0001447028-22-000019 | 10-K | XBRL Viewer

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Organization	12 Months Ended
Organization	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Description of the Business Arbutus Biopharma Corporation (“Arbutus” or the “Company”) is a clinical-stage biopharmaceutical company leveraging its extensive virology expertise to develop novel therapeutics that target specific viral diseases. The Company’s current focus areas include Hepatitis B virus (“HBV”), SARS-CoV-2 and other coronaviruses. In HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, oral capsid inhibitor, oral PD-L1 inhibitor, and oral RNA destabilizer that it intends to combine to provide a functional cure for patients with chronic HBV infection (“cHBV”) by suppressing viral replication, reducing surface antigen and reawakening the immune system. The Company believes its lead compound, AB-729, is the only RNAi therapeutic with evidence of immune re-awakening, and is currently being evaluated in multiple phase 2 clinical trials. The Company has an ongoing drug discovery and development program directed to identifying novel, orally active agents for treating coronaviruses (including SARS-CoV-2). The Company is also exploring oncology applications for its internal PD-L1 portfolio. Liquidity At December 31, 2021, the Company had an aggregate of $191.0 million in cash, cash equivalents and investments in marketable securities. In January 2022, the Company received a $40 million upfront payment and a $15 million equity investment from Qilu Pharmaceuticals Co., Ltd. (“Qilu”) as part of a technology transfer and exclusive licensing agreement to develop and commercialize AB-729 in China. The Company had no outstanding debt as of December 31, 2021. The Company believes it has sufficient cash resources to fund its operations for at least the next 12 months. The success of the Company is dependent on obtaining the necessary regulatory approvals to bring its products to market and achieve profitable operations. The Company’s research and development activities and the commercialization of its products are dependent on its 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 the Company’s existing or future research and development programs or the Company’s ability to continue to fund these programs in the future. COVID-19 Impact The impact of the COVID-19 pandemic has been, and will likely continue to be, extensive in many aspects of society. The pandemic has resulted in and will likely continue to result in significant disruptions to businesses. Measures implemented around the world in attempts to slow the spread of COVID-19 have had, and will likely continue to have, a major impact on clinical development, at least in the near-term, including shortages and delays in the supply chain and prohibitions in certain countries on enrolling patients in new clinical trials. While the Company has been able to progress with its clinical and pre-clinical activities to date, it is not possible to predict if the COVID-19 pandemic will materially impact the Company’s plans and timelines in the future.

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
OPERATING ACTIVITIES
Net loss	$ (76,247)	$ (63,745)
Non-cash items:
Depreciation	1,753	1,978
Stock-based compensation expense	6,424	6,161
Unrealized foreign exchange gains	(5)	(56)
Change in fair value of contingent consideration	1,872	473
Net equity investment loss	0	2,545
Non-cash royalty revenue	(6,108)	(3,395)
Non-cash interest expense	2,850	3,957
Net accretion and amortization of investments in marketable securities	999	210
Net change in operating items:
Accounts receivable	413	(108)
Prepaid expenses and other assets	(1,025)	(752)
Accounts payable and accrued liabilities	1,911	1,666
Lease liabilities	(369)	(375)
Net cash used in operating activities	(67,532)	(51,441)
INVESTING ACTIVITIES
Purchase of investments in marketable securities	(82,219)	(85,578)
Disposition of investments in marketable securities	70,350	73,398
Investment in Genevant	0	(2,500)
Acquisition of property and equipment	(809)	(229)
Net cash used in investing activities	(12,678)	(14,909)
FINANCING ACTIVITIES
Issuance of common shares pursuant to exercise of options	2,110	449
Issuance of common shares pursuant to exercise of ESPP options	461	0
Issuance of common shares pursuant to the Open Market Sales Agreement	134,665	86,297
Net cash provided by financing activities	137,236	86,746
Effect of foreign exchange rate changes on cash and cash equivalents	5	56
Increase in cash and cash equivalents	57,031	20,452
Cash and cash equivalents, beginning of period	52,251	31,799
Cash and cash equivalents, end of period	109,282	52,251
Supplemental cash flow information
Preferred shares dividends accrued	$ (12,139)	$ (12,123)

Leases (Tables)

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Schedule of lease cost

Weighted average remaining lease term and discount rate were as follows:


			As of December 31, 2021
Weighted-average remaining lease term (years)			5.2
Weighted average discount rate			9.0%

The Company did not include options to extend its lease terms as part of its ROU asset and lease liabilities.

Supplemental cash flow information related to the Company’s operating leases was as follows:


	2021		2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	650	$	657

Schedule of lease maturity

Future minimum lease payments under operating leases that have remaining terms as of December 31, 2021 are as follows:


	As of December 31, 2021
	(in thousands)
2022	$	641
2023	598
2024	616
2025	635
2026	654
Thereafter	134
Total lease payments	$	3,278
Less: interest	(664)
Present value of lease payments	$	2,614

Contingencies and commitments (Details) $ in Thousands, $ in Millions			1 Months Ended		12 Months Ended			53 Months Ended
	Dec. 18, 2020 USD ($)	Aug. 20, 2019 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 CAD ($)	Dec. 31, 2020 USD ($)	Mar. 31, 2004 USD ($)	Mar. 31, 2004 CAD ($)	Dec. 31, 2021 CAD ($)	Dec. 31, 2019 USD ($)	Oct. 31, 2014 USD ($)
Contingencies and Commitments [Line Items]
Percent of costs funded by TPC								27.00%	27.00%
Maximum contribution for product								$ 7,200	$ 9.3
Cumulative contribution for product					$ 2,700	$ 3.7
Royalty guarantees commitments percentage					2.50%	2.50%
Contingent consideration					$ 5,298		$ 3,426				$ 2,953
Enantigen
Contingencies and Commitments [Line Items]
Business combination, regulatory, development and sales milestone payments estimated fair value					5,300
Fair Value, Measurements, Recurring
Contingencies and Commitments [Line Items]
Contingent consideration					5,298		3,426
Blumberg and Drexel
Contingencies and Commitments [Line Items]
Development and regulatory milestones payment per licensed compound series, maximum												$ 102,500
Maximum royalty payment												$ 1,000
Blumberg and Drexel \| Fair Value, Measurements, Recurring \| Enantigen
Contingencies and Commitments [Line Items]
Contingent consideration					0
Arbitration with the University of British Columbia
Contingencies and Commitments [Line Items]
Payments for legal settlements		$ 5,900		$ 5,900
Litigation settlement interest		$ 2,600
Loss contingency, damages sought for allegedly unpaid royalties	$ 2,000
Arbitration with the University of British Columbia \| Minimum
Contingencies and Commitments [Line Items]
Legal Fees			$ 200
Royalty
Contingencies and Commitments [Line Items]
Collaborations and contracts					200		$ 200
Royalties paid or accrued					100
Contractual obligation					$ 2,700					$ 3.7

Sale of future royalties (Tables)

12 Months Ended

Dec. 31, 2021

Other Liabilities Disclosure [Abstract]

Activity related to net liability

The table below shows the activity related to the net liability for the years ended December 31, 2021 and December 31, 2020:


	Twelve Months Ended December 31,
	2021		2020
	(in thousands)
Net liability related to sale of future royalties - beginning balance	$	19,554	$	18,992
Non-cash royalty revenue	(6,108)		(3,395)
Non-cash interest expense	2,850		3,957
Net liability related to sale of future royalties - ending balance	$	16,296	$	19,554

Fair value measurements - Changes in fair value of contingent consideration (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Liabilities Measured on Recurring Basis [Roll Forward]
Liability at beginning of the period	$ 3,426	$ 2,953
Increase in fair value of liability	1,872	473
Liability at end of the period	$ 5,298	$ 3,426

Fair value measurements (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

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		Total
As of December 31, 2021	(in thousands)
Assets
Cash and cash equivalents	$	109,282	$	—	$	—	$	109,282
Investments in marketable securities	—		81,723		—		81,723
Total	$	109,282	$	81,723	$	—	$	191,005
Liabilities
Liability-classified options	$	—	$	—	$	26	$	26
Contingent consideration	—		—		5,298		5,298
Total	$	—	$	—	$	5,324	$	5,324


	Level 1		Level 2		Level 3		Total
As of December 31, 2020	(in thousands)
Assets
Cash and cash equivalents	$	52,251	$	—	$	—	$	52,251
Investments in marketable securities	—		71,017		—		71,017
Total	$	52,251	$	71,017	$	—	$	123,268
Liabilities
Liability-classified options	$	—	$	—	$	250	$	250
Contingent consideration	—		—		3,426		3,426
Total	$	—	$	—	$	3,676	$	3,676

Schedule of changes in fair value of liability-classified stock options

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


	Liability at beginning of the period		Fair value of liability-classified options exercised in the period		Decrease in fair value of liability		Liability at end of the period
	(in thousands)
Year ended December 31, 2021	$	250	$	(96)	$	(128)	$	26
Year ended December 31, 2020	$	253	$	—	$	(3)	$	250

Schedule of changes in fair value of contingent consideration

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


	Liability at beginning of the period		Increase in fair value of liability		Liability at end of the period
	(in thousands)
Year ended December 31, 2021	$	3,426	$	1,872	$	5,298
Year ended December 31, 2020	$	2,953	$	473	$	3,426

Fair value measurements - Assets and liabilities measured at fair value on recurring basis (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Liabilities
Contingent consideration	$ 5,298	$ 3,426	$ 2,953
Fair Value, Measurements, Recurring
Assets
Cash and cash equivalents	109,282	52,251
Investments in marketable securities	81,723	71,017
Total	191,005	123,268
Liabilities
Liability-classified options	26	250
Contingent consideration	5,298	3,426
Total	5,324	3,676
Fair Value, Measurements, Recurring \| Level 1
Assets
Cash and cash equivalents	109,282	52,251
Investments in marketable securities	0	0
Total	109,282	52,251
Liabilities
Liability-classified options	0	0
Contingent consideration	0	0
Total	0	0
Fair Value, Measurements, Recurring \| Level 2
Assets
Cash and cash equivalents	0	0
Investments in marketable securities	81,723	71,017
Total	81,723	71,017
Liabilities
Liability-classified options	0	0
Contingent consideration	0	0
Total	0	0
Fair Value, Measurements, Recurring \| Level 3
Assets
Cash and cash equivalents	0	0
Investments in marketable securities	0	0
Total	0	0
Liabilities
Liability-classified options	26	250
Contingent consideration	5,298	3,426
Total	$ 5,324	$ 3,676

Significant accounting policies - Estimated useful lives of property and equipment (Details)	12 Months Ended
	Dec. 31, 2021
Laboratory equipment
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Computer and office equipment \| Minimum
Property, Plant and Equipment [Line Items]
Useful lives	2 years
Computer and office equipment \| Maximum
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful lives	5 years

Investments in marketable securities

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments in marketable securities

Investments in marketable securities consisted of the following:


	Amortized Cost		Gross Unrealized Gain(1)		Gross Unrealized Loss(1)		Fair Value
As of December 31, 2021	(in thousands)
Cash equivalents
Money market fund	$	62,836	$	—	$	—	$	62,836


Total	$	62,836	$	—	$	—	$	62,836
Investments in marketable securities
US government agency bonds	$	21,198	$	—	$	(39)	$	21,159

US government bonds	60,675		—		(111)		60,564
Total	$	81,873	$	—	$	(150)	$	81,723

(1) Gross unrealized gain (loss) is pre-tax.


	Amortized Cost		Gross Unrealized Gain(1)		Gross Unrealized Loss(1)		Fair Value
As of December 31, 2020	(in thousands)
Cash equivalents
Money market fund	$	13,703	$	—	$	—	$	13,703

US treasury bills	2,000		—		—		2,000
Total	$	15,703	$	—	$	—	$	15,703
Investments in marketable securities
Us government agency bonds	$	11,550	$	7	$	—	$	11,557
US treasury bills	21,990		2		—		21,992
US government bonds	37,463		6		(1)		37,468
Total	$	71,003	$	15	$	(1)	$	71,017

(1) Gross unrealized gain (loss) is pre-tax.

There were no realized gains or losses for the year ended December 31, 2021 or 2020.

Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Trade accounts payable	$ 3,174	$ 2,994
Payroll accruals	4,279	3,566
Research and development accruals	2,371	1,653
Professional fee accruals	983	679
Liability options	26	250
Other accrued liabilities	5	9
Accounts payable and accrued liabilities	$ 10,838	$ 9,151

Consolidated Statement of Stockholders’ Equity - USD ($) $ in Thousands	Total	Convertible Preferred Shares	Common Shares	Additional paid-in capital	Deficit	Accumulated other comprehensive loss
Beginning balance (in shares) at Dec. 31, 2019		1,164,000	64,780,314
Beginning balance at Dec. 31, 2019	$ 72,744	$ 137,285	$ 898,535	$ 55,246	$ (970,093)	$ (48,229)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accretion of accumulated dividends on Preferred Shares	0	$ 12,123			(12,123)
Stock-based compensation	6,145			6,145
Certain fair value adjustments to liability stock option awards	18			18
Issuance of common shares pursuant to the Open Market Sales Agreement (in shares)			24,728,368
Issuance of common shares pursuant to the Open Market Sales Agreement	86,297		$ 86,297
Issuance of common shares pursuant to exercise of options (in shares)			170,040
Issuance of common shares pursuant to exercise of options	449		$ 1,107	(658)
Unrealized loss on available-for-sale securities	14					14
Currency translation adjustment	44					44
Net loss	(63,745)				(63,745)
Ending balance (in shares) at Dec. 31, 2020		1,164,000	89,678,722
Ending balance at Dec. 31, 2020	101,966	$ 149,408	$ 985,939	60,751	(1,045,961)	(48,171)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accretion of accumulated dividends on Preferred Shares	0	$ 12,139			(12,139)
Conversion of Preferred Shares into Common Shares (in shares)		(1,164,000)
Conversion of Preferred Shares into Common Shares (in shares)			22,833,922
Conversion of Preferred Shares into Common Shares	0	$ (161,547)	$ 161,547
Stock-based compensation	6,385			6,385
Certain fair value adjustments to liability stock option awards	263			263
Issuance of common shares pursuant to the Open Market Sales Agreement (in shares)			31,571,036
Issuance of common shares pursuant to the Open Market Sales Agreement	$ 134,665		$ 134,665
Issuance of common shares pursuant to exercise of ESPP options (in shares)	196,335		196,335
Issuance of common shares pursuant to exercise of ESPP options	$ 461		$ 817	(356)
Issuance of common shares pursuant to exercise of options (in shares)			707,721
Issuance of common shares pursuant to exercise of options	2,110		$ 3,668	(1,558)
Unrealized loss on available-for-sale securities	(164)					(164)
Net loss	(76,247)				(76,247)
Ending balance (in shares) at Dec. 31, 2021		0	144,987,736
Ending balance at Dec. 31, 2021	$ 169,439	$ 0	$ 1,286,636	$ 65,485	$ (1,134,347)	$ (48,335)

Significant accounting policies - Narrative (Details)	12 Months Ended
Significant accounting policies - Narrative (Details)	Dec. 31, 2021 USD ($) subsidiary shares	Dec. 31, 2020 shares	Oct. 18, 2021 shares	Jul. 31, 2020
Accounting Policies [Abstract]
Number of wholly-owned subsidiaries \| subsidiary	2
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Equity method investments \| $	$ 0
Anti-dilutive common shares excluded from calculation of income per common share (in shares)		31,800,000
Outstanding preferred shares that converted to common shares (in shares)			22,833,922
Preferred dividend percentage	8.75%
Stock Option \| Directors and Executives
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Expected life	6 years
Stock Option \| Employee
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Expected life	5 years
Stock Option
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Anti-dilutive common shares excluded from calculation of income per common share (in shares)	11,400,000
Genevant
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Ownership interest in equity method investment (as a percent)	16.00%			16.00%
Equity method investments \| $	$ 0

Stock-based compensation - Stock option activity under the Arbutus Plan (Details) - Arbutus Plans	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Stock Options
Number of optioned common shares
Balance - Number of optioned common shares (in shares)	10,391,676
Options granted (in shares)	3,531,050
Options exercised (in shares)	(637,721)
Options forfeited, canceled or expired (in shares)	(1,975,031)
Options vested (in shares)	0
Balance - Number of optioned common shares (in shares)	11,309,974
Weighted average exercise price
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 4.53
Options granted - Weighted average exercise price (in CAD and USD per share) \| $ / shares	4.17
Options exercised - Weighted average exercise price (in CAD and USD per share) \| $ / shares	3.13
Options forfeited, canceled or expired - Weighted average exercise price (in CAD and USD per share) \| $ / shares	6.54
Options vested (USD per share) \| $ / shares	0
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 4.14
Vested Stock Options
Number of optioned common shares
Balance - Number of optioned common shares (in shares)	6,384,386
Options granted (in shares)	0
Options exercised (in shares)	(637,721)
Options forfeited, canceled or expired (in shares)	(1,698,338)
Options vested (in shares)	2,496,021
Balance - Number of optioned common shares (in shares)	6,544,348
Non-Vested Stock Options
Number of optioned common shares
Balance - Number of optioned common shares (in shares)	4,007,290
Options granted (in shares)	3,531,050
Options exercised (in shares)	0
Options forfeited, canceled or expired (in shares)	(276,693)
Options vested (in shares)	2,496,021
Balance - Number of optioned common shares (in shares)	4,765,626
Weighted average exercise price
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 2.51
Options granted - Weighted average exercise price (in CAD and USD per share) \| $ / shares	3.06
Options exercised - Weighted average exercise price (in CAD and USD per share) \| $ / shares	0
Options forfeited, canceled or expired - Weighted average exercise price (in CAD and USD per share) \| $ / shares	2.84
Options vested (USD per share) \| $ / shares	2.88
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 2.71

Property and equipment (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

The Company’s property and equipment balances as of the years ended December 31, 2021 and 2020 are as follows:


	Cost		Accumulated depreciation		Net book value
December 31, 2021	(in thousands)
Lab equipment	$	6,408	$	(5,178)	$	1,230
Leasehold improvements	8,563		(3,883)		4,680
Computer hardware and software	386		(313)		73
	$	15,357	$	(9,374)	$	5,983


	Cost		Accumulated depreciation		Net book value
December 31, 2020	(in thousands)
Lab equipment	$	5,669	$	(4,369)	$	1,300
Leasehold improvements	8,555		(3,017)		5,538
Computer hardware and software	324		(235)		89
	$	14,548	$	(7,621)	$	6,927

Significant accounting policies (Tables)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Schedule of estimated useful lives of property and equipment

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	to	5
Furniture and fixtures		5

Schedule of computation of basic and diluted net loss per common share

The following table sets out the computation of basic and diluted net loss attributable to common shareholders per share:


	For the year ended December 31,
	2021		2020
	(in thousands, except share and per share amounts)
Numerator:
Allocation of distributable earnings	$	—	$	—
Allocation of undistributable loss	(88,386)		(75,868)
Allocation of net loss attributed to common shareholders	$	(88,386)	$	(75,868)
Denominator:
Weighted average number of common shares - basic and diluted	106,242,452		75,835,378
Basic and diluted net loss attributable to common shareholders per share	$	(0.83)	$	(1.00)

Leases - Lease cost (Details) - USD ($) $ in Thousands	12 Months Ended
Leases - Lease cost (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Weighted-average remaining lease term (years)	5 years 2 months 12 days
Weighted average discount rate	9.00%
Cash paid for amounts included in the measurement of lease liabilities	$ 650	$ 657

Fair value measurements - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Fair value of contingent consideration	$ 5,298	$ 3,426	$ 2,953
Increase in fair value of contingent consideration	$ 1,872	$ 473

Stock-based compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-based compensation

Awards outstanding and available for issuance

During the year ended December 31, 2021, the Company had stock options outstanding under the following plans (collectively, the “Plans”): the 2016 Omnibus Share and Incentive Plan (the “2016 Plan”), the 2011 Omnibus Share Compensation Plan (the “2011 Plan”); the 2019 inducement grant; and the OnCore Option Plan.

As of December 31, 2021, the aggregate number of shares authorized for awards under all Plans was 24,790,202. As of December 31, 2021, the Company had 11,410,574 options outstanding and 9,519,084 awards available for issuance under the Plans.

The Company issues new common shares of stock to settle options exercised.

The 2011 Plan expired in June 2021. Under the 2016 Plan, the Company’s 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 date of grant and the term may not exceed 10 years. Options granted generally vest over four years for employees and for directors’ initial grants, and immediately for directors’ annual grants.

In June 2019, the Company provided an inducement grant of 1,112,000 options to its newly hired Chief Executive Officer. These options were awarded in a separate plan as non-qualified awards and are governed by the substantially the same terms as the 2016 Plan.

Hereafter, information on options governed by the 2016 Plan, the 2011 Plan and inducement grant (the “Arbutus Plans”) is presented on a consolidated basis as the terms of the plans are similar. Information on the OnCore Option Plan is presented separately.

Stock options under the Arbutus Plans

Equity-classified stock options under the Arbutus Plans

The following table summarizes activity related to the Company’s equity-classified stock options, including its performance options, for the year ended December 31, 2021:


	Stock Options Outstanding			Vested Stock Options	Non-Vested Stock Options
	Number	Weighted-Average Exercise Price		Number	Number	Weighted-Average Grant-Date Fair Value
Balance as of December 31, 2020	10,391,676	$	4.53	6,384,386	4,007,290	$	2.51
Options granted	3,531,050	$	4.17	—	3,531,050	$	3.06
Options exercised	(637,721)	$	3.13	(637,721)	—	$	—
Options forfeited, canceled or expired	(1,975,031)	$	6.54	(1,698,338)	(276,693)	$	2.84
Options vested	—	$	—	2,496,021	(2,496,021)	$	2.88
Balance as of December 31, 2021	11,309,974	$	4.14	6,544,348	4,765,626	$	2.71

The intrinsic value of options exercised under the Arbutus Plans during 2021 and 2020 are $0.2 million and $0.3 million, respectively.

The following table summarizes additional information related to the Company’s equity-classified stock options, including its performance options, as of December 31, 2021:


	As of December 31, 2021
Options outstanding and expected to vest
Number of stock options outstanding	11,309,974
Weighted-average exercise price	$	4.14
Intrinsic value (in $000s)	$	5,117
Weighted-average term remaining	7.6 years
Vested stock options
Number of vested stock options	6,544,348
Weighted-average exercise price	$	4.43
Intrinsic value (in $000s)	$	3,233
Weighted-average term remaining	6.9 years

The assumptions used in the Black-Scholes option-pricing for grants made during the years ended December 31, 2021 and 2020 are as follows:


	December 31, 2021		December 31, 2020
Expected average option term	5.6 years		6.2 years
Expected volatility	93.4	%	80.2	%
Expected dividends	—	%	—	%
Risk-free interest rate	0.67	%	1.2	%

The Company considers all available information when estimating the fair value of its stock option grants.

Liability-classified stock options under the Arbutus Plans

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).

The following table summarizes activity related to the Company’s liability-classified stock options for the year ended December 31, 2021:


	Stock Options Vested and Outstanding
	Number	Weighted-Average Exercise Price
Balance as of December 31, 2020	197,500	$	6.00
Options exercised	(70,000)	$	1.62
Options forfeit, canceled or expired	(107,500)	$	7.65
Balance as of December 31, 2021	20,000	$	12.98

All of the outstanding liability-classified options are vested and the intrinsic value of those options exercised during 2021 was less than $0.1 million. The weighted average term remaining for the liability-classified options is 2.1 years as of December 31, 2021 and the fair value was less than $0.1 million.

Liability options are re-measured to their fair values at each reporting date, using the Black-Scholes valuation model.

OnCore Option Plan

The Company has reserved shares for the future exercises of OnCore stock options that were granted prior to the merger in 2015. The Company is not permitted to grant any further options under the OnCore Option Plan.

The following table summarizes activity related to the OnCore stock options for the year ended December 31, 2021:


	Stock Options Vested and Outstanding
	Number of OnCore Options	Number of Equivalent Company Common Shares	Weighted-Average Exercise Price
Balance as of December 31, 2020	80,035	80,600	$	0.56
Options exercised	—	—	$	—
Options forfeit, canceled or expired	—	—	$	—
Balance as of December 31, 2021	80,035	80,600	$	0.56

The following table summarizes additional information related to the OnCore stock options as of December 31, 2021:


	As of December 31, 2021
Vested stock options
Intrinsic value (in $000s)	$	183
Weighted-average term remaining	2.8 years

Employee Stock Purchase Plan

In May 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (ESPP) which became effective on May 28, 2020. A total of 1,500,000 common shares were reserved for issuance under the ESPP. Company employees contribute funds via payroll deductions, which are used to buy Company common shares at a discount of up to 15% based on the lower of the price at the start of the offering period and at the end of the relevant purchase period within such offering

period. The initial offering period under the ESPP was September 1, 2020 through August 31, 2021 with purchase dates set on February 26, 2021 and August 31, 2021, with subsequent offering periods beginning on September 1 and ending on August 31. A total of 196,335 ESPP shares were issued under the plan and the balance remaining for issuance under the ESPP plan is 1,303,665 at December 31, 2021. For the years ended December 31, 2021 and 2020, the Company recognized $0.3 million and $0.2 million, respectively, of stock-based compensation expense related to the ESPP. The fair value of the right to acquire stock at a discounted price under the ESPP is calculated using the Black-Scholes valuation model and recorded as stock-based compensation. Expense is recognized over the period the employee contributes to the plan through payroll deductions.

Stock-based compensation expense

Total stock-based compensation expense was comprised of: (1) vesting of options awarded to employees under the Arbutus and OnCore Plans calculated in accordance with the fair value method as described above; (2) fair value adjustments for the Company’s liability-classified stock options; and (3) amortization of compensation cost related to the ESPP.

The Company recognizes forfeitures as they occur, and the effects of forfeitures are reflected in stock-based compensation expense.

Stock-based compensation has been recorded in the consolidated statement of operations and comprehensive income (loss) as follows:


	Year Ended December 31,
	2021		2020
	(in thousands)
Research and development	$	2,777	$	3,090
General and administrative	3,647		3,071
Total	$	6,424	$	6,161

At December 31, 2021, there remained $11.6 million of unearned compensation expense related to unvested equity employee stock options to be recognized as expense over a weighted-average period of approximately 2.7 years.

For the year ended December 31, 2020, the Company recognized $0.3 million of performance based stock compensation expense, which is included in the table above. There was no performance based stock compensation expense in 2021.

Stock-based compensation - Outstanding options under the Oncore Option Plan (Details) - OnCore Option Plan $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of vested stock options \| $	$ 183
Weighted-average term remaining of vested stock options	2 years 9 months 18 days
Number of optioned common shares
Balance - Number of optioned common shares (in shares)	80,035
Options exercised (in shares)	0
Options forfeited, canceled or expired (in shares)	0
Balance - Number of optioned common shares (in shares)	80,035
Weighted average exercise price
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 0.56
Options exercised - Weighted average exercise price (in CAD and USD per share) \| $ / shares	0
Options forfeited, canceled or expired - Weighted average exercise price (in CAD and USD per share) \| $ / shares	0
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 0.56
Equivalent number of Company common shares
Number of optioned common shares
Balance - Number of optioned common shares (in shares)	80,600
Options exercised (in shares)	0
Options forfeited, canceled or expired (in shares)	0
Balance - Number of optioned common shares (in shares)	80,600

Fair value measurements

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair value measurements

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.

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

To determine the fair value of the contingent consideration (note 10), 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. The Company determined the fair value of the contingent consideration was $5.3 million as of December 31, 2021 and the increase of $1.9 million has been recorded within operating expenses in the statement of operations and comprehensive loss for the year ended December 31, 2021. The assumptions used in the discounted cash flow model are level 3 inputs as defined above. The Company assessed the sensitivity of the fair value measurement to changes in these unobservable inputs, and determined that changes within a reasonable range would not result in a materially different assessment of fair value.


	Level 1		Level 2		Level 3		Total
As of December 31, 2021	(in thousands)
Assets
Cash and cash equivalents	$	109,282	$	—	$	—	$	109,282
Investments in marketable securities	—		81,723		—		81,723
Total	$	109,282	$	81,723	$	—	$	191,005
Liabilities
Liability-classified options	$	—	$	—	$	26	$	26
Contingent consideration	—		—		5,298		5,298
Total	$	—	$	—	$	5,324	$	5,324


	Level 1		Level 2		Level 3		Total
As of December 31, 2020	(in thousands)
Assets
Cash and cash equivalents	$	52,251	$	—	$	—	$	52,251
Investments in marketable securities	—		71,017		—		71,017
Total	$	52,251	$	71,017	$	—	$	123,268
Liabilities
Liability-classified options	$	—	$	—	$	250	$	250
Contingent consideration	—		—		3,426		3,426
Total	$	—	$	—	$	3,676	$	3,676

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


	Liability at beginning of the period		Fair value of liability-classified options exercised in the period		Decrease in fair value of liability		Liability at end of the period
	(in thousands)
Year ended December 31, 2021	$	250	$	(96)	$	(128)	$	26
Year ended December 31, 2020	$	253	$	—	$	(3)	$	250

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


	Liability at beginning of the period		Increase in fair value of liability		Liability at end of the period
	(in thousands)
Year ended December 31, 2021	$	3,426	$	1,872	$	5,298
Year ended December 31, 2020	$	2,953	$	473	$	3,426

- Definition

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

+ References + Details

Investments in marketable securities (Tables)

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments in marketable securities

Investments in marketable securities consisted of the following:


	Amortized Cost		Gross Unrealized Gain(1)		Gross Unrealized Loss(1)		Fair Value
As of December 31, 2021	(in thousands)
Cash equivalents
Money market fund	$	62,836	$	—	$	—	$	62,836


Total	$	62,836	$	—	$	—	$	62,836
Investments in marketable securities
US government agency bonds	$	21,198	$	—	$	(39)	$	21,159

US government bonds	60,675		—		(111)		60,564
Total	$	81,873	$	—	$	(150)	$	81,723

(1) Gross unrealized gain (loss) is pre-tax.


	Amortized Cost		Gross Unrealized Gain(1)		Gross Unrealized Loss(1)		Fair Value
As of December 31, 2020	(in thousands)
Cash equivalents
Money market fund	$	13,703	$	—	$	—	$	13,703

US treasury bills	2,000		—		—		2,000
Total	$	15,703	$	—	$	—	$	15,703
Investments in marketable securities
Us government agency bonds	$	11,550	$	7	$	—	$	11,557
US treasury bills	21,990		2		—		21,992
US government bonds	37,463		6		(1)		37,468
Total	$	71,003	$	15	$	(1)	$	71,017

(1) Gross unrealized gain (loss) is pre-tax.

Shareholders’ equity (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 02, 2017	Dec. 31, 2021	Dec. 31, 2020	Oct. 18, 2021
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		1,164,000
Proceeds from issuance of common stock		$ 134,665	$ 86,297
Issuance of common shares in conjunction with the private offering, net of issuance costs		$ 134,665	$ 86,297
Preferred dividend percentage		8.75%
Outstanding preferred shares that converted to common shares (in shares)				22,833,922
Jefferies LLC \| Common Shares \| March 2021 Prospectus Supplement
Class of Stock [Line Items]
Consideration on sale of stock transaction		$ 75,000
Jefferies LLC \| Common Shares \| October 2021 Prospectus Supplement
Class of Stock [Line Items]
Consideration on sale of stock transaction		75,000
Aggregate share sales price		$ 52,300
Jefferies LLC \| Common Shares \| Sale Agreement
Class of Stock [Line Items]
Number of shares issued under agreement		31,571,036	24,728,368
Proceeds from issuance of common stock		$ 134,700	$ 86,300
Roivant
Class of Stock [Line Items]
Noncontrolling interest, ownership percentage by owners after conversion				27.00%
Roivant \| Convertible Preferred Stock
Class of Stock [Line Items]
Issuance of common shares in conjunction with the private offering, net of issuance costs	$ 116,400
Preferred stock, par value (in USD per share)	$ 7.13
Premium percentage on closing stock price	15.00%
Shares price (in USD per share)	$ 6.20
Preferred dividend percentage	8.75%

Stock-based compensation (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of allocation of stock-based compensation

Stock-based compensation has been recorded in the consolidated statement of operations and comprehensive income (loss) as follows:


	Year Ended December 31,
	2021		2020
	(in thousands)
Research and development	$	2,777	$	3,090
General and administrative	3,647		3,071
Total	$	6,424	$	6,161

Liability classified stock options

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option activity

The following table summarizes activity related to the Company’s liability-classified stock options for the year ended December 31, 2021:


	Stock Options Vested and Outstanding
	Number	Weighted-Average Exercise Price
Balance as of December 31, 2020	197,500	$	6.00
Options exercised	(70,000)	$	1.62
Options forfeit, canceled or expired	(107,500)	$	7.65
Balance as of December 31, 2021	20,000	$	12.98

Arbutus Plans

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option activity

The following table summarizes activity related to the Company’s equity-classified stock options, including its performance options, for the year ended December 31, 2021:


	Stock Options Outstanding			Vested Stock Options	Non-Vested Stock Options
	Number	Weighted-Average Exercise Price		Number	Number	Weighted-Average Grant-Date Fair Value
Balance as of December 31, 2020	10,391,676	$	4.53	6,384,386	4,007,290	$	2.51
Options granted	3,531,050	$	4.17	—	3,531,050	$	3.06
Options exercised	(637,721)	$	3.13	(637,721)	—	$	—
Options forfeited, canceled or expired	(1,975,031)	$	6.54	(1,698,338)	(276,693)	$	2.84
Options vested	—	$	—	2,496,021	(2,496,021)	$	2.88
Balance as of December 31, 2021	11,309,974	$	4.14	6,544,348	4,765,626	$	2.71

The following table summarizes additional information related to the Company’s equity-classified stock options, including its performance options, as of December 31, 2021:


	As of December 31, 2021
Options outstanding and expected to vest
Number of stock options outstanding	11,309,974
Weighted-average exercise price	$	4.14
Intrinsic value (in $000s)	$	5,117
Weighted-average term remaining	7.6 years
Vested stock options
Number of vested stock options	6,544,348
Weighted-average exercise price	$	4.43
Intrinsic value (in $000s)	$	3,233
Weighted-average term remaining	6.9 years

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

The assumptions used in the Black-Scholes option-pricing for grants made during the years ended December 31, 2021 and 2020 are as follows:


	December 31, 2021		December 31, 2020
Expected average option term	5.6 years		6.2 years
Expected volatility	93.4	%	80.2	%
Expected dividends	—	%	—	%
Risk-free interest rate	0.67	%	1.2	%

OnCore Option Plan

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option activity

The following table summarizes additional information related to the OnCore stock options as of December 31, 2021:


	As of December 31, 2021
Vested stock options
Intrinsic value (in $000s)	$	183
Weighted-average term remaining	2.8 years

Schedule of stock options vested and outstanding

The following table summarizes activity related to the OnCore stock options for the year ended December 31, 2021:


	Stock Options Vested and Outstanding
	Number of OnCore Options	Number of Equivalent Company Common Shares	Weighted-Average Exercise Price
Balance as of December 31, 2020	80,035	80,600	$	0.56
Options exercised	—	—	$	—
Options forfeit, canceled or expired	—	—	$	—
Balance as of December 31, 2021	80,035	80,600	$	0.56

Sale of future royalties - Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Liability Related To Future Royalties [Roll Forward]
Net liability related to sale of future royalties - beginning balance	$ 19,554	$ 18,992
Non-cash royalty revenue	(6,108)	(3,395)
Non-cash interest expense	2,850	3,957
Net liability related to sale of future royalties - ending balance	$ 16,296	$ 19,554

Accounts payable and accrued liabilities

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of the following:


	December 31, 2021		December 31, 2020
	(in thousands)
Trade accounts payable	$	3,174	$	2,994
Payroll accruals	4,279		3,566
Research and development accruals	2,371		1,653
Professional fee accruals	983		679
Liability options	26		250
Other accrued liabilities	5		9
Total	$	10,838	$	9,151

Collaborations and royalty entitlements

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Collaborations and royalty entitlements

Collaborations

Qilu Pharmaceuticals Co, Ltd.

In December 2021, the Company entered into a technology transfer and exclusive licensing agreement (the “License Agreement”) with Qilu, pursuant to which the Company granted Qilu an exclusive (except as to certain retained rights), sublicensable, royalty-bearing license, under certain intellectual property owned by the Company, to develop, manufacture and commercialize AB-729, including pharmaceutical products that include AB-729, for the treatment or prevention of hepatitis B in China, Hong Kong, Macau and Taiwan (the “Territory”).

In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $40.0 million on January 5, 2022 and agreed to pay the Company milestone payments totaling up to $245 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones. Qilu also agreed to pay the Company double digit royalties into the low twenties percent based upon annual net sales of AB-729 in the Territory. The royalties are payable on a product-by-product and region-by-region basis, subject to certain limitations.

Qilu is responsible for all costs related to developing, obtaining regulatory approval for, and commercializing AB-729 for the treatment or prevention of hepatitis B in the Territory. Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one AB-729 product candidate in the Territory. A joint development committee will be established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans. Both parties also agreed to negotiate in good faith the terms and conditions of a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of AB-729 necessary for Qilu to develop and commercialize in the Territory until the Company has completed manufacturing technology transfer to Qilu and approval of a product manufactured by Qilu, or its designated contract manufacturing organization, by the National Medical Products Administration in China for AB-729.

Concurrent with the execution of the license agreement, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Anchor Life Limited, a company established pursuant to the applicable laws and regulations of Hong Kong and an affiliate of Qilu (the “Investor”), pursuant to which the Investor purchased 3,579,952 of the Company’s common shares, without par value (the “Common Shares”), at a purchase price of USD $4.19 per share, which was a 15% premium on the thirty-day average closing price of the Common Shares as of the close of trading on December 10, 2021 (the “Share Transaction”). The Company received $15.0 million of gross proceeds from the Share Transaction on January 6, 2022. The Common Shares sold to the Investor in the Share Transaction represented approximately 2.5% of the Common Shares outstanding immediately prior to the execution of the Share Purchase Agreement.

The License Agreement falls under the scope of ASC Topic 808, Collaborative Arrangements, (“ASC 808”) as both parties are active participants in the arrangement that are exposed to significant risks and rewards. While this arrangement is in the scope of ASC 808, the Company analogizes to ASC 606 for some aspects of this arrangement, including for the delivery of a good or service (i.e., a unit of account). Revenue recognized by analogizing to ASC 606 will be recorded as revenue from collaborations and licenses on the consolidated statements of operations as the Company satisfies its performance obligations under the License Agreement which is expected to begin in 2022.

Assembly Biosciences, Inc.

In August 2020, the Company entered into a clinical collaboration agreement with Assembly Biosciences, Inc. (“Assembly”) to evaluate AB-729 in combination with Assembly’s lead HBV core inhibitor (capsid inhibitor) candidate vebicorvir (“VBR”) and standard-of-care NA therapy for the treatment of subjects with HBV infection. The Company and Assembly will share in the costs of the collaboration. The Company incurred $2.6 million and $0.2 million of costs related to the collaboration during the years ended December 31, 2021 and 2020, respectively and reflected those costs in research and development in the statements of operations and comprehensive loss. Except to the extent necessary to carry out Assembly’s responsibilities with respect to the collaboration trial, the Company has not provided any license grant to Assembly for use of AB-729.

Vaccitech plc

In July 2021, the Company entered into a clinical collaboration agreement with Vaccitech plc (“Vaccitech”) to evaluate AB-729 followed by Vaccitech’s VTP-300, a proprietary T cell stimulating therapeutic vaccine, in NrtI-suppressed patients with cHBV. The Company is responsible for managing this Phase 2a proof-of-concept clinical trial, subject to oversight by a joint development committee comprised of representatives from the Company and Vaccitech. The Company and Vaccitech retain full rights to their respective product candidates and will split all costs associated with the clinical trial. The Company incurred $0.5 million of costs related to the collaboration, net of Vaccitech’s 50% share, during the year ended December 31, 2021 and reflected those net costs in research and development in the statements of operations and comprehensive loss.

Antios Therapeutics, Inc.

In June 2021, the Company entered into a clinical collaboration agreement with Antios Therapeutics, Inc. (“Antios”) to evaluate a triple combination of AB-729, Antios’ proprietary active site polymerase inhibitor nucleotide (ASPIN), ATI-2173, and Viread (tenofovir disoproxil fumarate), a nucleos(t)ide reverse transcriptase inhibitor which is currently approved by the FDA, for the treatment of patients with cHBV. Antios is responsible for the costs of adding a single cohort to its clinical trial. The Company is responsible for the manufacture and supply of AB-729, the cost of which is not material.

X-Chem, Inc. and Proteros biostructures GmbH

In March 2021, the Company entered into a discovery research and license agreement with X-Chem, Inc. (“X-Chem”) and Proteros biostructures GmbH (“Proteros”) to focus on the discovery of novel inhibitors targeting the SARS-CoV-2 nsp5 main protease (Mpro). The agreement is designed to accelerate the development of pan-coronavirus agents to treat COVID-19 and potential future coronavirus outbreaks. This collaboration brought together the Company’s expertise in the discovery and development of antiviral agents with X-Chem’s industry leading DNA-encoded library (DEL) technology and Proteros’ protein sciences, biophysics and structural biology capabilities and provides important synergies to potentially identify safe and effective therapies against coronaviruses including SARS-CoV-2. The collaboration allows for the rapid screening of one of the largest small molecule libraries against Mpro (an essential protein required for the virus to replicate itself) and the use of state-of-the-art structure guided methods to rapidly optimize Mpro inhibitors, which the Company could potentially progress to clinical candidates. The agreement provides for payments by the Company to X-Chem and Proteros upon satisfaction of certain development, regulatory and commercial milestones, as well as royalties on sales. Through this collaboration, the Company has identified and obtained a worldwide exclusive license to several molecules that inhibit Mpro, a validated target for the treatment of COVID-19 and potential future coronavirus outbreaks. The Company incurred $1.9 million of costs related to the collaboration during the year ended December 31, 2021 and reflected those costs in research and development in the statements of operations and comprehensive loss.

Royalty Entitlements

Alnylam Pharmaceuticals, Inc. and Acuitas Therapeutics, Inc.

The Company has two royalty entitlements to Alnylam’s global net sales of ONPATTRO.

In 2012, the Company entered into a license agreement with Alnylam Pharmaceuticals, Inc. (“Alnylam”) that entitles Alnylam to develop and commercialize products with the Company’s LNP technology. Alnylam’s ONPATTRO, which represents the first approved application of the Company’s LNP technology, was launched by Alnylam in 2018. Under the terms of this license agreement, the Company is entitled to tiered royalty payments on global net sales of ONPATTRO ranging from 1.00% - 2.33% after offsets, with the highest tier applicable to annual net sales above $500 million. This royalty interest was sold to OMERS, effective as of January 1, 2019, for $20 million in gross proceeds before advisory fees. OMERS will retain this entitlement until it has received $30 million in royalties, at which point 100% of this royalty entitlement on future global net sales of ONPATTRO will revert back to the Company. OMERS has assumed the risk of collecting up to $30.0 million of future royalty payments from Alnylam and the Company is not obligated to reimburse OMERS if they fail to collect any such future royalties. If this royalty entitlement reverts to the Company, it has the potential to provide an active royalty stream or to be otherwise monetized again in full or in part. From the inception of the royalty sale through December 31, 2021, an aggregate of $11.2 million of royalties have been earned by OMERS. See note 9 for further details.

The Company also has rights to a second, lower royalty interest on global net sales of ONPATTRO originating from a settlement agreement and subsequent license agreement with Acuitas. This royalty entitlement from Acuitas has been retained by the Company and was not part of the royalty entitlement sale to OMERS.

Gritstone Oncology, Inc.

On October 16, 2017, the Company entered into a license agreement with Gritstone that granted them worldwide access to its portfolio of proprietary and clinically validated LNP technology and associated intellectual property to deliver Gritstone’s self-replicating, non-mRNA, RNA-based neoantigen immunotherapy products. Gritstone paid the Company an upfront payment, and will make payments for achievement of development, regulatory, and commercial milestones and royalties. As a result of the Company’s agreement with Genevant (see note 5 for details), from April 11, 2018 going forward, Genevant is entitled to 50% of the revenues earned by the Company from Gritstone. The Company is the agent in this arrangement and records revenue on a net basis. Milestone payments that are not within the control of the Company or the licensee, such as those that require regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company did not receive any payments from Gritstone during the years ended December 31, 2021 or 2020.

Acrotech Biopharma LLC

In May 2006, the Company signed a number of agreements with Talon Therapeutics, Inc. (“Talon,” formerly Hana Biosciences, Inc.) that granted Talon worldwide licenses to certain of its LNP technology (the “Talon License Agreement”) for three of Talon’s chemotherapy products, Marqibo®, Alocrest ™ (Optisomal Vinorelbine) and Brakiva ™ (Optisomal Topotecan).

In 2012, Talon received 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 2012, the Company received a milestone payment of $1.0 million based on the FDA’s approval of Marqibo and receives 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 $18.0 million on Alocrest and Brakiva. Talon was acquired by Spectrum Pharmaceuticals, Inc. in July 2013, who subsequently sold the license of Marqibo to Acrotech in January 2019. The acquisitions and license sale did not affect the terms of the license between Talon and the Company.

Revenues from the Company’s royalty entitlements are summarized in the following table:


	Year ended December 31,
	2021		2020
	(in thousands)
Revenue from collaborations and licenses
Acuitas Therapeutics, Inc.	$	4,675	$	3,259

Acrotech Biopharma, LLC	205		269
Non-cash royalty revenue
Alnylam Pharmaceuticals, Inc.	6,108		3,386
Total revenue	$	10,988	$	6,914

Accounts payable and accrued liabilities (Tables)

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of the following:


	December 31, 2021		December 31, 2020
	(in thousands)
Trade accounts payable	$	3,174	$	2,994
Payroll accruals	4,279		3,566
Research and development accruals	2,371		1,653
Professional fee accruals	983		679
Liability options	26		250
Other accrued liabilities	5		9
Total	$	10,838	$	9,151

Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

The Company has two operating leases for office and laboratory space. The Company’s corporate headquarters is located at 701 Veterans Circle, Warminster, Pennsylvania. The lease expires on April 30, 2027, and the Company has the option of extending the lease for two further five-year terms. The Company also leases office space located at 626 Jacksonville Rd, Warminster, Pennsylvania under a lease that expires on December 31, 2022, and the Company has an option to extend the lease term to April 30, 2027.

The Company accounts for its leases under ASC 842, Leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term. The leases do not provide an implicit rate so in determining the present value of lease payments, the Company utilized its incremental borrowing rate for the applicable lease, which was 9.0% for the 701 Veterans Circle lease and 7.6% for the 626 Jacksonville Rd. lease. The Company recognizes lease expense on a straight-line basis over the remaining lease term.

During each of the years ended December 31, 2021 and 2020, the Company incurred total operating lease expenses of $0.7 million, which included lease expenses associated with fixed lease payments of $0.6 million, and variable payments associated with common area maintenance and similar expenses of $0.1 million.

Weighted average remaining lease term and discount rate were as follows:


			As of December 31, 2021
Weighted-average remaining lease term (years)			5.2
Weighted average discount rate			9.0%

The Company did not include options to extend its lease terms as part of its ROU asset and lease liabilities.

Supplemental cash flow information related to the Company’s operating leases was as follows:


	2021		2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	650	$	657

Future minimum lease payments under operating leases that have remaining terms as of December 31, 2021 are as follows:


	As of December 31, 2021
	(in thousands)
2022	$	641
2023	598
2024	616
2025	635
2026	654
Thereafter	134
Total lease payments	$	3,278
Less: interest	(664)
Present value of lease payments	$	2,614

Property and equipment

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property and equipment

The Company’s property and equipment balances as of the years ended December 31, 2021 and 2020 are as follows:


	Cost		Accumulated depreciation		Net book value
December 31, 2021	(in thousands)
Lab equipment	$	6,408	$	(5,178)	$	1,230
Leasehold improvements	8,563		(3,883)		4,680
Computer hardware and software	386		(313)		73
	$	15,357	$	(9,374)	$	5,983


	Cost		Accumulated depreciation		Net book value
December 31, 2020	(in thousands)
Lab equipment	$	5,669	$	(4,369)	$	1,300
Leasehold improvements	8,555		(3,017)		5,538
Computer hardware and software	324		(235)		89
	$	14,548	$	(7,621)	$	6,927

Depreciation expense for the years ended December 31, 2021 and 2020 was $1.8 million and $2.0 million , respectively.

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 109,282	$ 52,251
Investments in marketable securities, current	46,035	71,017
Accounts receivable	899	1,312
Prepaid expenses and other current assets	4,445	3,124
Total current assets	160,661	127,704
Property and equipment, net of accumulated depreciation	5,983	6,927
Investments in marketable securities, non-current	35,688	0
Right of use asset	2,092	2,405
Other non-current assets	61	44
Total assets	204,485	137,080
Current liabilities:
Accounts payable and accrued liabilities	10,838	9,151
Lease liability, current	383	390
Total current liabilities	11,221	9,541
Liability related to sale of future royalties	16,296	19,554
Contingent consideration	5,298	3,426
Lease liability, non-current	2,231	2,593
Total liabilities	35,046	35,114
Stockholders' equity
Preferred shares, Authorized: unlimited number without par value, Issued and outstanding: 0 (December 31, 2020: 1,164,000)	0	149,408
Common shares, Authorized: unlimited number without par value, Issued and outstanding: 144,987,736 (December 31, 2020: 89,678,722)	1,286,636	985,939
Additional paid-in capital	65,485	60,751
Deficit	(1,134,347)	(1,045,961)
Accumulated other comprehensive loss	(48,335)	(48,171)
Total stockholders' equity	169,439	101,966
Total liabilities and stockholders' equity	$ 204,485	$ 137,080

Collaborations and royalty entitlements - Summary of revenues (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 10,988	$ 6,914
License \| Acuitas Therapeutics, Inc.
Disaggregation of Revenue [Line Items]
Revenues	4,675	3,259
License \| Acrotech Biopharma, LLC
Disaggregation of Revenue [Line Items]
Revenues	205	269
Non-cash royalty revenue
Disaggregation of Revenue [Line Items]
Revenues	6,108	3,395
Non-cash royalty revenue \| Alnylam Pharmaceuticals, Inc.
Disaggregation of Revenue [Line Items]
Revenues	$ 6,108	$ 3,386

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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+ Details

Stock-based compensation - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for issuance		1,500,000
Discount rate on shares		15.00%
Issuance of common shares pursuant to exercise of ESPP options (in shares)		196,335
Number of shares remaining for issuance		1,303,665
Stock-based compensation expense related to ESPP		$ 300	$ 200
Unearned compensation expense		$ 11,600
Unearned compensation expense, recognition period		2 years 8 months 12 days
Stock-based compensation expense		$ 6,424	$ 6,161
Collier Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	1,112,000
Arbutus Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life		5 years 7 months 6 days	6 years 2 months 12 days
Intrinsic value of options exercised		$ 200	$ 300
OnCore Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares)		80,035	80,035
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation awards approved to be issued (in shares)		24,790,202
Number of options outstanding (in shares)		11,410,574
Number of additional shares authorized (in shares)		9,519,084
Stock options \| 2016 and 2011 Plans \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life		10 years
Stock options \| 2016 and 2011 Plans \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option vesting period		4 years
Liability classified stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares)		20,000	197,500
Expected life		2 years 1 month 6 days
Intrinsic value of options exercised		$ 100
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 300

Stock-based compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 6,424	$ 6,161
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	2,777	3,090
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 3,647	$ 3,071

Related party transactions (Details) - USD ($)	3 Months Ended	12 Months Ended
Related party transactions (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Oct. 18, 2021	Jul. 31, 2020
Related Party Transaction [Line Items]
Outstanding preferred shares that converted to common shares (in shares)				22,833,922
Equity investment loss		$ 0	$ (2,545,000)
Equity method investments		0
Genevant
Related Party Transaction [Line Items]
Investments					$ 2,500,000
Equity investment loss	$ 2,500,000
Equity method investments		$ 0
Ownership interest in equity method investment (as a percent)		16.00%			16.00%
Genevant \| Equity Method Investee \| Administrative and transitional services
Related Party Transaction [Line Items]
Income from related party (less than)		$ 100,000	$ 100,000

Consolidated Balance Sheets (Parenthetical) - shares	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, shares issued (in shares)	0	1,164,000
Preferred stock, shares outstanding (in shares)	0	1,164,000
Common shares, shares issued (in shares)	144,987,736	89,678,722
Common shares, shares outstanding (in shares)	144,987,736	89,678,722

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Revenue
Revenues	$ 10,988	$ 6,914
Operating expenses
Research and development	65,502	49,338
General and administrative	17,136	14,845
Change in fair value of contingent consideration	1,872	473
Site consolidation	0	64
Total operating expenses	84,510	64,720
Loss from operations	(73,522)	(57,806)
Other income (loss)
Interest income	127	741
Interest expense	(2,857)	(4,011)
Equity investment loss	0	(2,545)
Foreign exchange gain (loss)	5	(124)
Total other loss	(2,725)	(5,939)
Net loss	(76,247)	(63,745)
Items applicable to preferred shares
Dividend accretion of convertible preferred shares	(12,139)	(12,123)
Net loss attributable to common shares	$ (88,386)	$ (75,868)
Loss per share
Basic (in USD per share)	$ (0.83)	$ (1.00)
Diluted (in USD per share)	$ (0.83)	$ (1.00)
Weighted average number of common shares
Basic (in shares)	106,242,452	75,835,378
Diluted (in shares)	106,242,452	75,835,378
Comprehensive income (loss)
Unrealized (loss) gain on available-for-sale securities	$ (164)	$ 14
Currency translation adjustments	0	44
Comprehensive loss	(76,411)	(63,687)
Collaborations and licenses
Revenue
Revenues	4,880	3,519
Non-cash royalty revenue
Revenue
Revenues	$ 6,108	$ 3,395

Shareholders’ equity	12 Months Ended
Shareholders’ equity	Dec. 31, 2021
Equity [Abstract]
Shareholders' equity	Shareholders’ equity Authorized share capital The Company’s authorized share capital consists of an unlimited number of common shares and 1,164,000 preferred shares without par value. Open Market Sale Agreement The Company has an Open Market Sale Agreement with Jefferies LLC (“Jefferies”) dated December 20, 2018, as amended by Amendment No. 1, dated December 20, 2019, Amendment No. 2, dated August 7, 2020 and Amendment No. 3, dated March 4, 2021 (as amended, the “Sale Agreement”), under which the Company may issue and sell common shares, from time to time, under a shelf registration statement on Form S-3 (File No. 333-248467), filed with the SEC on August 28, 2020 (the “Registration Statement”). On March 4, 2021, the Company filed a prospectus supplement with the SEC (the “March 2021 Prospectus Supplement”) in connection with the offering of up to an additional $75.0 million of the Company’s common shares pursuant to the Sale Agreement under the Registration Statement, which the Company fully utilized during 2021. On October 8, 2021, the Company filed a prospectus supplement with the SEC (the “October 2021 Prospectus Supplement”) in connection with the offering of up to an additional $75.0 million of the Company’s common shares pursuant to the Sale Agreement under the Registration Statement. During the years ended December 31, 2021 and 2020, the Company issued 31,571,036 and 24,728,368 common shares, respectively, under the Sale Agreement, as amended, resulting in net proceeds of approximately $134.7 million and $86.3 million, respectively. As of December 31, 2021, there was approximately $52.3 million remaining available under the October 2021 Prospectus Supplement. Series A Preferred Shares In October 2017, the Company entered into a subscription agreement with Roivant for the sale of Preferred Shares to Roivant for gross proceeds of $116.4 million. The Preferred Shares were non-voting and were convertible into common shares at a conversion price of $7.13 per share (which represented a 15% premium to the closing price of $6.20 per share). The purchase price for the Preferred Shares plus an amount equal to 8.75% per annum, compounded annually, was subject to mandatory conversion into common shares on October 18, 2021, at which time the Preferred Shares were converted into 22,833,922 common shares and both the lockup and standstill periods that Roivant had previously agreed to expired. Immediately following the conversion, Roivant owned approximately 27% of the Company’s outstanding common shares as of December 31, 2021. The Company recorded the Preferred Shares wholly as equity with no bifurcation of conversion feature from the host contract, given that the Preferred Shares could not be cash settled and the redemption features were within the Company’s control, which included a fixed conversion ratio with predetermined timing and proceeds. The Company accrued for the 8.75% per annum compounding coupon at each reporting period end date as an increase to share capital, and an increase to deficit (see statement of stockholder’s equity).

- 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.

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-Section 50
-Paragraph 14
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Investment in Genevant (Details) - USD ($)	3 Months Ended	12 Months Ended
Investment in Genevant (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Jul. 31, 2020
Schedule of Equity Method Investments [Line Items]
Gain (loss) on investments		$ 0	$ (2,545,000)
Equity method investments		$ 0
Genevant
Schedule of Equity Method Investments [Line Items]
Sub-licensing revenue, percentage		20.00%
Bona fide collaboration Percentage [Member]		14.00%
Investments				$ 2,500,000
Gain (loss) on investments	$ 2,500,000
Equity method investments		$ 0
Ownership interest in equity method investment (as a percent)		16.00%		16.00%

Income taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income taxes

The Company is subject to taxation and files income tax returns in Canadian federal and provincial, United States federal and several state jurisdictions. The United States Internal Revenue service is currently examining the Company’s federal tax return for 2018 and the Canada Revenue Agency is currently examining the Company’s Canadian tax returns for 2018 and 2019. The outcome of tax audits cannot be predicted with certainty, however the Company believes that an adequate provision has been made for any adjustments that may result from the examination. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.

Income tax (benefit) expense varies from the amounts that would be computed by applying the combined Canadian federal and provincial income tax rate of 27% (2020 - 27%) to the loss before income taxes as shown in the following tables:


	Year ended December 31,
	2021		2020
	(in thousands)
Computed taxes (benefits) at Canadian federal and provincial tax rates	$	(23,864)	$	(17,211)

Adjustment to prior year	(1,041)		390
Permanent and other differences	4,292		622
Change in valuation allowance - other	15,928		12,033
Federal and Provincial ITCs applied	(611)		—
Difference due to income taxed at foreign rates	4,840		3,716
Stock-based compensation	456		450

Income tax expense (recovery)	$	—	$	—

As of December 31, 2021, the Company had investment tax credits available to reduce Canadian federal income taxes of $7.4 million, versus $8.0 million as of December 31, 2020, which expire between 2030 and 2037, and provincial income taxes of $2.1 million, versus $2.6 million as of December 31, 2020, which expire between 2024 and 2027. The investment tax credits are accounted for under a flow-through method. In addition, the Company had research and development credits of $3.8 million as of December 31, 2021, and $3.9 million as of December 31, 2020, which expire between 2031 and 2038 and which can be used to reduce future taxable income in the United States.

As of December 31, 2021, the Company had scientific research and experimental development expenditures of $62.8 million available for indefinite carry-forward, versus the $58.6 million it had as of December 31, 2020. The Company also had net operating losses of $177.7 million as of December 31, 2021 and $175.6 million as of December 31, 2020, which are due to expire between 2028 and 2038 and which can be used to offset future taxable income in Canada.

As of December 31, 2021 and December 31, 2020, the Company had $11.7 million of net operating losses due to expire in 2035 which can be used to offset future taxable income in the United States. Future use of a portion of the United States loss carryforwards are subject to limitations under Internal Revenue Code Section 382. United States net operating loss carryforwards arising in 2019 and future periods have an indefinite carryforward period. As of December 31, 2021 and December 31, 2020, the Company had $197.8 million and $124.6 million, respectively, of total regular net operating losses which can be used to offset future taxable income in the United States.

As a result of ownership changes occurring on October 1, 2014 and March 4, 2015, the Company’s ability to use these losses may be limited. Losses incurred to date may be further limited if a subsequent change in control occurs.

The Company generated $7.7 million and $80.7 million in pre-tax domestic and foreign losses, respectively, for the year ended December 31, 2021. The Company generated $1.8 million and $61.9 million in pre-tax domestic and foreign losses, respectively, for the year ended December 31, 2020.

Significant components of the Company’s deferred tax assets and liabilities are shown below:


	As of December 31,
	2021		2020
	(in thousands)
Deferred tax assets (liabilities):
Non-capital losses carryforwards	$	90,255	$	74,351
Research and development deductions	16,968		15,812
Book amortization in excess of tax	(634)		(737)
Revenue recognized for tax purposes in excess of revenue recognized for accounting purposes	4,400		5,279
Tax value in excess of accounting value in lease inducements	549		627
Federal investment tax credits	5,301		5,872
Provincial investment tax credits	2,119		2,644
Equity accounted for investment	3,375		3,375
Federal R&E credits	3,741		3,897
Deductible stock options	3,309		2,457
Other	1,341		1,218
Total deferred tax assets	$	130,724	$	114,795
Valuation allowance	(130,724)		(114,795)
Net deferred tax assets (liabilities)	$	—	$	—

- Definition

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

+ References

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

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

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

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

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

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

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

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

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

+ Details

Organization (Details) - USD ($)		1 Months Ended
Organization (Details) - USD ($)	Jan. 05, 2022	Jan. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash, cash equivalents and short-term investments			$ 191,000,000
Outstanding debt			$ 0
Subsequent event
Class of Stock [Line Items]
Proceeds from equity investment		$ 15,000,000
One-Time Upfront Cash Payment \| Qilu \| Subsequent event
Class of Stock [Line Items]
Cash payment for collaborations	$ 40,000,000

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Fair value measurements - Changes in fair value of liabilities - classified as stock option (Details) - Liability classified stock options - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Liabilities Measured on Recurring Basis [Roll Forward]
Liability at beginning of the period	$ 250	$ 253
Fair value of liability-classified options exercised in the period	(96)	0
Decrease in fair value of liability	(128)	(3)
Liability at end of the period	$ 26	$ 250

Leases - Narrative (Details) $ in Millions	12 Months Ended
Leases - Narrative (Details) $ in Millions	Dec. 31, 2021 USD ($) lease renewal_option	Dec. 31, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Number of operating leases \| lease	2
Renewal term	5 years
Operating lease expense	$ 0.7	$ 0.7
Fixed lease payment	0.6	0.6
Variable lease payment	$ 0.1	$ 0.1
Corporate Headquarters Located 701 Veterans Circle, Warminster, Pennsylvania
Lessee, Lease, Description [Line Items]
Number of renewal options \| renewal_option	2
Discount rate	9.00%
Offices Located at 626 Jacksonville Rd., Warminster, Pennsylvania
Lessee, Lease, Description [Line Items]
Discount rate	7.60%

Sale of future royalties - Narrative (Details) - USD ($)			12 Months Ended		18 Months Ended	30 Months Ended
	Jul. 02, 2019	Jan. 01, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2020	Dec. 31, 2021
Other Liabilities Disclosure [Line Items]
Royalty guarantees commitments percentage			2.50%
Non-cash royalty revenue			$ 6,108,000	$ 3,395,000
Non-cash interest expense			2,850,000	3,957,000
OMERS
Other Liabilities Disclosure [Line Items]
Royalty interest sold, percentage of sales, annual revenue threshold of highest tier	$ 500,000,000
Gross proceeds from royalty interest sold		$ 20,000,000
Royalty interest sold, maximum royalties for buyer	$ 30,000,000
Royalty guarantees commitments percentage	100.00%
Royalty payable	$ 30,000,000
Non-cash royalty revenue			$ 6,100,000	3,400,000	$ 11,200,000	$ 11,200,000
Transaction costs related to sale of future royalties	$ 1,500,000
Effective annual interest rate of royalty liability			12.00%
Non-cash interest expense			$ 2,900,000	$ 4,000,000
OMERS \| Minimum
Other Liabilities Disclosure [Line Items]
Royalty, percentage of interest sold	1.00%
OMERS \| Maximum
Other Liabilities Disclosure [Line Items]
Royalty, percentage of interest sold	2.33%

Related party transactions	12 Months Ended
Related party transactions	Dec. 31, 2021
Related Party Transactions [Abstract]
Related party transactions	Related party transactions Pursuant to a financing and related subscription agreement, the Company issued Roivant the Preferred Shares in October 2017. On October 18, 2021, the Preferred Shares were converted into 22,833,922 common shares. Immediately following the conversion, Roivant owned approximately 27% of the Company’s outstanding common shares. See note 12 for further details. On July 31, 2020, Genevant was recapitalized through an equity investment and conversion of previously issued convertible debt securities held by Roivant. Arbutus participated in the recapitalization of Genevant with an investment of $2.5 million. Arbutus determined that this $2.5 million additional investment in Genevant represented the funding of prior losses and accordingly, the Company recorded the amount as an equity investment loss on the Consolidated Statements of Operations and Comprehensive Loss in 2020. As of December 31, 2021, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16% of the common equity of Genevant. See note 5 for further details. During each of the years ended December 31, 2021 and 2020, Genevant purchased certain administrative and transitional services from the Company totaling less than $0.1 million. These services were billed at agreed hourly rates and reflective of market rates for such services and these costs were netted in research and development in the income statement.

Stock-based compensation - Stock options outstanding under the Arbutus Plan (Details) - Arbutus Plans $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares
Stock Option
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of options outstanding (in shares) \| shares	11,309,974
Options outstanding, Weighted average exercise price (in USD per share) \| $ / shares	$ 4.14
Intrinsic value of stock options \| $	$ 5,117
Weighted-average term remaining	7 years 7 months 6 days
Vested Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of options outstanding (in shares) \| shares	6,544,348
Options outstanding, Weighted average exercise price (in USD per share) \| $ / shares	$ 4.43
Intrinsic value of stock options \| $	$ 3,233
Weighted-average term remaining	6 years 10 months 24 days

Significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of presentation

Principles of consolidation

All intercompany balances and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation, such as the reclassification of depreciation expense to research and development and general and administrative expenses. In February 2021, Arbutus Biopharma US Holdings, Inc. merged into Arbutus Biopharma, Inc. with Arbutus Biopharma, Inc. continuing its legal existence and Arbutus Biopharma US Holdings, Inc. ceasing to exist.

Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses and contingent liabilities as of the end or during the reporting period. Actual results could significantly differ from those estimates. Significant estimates in the accompanying consolidated financial statements impact contingent consideration, income tax recoveries, stock-based compensation, clinical trial accruals and the sale of future royalties liability.

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.

Investments in marketable securities

The Company’s short-term investments consist of marketable securities that have original maturities exceeding three months and remaining maturities of less than one year. The Company classifies investments with remaining maturities of one year or longer as non-current. These investments are accounted for as available-for-sale securities and are reported at fair value, with unrealized gains and losses reported in other comprehensive loss, until their disposition. Realized gains and losses from the sale of marketable securities, if any, are calculated using the specific-identification method, and are recorded as a component of other income or loss. The Company reviews its available-for-sale securities at each period end to determine if they remain available-for-sale based on the Company’s current intent and ability to sell the security if it is required to do so. Declines in value judged to be other-than-temporary are included in interest income or expense in the Company’s statements of operations and comprehensive loss. As of December 31, 2021, the recorded value of the Company’s investments in marketable securities was deemed to be recoverable in all respects.

All investments are governed by the Company’s Investment Policy approved by the Company’s board of directors.

Foreign currency translation and functional currency conversion

The Company’s functional currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated into United States 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 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.

Investment in Genevant

Investment in GenevantAs the result of a recapitalization of Genevant in July 2020, Arbutus’ ownership interest in Genevant decreased to approximately 16%. Due to Arbutus’ loss of significant influence with respect to Genevant as a result of the recapitalization, Arbutus discontinued the use of the equity method of accounting for its interest in Genevant. Ownership interests that do not confer the ability to exercise significant influence are accounted for at fair value, except when the investment does not have a readily-determinable fair value. In that case, the investment is carried at cost, less any impairment. The carrying value is subsequently adjusted to fair value based on any observable price changes. Following the recapitalization, Arbutus accounts for its interest in Genevant as equity securities without readily determinable fair values. Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar Genevant securities.

Property and equipment

Property and equipment is recorded at cost less impairment losses and accumulated depreciation. 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	to	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.

Impairment of property and equipment

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such a review should indicate that the carrying amount of long-lived assets is not recoverable, then such assets are written down to their fair values.

Revenue from collaborations and licenses

The Company generates revenue primarily through collaboration agreements and license agreements. Such agreements may require the Company to deliver various rights and/or services, including intellectual property rights or licenses and research, development and manufacturing services. Under such agreements, the Company is generally eligible to receive non-refundable upfront payments, funding for research, development and manufacturing services, milestone payments, and royalties.

The Company’s collaboration agreements fall under the scope of ASC Topic 808, Collaborative Arrangements, (“ASC 808”) when both parties are active participants in the arrangement and are exposed to significant risks and rewards. For certain arrangements under the scope of ASC 808, the Company analogizes to ASC 606 for some aspects, including for the delivery of a good or service (i.e., a unit of account).

ASC 606, Revenue From Contracts with Customers (“ASC 606”) requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under a five-step model: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as a performance obligation is satisfied.

In contracts where the Company has more than one performance obligation to provide its customer with goods or services, each performance obligation is evaluated to determine whether it is distinct based on whether (i) the customer can benefit from the

good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the contract is then allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each deliverable reflects the Company’s best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if the selling price on a stand-alone basis is not available.

The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred to the customer for the related goods or services. Consideration associated with at-risk substantive performance milestones, including sales-based milestones, is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Sales-based royalties received in connection with licenses of intellectual property are subject to a specific exception in the revenue standards, whereby the consideration is not included in the transaction price and recognized in revenue until the customer’s subsequent sales or usages occur.

Leases

LeasesThe Company accounts for its leases under ASC 842, Leases, which generally requires the recognition of operating and financing lease liabilities with corresponding right-of-use assets on the balance sheet. See note 6 for more information.

Research and development costs

Research and development costs include compensation and benefits for research and development employees, an allocation of overhead expenses and costs associated with materials and supplies used in clinical trials and research and development, outside contracted services including clinical and pre-clinical study costs, legal, regulatory compliance and fees paid to consultants or outside parties for research and development activities performed on the Company’s behalf. Such costs are charged to expense in the period in which they are incurred.

Research and development costs that are paid in advance of performance or receipt are recorded as prepaid expense and are amortized over the period that the services are performed.

Net loss attributable to common shareholders per share

Net loss attributable to common shareholders per shareNet loss attributable to common shareholders per share is calculated based on the weighted average number of common shares outstanding. Diluted net loss attributable to common shareholders per share does not differ from basic net loss attributable to common shareholders per share for the years ended December 31, 2021 and 2020, since the effect of including potential common shares would be anti-dilutive.

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.

Stock-based compensation

The Company measures and recognizes compensation expense for all share-based compensation arrangements based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. For those assumptions, the Company uses historical data and other information to estimate the expected price volatility and risk free interest rate for all awards. The expected life of stock options granted are estimated to be five years for employees and six years for directors and executives, based on the Company’s historical experience. Assumptions on the dividend yield are based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. Expense is recognized over the vesting period for all awards and commences at the grant date for time-based awards and upon the Company’s determination that the achievement of such performance conditions is probable for performance-based awards. Forfeitures are recognized as they occur.

For the Company’s Employee Stock Purchase Plan, the fair value of the right to acquire stock at a discounted price under the plan is calculated using the Black-Scholes valuation model. Expense is recognized over the period the employee contributes to the plan through payroll deductions.

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. As of January 1, 2016, the Company changed its functional currency to US dollars, which resulted in certain stock option awards with exercise prices denominated in Canadian dollars having an exercise price that is not denominated in the Company’s functional currency. 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 a liability.

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.

Preferred Shares

Preferred SharesThe Company accounted for its Preferred Shares under ASC 480 – Distinguishing Liabilities from Equity (“ASC 480”), which provides guidance for equity instruments with conversion features. The Company classified the Preferred Shares in its consolidated balance sheet wholly as equity, with no bifurcation of conversion feature from the host contract, given that the Preferred Shares could not be cash-settled and the redemption features, which included a fixed conversion ratio with predetermined timing and proceeds, were within the Company’s control. The Company accrued for the 8.75% per annum compounding accrual at each reporting period-end date as an increase to share capital, and an increase to deficit.

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 the United States.

Comprehensive loss

Comprehensive loss is comprised of net loss, the impact of foreign currency translation adjustments and adjustments for the change in unrealized gains and losses on investments in available-for-sale marketable securities. The Company displays comprehensive loss and its components in the consolidated statements of operations and comprehensive loss, net of tax effects if any.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds these investments in highly rated financial institutions, and, by policy, limits the amounts of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Recent accounting pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASC 326). The guidance is effective for the Company beginning January 1, 2023 and it changes how entities account for credit losses on financial assets and other instruments that are not measured at fair value through net income, including available-for-sale debt securities. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

Fair value measurements

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

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 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.

Leases - Maturity of lease liability (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Leases [Abstract]
2022	$ 641
2023	598
2024	616
2025	635
2026	654
Thereafter	134
Total lease payments	3,278
Less: interest	(664)
Present value of lease payments	$ 2,614

Sale of future royalties

12 Months Ended

Dec. 31, 2021

Other Liabilities Disclosure [Abstract]

Sale of future royalties

On July 2, 2019, the Company entered into a Purchase and Sale Agreement (the “Agreement”) with the Ontario Municipal Employees Retirement System (“OMERS”), pursuant to which the Company sold to OMERS part of its royalty interest on future global net sales of ONPATTRO, an RNA interference therapeutic currently being sold by Alnylam.

ONPATTRO utilizes Arbutus’s LNP technology, which was licensed to Alnylam pursuant to the Cross-License Agreement, dated November 12, 2012, by and between the Company and Alnylam (the “LNP License Agreement”). Under the terms of the LNP License Agreement, the Company is entitled to tiered royalty payments on global net sales of ONPATTRO ranging from 1.00% to 2.33% after offsets, with the highest tier applicable to annual net sales above $500 million. This royalty interest was sold to OMERS, effective as of January 1, 2019, for $20 million in gross proceeds before advisory fees. OMERS will retain this entitlement until it has received $30 million in royalties, at which point 100% of such royalty interest on future global net sales of ONPATTRO will revert to the Company. OMERS has assumed the risk of collecting up to $30 million of future royalty payments from Alnylam and Arbutus is not obligated to reimburse OMERS if they fail to collect any such future royalties. From the inception of the royalty sale through December 31, 2021, an aggregate of $11.2 million of royalties have been earned by OMERS.

The $30 million in royalties to be paid to OMERS is accounted for as a liability, with the difference between the liability and the gross proceeds received accounted for as a discount. The discount, as well as $1.5 million of transaction costs, will be amortized as interest expense based on the projected balance of the liability as of the beginning of each period. Management estimated an effective annual interest rate of approximately 12%. Over the course of the Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in the timing of forecasted royalty revenue. On a quarterly basis, the Company will reassess the expected timing of the royalty revenue, recalculate the amortization and effective interest rate and adjust the accounting prospectively as needed.

The Company recognizes non-cash royalty revenue related to the sales of ONPATTRO during the term of the Agreement. As royalties are remitted to OMERS from Alnylam, the balance of the recognized liability is effectively repaid over the life of the Agreement. From the inception of the royalty sale through December 31, 2021, the Company has recorded an aggregate of $11.2 million of non-cash royalty revenue for royalties earned by OMERS. There are a number of factors that could materially affect the amount and timing of royalty payments from Alnylam, none of which are within the Company’s control.

During the year ended December 31, 2021, the Company recognized non-cash royalty revenue of $6.1 million and $2.9 million of related non-cash interest expense. During the year ended December 31, 2020, the Company recognized non-cash royalty revenue of $3.4 million and related non-cash interest expense of $4.0 million.

The table below shows the activity related to the net liability for the years ended December 31, 2021 and December 31, 2020:


	Twelve Months Ended December 31,
	2021		2020
	(in thousands)
Net liability related to sale of future royalties - beginning balance	$	19,554	$	18,992
Non-cash royalty revenue	(6,108)		(3,395)
Non-cash interest expense	2,850		3,957
Net liability related to sale of future royalties - ending balance	$	16,296	$	19,554

In addition to the royalty from the Alnylam LNP License Agreement, the Company is also receiving a second, lower royalty interest on global net sales of ONPATTRO originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc. (“Acuitas”). The royalty from Acuitas has been retained by the Company and was not part of the royalty sale to OMERS.

Investments in marketable securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Cash Equivalents, Amortized Cost	$ 109,282	$ 52,251
Amortized Cost	81,873	71,003
Gross Unrealized Gain	0	15
Gross Unrealized Loss	(150)	(1)
Fair Value	81,723	71,017
Cash equivalents
Debt Securities, Available-for-sale [Line Items]
Cash Equivalents, Amortized Cost	62,836	15,703
Cash Equivalents, Fair Value	62,836	15,703
Money market fund \| Cash equivalents
Debt Securities, Available-for-sale [Line Items]
Cash Equivalents, Amortized Cost	62,836	13,703
Cash Equivalents, Fair Value	62,836	13,703
US government agency bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	21,198	11,550
Gross Unrealized Gain	0	7
Gross Unrealized Loss	(39)	0
Fair Value	21,159	11,557
US treasury bills
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		21,990
Gross Unrealized Gain		2
Gross Unrealized Loss		0
Fair Value		21,992
US treasury bills \| Cash equivalents
Debt Securities, Available-for-sale [Line Items]
Cash Equivalents, Amortized Cost		2,000
Cash Equivalents, Fair Value		2,000
US government bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	60,675	37,463
Gross Unrealized Gain	0	6
Gross Unrealized Loss	(111)	(1)
Fair Value	$ 60,564	$ 37,468

Collaborations and royalty entitlements (Tables)

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of revenue recognized under collaborations, contracts and licensing agreements

Revenues from the Company’s royalty entitlements are summarized in the following table:


	Year ended December 31,
	2021		2020
	(in thousands)
Revenue from collaborations and licenses
Acuitas Therapeutics, Inc.	$	4,675	$	3,259

Acrotech Biopharma, LLC	205		269
Non-cash royalty revenue
Alnylam Pharmaceuticals, Inc.	6,108		3,386
Total revenue	$	10,988	$	6,914

Income taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Income taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Income Taxes [Line Items]
Canadian federal and provincial income tax rate	27.00%	27.00%
Research and development credits	$ 3,800	$ 3,900
Scientific research and experimental development expenditures available for indefinite carry-forward	90,255	74,351
Deferred tax assets, operating loss carryforwards, subject to expiration	11,700	11,700
Pre-tax domestic losses	7,700	1,800
Pre-tax foreign losses	80,700	61,900
United States
Income Taxes [Line Items]
Net operating losses	197,800	124,600
Investment tax credit carryforward
Income Taxes [Line Items]
Investment tax credits available to reduce Canadian federal income taxes	7,400	8,000
Investment tax credits available to reduce provincial income taxes	2,100	2,600
Research tax credit carryforward
Income Taxes [Line Items]
Scientific research and experimental development expenditures available for indefinite carry-forward	62,800	58,600
Deferred tax assets, operating loss carryforwards, subject to expiration	$ 177,700	$ 175,600

Significant accounting policies - Computation of basic and diluted net income (loss) per common share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dividend accretion of convertible preferred shares	$ (12,139)	$ (12,123)
Net loss attributable to common shares	$ (88,386)	$ (75,868)
Weighted average number of common shares - basic (in shares)	106,242,452	75,835,378
Weighted average number of common shares - diluted (in shares)	106,242,452	75,835,378
Basic net loss attributable to common shareholders per share (in USD per share)	$ (0.83)	$ (1.00)
Diluted net loss attributable to common shareholders per share (in USD per share)	$ (0.83)	$ (1.00)
Common Shares
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dividend accretion of convertible preferred shares	$ 0	$ 0
Allocation of undistributable loss	(88,386)	(75,868)
Net loss attributable to common shares	$ (88,386)	$ (75,868)
Weighted average number of common shares - basic (in shares)	106,242,452	75,835,378
Weighted average number of common shares - diluted (in shares)	106,242,452	75,835,378
Basic net loss attributable to common shareholders per share (in USD per share)	$ (0.83)	$ (1.00)
Diluted net loss attributable to common shareholders per share (in USD per share)	$ (0.83)	$ (1.00)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

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Income taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Components of Deferred Tax Assets [Line Items]
Non-capital losses carryforwards	$ 90,255	$ 74,351
Research and development deductions	16,968	15,812
Book amortization in excess of tax	(634)	(737)
Revenue recognized for tax purposes in excess of revenue recognized for accounting purposes	4,400	5,279
Tax value in excess of accounting value in lease inducements	549	627
Equity accounted for investment	3,375	3,375
Federal R&E credits	3,741	3,897
Deductible stock options	3,309	2,457
Other	1,341	1,218
Total deferred tax assets	130,724	114,795
Valuation allowance	(130,724)	(114,795)
Net deferred tax assets (liabilities)	0	0
Federal
Components of Deferred Tax Assets [Line Items]
Investment tax credits	5,301	5,872
Provincial
Components of Deferred Tax Assets [Line Items]
Investment tax credits	$ 2,119	$ 2,644

Investment in Genevant	12 Months Ended
Investment in Genevant	Dec. 31, 2021
Equity Method Investments and Joint Ventures [Abstract]
Investment in Genevant	Investment in GenevantIn April 2018, the Company entered into an agreement with Roivant Sciences Ltd. (“Roivant”), its largest shareholder, to launch Genevant Sciences Ltd. (“Genevant”), a company focused on a broad range of RNA-based therapeutics enabled by the Company’s LNP and ligand conjugate delivery technologies. The Company licensed rights to its LNP and ligand conjugate delivery platforms to Genevant for RNA-based applications outside of HBV, except to the extent certain rights had already been licensed to other third parties (the “Genevant License”). The Company retained all rights to its LNP and conjugate delivery platforms for HBV. Under the Genevant License, as amended, if a third party sublicensee of intellectual property licensed by Genevant from the Company commercializes a sublicensed product, the Company becomes entitled to receive a specified percentage of certain revenue that may be received by Genevant for such sublicense, including royalties, commercial milestones and other sales-related revenue, or, if less, tiered low single-digit royalties on net sales of the sublicensed product. The specified percentage is 20% in the case of a mere sublicense (i.e., naked sublicense) by Genevant without additional contribution and 14% in the case of a bona fide collaboration with Genevant. Additionally, if Genevant receives proceeds from an action for infringement by any third parties of the Company’s intellectual property licensed to Genevant, the Company would be entitled to receive, after deduction of litigation costs, 20% of the proceeds received by Genevant or, if less, tiered low single-digit royalties on net sales of the infringing product (inclusive of the proceeds from litigation or settlement, which would be treated as net sales). On July 31, 2020, Roivant recapitalized Genevant through an equity investment and conversion of previously issued convertible debt securities held by Roivant. The Company participated in the recapitalization of Genevant with an investment of $2.5 million. The Company determined that this $2.5 million additional investment in Genevant represented the funding of prior losses and accordingly, the Company recorded the amount as an equity investment loss on the Condensed Consolidated Statements of Operations and Comprehensive Loss in 2020. Following the recapitalization, the Company owned approximately 16% of the common equity of Genevant. In connection with the recapitalization, Genevant, the Company and Roivant entered into an Amended and Restated Shareholders Agreement that provides Roivant with substantial control of Genevant. The Company has a non-voting observer seat on Genevant’s Board of Directors. Due to the Company’s loss of significant influence with respect to Genevant as a result of the recapitalization, the Company discontinued the use of the equity method of accounting for its interest in Genevant. Following the recapitalization, the Company accounts for its interest in Genevant as equity securities without readily determinable fair values. Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar Genevant securities. The Company’s entitlement to receive future royalties or sublicensing revenue under the Genevant License was not impacted by the recapitalization. As of December 31, 2021, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16% of the common equity of Genevant.

Income taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of effective income tax rate reconciliation


	Year ended December 31,
	2021		2020
	(in thousands)
Computed taxes (benefits) at Canadian federal and provincial tax rates	$	(23,864)	$	(17,211)

Adjustment to prior year	(1,041)		390
Permanent and other differences	4,292		622
Change in valuation allowance - other	15,928		12,033
Federal and Provincial ITCs applied	(611)		—
Difference due to income taxed at foreign rates	4,840		3,716
Stock-based compensation	456		450

Income tax expense (recovery)	$	—	$	—

Schedule of components of deferred tax assets

Significant components of the Company’s deferred tax assets and liabilities are shown below:


	As of December 31,
	2021		2020
	(in thousands)
Deferred tax assets (liabilities):
Non-capital losses carryforwards	$	90,255	$	74,351
Research and development deductions	16,968		15,812
Book amortization in excess of tax	(634)		(737)
Revenue recognized for tax purposes in excess of revenue recognized for accounting purposes	4,400		5,279
Tax value in excess of accounting value in lease inducements	549		627
Federal investment tax credits	5,301		5,872
Provincial investment tax credits	2,119		2,644
Equity accounted for investment	3,375		3,375
Federal R&E credits	3,741		3,897
Deductible stock options	3,309		2,457
Other	1,341		1,218
Total deferred tax assets	$	130,724	$	114,795
Valuation allowance	(130,724)		(114,795)
Net deferred tax assets (liabilities)	$	—	$	—

Property and equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Cost	$ 15,357	$ 14,548
Accumulated depreciation	(9,374)	(7,621)
Net book value	5,983	6,927
Depreciation	1,753	1,978
Lab equipment
Property, Plant and Equipment [Line Items]
Cost	6,408	5,669
Accumulated depreciation	(5,178)	(4,369)
Net book value	1,230	1,300
Leasehold improvements
Property, Plant and Equipment [Line Items]
Cost	8,563	8,555
Accumulated depreciation	(3,883)	(3,017)
Net book value	4,680	5,538
Computer hardware and software
Property, Plant and Equipment [Line Items]
Cost	386	324
Accumulated depreciation	(313)	(235)
Net book value	$ 73	$ 89

Collaborations and royalty entitlements - Narrative (Details)					12 Months Ended			18 Months Ended	30 Months Ended
	Jan. 06, 2022 USD ($)	Jan. 05, 2022 USD ($)	Jul. 02, 2019 USD ($)	Jan. 01, 2019 USD ($)	Dec. 31, 2021 USD ($) product shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2014 USD ($)	Dec. 31, 2020 USD ($) shares	Dec. 31, 2021 USD ($) product shares	Dec. 13, 2021 USD ($) $ / shares shares	Apr. 11, 2018	May 06, 2006 chemotherapy_products
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Common shares, shares issued (in shares) \| shares					144,987,736	89,678,722		89,678,722	144,987,736
Issuance of common shares pursuant to the Open Market Sales Agreement					$ 134,665,000	$ 86,297,000
Number of royalty entitlements \| product					2				2
Royalty guarantees commitments percentage					2.50%
Non-cash royalty revenue					$ 6,108,000	3,395,000
Number of chemotherapy products with worldwide licenses \| chemotherapy_products												3
Marqibo Commercial Sales
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Contracts revenue							$ 1,000,000
Common Shares \| Qilu
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners										2.50%
Qilu
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License Agreement Milestone payment maximum										$ 245,000,000
Qilu \| Common Shares
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Common shares, shares issued (in shares) \| shares										3,579,952
Shares price (in USD per share) \| $ / shares										$ 4.19
Premium percentage on closing stock price										15.00%
Qilu \| Common Shares \| Subsequent event
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Issuance of common shares pursuant to the Open Market Sales Agreement	$ 15,000,000
Qilu \| One-Time Upfront Cash Payment \| Subsequent event
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Cash payment for collaborations		$ 40,000,000
Assembly
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Costs related to collaboration					2,600,000	200,000
Vaccitech
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Costs related to collaboration					$ 500,000
Percent of Costs related to Collaboration					50.00%
Proteros
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Costs related to collaboration					$ 1,900,000
OMERS
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty interest sold, percentage of sales, annual revenue threshold of highest tier			$ 500,000,000
Gross proceeds from royalty interest sold				$ 20,000,000
Royalty interest sold, maximum royalties for buyer			$ 30,000,000
Royalty guarantees commitments percentage			100.00%
Royalty payable			$ 30,000,000
Non-cash royalty revenue					$ 6,100,000	$ 3,400,000		$ 11,200,000	$ 11,200,000
OMERS \| Minimum
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty, percentage of interest sold			1.00%
OMERS \| Maximum
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty, percentage of interest sold			2.33%
Gritstone Oncology, Inc. \| License \| Genevant
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Equity method investment, percentage or revenue entitled											50.00%
Talon Therapeutics
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Non-cash royalty revenue							$ 18,000,000

Stock-based compensation - Valuation assumptions for stock options under the Arbutus Plan (Details) - Arbutus Plans	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected average option term	5 years 7 months 6 days	6 years 2 months 12 days
Expected volatility	93.40%	80.20%
Expected dividends	0.00%	0.00%
Risk-free interest rate	0.67%	1.20%

Income taxes - Income tax reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Computed taxes (benefits) at Canadian federal and provincial tax rates	$ (23,864)	$ (17,211)
Adjustment to prior year	(1,041)	390
Permanent and other differences	4,292	622
Change in valuation allowance - other	15,928	12,033
Federal and Provincial ITCs applied	(611)	0
Difference due to income taxed at foreign rates	4,840	3,716
Stock-based compensation	456	450
Income tax expense (recovery)	$ 0	$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Stock-based compensation - Stock option activity for liability-classified options (Details) - Liability classified stock options	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Number of optioned common shares
Balance - Number of optioned common shares (in shares) \| shares	197,500
Options exercised (in shares) \| shares	(70,000)
Options forfeited, canceled or expired (in shares) \| shares	(107,500)
Balance - Number of optioned common shares (in shares) \| shares	20,000
Weighted average exercise price
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 6.00
Options exercised - Weighted average exercise price (in CAD and USD per share) \| $ / shares	1.62
Options forfeited, canceled or expired - Weighted average exercise price (in CAD and USD per share) \| $ / shares	7.65
Balance - Weighted average exercise price (in CAD and USD per share) \| $ / shares	$ 12.98

Significant accounting policies

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Significant accounting policies

Basis of presentation and principles of consolidation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Arbutus Biopharma Corporation and its two wholly-owned subsidiaries, Arbutus Biopharma, Inc. and Arbutus Biopharma U.S. Holdings, Inc. All intercompany balances and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation, such as the reclassification of depreciation expense to research and development and general and administrative expenses. In February 2021, Arbutus Biopharma US Holdings, Inc. merged into Arbutus Biopharma, Inc. with Arbutus Biopharma, Inc. continuing its legal existence and Arbutus Biopharma US Holdings, Inc. ceasing to exist.

Use of estimates

Cash and cash equivalents

Investments in marketable securities

All investments are governed by the Company’s Investment Policy approved by the Company’s board of directors.

Foreign currency translation and functional currency conversion

Investment in Genevant

As the result of a recapitalization of Genevant in July 2020, Arbutus’ ownership interest in Genevant decreased to approximately 16%. Due to Arbutus’ loss of significant influence with respect to Genevant as a result of the recapitalization, Arbutus discontinued the use of the equity method of accounting for its interest in Genevant. Ownership interests that do not confer the ability to exercise significant influence are accounted for at fair value, except when the investment does not have a readily-determinable fair value. In that case, the investment is carried at cost, less any impairment. The carrying value is subsequently adjusted to fair value based on any observable price changes. Following the recapitalization, Arbutus accounts for its interest in Genevant as equity securities without readily determinable fair values. Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar Genevant securities. As of December 31, 2021, the carrying value of Arbutus’ investment in Genevant was zero and Arbutus owned approximately 16% of the common equity of Genevant.

See note 5 for more information.

Property and equipment


	Useful Life (Years)
Laboratory equipment		5
Computer and office equipment	2	to	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.

Revenue from collaborations and licenses

Leases

The Company accounts for its leases under ASC 842, Leases, which generally requires the recognition of operating and financing lease liabilities with corresponding right-of-use assets on the balance sheet. See note 6 for more information.

Research and development costs

Research and development costs that are paid in advance of performance or receipt are recorded as prepaid expense and are amortized over the period that the services are performed.

Net loss attributable to common shareholders per share

Net loss attributable to common shareholders per share is calculated based on the weighted average number of common shares outstanding. Diluted net loss attributable to common shareholders per share does not differ from basic net loss attributable to common shareholders per share for the years ended December 31, 2021 and 2020, since the effect of including potential common shares would be anti-dilutive. For the year ended December 31, 2021, potential common shares of 11.4 million pertaining to outstanding stock options were excluded from the calculation of net loss attributable to common shareholders, per share. A total of approximately 31.8 million outstanding stock options and if-converted Series A participating convertible preferred shares (“Preferred Shares”) were excluded from the calculation for the year ended December 31, 2020.

On October 18, 2021, the Company’s outstanding Preferred Shares were converted into 22,833,922 common shares. Prior to that date, the Company followed the two-class method when computing net loss attributable to common shareholders per share as the Preferred Shares, as further described in note 12, met the definition of participating securities. The Company’s Preferred Shares entitled the holders to participate in dividends but did not require the holders to participate in losses of the Company. Accordingly, net losses attributable to holders of the Company’s common shares were not allocated to holders of the Preferred Shares.

The following table sets out the computation of basic and diluted net loss attributable to common shareholders per share:


	For the year ended December 31,
	2021		2020
	(in thousands, except share and per share amounts)
Numerator:
Allocation of distributable earnings	$	—	$	—
Allocation of undistributable loss	(88,386)		(75,868)
Allocation of net loss attributed to common shareholders	$	(88,386)	$	(75,868)
Denominator:
Weighted average number of common shares - basic and diluted	106,242,452		75,835,378
Basic and diluted net loss attributable to common shareholders per share	$	(0.83)	$	(1.00)

See note 12 and note 13 for more information about the Company’s common shares.

Deferred income taxes

Stock-based compensation

Preferred Shares

The Company accounted for its Preferred Shares under ASC 480 – Distinguishing Liabilities from Equity (“ASC 480”), which provides guidance for equity instruments with conversion features. The Company classified the Preferred Shares in its consolidated balance sheet wholly as equity, with no bifurcation of conversion feature from the host contract, given that the Preferred Shares could not be cash-settled and the redemption features, which included a fixed conversion ratio with predetermined timing and proceeds, were within the Company’s control. The Company accrued for the 8.75% per annum compounding accrual at each reporting period-end date as an increase to share capital, and an increase to deficit. The Company’s Preferred Shares were converted into 22,833,922 common shares on October 18, 2021.

Segment information

Comprehensive loss

Concentrations of Credit Risk

Recent accounting pronouncements

Contingencies and commitments	12 Months Ended
Contingencies and commitments	Dec. 31, 2021
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 $7.2 million (C$9.3 million). The Company received a cumulative contribution of $2.7 million (C$3.7 million). 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-RNAi 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, a chemotherapy product sold by Acrotech Biopharma LLC (“Acrotech”). For the years ended December 31, 2021 and 2020, the Company earned royalties on Marqibo sales in the amount of $0.2 million in each period. The resulting royalties payable by the Company to TPC were not material in either period. The cumulative amount paid or accrued up to December 31, 2021 was less than $0.1 million, resulting in the contingent amount due to TPC being $2.7 million (C$3.7 million). Arbitration with the University of British Columbia Certain early work on lipid nanoparticle delivery systems and related inventions was undertaken at the University of British Columbia (“UBC”), as well as by the Company that was subsequently assigned to UBC. These inventions are licensed to the Company by UBC under a license agreement, initially entered into in 1998 and as amended in 2001, 2006 and 2007. The Company has granted sublicenses under the UBC license to certain third parties, including Alnylam. In November 2014, UBC filed a demand for arbitration against the Company which alleged entitlement to unpaid royalties. In August 2019, the arbitrator issued its decision for the second phase of the arbitration, awarding UBC $5.9 million, which included interest of approximately $2.6 million. The Company paid the $5.9 million award to UBC in September 2019 and paid an additional $0.2 million for costs and attorneys’ fees in March 2021, and this matter is now fully resolved. On December 18, 2020, UBC delivered to the Company a notice of arbitration alleging that under the cross license between UBC and Arbutus, it is due royalties of $2.0 million plus interest arising from the Company’s sale to OMERS of part of its royalty interest on future global net sales of ONPATTRO, currently being sold by Alnylam. Oral hearings for this matter are currently scheduled to begin on April 25, 2022. The Company does not believe that any royalties are due to UBC and the Company intends to vigorously contest UBC’s allegation. Stock Purchase Agreement with Enantigen In October 2014, Arbutus Inc., the Company’s wholly-owned subsidiary, acquired all of the outstanding shares of Enantigen Therapeutics, Inc. (“Enantigen”) pursuant to a stock purchase agreement. The amount paid to Enantigen’s selling shareholders could be up to an additional $102.5 million in sales performance milestones in connection with the sale of the first commercialized product by Arbutus for the treatment of HBV, regardless of whether such product is based upon assets acquired under this agreement, and a low single-digit royalty on net sales of such first commercialized HBV product, up to a maximum royalty payment of $1.0 million that, if paid, would be offset against Arbutus’ milestone payment obligations. Certain other development milestones related to the acquisition were tied to programs which are no longer under development by Arbutus, and therefore the contingency related to those development milestones is zero. The contingent consideration is a financial liability and is 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 (note 3). The fair value of the contingent consideration was $5.3 million as of December 31, 2021.