,065	7,497
Deferred tax liability	41,263	146,324
Total liabilities	72,914	164,612
Stockholders’ equity:
Common shares, authorized - unlimited number with no par value, Issued and outstanding: 54,841,494 (December 31, 2015 - 54,570,691)	867,393	834,240
Additional paid-in capital	36,543	30,206
Deficit	(651,149)	(266,985)
Accumulated other comprehensive loss	(49,782)	(49,782)
Total stockholders' equity	203,005	547,679
Total liabilities and stockholders' equity	$ 275,919	$ 712,291

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common shares, par value (in USD per share)	$ 0	$ 0
Common shares, shares issued	54,841,494	54,570,691
Common shares, shares outstanding	54,841,494	54,570,691

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue
Collaborations and contracts	$ 229	$ 13,309	$ 11,738
Licensing fees, milestone and royalty payments	1,262	11,564	3,215
Total revenue	1,491	24,873	14,953
Expenses
Research, development, collaborations and contracts	61,253	51,505	38,713
General and administrative	39,438	26,438	8,683
Depreciation of property and equipment	1,092	589	529
Acquisition costs	0	9,656	462
Impairment of intangible assets	253,197	39,007	0
Impairment of goodwill	138,150	0	0
Total expenses	493,130	127,195	48,387
Loss from operations	(491,639)	(102,322)	(33,434)
Other income (losses)
Interest income	1,391	674	853
Foreign exchange gains	1,120	21,771	4,127
Gain on disposition of financial instrument	1,000	0	0
Decrease (increase) in fair value of warrant liability	530	3,341	(10,383)
Increase in fair value of contingent consideration	(1,568)	(770)	0
Total other income (losses)	2,473	25,016	(5,403)
Loss before income taxes	(489,166)	(77,306)	(38,837)
Deferred income tax recovery	105,002	16,185	0
Net loss	$ (384,164)	$ (61,121)	$ (38,837)
Loss per common share
Basic loss per common share (in USD per share)	$ (7.24)	$ (1.34)	$ (1.80)
Diluted loss per common share (in USD per share)	$ (7.24)	$ (1.34)	$ (1.80)
Weighted average number of common shares
Basic weighted average number of common shares (in shares)	53,074,401	45,462,324	21,603,136
Diluted weighted average number of common shares (in shares)	53,074,401	45,462,324	21,603,136
Other Comprehensive loss
Cumulative translation adjustment	$ 0	$ (27,469)	$ (6,489)
Comprehensive loss	$ (384,164)	$ (88,590)	$ (45,326)

Consolidated Statement of Stockholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Deficit	Accumulated other comprehensive loss
Balance (in shares) at Dec. 31, 2013		19,048,900
Balance at Dec. 31, 2013	$ 59,194	$ 216,702	$ 25,343	$ (167,027)	$ (15,824)
Stock-based compensation	3,283		3,283
Issuance of common shares pursuant to exercise of options (in shares)		648,506
Issuance of common shares pursuant to exercise of options	2,616	$ 5,034	(2,418)
Issuance of common shares pursuant to exercise of warrants (in shares)		615,763
Issuance of common shares pursuant to exercise of warrants	11,791	$ 11,791
Issuance of common shares in conjunction with the private offering, net of issuance costs (in shares)		2,125,000
Issuance of common shares in conjunction with the private offering, net of issuance costs	56,477	$ 56,477
Currency translation adjustment	(6,489)				(6,489)
Net loss	(38,837)			(38,837)
Balance (in shares) at Dec. 31, 2014		22,438,169
Balance at Dec. 31, 2014	88,035	$ 290,004	26,208	(205,864)	(22,313)
Stock-based compensation	22,093	$ 16,687	5,406
Issuance of common shares pursuant to exercise of options (in shares)		640,457
Issuance of common shares pursuant to exercise of options	1,651	$ 4,186	(2,535)
Issuance of common shares pursuant to exercise of warrants (in shares)		18,750
Issuance of common shares pursuant to exercise of warrants	371	$ 371
Issuance of common shares in conjunction with the private offering, net of issuance costs (in shares)		7,500,000
Issuance of common shares in conjunction with the private offering, net of issuance costs	142,177	$ 142,177
Increase of equity instruments in conjunction with the acquisition of Arbutus Inc. (in shares)		23,973,315
Increase of equity instruments in conjunction with the acquisition of Arbutus Inc.	381,942	$ 380,815	1,127
Currency translation adjustment	(27,469)				(27,469)
Net loss	(61,121)			(61,121)
Balance (in shares) at Dec. 31, 2015		54,570,691
Balance at Dec. 31, 2015	547,679	$ 834,240	30,206	(266,985)	(49,782)
Stock-based compensation	38,162	$ 31,986	6,176
Reclassification of equity to liability stock option awards	(3,243)		(3,243)
Certain fair value adjustments to liability stock option awards	3,621		3,621
Issuance of common shares pursuant to exercise of options (in shares)		100,303
Issuance of common shares pursuant to exercise of options	258	$ 475	(217)
Issuance of common shares pursuant to exercise of warrants (in shares)		170,500
Issuance of common shares pursuant to exercise of warrants	692	$ 692
Currency translation adjustment	0
Net loss	(384,164)			(384,164)
Balance (in shares) at Dec. 31, 2016		54,841,494
Balance at Dec. 31, 2016	$ 203,005	$ 867,393	$ 36,543	$ (651,149)	$ (49,782)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
OPERATING ACTIVITIES
Net loss for the period	$ (384,164)	$ (61,121)	$ (38,837)
Items not involving cash:
Deferred income taxes	(105,061)	(16,185)	0
Depreciation of property and equipment	1,092	589	529
Loss (gain) on sale of property and equipment	174	0	(80)
Unrealized foreign exchange gains	(1,003)	(21,966)	(4,218)
Change in fair value of warrant liability	(530)	(3,341)	10,383
Change in fair value of contingent consideration	1,568	770	0
Impairment of intangible assets	253,197	39,007	0
Impairment of goodwill	138,150	0	0
Net change in non-cash operating items:
Accounts receivable	735	628	(1,887)
Accrued revenue		349	(360)
Deferred expenses	0	0	167
Investment tax credits receivable	(47)	(188)	(52)
Prepaid expenses and other assets	(115)	159	(773)
Accounts payable and accrued liabilities	26	(2,489)	6,253
Deferred revenue	(1,066)	(13,090)	13,171
Net cash used in operating activities	(57,885)	(54,785)	(12,421)
INVESTING ACTIVITIES
Disposition (acquisition) of investments	(82,551)	9,645	(41,982)
Acquisition of restricted investment	(12,601)	0	0
Cash acquired through acquisition	0	324	0
Proceeds from sale of property and equipment	25	0	80
Acquisition of property and equipment	(3,996)	(2,287)	(1,056)
Net cash provided by (used in) investing activities	(99,123)	7,682	(42,958)
FINANCING ACTIVITIES
Proceeds from loan payable	12,001	0	0
Proceeds from issuance of common shares, net of issuance costs	0	142,177	56,477
Issuance of common shares pursuant to exercise of options	192	1,651	2,616
Issuance of common shares pursuant to exercise of warrants	445	42	1,583
Net cash provided by financing activities	12,638	143,870	60,676
Effect of foreign currency rate changes on cash and cash equivalents	1,004	(2,175)	(1,827)
Increase in cash and cash equivalents	(143,366)	94,592	3,470
Cash and cash equivalents, beginning of period	166,779	72,187	68,717
Cash and cash equivalents, end of period	23,413	166,779	72,187
Supplemental cash flow information
Acquisition of property and equipment not yet paid	1,057	0	0
Fair value of warrants exercised on a cashless basis	0	0	(116)
Investment tax credits received	0	24	0
Acquisition of Arbutus Inc. net of cash acquired	0	381,618	0
Research, development, collaborations
Items not involving cash:
Stock-based compensation	11,155	7,869	2,343
General and administrative expenses
Items not involving cash:
Stock-based compensation	$ 28,004	$ 14,224	$ 940

Nature of Business and Future Operations	12 Months Ended
Nature of Business and Future Operations	Dec. 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, a disease of the liver caused by the hepatitis B virus (“HBV”). The Company is also developing a pipeline focused on advancing novel RNA interference therapeutics ("RNAi") leveraging the Company’s expertise in Lipid Nanoparticle ("LNP") technology. 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

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Significant accounting policies

Basis of presentation

Arbutus Biopharma Corporation was incorporated in Canada on October 6, 2005 as an inactive wholly owned subsidiary of Inex Pharmaceuticals Corporation (Inex). Pursuant to a “Plan of Arrangement” effective April 30, 2007, the business and substantially all of the assets and liabilities of Inex were transferred to the Company. The consolidated financial statements for all periods presented herein include the consolidated operations of Inex until April 30, 2007 and the operations of the Company thereafter.

The Company has two wholly-owned subsidiaries as at December 31, 2016: Arbutus Biopharma, Inc. (Arbutus Inc. formerly OnCore Biopharma, Inc.) and Protiva Biotherapeutics Inc. ("Protiva"). Protiva was acquired on May 30, 2008. Arbutus Inc. was acquired by way of a Merger Agreement on March 4, 2015.

In addition to Arbutus Inc. and Protiva, the Company's former 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 4(b).

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Arbutus Inc. and Protiva. All intercompany transactions and balances have been eliminated on consolidation.

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 re-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 in 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.

Use of estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses, contingent assets and contingent liabilities as at the end or during the reporting period. Actual results could significantly differ from those estimates. Significant areas requiring the use of management estimates relate valuation of intangible assets and goodwill, recognition of revenue, stock-based compensation, and financial instruments, and the amounts recorded as accrued liabilities, contingent consideration, and income tax recovery.

Cash and cash equivalents

Cash and cash equivalents are all highly liquid instruments with an original maturity of three months or less when purchased. Cash equivalents are recorded at cost plus accrued interest. The carrying value of these cash equivalents approximates their fair value.

Short-term and long-term investments

Short-term investments have original maturities exceeding three months, and have remaining maturities less than one year. Long-term investments have remaining maturities exceeding twelve months. Short-term and long-term investments accrue interest daily based on a fixed interest rate for the term. The carrying value of these investments are recorded at cost plus accrued interest, which approximates their fair value. All investments are governed by the Board approved Investment Policy for the Company.

Loan payable and restricted cash (investment)

The Company obtained a loan from Wells Fargo for the purpose of financing its operations, including the expansion of laboratory facilities for its U.S. operations. The loan accrues interest daily based on an interest rate with a variable and fixed component. The variable component is the one-month London Interbank Offered Rate (LIBOR), and the fixed component is a margin based on the amount of collateral cash the Company maintains with the lender - see note 9. The loan is due December 2019. The loan is recorded at amortized cost.

The Company must maintain a cash or investment balance as collateral for the loan payable to Wells Fargo. The cash or investment is restricted from the Company's use until the loan is repaid. The Company does not expect to repay the loan within twelve months of the balance sheet date so has classified the restricted cash as a long-term asset. The restricted cash balance has been used to purchase a two year investment maturing on December 23, 2018 and accruing interest at a fixed interest rate of 1.25%. The carrying value of the restricted cash is recorded at cost plus any accrued interest not yet received, which approximates its fair value.

Fair value of financial instruments

We measure certain financial instruments and other items at fair value.

To determine the fair value, we use 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.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The Company’s financial instruments consist of cash and cash equivalents, short-term, long-term and restricted investments, accounts receivable, accounts payable and accrued liabilities, warrants, and loan payable . Long-term and restricted investments approximate fair value due to the interest rates being at prevailing market rates.

The carrying values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturity of these financial instruments.

As quoted prices for the warrants are not readily available, the Company has used a Black-Scholes pricing model, as described in note 6, to estimate fair value. These are level 3 inputs as defined above.

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 detailed in note 10. The Company determined the fair value of the contingent consideration was $9,065,000 and the increase of $1,568,000 has been recorded in other losses in the statement of operations and comprehensive loss for the year ended December 31, 2016. The assumptions used in the discounted cash flow model are level 3 inputs as defined above.

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



	Level 1		Level 2	Level 3		December 31, 2016
Assets
Cash and cash equivalents	$	23,413	—	—		$	23,413
Short-term investments	107,146		—	—		107,146
Restricted investment	12,601		—	—		12,601
Total	$	143,160	—	—		$	143,160
Liabilities
Warrants	—		—	$	107	$	107
Liability-classified stock option awards	—		—	553		553
Contingent consideration	—		—	9,065		9,065
Total	—		—	9,725		$	9,725



	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
Total	—		—	$	8,380	$	8,380

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



	Liability at beginning of the period		Fair value of warrants exercised in the period			Increase (decrease) in fair value of warrants			Foreign exchange loss			Liability at end of the period
Year ended December 31, 2014	$	5,379	$	(10,208	)	$	10,383		$	(455	)	$	5,099
Year ended December 31, 2015	$	5,099	$	(334	)	$	(3,341	)	$	(541	)	$	883
Year ended December 31, 2016	$	883	$	(247	)	$	(529	)	$	—		$	107

The following table presents the changes in fair value of the Company’s liability-classified stock option awards:



	Reclassification of equity to liability ⁽¹⁾		Fair value of liability-classified stock option awards exercised in the period			Increase (decrease) in fair value of liability			Liability at end of the period
Year ended December 31, 2016	$	1,909	$	(54	)	$	(1,302	)	$	553

(1) Upon functional currency conversion on January 1, 2016 - see functional currency conversion above.

The following table presents the changes in fair value of the Company’s contingent consideration:



	Contingent consideration at beginning of the period		Increase in fair value of contingent consideration		Contingent consideration at end of the period
Year ended December 31, 2015⁽¹⁾	$	6,727	$	770	$	7,497
Year ended December 31, 2016	$	7,497	$	1,568	$	9,065

(1) As at acquisition date of March 4, 2015.

Property and equipment

Property and equipment is recorded at cost less impairment losses, accumulated depreciation, related government grants and investment tax credits. The Company records depreciation using the straight-line method over the estimated useful lives of the capital assets as follows:



	Useful life (years)
Laboratory equipment		5
Computer and office equipment	2	—	5
Furniture and fixtures		5

Leasehold improvements are depreciated over their estimated useful lives but in no case longer than the lease term, except where lease renewal is reasonably assured.

If there is a major event indicating that the carrying value of property and equipment may be impaired then management will perform an impairment test and if the carrying value exceeds the recoverable value, based on undiscounted future cash flows, then such assets are written down to their fair values.

Goodwill and intangible assets

The costs incurred in establishing and maintaining patents for intellectual property developed internally are expensed in the period incurred.

Intangible assets consist of in-process research and development arising from the Company’s acquisition of Arbutus Inc. in 2015. In-process research and development (IPR&D) intangible assets are classified as indefinite-lived and are not amortized. IPR&D becomes definite-lived upon the completion or abandonment of the associated research and development efforts. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, which are the respective patent terms. Amortization begins when intangible assets with finite lives are put into use. If there is a major event indicating that the carrying value of intangible assets may be impaired, then management will perform an impairment test in an interim period and if the carrying value exceeds the recoverable value, based on discounted future cash flows, then such assets are written down to their fair values.

The Company reviews the recoverable amount of intangible assets and goodwill on an annual basis, and the annual evaluation is performed as of December 31 each year. In addition, the Company evaluates for events or changes in the business that could indicate impairment and earlier testing. Such indicators include, but are not limited to, on an ongoing basis: (a) industry and market considerations such as increased competitive environment or adverse change in legal factors including an adverse assessment by regulators; (b) an accumulation of costs significantly in excess of the amount originally expected for the development of the asset; (c) current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the asset; (d) adverse research and development program results; and (e) if applicable, a sustained decrease in share price.

Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of Arbutus Inc. - see note 3. Goodwill has an indefinite accounting life and is therefore not amortized. Instead, goodwill is subject to a two-step impairment test on an annual basis, unless the Company identifies impairment indicators that would require earlier testing. The first step compares the fair value of the reporting unit to its carrying amount, which includes the goodwill. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying amount exceeds the fair value of the reporting unit, the second step measures the amount of the impairment loss. In the second step of the impairment test, the amount of impairment loss is calculated to the extent that the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the Company's single reporting unit based on a hypothetical purchase price allocation.

Revenue recognition

The Company earns revenue from research and development collaboration and contract services, licensing fees, milestone and royalty payments. In arrangements with multiple deliverables, the delivered item or items is considered a separate unit of accounting if: (1) the delivered item has value to the customer on a standalone basis; and (2) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probably and substantially in the Company's control. If the elements of the arrangement do not meet both of the criteria above, they are recognized as a single unit of accounting. If the elements do meet the criteria above, arrangement consideration is allocated to the separate units of accounting based on their relative selling price. Non-refundable payments received under collaborative research and development agreements are recorded as revenue as services are performed and related expenditures are incurred. Non-refundable upfront license fees from collaborative licensing and development arrangements are recognized as the Company fulfills its obligations related to the various elements within the agreements, in accordance with the contractual arrangements with third parties and the term over which the underlying benefit is being conferred. If non-refundable license fees have values to the customer on a standalone basis, separate from the undelivered performance obligations, they are recognized upon delivery. To date, the Company has not recognized any non-refundable license fees upon delivery.

The Company evaluates new arrangements for any substantive milestones by considering: whether substantive uncertainty exists upon execution of the arrangement; if the event can only be achieved based in whole or in part on the Company’s performance, or occurrence of a specific outcome resulting from the Company’s performance; any future performance required, and payment is reasonable relative to all deliverables; and, the payment terms in the arrangement. Payments received upon the achievement of substantive milestones are recognized as revenue in their entirety. Payments received upon the occurrence of milestones that are non-substantive are deferred and recognized as revenue over the estimated period of performance applicable to the associated collaborative agreement.

Revenue earned under research and development manufacturing collaborations where the Company bears some or all of the risk of a product manufacturing failure is recognized when the purchaser accepts the product and there are no remaining rights of return.

Revenue earned under research and development collaborations where the Company does not bear any risk of product manufacturing failure is recognized in the period the work is performed. For contracts where the manufacturing amount is specified, revenue is recognized as product is manufactured in proportion to the total amount specified under the contract.

Revenue and expenses under the contract with the United States Government Department of Defense (“DoD”) were being recorded using the percentage-of-completion method. Contract progress was based on costs incurred to date. Expenses under the contract were recorded in the Company’s consolidated statement of operations and comprehensive income (loss) as they were incurred. Government contract revenues related to expenses incurred under the contract were recorded in the same period as those expenses. Expenses accrued under the contract but not yet invoiced were recorded in the Company’s balance sheet as accrued liabilities and accrued revenues. Equipment purchased under the contract was recorded on the Company’s balance sheet as deferred expense and deferred revenue and amortized, on a straight-line basis, over the life of the contract.

Cash or other compensation received in advance of meeting the revenue recognition criteria is recorded on the balance sheet as deferred revenue. Revenue meeting recognition criteria but not yet received or receivable is recorded on the balance sheet as accrued revenue.

Leases and lease inducements

Leases entered into are classified as either capital or operating leases. Leases which substantially transfer all benefits and risks of ownership of property to the Company are accounted for as capital leases. At the time a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the purchase and financing.

All other leases are accounted for as operating leases wherein rental payments are expensed as incurred.

Lease inducements represent leasehold improvement allowances and reduced or free rent periods and are amortized on a straight-line basis over the term of the lease and are recorded as a reduction of rent expense.

Research and development costs

Research and development costs, including acquired in-process research and development expenses for which there is no alternative future use, are charged as an expense in the period in which they are incurred.

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 for the years ended December 31, 2016, 2015 and 2014, since the effect of the Company’s stock options and warrants is anti-dilutive.

The following table sets out the computation of basic and diluted net income (loss) per common share:



	For the year ended December 31
	2016			2015			2014
Numerator:
Net loss	$	(384,164	)	$	(61,121	)	$	(38,837	)
Denominator:
Weighted average number of common shares	53,074,401			45,462,324			21,603,136
Basic income (loss) per common share	$	(7.24	)	$	(1.34	)	$	(1.80	)
Diluted income (loss) per common share	$	(7.24	)	$	(1.34	)	$	(1.80	)

For the year ended December 31, 2016, potential common shares of 4,645,864 were excluded from the calculation of income per common share because their inclusion would be anti-dilutive (December 31, 2015 – 2,899,331; December 31, 2014 – 2,221,233).

Government grants and refundable investment tax credits

Government grants and tax credits provided for current expenses is included in the determination of income or loss for the year, as a reduction of the expenses to which it relates. Government grants and tax credits towards the acquisition of property and equipment is deducted from the cost of the related property and equipment.

Deferred income taxes

Income taxes are accounted for using the asset and liability method of accounting. Deferred income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases and for loss carry-forwards. Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax laws or rates is included in earnings in the period that includes the enactment date. When realization of deferred income tax assets does not meet the more-likely-than-not criterion for recognition, a valuation allowance is provided.

Equity classified stock option awards

The Company grants stock options to employees, directors and consultants pursuant to share incentive plans described in note 6. Compensation expense is recorded for issued stock options using the fair value method with a corresponding increase in additional paid-in capital. Any consideration received on the exercise of stock options is credited to share capital.

The fair value of equity classified stock options is measured at the grant date and amortized on a straight-line basis over the vesting period.

Liability-classified stock option awards

The Company accounts for liability-classified stock option awards ("liability options") under ASC 718 - Compensation - Stock Compensation ("ASC 718"), 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. Under ASC 718, when an award is reclassified from equity to liability, if at the reclassification date the original vesting conditions are expected to be satisfied, then the minimum amount of compensation cost to be recognized is based on the grant date fair value of the original award. Fair value changes below this minimum amount are recorded in additional paid-in capital.

Replacement awards

Replacement awards are share-based payment awards exchanged for awards held by employees of Arbutus Inc. As part of the Company’s acquisition of Arbutus Inc., Arbutus shares were exchanged for Arbutus Inc.’s shares subject to repurchase rights held by Arbutus Inc.’s employees.

As at the date of acquisition of Arbutus Inc., the Company determined the total fair value of replacement awards and attributed a portion of the replacement awards to pre-combination service as part of the total acquisition consideration, and a portion to post-combination service, which is recognized as compensation expense over the expiry period of repurchase provision rights subsequent to the acquisition date.

The replacement awards consist of common shares that were issued at acquisition. Accordingly, as stock compensation expense related to these awards is recognized, share capital is increased by a corresponding amount. Replacement awards are excluded in the calculation of basic net income (loss) per share until the repurchase rights have expired.

Warrants

The Company accounts for the warrants under the authoritative guidance on accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock, on the understanding that in compliance with applicable securities laws, the registered warrants require the issuance of registered securities upon exercise and do not sufficiently preclude an implied right to net cash settlement. The Company classifies warrants in its consolidated balance sheet as a liability which is revalued at each balance sheet date subsequent to the initial issuance. The Company uses the Black-Scholes pricing model to value the warrants. Determining the appropriate fair-value model and calculating the fair value of registered warrants requires considerable judgment. A small change in the estimates used may cause a relatively large change in the estimated valuation. The estimated volatility of the Company’s common stock at the date of issuance, and at each subsequent reporting period, is based on historic fluctuations in the Company’s stock price. The risk-free interest rate is based on the Government of Canada rate for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is based on the historical pattern of exercises of warrants.

Segment information

The Company operates in a single reporting segment. Substantially all of the Company’s revenues to date were earned from customers or collaborators based in the United States. Substantially all of the Company’s premises, property and equipment are located in Canada and the United States.

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. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The standard, as subsequently amended (ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20), 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. The new guidance would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. The Company has begun its evaluation and, at this time, does not expect adoption of this guidance to materially impact its financial statements.

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 in any interim period or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company has early adopted all provisions of this update effective October 1, 2016 and elected an entity-wide accounting policy to recognize forfeitures as they occur. The impact of this adoption was immaterial and has been reflected in the Company's statement of operations and comprehensive loss for the year ended December 31, 2016. The remaining provisions did not have a material impact on the Company's financial statements.

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 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. Under this update, the classification of cash receipts and payments that have aspects of more than one class of cash flows should be determined first by applying specific guidance in GAAP. In the absence of specific guidance, an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. An entity should then classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The amendments in this update are effective for public business entities for fiscal years beginning after December 31, 2017, which for the Company means January 1, 2018, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the extent of the impact of this adoption.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Statement of Cash Flows: Restricted Cash. The update requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that included that interim period. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the extent of the impact of this adoption.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets required and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments in this update are effective for public business entities should be adopted for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company means January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the extent of the impact of this adoption.

Impairment Evaluations For Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Impairment evaluations for intangible assets and goodwill

During the year ended December 31, 2016, the Company recognized a cumulative impairment charge of $391,347,000 against intangible assets and goodwill, as detailed below. The change in the estimated discount rate and the resulting impairment charge did not impact liquidity, cash runway, or cash flow from operations.

All in-process research and development (IPR&D) acquired is currently classified as indefinite-lived and is not currently being amortized. IPR&D becomes definite-lived upon the completion or abandonment of the associated research and development efforts, and will be amortized from that time over an estimated useful life based on respective patent terms. The Company evaluates the recoverable amount of intangible assets on an annual basis and performs an annual evaluation of goodwill as of December 31 each year, unless there is an event or change in the business that could indicate a requirement to test at an interim period.

Impairment of intangible assets

During the year-ended December 31, 2016, the Company recorded a total impairment charge of $253,197,000 and a corresponding income tax benefit of $105,002,000 against its identified intangible assets. The total impairment charge included $156,324,000 for the discontinuance of the ARB-1598 program in the Immune Modulator drug class, as well as a delay in the Company's research and development of its cccDNA Sterilizer drug class recorded during the quarter ended June 30, 2016. An additional charge of $96,873,000 resulted from the Company's impairment assessment performed at December 31, 2016.

At December 31, 2016, the Company re-assessed the discount rate used in its valuation models used to assess the carrying value of goodwill and intangible assets for impairment as a result of the sustained discrepancy between the Company’s market capitalization compared to carrying values and management’s assessment of fair values. As a result, the Company adjusted its company-specific risk premium to its market-derived weighted average cost of capital, which has increased the discount rate used in the annual impairment assessment at December 31, 2016. Following the process prescribed by the standard, intangible assets are first tested before assessing goodwill for impairment. The change in discount rate has resulted in an impairment charge of $96,873,000 to the Company’s intangible assets at December 31, 2016.

The following table summarizes the carrying values, net of impairment of the intangible assets as at December 31, 2016:



Year ended December 31	2016		2015
IPR&D – Immune Modulators	40,798		183,103
IPR&D – Antigen Inhibitors	14,811		36,437
IPR&D – cccDNA Sterilizers	43,836		133,102
Total IPR&D	$	99,445	$	352,642

Annual impairment evaluation of goodwill

On December 31, the Company conducted its annual impairment evaluation of goodwill. Goodwill was recorded as a result of the acquisition of Arbutus Inc. as described in note 2. As part of the evaluation of the recoverability of goodwill, the Company has identified only one reporting unit to which the total carrying amount of goodwill has been assigned.

The Company determines the fair value of the reporting unit each reporting period using accepted valuation methods, including the use of discounted cash flows supplemented by market-based assessments of fair value.

The income approach is used in step one of the impairment assessment to estimate the fair value of the reporting unit, which requires estimating future cash flows and risk-adjusted discount rates in the Company's discounted cash flow model. The overall market outlook and cash flow projections of our reporting unit involve the use of key assumptions, including cash flows, discount rates and probability of success. Due to uncertainties in the estimates that are inherent to our industry, actual results could differ significantly from the estimates made.

As at December 31, 2016, the Company re-assessed the discount rate used in the calculation of fair value, consistent with the change to the discount rate used in the intangible assets impairment assessment (described above). As a result of the increased discount rate, the carrying value of the reporting unit determined in step one of the impairment assessment exceeded the fair value of the reporting unit, and as such the Company proceeded to the second step of the impairment test, which measures the amount of an impairment charge. In the second step, the carrying value of goodwill is compared to the fair value of goodwill that is implied by performing a hypothetical purchase price allocation based on identifiable assets at the date of the assessment. The remaining implied goodwill of $24,364,000 is the result of deferred taxes in the hypothetical purchase price allocation. As a result, the Company has recorded an impairment for $138,150,000 against goodwill.

Many key assumptions in the cash flow projections are interdependent on each other. A change in any one or combination of these assumptions could impact the estimated fair value of the reporting unit. See note 2 for additional discussion of the Company's policy for accounting for goodwill.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Collaborations, Contracts and Licensing Agreements

12 Months Ended

Dec. 31, 2016

Deferred Revenue Disclosure [Abstract]

Collaborations, contracts and licensing agreements

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



	Year ended December 31
	2016		2015		2014
Collaborations and contracts
DoD (a)	$	—	$	6,764	$	8,407
Monsanto (b)	—		4,725		1,080
BMS (c)	—		—		1,741
Dicerna (d)	229		1,820		510
Total research and development collaborations and contracts	229		13,309		11,738
Licensing fees, milestone and royalty payments
Monsanto licensing fees and milestone payments (b)	—		10,256		2,744
Dicerna licensing fee (d)	1,066		1,053		131
Other milestone and royalty payments (e)	196		255		340
Total licensing fees, milestone and royalty payments	1,262		11,564		3,215
Total revenue	$	1,491	$	24,873	$	14,953

The following table sets forth deferred collaborations and contracts revenue:



	December 31, 2016		December 31, 2015
DoD (a)	$	15	$	15
Monsanto current portion (b)	—		—
Dicerna current portion (d)	—		853
Deferred revenue, current portion	15		868
Monsanto long-term portion (b)	—		—
Dicerna long-term portion (d)	—		213
Total deferred revenue	$	15	$	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.

In the initial phase of the contract, funded as part of the Transformational Medical Technologies program, the Company was eligible to receive up to $34,700,000. This initial funding was for the development of TKM-Ebola including completion of preclinical development, filing an Investigational New Drug application with the United States Food and Drug Administration (“FDA”) and completing a Phase 1 human safety clinical trial. On May 8, 2013, the Company announced that the contract had been modified to support development plans that integrate recent advancements in lipid nanoparticle (“LNP”) formulation and manufacturing technologies. The contract modification increased the stage one targeted funding by an additional $6,970,000. On April 22, 2014, the Company and the DoD signed a contract modification to further increase the stage one targeted funding by $2,100,000 to $43,819,000. The additional funding was to compensate the Company for unrecovered overheads related to the temporary stop-work period that occurred in 2012 and to provide additional overhead funding should it be required.

The DoD had the option of extending the contract beyond the initial funding period to support the advancement of TKM-Ebola through to the completion of clinical development and FDA approval. Based on the contract’s budget this would have provided the Company with up to $140,000,000 in funding for the entire program. In December 2014, the DoD exercised an option valued at $7,000,000 to manufacture TKM-Ebola-Guinea, developed by the Company targeting the Ebola-Guinea strain responsible for the current outbreak in West Africa.

Under the contract, the Company is reimbursed for costs incurred, including an allocation of overhead costs, and is paid an incentive fee. At the beginning of the fiscal year, the Company estimates its labor and overhead rates for the year ahead. At the end of the year the actual labor and overhead rates are calculated and revenue is adjusted accordingly. The Company’s actual labor and overhead rates will differ from its estimated rates based on actual costs incurred and the proportion of the Company’s efforts on contracts and internal products versus indirect activities. Within minimum and maximum collars, the amount of incentive fee the Company can earn under the contract varies based on costs incurred versus budgeted costs. During the contractual period, incentive fee revenue and total costs are impacted by management’s estimate and judgments which are continuously reviewed and adjusted as necessary using the cumulative catch-up method. For the years ended December 31, 2015 and 2016, the Company believes it can reliably estimate the final contract costs so has recognized the portion of expected incentive fee which has been earned to date.

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 has an option to obtain a license to use the Company’s proprietary delivery technology and related intellectual property for use in agriculture. Over the option period, which is expected to be approximately four years, the Company will provide lipid formulations for Monsanto’s research and development activities, and Monsanto will make certain payments to the Company to maintain its option rights. The maximum potential value of the transaction is $86,200,000 following the successful completion of milestones.

In May 2015, the arrangement was amended to extend the option period by approximately five months, with payments up to $2,000,000 for the extension period. From inception of the contract to December 31, 2015, the Company had received $19,300,000 from Monsanto. The amounts received relate to research services and use of the Company’s technology over the option period, and are recognized as revenue on a straight-line basis over the extended option period.

Following the completion of the Phase A extension period in October 2015, no further research activities were conducted under the arrangement, as Monsanto did not elect to proceed to Phase B of the research plan. As such, the Company revised its estimate of the option period, over which payments received from Monsanto is recognized as revenue, to be from inception to December 31, 2015 as the Company believes it no longer has any further obligations to provide future research activities to Monsanto. This resulted in the full release of Monsanto deferred revenue and a recognition of $14,981,000 in Monsanto revenue for the year ended December 31, 2015.

Under the Agreements, the Company has established a wholly-owned subsidiary, PADCo. The Company has determined that PADCo is a variable interest entity (“VIE”); however, Monsanto is the primary beneficiary of the arrangement. PADCo was established to perform research and development activities, which have been 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 a gain on disposition of a financial instrument in its consolidated statement of operations and comprehensive loss for the year ended December 31, 2016.

On May 10, 2010 the Company announced the expansion of its research collaboration with BMS. Under the new agreement, BMS uses small interfering RNA (“siRNA”) molecules formulated by the Company in LNP technology to silence target genes of interest. BMS is conducting the preclinical work to validate the function of certain genes and share the data with the Company. The Company can use the preclinical data to develop RNAi therapeutic drugs against the therapeutic targets of interest. The Company received $3,000,000 from BMS concurrent with the signing of the agreement and recorded the amount as deferred revenue. The Company is required to provide a pre-determined number of LNP batches over the four-year agreement. BMS has a first right to negotiate a licensing agreement on certain RNAi products developed by the Company that evolve from BMS validated gene targets.

Revenue from the May 10, 2010 agreement with BMS is being recognized as the Company produces the related LNP batches.

Revenue earned for the year ended December 31, 2014 relates to batches shipped to BMS during the period. In August 2014, the agreement expired and both companies' obligations under the agreement ended.

(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 related to development, manufacture, and commercialization of 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 the manufacturing and services provided, as well as further payments with the achievement of development and regulatory milestones of $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. In September 2016, Dicerna announced the discontinuation of their DCR-PH1 program using the Company's technology. As such, the Company revised the completion date of performance period from March 2017 to September 30, 2016, at which time the Company had no further remaining performance obligations. This resulted in the recognition of $1,066,000 in Dicerna license fee revenue for the year ended December 31, 2016.

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 did 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. In the year ended December 31, 2016, the Company recorded $212,000 in Marqibo royalty revenue (2015 - $240,000, 2014 -$190,000). In the year ended December 31, 2016, the Company accrued $5,000 in royalties due to TPC in respect of the Marqibo royalty earned by the Company (see note 10).

Property and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property and equipment



December 31, 2016	Cost		Accumulated depreciation			Net book value
Lab equipment	$	7,894	$	(4,305	)	$	3,589
Leasehold improvements	4,928		(4,454		)	474
Computer hardware and software	2,103		(1,665		)	438
Furniture and fixtures	374		(314		)	60
Assets under construction	$	2,384	$	—		$	2,384
	$	17,683	$	(10,738	)	$	6,945



December 31, 2015	Cost		Accumulated depreciation			Net book value
Lab equipment	$	5,910	$	(3,748	)	$	2,162
Leasehold improvements	4,681		(4,189		)	492
Computer hardware and software	2,014		(1,487		)	527
Furniture and fixtures	307		(305		)	2
	$	12,912	$	(9,729	)	$	3,183

As at December 31, 2016, all of the Company’s property and equipment are currently in use and no impairment has been recorded.

Share Capital

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Note [Abstract]

Share capital

(a) Financing

On March 26, 2014, the Company completed an underwritten public offering of 2,125,000 common shares, at a price of $28.50 per share, representing gross proceeds of $60,562,000. The Company also granted the underwriters a 30-day option to purchase an additional 318,750 shares for an additional $9,084,000 to cover any over-allotments. The underwriters did not exercise the option. The cost of financing, including commissions and professional fees, was $4,085,000, resulting in net proceeds of $56,477,000.

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 $142,177,000.

(b) Authorized share capital

The Company’s authorized share capital consists of an unlimited number of common and preferred shares without par value.

During the year ended December 31, 2016, there were 170,500 warrants exercised for $445,000 in cash (December 31, 2015 – 18,750 warrants for $42,000) and no warrants were exercised using the cashless exercise provision (December 31, 2015 – 0 warrants for 0 common shares). In June 2016, 8,000 of the Company's warrants expired. The decrease in fair value from the previous balance sheet date relating to the expired warrants has been included in the total decrease in fair value of warrant liability in the Company's statement of comprehensive loss for the year ended December 31, 2016 of $530,000.

The following table summarizes the Company’s warrant activity for the years ended December 31, 2016 and 2015:



	Common shares purchasable upon exercise of warrants		Weighted average exercise price (C$)		Weighted average exercise price (US$)		Range of exercise prices (C$)				Range of exercise prices (US$)					Weighted average remaining contractual life (years)	Aggregate intrinsic value (C$)		Aggregate intrinsic value (US$)
Balance, December 31, 2014	398,250		$	2.95	$	2.67	$2.60	—	$	3.35	$2.35		—	$	3.03	1.8	$	5,902	$	5,343
Exercised	(18,750	)	2.88		2.25		2.60	—	3.35		2.03		—	2.62
Balance, December 31, 2015	379,500		$	2.95	$	2.13	$2.60	—	$	3.35	$2.03		—	$	2.62	0.8	1,217		$	879
Exercised	(170,500	)	3.35		2.53		3.35	—	3.35		2.53		—	2.53
Expired	(8,000	)	3.35		2.53		3.35	—	3.35		2.53		—	2.53
Balance, December 31, 2016	201,000		$	2.60	$	1.94	$2.60	—	$	2.60	$	1.94	—	$	1.94	0.2	$	139	$	104

The aggregate intrinsic value in the table above is calculated based on the difference between the exercise price of the warrants and the quoted price of the Company’s common stock as of the reporting date.

All of the Company’s warrants were exercisable as of December 31, 2016.

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



	As at December 31
	2016			2015
Dividend yield	—		%	—		%
Expected volatility	41.95		%	49.07		%
Risk-free interest rate	0.76		%	0.48		%
Expected average term (years)	0.2 years			0.6 years
Fair value of warrants outstanding	$	0.53		$	2.33
Aggregate fair value of warrants outstanding	$	107		$	883
Number of warrants outstanding	201,000			379,500

The value of the Company’s warrants is particularly sensitive to changes in the Company’s share price and the estimated share price volatility.

(d) Stock-based compensation

The Company has seven share-based compensation plans; the “2007 Plan”, the “2011 Plan”, the "2016 Plan", two “Designated Plans” (together, the “Arbutus Plans”), the “Protiva Option Plan”, and the "OnCore Option Plan".

On June 22, 2011, the shareholders of the Company approved an omnibus stock-based compensation plan (the “2011 Plan”). The Company’s pre-existing 2007 Plan was limited to the granting of stock options as equity incentive awards whereas the 2011 Plan also allows for the issuance of tandem stock appreciation rights, restricted stock units and deferred stock units (collectively, and including options, referred to as “Awards”). The 2011 Plan replaces the 2007 Plan. The 2007 Plan will continue to govern the options granted thereunder. No further options will be granted under the Company’s 2007 Plan.

Under the Company’s 2007 Plan the Board of Directors granted options to employees, directors and consultants of the Company. The exercise price of the options was determined by the Company’s Board of Directors but was always at least equal to the closing market price of the common shares on the day preceding the date of grant and the term of options granted did not exceed 10 years. The options granted generally vested over three years for employees and immediately for directors.

Under the Company’s 2011 Plan the Board of Directors may grant options, and other types of Awards, to employees, directors and consultants of the Company. The exercise price of the options is determined by the Company’s Board of Directors but will be at least equal to the closing market price of the common shares on the day preceding the date of grant and the term may not exceed 10 years. Options granted generally vest over three years for employees and immediately for directors.

At the Company’s annual general and special meeting of shareholders on May 8, 2014 and July 9, 2015, the shareholders of the Company approved respectively, a 800,000 and a 3,500,000 increase in the number of stock-based compensation awards that the Company is permitted to issue under the 2011 Plan.

At the Company’s annual general and special meeting of shareholders on May 19, 2016, the shareholders of the Company approved the adoption of the Company's 2016 Omnibus Share and Incentive Plan (the "2016 Plan") and the reserve of 5,000,000 shares of the Company issuable pursuant to awards under the 2016 Plan. These include both equity-classified and liability-classified stock options. The Company's 2011 Omnibus Share Compensation Plan, as amended, also remains in effect.

Additionally, the Company granted a total of 200,000 options in 2013 to two executive officers in conjunction with their new appointments as executive officers. These options were granted in accordance with the policies of the Toronto Stock Exchange and pursuant to newly designated share compensation plans (the “Designated Plans”). The Designated Plans are governed by substantially the same terms as the 2011 Plan. Hereafter, information on options governed by the 2007 Plan, the 2011 Plan, the 2016 Plan and the Designated Plans is presented on a consolidated basis as the terms of the five plans are similar. Information on the Protiva Option Plan and the OnCore Option Plan are presented separately.

Stock option activity for the Arbutus Plans

Equity-classified stock option activity:



	Number of optioned common shares		Weighted average exercise price (C$)		Weighted average exercise price (US$)		Aggregate intrinsic value (C$)		Aggregate intrinsic value (US$)
Balance, December 31, 2013	1,730,765		$	4.45	$	4.32	$	7,030	$	6,826
Options granted	431,125		13.63		12.34
Options exercised	(622,752	)	4.62		4.18		7,650		6,926
Options forfeited, canceled or expired	(9,000	)	8.20		7.42
Balance, December 31, 2014	1,530,138		6.95		6.29		16,573		15,004
Options granted	1,309,625		N/A		16.57
Options exercised	(398,293	)	5.03		3.93		6,887		5,386
Options forfeited, canceled or expired	(151,207	)	19.29		15.09
Balance, December 31, 2015	2,290,263		15.53		11.22		1,376		994
Options reclassified to liability¹	(718,333	)	7.24		5.23		836		604
Options granted	1,789,599		N/A		3.89
Options exercised	(56,125	)	2.88		2.18		160		121
Options forfeited, canceled or expired	(394,200	)	13.49		10.18
Balance, December 31, 2016	2,911,204		$	11.45	$	8.53	$	75	$	56


1.	Due to the change in the Company's 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 - see note 2.

Options under the Arbutus Plans expire at various dates from March 21, 2017 to November 28, 2026.

The following table summarizes information pertaining to stock options outstanding at December 31, 2016 under the Arbutus Plans:



			Options outstanding December 31, 2016			Options exercisable December 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$)
$1.12	to	$3.05	121,725	6.4	2.23	75,225	1.78
$3.28	to	$3.84	209,033	8.4	3.64	62,033	3.69
$3.94	to	$3.94	1,369,849	9.2

Consolidated Statement of Stockholders Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement of Stockholders' Equity [Abstract]
Issuance of common shares in conjunction with private offering, issuance costs	$ 4,085	$ 2,462