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("DoD") to develop TKM-Ebola On July 14, 2010, the Company signed a contract with the DoD to advance TKM-Ebola, an RNAi therapeutic utilizing the Company's lipid nanoparticle technology to treat Ebola virus infection. In the initial phase of the contract, funded as part of the Transformational Medical Technologies program, the Company was eligible to receive up to $34,700,000. This initial funding is for the development of TKM-Ebola including completion of preclinical development, filing an Investigational New Drug application with the United States Food and Drug Administration ("FDA") and completing a Phase 1 human safety clinical trial. On May 8, 2013, the Company announced that the contract had been modified to support development plans that integrate recent advancements in lipid nanoparticle ("LNP") formulation and manufacturing technologies. The contract modification increased the stage one targeted funding by an additional $6,970,000. On April 22, 2014, the Company and the DoD signed a contract modification to further increase the stage one targeted funding by $2,100,000 to $43,819,000. The additional funding is to compensate the Company for unrecovered overheads related to the temporary stop-work period that occurred in 2012 and to provide additional overhead funding should it be required. In May 2015, the Company and the DoD signed a contract modification to further increase stage one funding by up to $1,000,000. The DoD has the option of extending the contract beyond the initial funding period to support the advancement of TKM-Ebola through to the completion of clinical development and FDA approval. Based on the contract's budget this would provide the Company with up to $140,000,000 in funding for the entire program. In October 2014, the Company and the DoD exercised an option to add $7,000,000 for the manufacture of TKMEbola-Guinea (the "Ebola-Guinea Amendment"), developed by the Company, targeting the Ebola-Guinea strain responsible for the current outbreak in West Africa. In March 2015, the Company and the DoD signed a contract modification to provide up to $2,250,000 to fund the Company for TKM-Ebola-Guinea IND submission expenses. Under the contract, the Company is reimbursed for costs incurred, including an allocation of overhead costs, and is paid an incentive fee. At the beginning of the fiscal year the Company estimates its labour and overhead rates for the year ahead. At the end of the year the actual labour and overhead rates are calculated and revenue is adjusted accordingly. The Company's actual labour and overhead rates will differ from its estimated rates based on actual costs incurred and the proportion of the Company's efforts on contracts and internal products versus indirect activities. Within minimum and maximum collars, the amount of incentive fee the Company can earn under the contract varies based on costs incurred versus budgeted costs. During the contractual period, incentive fee revenue and total costs are impacted by management's estimate and judgments which are continuously reviewed and adjusted as necessary using the cumulative catch-up method. At June 30, 2015, the Company believes it can reliably estimate the final contract costs so has recognized the portion of expected incentive fee which has been earned to date. On July 20, 2015, the Company announced given the unclear development path for TKM-Ebola, development activities will be suspended and a joint re-evaluation of the development contract with the DoD is underway. Option and Services Agreements with Monsanto Company ("Monsanto") On January 13, 2014, the Company and Monsanto signed an Option Agreement and a Services Agreement (together, the "Agreements"). Under the Agreements, Monsanto has an option to obtain a license to use the Company's proprietary delivery technology and related intellectual property for use in agriculture. Over the option period, which is expected to be approximately four years, the Company will provide lipid formulations for Monsanto's research and development activities, and Monsanto will make certain payments to the Company to maintain its option rights. The maximum potential value of the transaction, following the successful completion of milestones, is $86,200,000. In May 2015, the arrangement was amended to extend the option period by approximately five months, with payments up to $2,000,000 for the extension period. From inception of the contract to June 30, 2015, the Company had received $18,550,000 from MonsantoThe amounts received relate to research services and use of the Company's technology over the option period, and are recognized as revenue on a straight-line basis over the extended option period. Under the Agreements, the Company has established a wholly-owned subsidiary, PADCo. The Company has determined that PADCo is a variable interest entity ("VIE"); however, Monsanto is the primary beneficiary of the arrangement. PADCo was established to perform research and development activities, which have been funded by Monsanto in return for a call option to acquire the equity or all of the assets of PADCo. At any time during the option period, Monsanto may choose to exercise its option, in which case Monsanto would pay the Company an option exercise fee and would receive a worldwide, exclusive right to use the Company's proprietary delivery technology in the field of agriculture. Monsanto may elect to terminate this option at their discretion. The Company retains all rights to therapeutics uses of all current intellectual property and intellectual property developed under the Agreements. The Company's initial investment is not significant, and has no implied or unfunded commitments and the maximum exposure to loss is limited to the amount of investment in the entity. The Company has included its investment in PADco in Other Assets. There were no significant assets or liabilities for PADCo as at June 30, 2015. There was no equity income or loss with respect to PADCo recorded for the six months ended June 30, 2015. Bristol-Myers Squibb ("BMS") collaboration On May 10, 2010 the Company announced the expansion of its research collaboration with BMS. Under the new agreement, BMS uses small interfering RNA ("siRNA") molecules formulated by the Company in LNP technology to silence target genes of interest. BMS is conducting the preclinical work to validate the function of certain genes and share the data with the Company. The Company could use the preclinical data to develop RNAi therapeutic drugs against the therapeutic targets of interest. The Company received $3,000,000 from BMS concurrent with the signing of the agreement and recorded the amount as deferred revenue. The Company was required to provide a pre-determined number of LNP batches over the four-year agreement. BMS had a first right to negotiate a licensing agreement on certain RNAi products developed by the Company that evolve from BMS validated gene targets. Revenue from the May 10, 2010 agreement with BMS was being recognized as the Company produces the related LNP batches. The revenue earned for the six months ended June 30, 2014 was related to BMS batches shipped during the period. In August 2014, the agreement expired and both companies' obligations under the agreement ended. License and Development and Supply Agreement with Dicerna Pharmaceuticals, Inc. ("Dicerna") On November 16, 2014, the Company signed a License Agreement and a Development and Supply Agreement (together, the "Agreements") with Dicerna to develop, manufacture, and commercialize products directed to the treatment of Primary Hyperoxaluria 1 ("PH1"). In consideration for the rights granted under the Agreements, Dicerna paid the Company an upfront cash payment of $2,500,000. The Company is also entitled to receive payments from Dicerna on manufacturing and services provided, as well as further payments with the achievement of development and regulatory milestones of up to $22,000,000, in aggregate, and potential commercial royalties. Further, under the Agreements, a joint development committee has been established to provide guidance and direction on the progression of the collaboration. The Company determined the deliverables under the Agreements included the rights granted, participation in the joint development committee, materials manufactured and other services provided, as directed under the joint development committee. The Company has determined that manufacturing services and other services provided have standalone value, as a separate statement of work is executed and invoiced for each manufacturing or service work order. The relative fair values are determined as a batch price or fee is estimated upon the execution of each work order, with actual expenditures charged at comparable market rates with embedded margins on each work order. Manufacturing work orders are invoiced at the time of execution of the work order, at the initiation of manufacture, and at the release of materials. Revenue from service work orders is recognized as the services are performed. The license and participation in the joint development committee have been determined by the Company to not have standalone value due to the uniqueness of the subject matter under the Agreements. Therefore, these deliverables are treated as one unit of accounting and recognized as revenue over the performance period, which the Company has estimated to be approximately 28 months. The Company believes the development and regulatory milestones are substantive, due to the existence of substantive uncertainty upon the execution of the arrangement, and that the achievement of the development and regulatory events are based, in part, on the Company's performance and the occurrence of a specific outcome resulting from performance. The Company has not received any milestone payments to date. License and collaboration with Alnylam Pharmaceuticals, Inc. ("Alnylam") and Acuitas Therapeutics Inc. ("Acuitas", formerly AlCana Technologies Inc.) Milestone receipts and payments In the six months ended June 30, 2014, the Company earned a $150,000 milestone from Acuitas, subsequent to Acuitas receiving a milestone payment from Alnylam with respect to Alnylam initiating a Phase III trial for ALN-TTR02. Arbitration with Alnylam and Ascletis Pharmaceuticals (Hangzhou) Co. Ltd. ("Ascletis") On June 21, 2013, the Company transferred manufacturing process technology to Ascletis to enable them to produce ALN-VSP, a product candidate licensed to them by Alnylam. The Company believes that under the new licensing agreement with Alnylam, the technology transfer to Ascletis triggers a $5,000,000 milestone obligation from Alnylam to the Company. However, Alnylam has demanded a declaration that the Company has not yet met its milestone obligations. The Company disputes Alnylam's position. To remedy this dispute, the Company and Alnylam have commenced arbitration proceedings as provided for under the agreement. The hearing date for this arbitration took place in May 2015, and a decision of the arbitrator is pending. The Company has not recorded any revenue in respect of this milestone. Agreements with Spectrum Pharmaceuticals, Inc. ("Spectrum") On May 6, 2006, the Company signed a number of agreements with Talon Therapeutics, Inc. ("Talon", formerly Hana Biosciences, Inc.) including the grant of worldwide licenses (the "Talon License Agreement") for three of the Company's chemotherapy products, Marqibo, AlocrestTM (Optisomal Vinorelbine) and BrakivaTM (Optisomal Topotecan). On August 9, 2012, the Company announced that Talon had received accelerated approval for Marqibo from the FDA for the treatment of adult patients with Philadelphia chromosome negative acute lymphoblastic leukemia in second or greater relapse or whose disease has progressed following two or more anti-leukemia therapies. Marqibo is a liposomal formulation of the chemotherapy drug vincristine. There are no further milestones related to Marqibo but the Company is eligible to receive total milestone payments of up to $18,000,000 on Alocrest and Brakiva. Talon was acquired by Spectrum in July 2013. The acquisition does not affect the terms of the license between Talon and the Company. On September 3, 2013, Spectrum announced that they had shipped the first commercial orders of Marqibo. For the three and six months ended June 30, 2015, the Company recorded $62,000 and $119,000 in Marqibo royalty revenue (three and six months ended June 30, 2014 - $41,000 and $87,000 respectively). For the six months ended June 30, 2015, the Company accrued 2.5% in royalties due to TPC in respect of the Marqibo royalty earned by the Company - see note 8, contingencies and commitments.

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1.       Nature of business and future operations Arbutus Biopharma Corporation (the “Company” or “Arbutus”) is a Canadian biopharmaceutical business dedicated to discovering, developing, and commercializing a cure for patients suffering from chronic hepatitis B infection (“HBV”), a disease of the liver caused by hepatitis B virus (“HBV”). The Company is also developing a pipeline focused on advancing novel RNA interference therapeutics (RNAi) leveraging the Company’s expertise in Lipid Nanoparticle (“LNP”) technology. Effective July 31, 2015, the corporate name changed from Tekmira Pharmaceuticals Corporation (“Tekmira”) to Arbutus Biopharma Corporation. Also effective July 31, 2015, the corporate name of the wholly-owned subsidiary, OnCore Biopharma, Inc. (“OnCore”) changed to Arbutus Biopharma Inc. (“Arbutus Inc.”). Including Arbutus Inc., the Company has five wholly-owned subsidiaries: Protiva Biotherapeutics Inc. (“Protiva”), Protiva Biotherapeutics (USA) Inc. (“Protiva USA”), Protiva Agricultural Development Company Inc. (“PADCo”), and Enantigen Therapeutics, Inc. (“Enantigen”). The success of the Company is dependent on obtaining the necessary regulatory approvals to bring its products to market and achieve profitable operations. The continuation of the research and development activities and the commercialization of its products are dependent on the Company’s ability to successfully complete these activities and to obtain adequate financing through a combination of financing activities and operations. It is not possible to predict either the outcome of future research and development programs or the Company’s ability to continue to fund these programs in the future.

2.       Significant accounting policies Basis of presentation These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”) for interim financial statements and accordingly, do not include all disclosures required for annual financial statements. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014 and included in the Company’s 2014 annual report on Form 10-K. The unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments and reclassifications necessary to present fairly the financial position, results of operations and cash flows at September 30, 2015 and for all periods presented. The results of operations for the three and nine months ended September 30, 2015 and September 30, 2014 are not necessarily indicative of the results for the full year. These condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2014, except as described below. Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and four of its wholly-owned subsidiaries, Arbutus Inc., Protiva, Protiva USA, and Enantigen. All intercompany transactions and balances have been eliminated on consolidation. The Company records its investment in PADCo using the equity method. The Company has determined that PADCo is a variable interest entity (“VIE”) of which it is not the primary beneficiary. The Company is not the primary beneficiary as it does not have the power to make the decisions that most significantly affect the economic performance of the VIE nor does not have the right to receive the benefits or the obligation to absorb losses that in either case could potentially be significant to the VIE. PADCo is described further in note 4(b). Replacement awards Replacement awards are share-based payment awards exchanged for awards held by employees of Arbutus Inc. As part of the Company’s acquisition of Arbutus Inc. (formerly OnCore), Arbutus (formerly Tekmira) shares were exchanged for Arbutus Inc.’s shares subject to repurchase rights held by Arbutus Inc.’s employees – see note 3. As at the date of acquisition of Arbutus Inc., the Company determined the total fair value of replacement awards and attributed a portion of the replacement awards to pre-combination service as part of the total acquisition consideration, and a portion to post-combination service, which is recognized as compensation expense over the expiry period of repurchase provision rights subsequent to the acquisition date. The replacement awards consist of common shares that were issued at acquisition. Accordingly, as stock compensation expense related to these awards is recognized, share capital is increased by a corresponding amount Goodwill and intangible assets The costs incurred in establishing and maintaining patents for intellectual property developed internally are expensed in the period incurred. Intangible assets consist of in-process research and development arising from the Company’s acquisition of Arbutus Inc. – see note 3. In-process research and development (IPR&D) intangible assets are classified as indefinite-lived and are not amortized. IPR&D becomes definite-lived upon the completion or abandonment of the associated research and development efforts. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, which are the respective patent terms. Amortization begins when intangible assets with finite lives are put into use. If there is a major event indicating that the carrying value of intangible assets may be impaired, then management will perform an impairment test and if the carrying value exceeds the recoverable value, based on discounted future cash flows, then such assets are written down to their fair values. Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of Arbutus Inc. &#8211; see note 3. Goodwill has an indefinite accounting life and is therefore not amortized. Instead, goodwill is subject to a two-step impairment test on an annual basis, unless the Company identifies impairment indicators that would require earlier testing. The first step compares the fair value of the reporting unit to its carrying amount, which includes the goodwill. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying amount exceeds the implied fair value of the goodwill, the second step measures the amount of the impairment loss. If the carrying amount exceeds the fair value of the goodwill, an impairment loss is recognized equal to that excess. The Company reviews the recoverable amount of intangible assets on an annual basis, and the annual evaluation for goodwill is performed as of November 30 each year. In addition, the Company evaluates for events or changes in the business that could indicate impairment and earlier testing. Such indicators include, but are not limited to on an ongoing basis: (a) industry and market considerations such as increased competitive environment or adverse change in legal factors including an adverse assessment by regulators; (b) an accumulation of costs significantly in excess of the amount originally expected for the development of the asset; (c) current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the asset; and (d) if applicable, a sustained decrease in share price. Income or loss per share Income or loss per share is calculated based on the weighted average number of common shares outstanding. Diluted loss per share does not differ from basic loss per share since the effect of the Company’s stock options and warrants is anti-dilutive. Diluted income per share is calculated using the treasury stock method which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of potentially issuable common shares from outstanding, in-the-money stock options and warrants. During the nine months ended September 30, 2015, potential common shares of 6,481,295 (September 30, 2014 – 2,356,025) were excluded from the calculation of income per common share because their inclusion would be anti-dilutive, of which 3,625,411 relates to shares issued subject to repurchase provisions as part of consideration paid for the acquisition of Arbutus Inc. – see note 3. Fair value of financial instruments The Company measures certain financial instruments and other items at fair value. To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The three levels of inputs that may be used to measure fair value are as follows: <ul style="text-align: justify;"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> Level 1 inputs are quoted market prices for identical instruments available in active markets. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> 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. </li> </ul> <ul style="text-align: justify;"> <li style="font-family: times new roman,times,serif; font-size: 10pt;">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.</li> </ul> The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, in thousands, and indicates the fair value hierarchy of the valuation techniques used to determine such fair value: <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 1</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 2</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 3</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="15%">September 30, 2015</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Assets </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Cash and cash equivalents</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 181,089 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 181,089 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Guaranteed investment certificate</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 15,006 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="15%"> 15,006 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Term deposit</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 10,041 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> 10,041 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 206,136 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 206,136 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="15%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Liabilities </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Warrants</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 1,495 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 1,495 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Contingent consideration</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 6,665 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 6,665 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Financial instrument</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 8,160 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 8,160 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> </table> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 1</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 2</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 3</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="15%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Assets </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Cash and cash equivalents</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 72,187 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 72,187 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Guaranteed investment certificates</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 39,974 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> 39,974 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Total</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 112,161 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 112,161 </td> <td align="left" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="15%"> </td> <td bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Liabilities </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="15%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Warrants</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Financial instrument</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> </table> The Company acquired a term deposit in May 2015 with an original maturity of 24 months and it has been classified as a long-term investment on the balance sheet. The Company also acquired a Guaranteed Investment Certificate in August 2015 with an original maturity of 12 months and it has been classified as a short-term investment on the balance sheet. For the period ended September 30, 2015, the fair value of the long-term investment is $10,041,000, and the fair value of the short-term investment is $15,006,000 (C$20,027,000), which include the principal and accrued interest earned as at the balance sheet date. The Company used a discounted cash flow model to determine the fair value of the financial instrument, related to Monsanto’s call option to acquire the equity or all of the assets of PADCo, as described in note 4(b). The fair value was determined at the date of recognition, and at each reporting date. The initial fair value of the financial liability was nil, and there has been no change to its fair value as at September 30, 2015. Contingent consideration is a liability assumed by the Company from its acquisition of Arbutus Inc. – see notes 3 and 8. The Company used a discounted cash flow model to determine the fair value of the contingent consideration as at the acquisition date, and at each subsequent reporting date. The Company’s preliminary estimate of the fair value of the contingent consideration was $6,665,000 as at September 30, 2015.  The following table presents the changes in fair value of the Company’s warrants, in thousands: <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0);"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="15%"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Opening liability of</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Fair value of</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Increase</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="center" nowrap="nowrap" width="15%">Liability at beginning</td> <td align="center" nowrap="nowrap" width="11%">warrants issued in</td> <td align="center" nowrap="nowrap" width="11%">warrants exercised</td> <td align="center" nowrap="nowrap" width="11%">(decrease) in fair</td> <td align="center" nowrap="nowrap" width="11%">Foreign exchange</td> <td align="center" nowrap="nowrap" width="11%">Liability at end</td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%">of the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">in the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">value of warrants</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(gain) loss</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">of the period</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Nine months ended September 30, 2014</td> <td align="right" bgcolor="#e6efff" width="15%"> $5,379 </td> <td align="left" bgcolor="#e6efff" width="11%">                              - </td> <td align="right" bgcolor="#e6efff" width="11%"> $ ( 9,260) </td> <td align="right" bgcolor="#e6efff" width="11%"> $12,943 </td> <td align="right" bgcolor="#e6efff" width="11%"> $(355) </td> <td align="right" bgcolor="#e6efff" width="11%"> $8,707 </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Nine months ended September 30, 2015</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> $5,099 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">                              - </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $(334) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $ ( 2,777) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $(493) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $1,495 </td> </tr> </table> </div> The change in fair value of warrant liability for the nine months ended September 30, 2015 is recorded in the statement of operations and comprehensive loss. The weighted average Black-Scholes option-pricing assumptions and the resultant fair values, in thousands, for warrants outstanding at September 30, 2015 and at December 31, 2014 are as follows: <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> September 30, 2015 </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Dividend yield</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Expected volatility</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 65.43% </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 85.22% </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Risk-free interest rate</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.52% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 1.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Expected average term</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 0.9 years </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 0.5 years </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Fair value of warrants outstanding</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> $3.94 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> $12.80 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Aggregate fair value of warrants outstanding</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> $1,495 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> $5,099 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Number of warrants outstanding</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 379,500 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 398,250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table> </div> <div align="center"> </div> Foreign currency translation and reporting currency Functional currency The functional currency of the Company and its integrated subsidiaries (Protiva and Protiva USA) is the Canadian dollar. Foreign currency monetary assets and liabilities are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates. The previous month’s average rate of exchange is used to translate revenue and expense transactions. Exchange gains and losses are included in income or loss for the period. The local currency of Arbutus Inc. (including its subsidiary, Enantigen) is the United States dollars which has been determined to be its functional currency, as it is the currency of the primary economic environment in which Arbutus Inc. operates and expends cash. Foreign currency monetary assets and liabilities are translated into United States dollars at the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates. The previous month’s average rate of exchange is used to translate revenue and expense transactions. Exchange gains and losses are included in income or loss for the period. Reporting currency The Company is using United States dollars as its reporting currency. All assets and liabilities are translated using the exchange rate at the balance sheet date. Revenues, expenses and other income (losses) are translated using the average rate for the period, except for large transactions, for which the exchange rate on the date of the transaction is used. Equity accounts are translated using the historical rate. The translation differences from the Company’s functional currency to the Company’s reporting currency of U.S. dollars are unrealized gains and losses; therefore, the differences are recorded in other comprehensive income (loss), and do not impact the calculation of Income or Loss per Share. Recent accounting pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The update eliminates the requirement to retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill during the measurement period when new information is obtained about the facts and circumstances that existed as of the acquisition date, that if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2015, which for the Company means January 1, 2016, and should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update. Early application permitted for financial statements that have not been issued. The Company does not plan to early adopt this update and is currently assessing the impact of the adoption. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The standard is intended to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS by creating a new Topic 606, Revenue from Contracts with Customers. This guidance supersedes the revenue recognition requirements in ASC 605, Revenue Recognition, and supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The core principle of the accounting standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good or services. The amendments should be applied by either (1) retrospectively to each prior reporting period presented; or (2) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer the effective date of Update 2014-09 for all entities by one year. The new guidance would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. Entities are permitted to adopt in accordance with the original effective date if they choose. The Company has not yet determined the extent of the impact of adoption. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The update is intended to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Under amendments to GAAP, the assessment period is within one year after the date that the financial statements are issued (or available to be issued). The amendments are effective for the annual period ending after December 15, 2016, which for the Company means January 1, 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not plan to early adopt this update. The extent on the impact of this adoption has not yet been determined.

Basis of presentation These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”) for interim financial statements and accordingly, do not include all disclosures required for annual financial statements. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014 and included in the Company’s 2014 annual report on Form 10-K. The unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments and reclassifications necessary to present fairly the financial position, results of operations and cash flows at September 30, 2015 and for all periods presented. The results of operations for the three and nine months ended September 30, 2015 and September 30, 2014 are not necessarily indicative of the results for the full year. These condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2014, except as described below.

Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and four of its wholly-owned subsidiaries, Arbutus Inc., Protiva, Protiva USA, and Enantigen. All intercompany transactions and balances have been eliminated on consolidation. The Company records its investment in PADCo using the equity method. The Company has determined that PADCo is a variable interest entity (“VIE”) of which it is not the primary beneficiary. The Company is not the primary beneficiary as it does not have the power to make the decisions that most significantly affect the economic performance of the VIE nor does not have the right to receive the benefits or the obligation to absorb losses that in either case could potentially be significant to the VIE. PADCo is described further in note 4(b).

Replacement awards Replacement awards are share-based payment awards exchanged for awards held by employees of Arbutus Inc. As part of the Company’s acquisition of Arbutus Inc. (formerly OnCore), Arbutus (formerly Tekmira) shares were exchanged for Arbutus Inc.’s shares subject to repurchase rights held by Arbutus Inc.’s employees – see note 3. As at the date of acquisition of Arbutus Inc., the Company determined the total fair value of replacement awards and attributed a portion of the replacement awards to pre-combination service as part of the total acquisition consideration, and a portion to post-combination service, which is recognized as compensation expense over the expiry period of repurchase provision rights subsequent to the acquisition date. The replacement awards consist of common shares that were issued at acquisition. Accordingly, as stock compensation expense related to these awards is recognized, share capital is increased by a corresponding amount

Income or loss per share Income or loss per share is calculated based on the weighted average number of common shares outstanding. Diluted loss per share does not differ from basic loss per share since the effect of the Company’s stock options and warrants is anti-dilutive. Diluted income per share is calculated using the treasury stock method which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of potentially issuable common shares from outstanding, in-the-money stock options and warrants. During the nine months ended September 30, 2015, potential common shares of 6,481,295 (September 30, 2014 – 2,356,025) were excluded from the calculation of income per common share because their inclusion would be anti-dilutive, of which 3,625,411 relates to shares issued subject to repurchase provisions as part of consideration paid for the acquisition of Arbutus Inc. – see note 3.

Fair value of financial instruments The Company measures certain financial instruments and other items at fair value. To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The three levels of inputs that may be used to measure fair value are as follows: <ul style="text-align: justify;"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> Level 1 inputs are quoted market prices for identical instruments available in active markets. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> 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. </li> </ul> <ul style="text-align: justify;"> <li style="font-family: times new roman,times,serif; font-size: 10pt;">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.</li> </ul> The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, in thousands, and indicates the fair value hierarchy of the valuation techniques used to determine such fair value: <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 1</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 2</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 3</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="15%">September 30, 2015</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Assets </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Cash and cash equivalents</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 181,089 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 181,089 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Guaranteed investment certificate</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 15,006 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="15%"> 15,006 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Term deposit</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 10,041 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> 10,041 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 206,136 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 206,136 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="15%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Liabilities </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Warrants</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 1,495 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 1,495 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Contingent consideration</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 6,665 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 6,665 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Financial instrument</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 8,160 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 8,160 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> </table> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 1</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 2</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Level 3</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="15%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Assets </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="15%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Cash and cash equivalents</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 72,187 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 72,187 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Guaranteed investment certificates</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 39,974 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> 39,974 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Total</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 112,161 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="15%"> 112,161 </td> <td align="left" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="15%"> </td> <td bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Liabilities </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="15%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Warrants</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Financial instrument</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="15%"> 5,099 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> </table> The Company acquired a term deposit in May 2015 with an original maturity of 24 months and it has been classified as a long-term investment on the balance sheet. The Company also acquired a Guaranteed Investment Certificate in August 2015 with an original maturity of 12 months and it has been classified as a short-term investment on the balance sheet. For the period ended September 30, 2015, the fair value of the long-term investment is $10,041,000, and the fair value of the short-term investment is $15,006,000 (C$20,027,000), which include the principal and accrued interest earned as at the balance sheet date. The Company used a discounted cash flow model to determine the fair value of the financial instrument, related to Monsanto’s call option to acquire the equity or all of the assets of PADCo, as described in note 4(b). The fair value was determined at the date of recognition, and at each reporting date. The initial fair value of the financial liability was nil, and there has been no change to its fair value as at September 30, 2015. Contingent consideration is a liability assumed by the Company from its acquisition of Arbutus Inc. – see notes 3 and 8. The Company used a discounted cash flow model to determine the fair value of the contingent consideration as at the acquisition date, and at each subsequent reporting date. The Company’s preliminary estimate of the fair value of the contingent consideration was $6,665,000 as at September 30, 2015.  The following table presents the changes in fair value of the Company’s warrants, in thousands: <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0);"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="15%"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Opening liability of</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Fair value of</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%">Increase</td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%"> </td> <td align="center" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0);" width="11%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="center" nowrap="nowrap" width="15%">Liability at beginning</td> <td align="center" nowrap="nowrap" width="11%">warrants issued in</td> <td align="center" nowrap="nowrap" width="11%">warrants exercised</td> <td align="center" nowrap="nowrap" width="11%">(decrease) in fair</td> <td align="center" nowrap="nowrap" width="11%">Foreign exchange</td> <td align="center" nowrap="nowrap" width="11%">Liability at end</td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%">of the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">in the period</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">value of warrants</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(gain) loss</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">of the period</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Nine months ended September 30, 2014</td> <td align="right" bgcolor="#e6efff" width="15%"> $5,379 </td> <td align="left" bgcolor="#e6efff" width="11%">                              - </td> <td align="right" bgcolor="#e6efff" width="11%"> $ ( 9,260) </td> <td align="right" bgcolor="#e6efff" width="11%"> $12,943 </td> <td align="right" bgcolor="#e6efff" width="11%"> $(355) </td> <td align="right" bgcolor="#e6efff" width="11%"> $8,707 </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Nine months ended September 30, 2015</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="15%"> $5,099 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">                              - </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $(334) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $ ( 2,777) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $(493) </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%"> $1,495 </td> </tr> </table> </div> The change in fair value of warrant liability for the nine months ended September 30, 2015 is recorded in the statement of operations and comprehensive loss. The weighted average Black-Scholes option-pricing assumptions and the resultant fair values, in thousands, for warrants outstanding at September 30, 2015 and at December 31, 2014 are as follows: <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> September 30, 2015 </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Dividend yield</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Expected volatility</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 65.43% </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 85.22% </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Risk-free interest rate</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 0.52% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 1.00% </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Expected average term</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 0.9 years </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 0.5 years </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Fair value of warrants outstanding</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> $3.94 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> $12.80 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Aggregate fair value of warrants outstanding</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> $1,495 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> $5,099 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Number of warrants outstanding</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 379,500 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 398,250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table> </div>

Foreign currency translation and reporting currency Functional currency The functional currency of the Company and its integrated subsidiaries (Protiva and Protiva USA) is the Canadian dollar. Foreign currency monetary assets and liabilities are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates. The previous month’s average rate of exchange is used to translate revenue and expense transactions. Exchange gains and losses are included in income or loss for the period. The local currency of Arbutus Inc. (including its subsidiary, Enantigen) is the United States dollars which has been determined to be its functional currency, as it is the currency of the primary economic environment in which Arbutus Inc. operates and expends cash. Foreign currency monetary assets and liabilities are translated into United States dollars at the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates. The previous month’s average rate of exchange is used to translate revenue and expense transactions. Exchange gains and losses are included in income or loss for the period. Reporting currency The Company is using United States dollars as its reporting currency. All assets and liabilities are translated using the exchange rate at the balance sheet date. Revenues, expenses and other income (losses) are translated using the average rate for the period, except for large transactions, for which the exchange rate on the date of the transaction is used. Equity accounts are translated using the historical rate. The translation differences from the Company’s functional currency to the Company’s reporting currency of U.S. dollars are unrealized gains and losses; therefore, the differences are recorded in other comprehensive income (loss), and do not impact the calculation of Income or Loss per Share.

Recent accounting pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The update eliminates the requirement to retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill during the measurement period when new information is obtained about the facts and circumstances that existed as of the acquisition date, that if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2015, which for the Company means January 1, 2016, and should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update. Early application permitted for financial statements that have not been issued. The Company does not plan to early adopt this update and is currently assessing the impact of the adoption. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The standard is intended to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS by creating a new Topic 606, Revenue from Contracts with Customers. This guidance supersedes the revenue recognition requirements in ASC 605, Revenue Recognition, and supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The core principle of the accounting standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good or services. The amendments should be applied by either (1) retrospectively to each prior reporting period presented; or (2) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer the effective date of Update 2014-09 for all entities by one year. The new guidance would be effective for fiscal years beginning after December 15, 2017, which for the Company means January 1, 2018. Entities are permitted to adopt in accordance with the original effective date if they choose. The Company has not yet determined the extent of the impact of adoption. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The update is intended to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Under amendments to GAAP, the assessment period is within one year after the date that the financial statements are issued (or available to be issued). The amendments are effective for the annual period ending after December 15, 2016, which for the Company means January 1, 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not plan to early adopt this update. The extent on the impact of this adoption has not yet been determined.

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3.       Merger with Arbutus Biopharma Inc. (formerly OnCore BioPharma, Inc.) (a)      Purchase Price Allocation On January 11, 2015, the Company entered into a Merger Agreement to acquire 100% of the outstanding shares of Arbutus Inc. and its wholly-owned subsidiary, Enantigen (see note 8). Arbutus Inc. was a privately owned U.S. company focused on discovery, development and commercialization of an all-oral cure regimen for patients with HBV. The merger was approved by the Company’s shareholders on March 3, 2015 and consummated on March 4, 2015. Arbutus Inc.’s results of operations and fair value of assets acquired and liabilities assumed are included in the Company’s consolidated financial statements from the date of acquisition. The transaction has been accounted for using the acquisition method based on ASC 805, Business Combinations, with Arbutus (formerly Tekmira) identified as the acquirer, based on managements’ analysis and evaluation of the form of the acquisition, the relative contribution and rights of the predecessor groups post-closing, and the relative number of shares issued by the Company on acquisition of Arbutus Inc. Under the acquisition method, the consideration transferred is measured at fair value; common shares as consideration are issued at the market price as at the acquisition date. The excess of the purchase price over the preliminary fair value assigned to the net assets acquired has been recorded as goodwill. Acquisition costs were expensed as incurred. The Company recorded $9,656,000 of acquisition costs for the nine-months ended September 30, 2015. The Company issued consideration with a total fair value of $381,942,000 on acquisition. Of this consideration, 23,973,315 common shares were issued, which is comprised of 20,347,906 common shares issued without subjects and 3,625,412 common shares issued to Arbutus Inc.’s founding executives and subject to repurchase provisions. The fair value of the common shares issued without subjects has been determined to be the Company’s NASDAQ closing price of $18.26 on the date prior to the acquisition’s consummation, March 4, 2015. The total fair value of the common shares issued subject to repurchase provision has been determined to be $66,196,000, using the Black-Scholes pricing model with assumed risk-free interest rate of 0.74%, volatility of 81%, a zero dividend yield and an expected life of 4 years. Of the total fair value, $9,262,000 has been attributed as pre-combination service and included as part of the total acquisition consideration. The post-combination attribution of $56,934,000 will be recognized as compensation expense over the period of expiry of repurchase provision rights. The Company recorded $10,962,000 in stock-based compensation expense related to services performed during the period of expiration of repurchase provision rights from the acquisition date through to September 30, 2015. In July 2015, in conjunction with amendments to the employment contracts of Arbutus Inc.’s founding executives, the Company amended the repurchase provision rights period of expiry from August 2018 to August 2017. This amendment results in an acceleration of compensation expense recognized in each subsequent period by approximately $1,900,000 per quarter, effective in Q3 2015. As at the acquisition date, 3,625,412 shares were issued and outstanding which were and continue to remain subject to a repurchase provision. Subsequent to the acquisition date and the July 2015 amendment to the repurchase provision rights, the rights expire at a rate of 302,120 on November 30, 2015 and February 29, 2016 and at a rate of 503,552 shares every three months commencing May 31, 2016. The Company has further reserved 184,332 shares for the future exercise of Arbutus Inc. stock options. The total fair value of Arbutus Inc. stock options at the date of acquisition has been determined to be $3,287,000, using the Black-Scholes pricing model with an assumed risk-free interest rate of 0.97%, volatility of 78%, a zero dividend yield and an expected life of 8 years, which are consistent with the assumption inputs used by the Company to determine the fair value of its options. Of the total fair value, $1,127,000 has been attributed as pre-combination service and included as part of the total acquisition consideration. The post-combination attribution of $2,160,000 will be recognized as compensation expense over the vesting period of the stock options through to December 2018. The Company has included $330,000 compensation expense related to the vesting of Arbutus Inc. stock options from the acquisition date through to September 30, 2015. The aggregate fair value of consideration transferred to acquire Arbutus Inc.’s outstanding shares has been determined to be $381,942,000, and has been attributed to preliminary fair values of assets acquired and liabilities assumed. The Company has refined the preliminary allocation of the purchase price for intangible assets, goodwill, contingent consideration and deferred tax liability from what was disclosed in prior periods. The following table summarizes the Company’s purchase price allocation as at September 30, 2015, which remains preliminary as the assessments of the fair value of assets acquired and liabilities assumed are ongoinging. <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Consideration paid:</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="left" bgcolor="#e6efff" width="12%">  </td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left">          Common shares issued without subjects</td> <td align="left" width="1%"> $</td> <td align="right" width="12%"> 371,553</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Common shares issued subject to repurchase provision</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 9,262</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left">          Common shares issuable for Arbutus Inc. stock options</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,127</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">  </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> $</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 381,942</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left">  </td> <td align="left" width="1%">  </td> <td align="left" width="12%">  </td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left"> Identifiable assets acquired and liabilities assumed:</td> <td align="left" width="1%">  </td> <td align="left" width="12%">  </td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Cash</td> <td align="left" bgcolor="#e6efff" width="1%"> $</td> <td align="right" bgcolor="#e6efff" width="12%"> 324</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left">          Prepaid expenses and other assets</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> 116</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Accounts receivable</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 8</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left">          Property and equipment</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> 147</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Acquired intangible assets</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 391,591</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left">          Goodwill</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> 156,637</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Accounts payable and accrued liabilities</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (3,580</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr valign="top"> <td align="left">          Other noncurrent liabilities (note 8)</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> (6,665</td> <td align="left" width="2%"> )</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">          Deferred income tax liability</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (156,636</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> )</td> </tr> <tr valign="top"> <td align="left"> Total purchase price allocation</td> <td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> $</td> <td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 381,942</td> <td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%">  </td> </tr> </table> The preliminary fair value of intangible assets is estimated to be $391,591,000. The fair value of each IPR&D is estimated using the income approach. The income approach uses valuation techniques to discount future economic benefits attributed to the subject intangible asset to a present value. Present value is based on current market expectations about those future amounts and includes management&#8217;s estimates of risk-adjusted future incremental earnings that may be achieved upon regulatory approval, promotion, and distribution associated with the rights and includes estimated cash flows of approximately 20 years and a discount rate of approximately 13.9%. The identifiable intangible assets acquired consist of in-process research and development (IPR&D) HBV assets, as summarized in the table below: <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> $ </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> IPR&D - Cyclophilins</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 37,990</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left"> IPR&D - Immune Modulators</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> 188,498</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> IPR&D - Antigen Inhibitors</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 35,374</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> IPR&D - cccDNA Sterilizers</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 129,729</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Total IPR&D</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> $</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 391,591 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%">  </td> </tr> </table> All IPR&D acquired is currently classified as indefinite-lived and is not currently being amortized. IPR&D becomes definite-lived upon the completion or abandonment of the associated research and development efforts, and will be amortized from that time over an estimated useful life based on respective patent terms. The fair value of each IPR&D asset will continue to be evaluated on a quarterly basis for indicators of impairment. Based on the preliminary fair values above, an amount of $156,637,000 has been allocated to goodwill, which represents the excess of the purchase price over the fair values assigned to the net assets acquired. Goodwill is attributable to synergies expected to arise after the Company’s acquisition of Arbutus Inc. The full amount of the preliminary value of goodwill has been assigned to the entire Company, since management has determined that the Company has only one reporting unit. The goodwill is not deductible for tax purposes, and is not amortized, but will be evaluated for impairment on an annual basis or more often if the Company identifies impairment indicators that would require earlier testing. The amount of net loss of Arbutus Inc. included in the consolidated statements of operations from the acquisition date, through the period ended September 30, 2015 was $9,067,000. Arbutus Inc. did not earn any revenues from the acquisition date through the period ended September 30, 2015. The following table presents the unaudited pro forma results for the three and nine months ended September 30, 2015 and 2014. The pro forma financial information combines the results of operations of Arbutus, Arbutus Inc., Protiva, Protiva USA, and Enantigen as though the businesses had been combined as of the beginning of fiscal 2014. The pro forma financial information is presented for informational purposes only, and is not indicative of the results of operations that would have been achieved if the merger had taken place at the beginning of fiscal 2014. The pro forma financial information presented includes acquisition costs, amortization charges for acquired tangible assets, estimated impairment charge on acquired intangible assets (as described in note 3b below), but does not include amortization charges for acquired intangible assets as these assets have not yet been put in use. <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">  </td> <td align="left" width="1%">  </td> <td align="center" colspan="4" nowrap="nowrap"> Three Months Ended</td> <td align="center" nowrap="nowrap" width="2%">  </td> <td align="center" nowrap="nowrap" width="1%">  </td> <td align="center" colspan="4" nowrap="nowrap"> Nine Months Ended</td> <td align="center" width="2%">  </td> </tr> <tr valign="top"> <td align="left">  </td> <td align="left" width="1%">  </td> <td align="center" colspan="4" nowrap="nowrap"> September 30,</td> <td align="center" nowrap="nowrap" width="2%">  </td> <td align="center" nowrap="nowrap" width="1%">  </td> <td align="center" colspan="4" nowrap="nowrap"> September 30,</td> <td align="center" width="2%">  </td> </tr> <tr valign="top"> <td align="left">  </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015</td> <td align="center" nowrap="nowrap" width="2%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2014</td> <td align="center" nowrap="nowrap" width="2%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015</td> <td align="center" nowrap="nowrap" width="2%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2014</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Pro forma information</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="left" bgcolor="#e6efff" width="12%">  </td> <td align="left" bgcolor="#e6efff" width="2%">  </td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="left" bgcolor="#e6efff" width="12%">  </td> <td align="left" bgcolor="#e6efff" width="2%">  </td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="left" bgcolor="#e6efff" width="12%">  </td> <td align="left" bgcolor="#e6efff" width="2%">  </td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="left" bgcolor="#e6efff" width="12%">  </td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left"> Gross Revenue</td> <td align="left" width="1%"> $</td> <td align="right" width="12%"> 4,065 </td> <td align="left" width="2%">  </td> <td align="left" width="1%"> $</td> <td align="right" width="12%"> 4,362</td> <td align="left" width="2%">  </td> <td align="left" width="1%"> $</td> <td align="right" width="12%"> 12,187 </td> <td align="left" width="2%">  </td> <td align="left" width="1%"> $</td> <td align="right" width="12%"> 10,603</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Loss from operations</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (58,138 </td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (11,222</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (97,629 </td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (35,501</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr valign="top"> <td align="left"> Net loss</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (28,928 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> )</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (12,976</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> )</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (62,922 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> )</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (45,939</td> <td align="left" width="2%"> )</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Basic and diluted loss per share</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (0.57 </td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (0.28</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (1.31 </td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> (1.02</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> </table> </div> (b)       Impairment evaluations for intangible assets and goodwill As indicated in note 2 above, the Company will evaluate the recoverable amount of intangible assets on an annual basis and perform an annual evaluation of goodwill as of November 30 each year, unless there is an event or change in the business that could indicate impairment and earlier testing. On October 28, 2015, the Company announced that the development of the cyclophilin drug candidate, OCB-030 has been discontinued. The decision was based on extensive preclinical evaluations performed by the Company of OCB-030 and other competitive cyclophilin inhibitors following the acquisition of Arbutus Inc., which concluded that cyclophilins do not play a meaningful role in HBV biology. Although the final conclusion was made subsequent to the period end, it reflected management’s best estimate as at September 30, 2015, and as such, the Company recorded an estimated impairment charge of $37,990,000 and a corresponding income tax benefit of $15,196,000 related to the decrease in deferred tax liability for the discontinuance of OCB-030 in the consolidated statement of operations and comprehensive loss. For all other IPR&D, no impairment triggers were identified. The following table summarizes the preliminary carrying values, net of estimated impairment of the intangible assets as at September 30, 2015: <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> $ </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> IPR&D - Cyclophilins</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> -</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left"> IPR&D - Immune Modulators</td> <td align="left" width="1%">  </td> <td align="right" width="12%"> 188,498</td> <td align="left" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> IPR&D - Antigen Inhibitors</td> <td align="left" bgcolor="#e6efff" width="1%">  </td> <td align="right" bgcolor="#e6efff" width="12%"> 35,374</td> <td align="left" bgcolor="#e6efff" width="2%">  </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> IPR&D - cccDNA Sterilizers</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">  </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 129,729</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">  </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Total IPR&D</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> $</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 353,601 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%">  </td> </tr> </table> The Company further determined that in conjunction with the sustained decline in the share price, the estimated impairment on cyclophilins reflect significant changes in the business that would trigger an earlier evaluation of the carrying value of goodwill prior to the annual impairment testing date of November 30.  Goodwill was recorded as a result of the acquisition of Arbutus Inc. as described in note 3(a), and has a preliminary carrying value of $156,637,000. As part of the evaluation of the recoverability of goodwill, the Company has identified only one reporting unit to which the total preliminary carrying amount of goodwill has been assigned. The income approach is used to estimate the fair value of the reporting unit, which requires estimating future cash flows and risk-adjusted discount rates. Changes in these estimates and assumptions could materially affect the determination of fair value of the reporting unit and may result in impairment charges in future periods. As at September 30, 2015, the fair value of the reporting unit exceeded the preliminary carrying value of the reporting unit, and as such the second step of the impairment test, which measures the amount of impairment charge, was not required. In addition to the income approach, the Company considered the market capitalization of approximately $332,330,000 as at September 30, 2015. Although the Company’s carrying value of $553,807,000 exceeded the market capitalization, the Company reconciled the income approach determination of fair value with the market capitalization by considering macroeconomic factors, and as such, the Company does not believe that market capitalization appropriately reflected the value of the Company for the purpose of testing goodwill impairment in the interim. No impairment charge on goodwill was recorded for the period ended September 30, 2015.

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" bgcolor="#e6efff">Consideration paid:</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">         Common shares issued without subjects</td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 371,553 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Common shares issued subject to repurchase provision</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 9,262 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">         Common shares issuable for Arbutus Inc. stock options</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,127 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 381,942 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Identifiable assets acquired and liabilities assumed:</td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Cash</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 324 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">         Prepaid expenses and other assets</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 116 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Accounts receivable</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 8 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">         Property and equipment</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 147 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Acquired intangible assets</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 391,591 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">         Goodwill</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 156,637 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Accounts payable and accrued liabilities</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (3,580 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr valign="top"> <td align="left">         Other noncurrent liabilities (note 8)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> (6,665 </td> <td align="left" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">         Deferred income tax liability</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (156,636 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Total purchase price allocation</td> <td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td> <td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> 381,942 </td> <td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td> </tr> </table>

371553000

9262000 1127000

381942000

324000

116000

8000

147000

391591000

156637000

3580000

6665000

156636000

381942000

37990000

188498000

35374000

129729000

391591000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap"> Three Months Ended </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap"> Nine Months Ended </td> <td align="center" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap"> September 30, </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap"> September 30, </td> <td align="center" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="center" nowrap="nowrap" width="2%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Pro forma information </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Gross Revenue</td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 4,065 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 4,362 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 12,187 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 10,603 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Loss from operations</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (58,138 </td> <td align="left" bgcolor="#e6efff" width="2%"> ) </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (11,222 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (97,629 </td> <td align="left" bgcolor="#e6efff" width="2%"> ) </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (35,501 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Net loss</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (28,928 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> ) </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (12,976 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (62,922 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> ) </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> (45,939 </td> <td align="left" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Basic and diluted loss per share</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (0.57 </td> <td align="left" bgcolor="#e6efff" width="2%"> ) </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (0.28 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (1.31 </td> <td align="left" bgcolor="#e6efff" width="2%"> ) </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> (1.02 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> </table>

4065000

4362000

12187000

10603000

-58138000

-11222000

-97629000

-35501000

-28928000

-12976000

-62922000

-45939000

-0.57 -0.28 -1.31 -1.02

188498000

35374000

129729000

353601000

1.00

9656000

23973315

20347906

3625412

18.26

66196000

0.0074

0.81

P4Y

56934000 10962000 1900000

3625412

302120 503552

184332

3287000

0.0097

0.78

P8Y

1127000 2160000 330000

381942000

P20Y

0.139

9067000

37990000

15196000

156637000

332330000

553807000

0.00

4.       Collaborations, contracts and licensing agreements The following tables set forth revenue recognized under collaborations, contracts and licensing agreements, in thousands: <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);"> Three months ended September 30 </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);"> Nine months ended September 30 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Collaborations and contracts </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">DoD (a)</td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 2,002 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 1,493 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 6,909 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 5,594 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Monsanto (b)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 309 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 283 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 826 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 809 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">BMS (d)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 1,552 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 1,758 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Dicerna (e)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 724 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,130 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Total research and development collaborations and contracts</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 3,035 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 3,578 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 8,865 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 8,411 </td> <td align="left" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Licensing fees, milestone and royalty payments </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Monsanto licensing fees and milestone payments (b)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 727 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 730 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 2,374 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 1,901 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Acuitas milestone payments (c)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 150 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Dicerna licensing fee (e)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 263 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 789 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Spectrum royalty payments (f)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 40 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 54 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 159 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 141 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Total licensing fees, milestone and royalty payments</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,030 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 784 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 3,322 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2,192 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);"> Total revenue </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 4,065 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 4,362 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 12,187 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 10,603 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table> The following table sets forth deferred collaborations and contracts revenue: <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> September 30, 2015 </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">DoD (a)</td> <td align="left" bgcolor="#e6efff" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" width="12%"> 57 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 313 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Monsanto current portion (b)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 3,773 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 4,245 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Dicerna current portion (e)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,005 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,221 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Deferred revenue, current portion</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 4,835 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 5,779 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Monsanto long-term portion (b)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 6,446 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 8,666 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Dicerna long-term portion (e)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 442 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,271 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);"> Total deferred revenue </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 11,723 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 15,716 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table> </div> (a)      Contract with United States Government’s Department of Defense (“DoD”) to develop TKM-Ebola On July 14, 2010, the Company signed a contract with the DoD to advance TKM-Ebola, an RNAi therapeutic utilizing the Company’s lipid nanoparticle technology to treat Ebola virus infection. In the initial phase of the contract, funded as part of the Transformational Medical Technologies program, the Company was eligible to receive up to $34,700,000. This initial funding is for the development of TKM-Ebola including completion of preclinical development, filing an Investigational New Drug application with the United States Food and Drug Administration (“FDA”) and completing a Phase 1 human safety clinical trial. On May 8, 2013, the Company announced that the contract had been modified to support development plans that integrate recent advancements in lipid nanoparticle (“LNP”) formulation and manufacturing technologies. The contract modification increased the stage one targeted funding by an additional $6,970,000. On April 22, 2014, the Company and the DoD signed a contract modification to further increase the stage one targeted funding by $2,100,000 to $43,819,000. The additional funding is to compensate the Company for unrecovered overheads related to the temporary stop-work period that occurred in 2012 and to provide additional overhead funding should it be required. In May 2015, the Company and the DoD signed a contract modification to further increase stage one funding by up to $1,000,000. The DoD has the option of extending the contract beyond the initial funding period to support the advancement of TKM-Ebola through to the completion of clinical development and FDA approval. Based on the contract’s budget this would provide the Company with up to $140,000,000 in funding for the entire program. In October 2014, the Company and the DoD exercised an option to add $7,000,000 for the manufacture of TKM-Ebola-Guinea (the “Ebola-Guinea Amendment”), developed by the Company, targeting the Ebola-Guinea strain responsible for the current outbreak in West Africa. In March 2015, the Company and the DoD signed a contract modification to provide up to $2,250,000 to fund the Company for TKM- Ebola-Guinea IND submission expenses. Under the contract, the Company is reimbursed for costs incurred, including an allocation of overhead costs, and is paid an incentive fee. At the beginning of the fiscal year the Company estimates its labor and overhead rates for the year ahead. At the end of the year the actual labor and overhead rates are calculated and revenue is adjusted accordingly. The Company’s actual labor and overhead rates will differ from its estimated rates based on actual costs incurred and the proportion of the Company’s efforts on contracts and internal products versus indirect activities. Within minimum and maximum collars, the amount of incentive fee the Company can earn under the contract varies based on costs incurred versus budgeted costs. During the contractual period, incentive fee revenue and total costs are impacted by management’s estimate and judgments which are continuously reviewed and adjusted as necessary using the cumulative catch-up method. At September 30, 2015, the Company believes it can reliably estimate the final contract costs so has recognized the portion of expected incentive fee which has been earned to date. On October 1, 2015, the Company received formal notification from the DoD that, due to the unclear development path for TKM-Ebola and TKM-Ebola-Guinea, the Ebola-Guinea Manufacturing and the Ebola-Guinea IND submission statements of work had been terminated, subject to the completion of certain post-termination obligations. The TKM-Ebola portion of the contract is expected to complete before the end of 2015 at which point contract close out procedures will commence. (b)       Option and Services Agreements with Monsanto Company (“Monsanto”) On January 13, 2014, the Company and Monsanto signed an Option Agreement and a Services Agreement (together, the “Agreements”). Under the Agreements, Monsanto has an option to obtain a license to use the Company’s proprietary delivery technology and related intellectual property for use in agriculture. Over the option period, which is expected to be approximately four years, the Company will provide lipid formulations for Monsanto’s research and development activities, and Monsanto will make certain payments to the Company to maintain its option rights. The maximum potential value of the transaction, following the successful completion of milestones, is $86,200,000. In May 2015, the arrangement was amended to extend the option period by approximately five months, with payments up to $2,000,000 for the extension period. From inception of the contract to September 30, 2015, the Company had received $19,300,000 from Monsanto. The amounts received relate to research services and use of the Company’s technology over the option period, and are recognized as revenue on a straight-line basis over the extended option period. Under the Agreements, the Company has established a wholly-owned subsidiary, PADCo. The Company has determined that PADCo is a variable interest entity (“VIE”); however, Monsanto is the primary beneficiary of the arrangement. PADCo was established to perform research and development activities, which have been funded by Monsanto in return for a call option to acquire the equity or all of the assets of PADCo. At any time during the option period, Monsanto may choose to exercise its option, in which case Monsanto would pay the Company an option exercise fee and would receive a worldwide, exclusive right to use the Company’s proprietary delivery technology in the field of agriculture. Monsanto may elect to terminate this option at their discretion. The Company retains all rights to therapeutics uses of all current intellectual property and intellectual property developed under the Agreements. The Company’s initial investment is not significant, and has no implied or unfunded commitments and the maximum exposure to loss is limited to the amount of investment in the entity. The Company has included its investment in PADCo in Other Assets. There were no significant assets or liabilities for PADCo as at September 30, 2015. There was no equity income or loss with respect to PADCo recorded for the nine months ended September 30, 2015. <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr> <td valign="top" width="5%"> (c) </td> <td> License and collaboration with Alnylam Pharmaceuticals, Inc. (“Alnylam”) and Acuitas Therapeutics Inc. (“Acuitas”, formerly AlCana Technologies Inc.) </td> </tr> </table> Milestone receipts and payments In the nine months ended September 30, 2014, the Company earned a $150,000 milestone from Acuitas, subsequent to Acuitas receiving a milestone payment from Alnylam with respect to Alnylam initiating a Phase III trial for ALN-TTR02. Arbitration with Alnylam and Ascletis Pharmaceuticals (Hangzhou) Co. Ltd. (“Ascletis”) On June 21, 2013, the Company transferred manufacturing process technology to Ascletis to enable them to produce ALN-VSP, a product candidate licensed to them by Alnylam. The Company believes that under the new licensing agreement with Alnylam, the technology transfer to Ascletis triggers a $5,000,000 milestone obligation from Alnylam to the Company. However, Alnylam has demanded a declaration that the Company has not yet met its milestone obligations. The Company disputes Alnylam’s position. To remedy this dispute, the Company and Alnylam have commenced arbitration proceedings as provided for under the agreement. The hearing date for this arbitration took place in May 2015, and the decision of the arbitrator is pending. The Company has not recorded any revenue in respect of this milestone. (d)      Bristol-Myers Squibb (“BMS”) collaboration On May 10, 2010 the Company announced the expansion of its research collaboration with BMS. Under the new agreement, BMS uses small interfering RNA (“siRNA”) molecules formulated by the Company in LNP technology to silence target genes of interest. BMS is conducting the preclinical work to validate the function of certain genes and share the data with the Company. The Company could use the preclinical data to develop RNAi therapeutic drugs against the therapeutic targets of interest. The Company received $3,000,000 from BMS concurrent with the signing of the agreement and recorded the amount as deferred revenue. The Company was required to provide a pre-determined number of LNP batches over the four-year agreement. BMS had a first right to negotiate a licensing agreement on certain RNAi products developed by the Company that evolve from BMS validated gene targets. Revenue from the May 10, 2010 agreement with BMS was being recognized as the Company produces the related LNP batches. The revenue earned for the nine months ended September 30, 2014 was related to BMS batches shipped during the period. In August 2014, the agreement expired and both companies’ obligations under the agreement ended. (e)      License and Development and Supply Agreement with Dicerna Pharmaceuticals, Inc. (“Dicerna”) On November 16, 2014, the Company signed a License Agreement and a Development and Supply Agreement (together, the “Agreements”) with Dicerna to develop, manufacture, and commercialize products directed to the treatment of Primary Hyperoxaluria 1 (“PH1”). In consideration for the rights granted under the Agreements, Dicerna paid the Company an upfront cash payment of $2,500,000. The Company is also entitled to receive payments from Dicerna on manufacturing and services provided, as well as further payments with the achievement of development and regulatory milestones of up to $22,000,000, in aggregate, and potential commercial royalties. Further, under the Agreements, a joint development committee has been established to provide guidance and direction on the progression of the collaboration. The Company determined the deliverables under the Agreements included the rights granted, participation in the joint development committee, materials manufactured and other services provided, as directed under the joint development committee. The Company has determined that manufacturing services and other services provided have standalone value, as a separate statement of work is executed and invoiced for each manufacturing or service work order. The relative fair values are determined as a batch price or fee is estimated upon the execution of each work order, with actual expenditures charged at comparable market rates with embedded margins on each work order. Manufacturing work orders are invoiced at the time of execution of the work order, at the initiation of manufacture, and at the release of materials. Revenue from service work orders is recognized as the services are performed. The license and participation in the joint development committee have been determined by the Company to not have standalone value due to the uniqueness of the subject matter under the Agreements. Therefore, these deliverables are treated as one unit of accounting and recognized as revenue over the performance period, which the Company has estimated to be approximately 28 months. The Company believes the development and regulatory milestones are substantive, due to the existence of substantive uncertainty upon the execution of the arrangement, and that the achievement of the development and regulatory events are based, in part, on the Company’s performance and the occurrence of a specific outcome resulting from performance. The Company has not received any milestone payments to date. (f)      Agreements with Spectrum Pharmaceuticals, Inc. (“Spectrum”) On May 6, 2006, the Company signed a number of agreements with Talon Therapeutics, Inc. (“Talon”, formerly Hana Biosciences, Inc.) including the grant of worldwide licenses (the “Talon License Agreement”) for three of the Company’s chemotherapy products, Marqibo®, Alocrest TM (Optisomal Vinorelbine) and Brakiva TM (Optisomal Topotecan). On August 9, 2012, the Company announced that Talon had received accelerated approval for Marqibo from the FDA for the treatment of adult patients with Philadelphia chromosome negative acute lymphoblastic leukemia in second or greater relapse or whose disease has progressed following two or more anti-leukemia therapies. Marqibo is a liposomal formulation of the chemotherapy drug vincristine. There are no further milestones related to Marqibo but the Company is eligible to receive total milestone payments of up to $18,000,000 on Alocrest and Brakiva. Talon was acquired by Spectrum in July 2013. The acquisition does not affect the terms of the license between Talon and the Company. On September 3, 2013, Spectrum announced that they had shipped the first commercial orders of Marqibo. For the three and nine months ended September 30, 2015, the Company recorded $40,000 and $159,000 in Marqibo royalty revenue (three and nine months ended September 30, 2014 - $54,000 and $141,000 respectively). For the nine months ended September 30, 2015, the Company accrued 2.5% in royalties due to TPC in respect of the Marqibo royalty earned by the Company – see note 8, contingencies and commitments.

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);"> Three months ended September 30 </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="center" colspan="4" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);"> Nine months ended September 30 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2015 </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Collaborations and contracts </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="left" bgcolor="#e6efff" width="12%"> </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">DoD (a)</td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 2,002 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 1,493 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> $ </td> <td align="right" width="12%"> 6,909 </td> <td align="left" width="2%"> </td> <td align="left" width="1%">$</td> <td align="right" width="12%"> 5,594 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Monsanto (b)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 309 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 283 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 826 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 809 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">BMS (d)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 1,552 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 1,758 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Dicerna (e)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 724 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,130 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Total research and development collaborations and contracts</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 3,035 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 3,578 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 8,865 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 8,411 </td> <td align="left" width="2%"> </td> </tr> <tr> <td bgcolor="#e6efff"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> <td bgcolor="#e6efff" width="1%"> </td> <td bgcolor="#e6efff" width="12%"> </td> <td bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left"> Licensing fees, milestone and royalty payments </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="left" width="12%"> </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Monsanto licensing fees and milestone payments (b)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 727 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 730 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 2,374 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 1,901 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Acuitas milestone payments (c)</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> - </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 150 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Dicerna licensing fee (e)</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 263 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 789 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">Spectrum royalty payments (f)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 40 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 54 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 159 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 141 </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Total licensing fees, milestone and royalty payments</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 1,030 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 784 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 3,322 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 2,192 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);"> Total revenue </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 4,065 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 4,362 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 12,187 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 10,603 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table>

2002000

1493000

6909000

5594000

309000

283000

826000

809000

1552000

1758000

724000

250000

1130000

250000

3035000

3578000

727000

730000

2374000

1901000

150000

263000

789000

40000

54000

159000

141000

1030000

784000

4065000

4362000

57000

313000

3773000

4245000

1005000

1221000

6446000

8666000

442000

1271000

11723000

15716000

34700000 6970000 2100000 43819000 1000000 140000000 7000000 2250000 86200000 2000000 19300000

150000

5000000

3000000

P28M

2500000

22000000 18000000

40000

159000

54000

141000

0.025 P4Y P150D P4Y

5.      Accounts payable and accrued liabilities Accounts payable and accrued liabilities is comprised of the following, in thousands: <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> September 30, 2015 </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" nowrap="nowrap" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="12%">December 31, 2014</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr> <td> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Trade accounts payable</td> <td align="left" bgcolor="#e6efff" width="1%"> $ </td> <td align="right" bgcolor="#e6efff" width="12%"> 2,898 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="12%"> 2,044 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Research and development accruals</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 2,964 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 2,391 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">License fee accruals</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Professional fee accruals</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 336 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 1,294 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Deferred lease inducements</td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 325 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> <td align="left" bgcolor="#e6efff" width="1%"> </td> <td align="right" bgcolor="#e6efff" width="12%"> 250 </td> <td align="left" bgcolor="#e6efff" width="2%"> </td> </tr> <tr valign="top"> <td align="left">Payroll accruals</td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 26 </td> <td align="left" width="2%"> </td> <td align="left" width="1%"> </td> <td align="right" width="12%"> 2,873 </td> <td align="left" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Other accrued liabilities</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 952 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 226 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 2px solid rgb(0, 0, 0);"> </td> <td align="left" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%"> $ </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 7,501 </td> <td align="left" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> <td align="left" style="border-bottom: 2px solid rgb(0, 0, 0);" width="1%">$</td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="12%"> 9,328 </td> <td align="left" style="border-bottom: 2px solid rgb(0, 0, 0);" width="2%"> </td> </tr> </table> </div>

2898000

2044000

2964000 2391000 0 250000

336000

1294000

325000

250000

26000

2873000

952000

226000

7501000

9328000

6.      Financing On March 25, 2015, the Company announced that it had completed an underwritten public offering of 7,500,000 common shares, at a price of $20.25 per share, representing gross proceeds of $151,875,000. The Company also granted the underwriters a 30 -day option to purchase an additional 1,125,000 shares for an additional $22,781,000 to cover any over-allotments. The underwriters did not exercise the option. The cost of financing, including commissions and professional fees, was $9,700,000, resulting in net proceeds of $142,177,000.

7500000

20.25

151875000

P30D

1125000

22781000

9700000

142177000

7 .       Concentrations of credit risk Credit risk is defined by the Company as an unexpected loss in cash and earnings if a collaborative partner is unable to pay its obligations in due time. The Company’s main source of credit risk is related to its accounts receivable balance which principally represents temporary financing provided to collaborative partners in the normal course of operations. The Company does not currently maintain a provision for bad debts as the majority of accounts receivable are from collaborative partners or government agencies and are considered low risk. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at September 30, 2015 was the accounts receivable balance of $2,192,000 (December 31, 2014 - $1,903,000). All accounts receivable balances were current as at September 30, 2015 and at December 31, 2014.

2192000

1903000

8.      Contingencies and commitments Product development partnership with the Canadian Government The Company entered into a Technology Partnerships Canada ("TPC") agreement with the Canadian Federal Government on November 12, 1999. Under this agreement, TPC agreed to fund 27% of the costs incurred by the Company, prior to March 31, 2004, in the development of certain oligonucleotide product candidates up to a maximum contribution from TPC of $7,179,000 (C$9,323,000). As at September 30, 2015, a cumulative contribution of $2,774,000 (C$3,702,000) has been received and the Company does not expect any further funding under this agreement. In return for the funding provided by TPC, the Company agreed to pay royalties on the share of future licensing and product revenue, if any, that is received by the Company on certain non-siRNA oligonucleotide product candidates covered by the funding under the agreement. These royalties are payable until a certain cumulative payment amount is achieved or until a pre-specified date. In addition, until a cumulative amount equal to the funding actually received under the agreement has been paid to TPC, the Company agreed to pay 2.5% royalties on any royalties the Company receives for Marqibo. For the three and nine months ended September 30, 2015, the Company earned royalties on Marqibo sales in the amount of $40,000 and $159,000 respectively (three and nine months ended September 30, 2014 – $54,000 and $141,000 respectively) (see note 4(f)), resulting in $4,000 being recorded by the Company as royalty payable to TPC (September 30, 2014 - $4,000). The cumulative amount paid or accrued up to September 30, 2015 was $10,000, resulting in the contingent amount due to TPC being $2,765,000 (C$3,690,000). License agreement with Marina Biotech, Inc. (“Marina”) On November 29, 2012 the Company announced a worldwide, non-exclusive license to a novel RNAi payload technology called Unlocked Nucleobase Analog (“UNA”) from Marina for the development of RNAi therapeutics. UNA technology can be used in the development of RNAi therapeutics, which treats disease by silencing specific disease causing genes. UNAs can be incorporated into RNAi drugs and have the potential to improve them by increasing their stability and reducing off-target effects. Under the license agreement the Company paid Marina an upfront fee of $300,000 during the year ended December 31, 2012. A further license payment of $200,000 was paid in 2013 and the Company will make milestone payments of up to $3,250,000 and royalties on each product developed by the Company that uses Marina’s UNA technology. The payments to Marina are expensed to research, development, collaborations and contracts expense. Effective August 9, 2013, Marina’s UNA technology was acquired by Arcturus Therapeutics, Inc. (“Arcturus”) and the UNA license agreement between the Company and Marina was assigned to Arcturus. The terms of the license are otherwise unchanged. On December 22, 2014, the Company received clearance from Health Canada to conduct a Phase I Clinical Study with TKM-HBV, which utilizes Arcturus’ UNA technology. This triggered the accrual of $250,000 as at December 31, 2014 related to the milestone payable to Arcturus upon the dosing of first subject in a Phase I clinical trial of TKM-HBV, which occurred and was paid by the Company in January 2015. Arbitration with the University of British Columbia (“UBC”) Certain early work on lipid nanoparticle delivery systems and related inventions was undertaken at UBC. These inventions are licensed to the Company by UBC under a license agreement, initially entered in 1998 as amended in 2001, 2006 and 2007. The Company has granted sublicenses under the UBC license to Alnylam as well as to Spectrum. Alnylam has in turn sublicensed back to the Company under the licensed UBC patents for discovery, development and commercialization of RNAi products. In 2009, the Company entered into a supplemental agreement with UBC, Alnylam and Acuitas, in relation to a separate research collaboration to be conducted among UBC, Alnylam and Acuitas to which the Company has license rights. The settlement agreement signed in late 2012 to resolve the litigation among the Company, Alnylam, and Acuitas, provided for the effective termination of all obligations under such supplemental agreement as between and among all litigants. On November 10, 2014, UBC filed a notice of arbitration against the Company and on January 16, 2015, filed a Statement of Claim, which alleges entitlement to $3,500,000 in allegedly unpaid royalties based on publicly available information, and an unspecified amount based on non-public information. UBC also seeks interest and costs, including legal fees. The Company is currently disputing UBC’s allegations, and no dates have been scheduled for this arbitration. The Company has not recorded an estimate of the possible loss associated with this arbitration, due to the uncertainties related to both the likelihood and amount of any possible loss or range of loss. Costs related to the arbitration have been recorded by the Company as incurred. Contingent consideration from Arbutus Inc. acquisition of Enantigen and License Agreements between Enantigen and the Baruch S. Blumberg Institute (“Blumberg”) and Drexel University (“Drexel”) In October 2014, Arbutus Inc. acquired all of the outstanding shares of Enantigen pursuant to a stock purchase agreement. Through this transaction, Arbutus Inc. acquired a HBV surface antigen secretion inhibitor program and a capsid assembly inhibitor program, each of which are now assets of Arbutus, following the Company’s merger with Arbutus Inc. – see note 3. Under the stock purchase agreement, Arbutus Inc. agreed to pay up to a total of $21,000,000 to Enantigen’s selling stockholders upon the achievement of certain triggering events related to Enantigen’s two programs in pre-clinical development related to HBV therapies, as well as $102.5 million to Enantigen’s selling stockholders upon the achievement of certain development milestones and sales performance milestones, respectively. The first triggering event is the enrollment of first patient in Phase 1b clinical trial in HBV patients, which the Company does not expect to occur in the next twelve-month period. The regulatory, development and sales milestone payments have an estimated fair value of approximately $6,665,000 as at the date of acquisition of Arbutus Inc., and have been treated as contingent consideration payable in the purchase price allocation (note 3), based on information available at the date of acquisition, using a probability weighted assessment of the likelihood the milestones would be met and the estimated timing of such payments, and then the potential contingent payments were discounted to their present value using a probability adjusted discount rate that reflects the early stage nature of the development program, time to complete the program development, and overall biotech indices. As part of its acquisition of Arbutus Inc. on March 4, 2015 as described in note 3, the other non-current liabilities assumed by the Company included the contingent consideration of $6,665,000 related to Arbutus Inc.’s acquisition of Enantigen. Contingent consideration is considered as a financial liability, and the Company determines 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. The Company is currently undertaking valuation assessments of assets acquired and liabilities assumed from Arbutus Inc., which includes a valuation assessment of the contingent consideration. No change to the fair value of the contingent consideration has been recorded for the three and nine-months ended September 30, 2015. Drexel and Blumberg In February 2014, Arbutus Inc. entered into a license agreement with Blumberg and Drexel that granted an exclusive, worldwide, sub-licensable license to three different compound series: cccDNA inhibitors, capsid assembly inhibitors and HCC inhibitors. In partial consideration for this license, Arbutus Inc. paid a license initiation fee of $150,000 and issued warrants to Blumberg and Drexel. The warrants were exercised prior to the Company’s acquisition of Arbutus Inc. Under this license agreement, Arbutus Inc. also agreed to pay up to $3,500,000 in development and regulatory milestones per licensed compound series, up to $92,500,000 in sales performance milestones per licensed product, and royalties in the mid-single digits based upon the proportionate net sales of licensed products in any commercialized combination. The Company is obligated to pay Blumberg and Drexel a double digit percentage of all amounts received from the sub-licensees, subject to customary exclusions. In November 2014, Arbutus Inc. entered into an additional license agreement with Blumberg and Drexel pursuant to which it received an exclusive, worldwide, sub-licensable license under specified patents and know-how controlled by Blumberg and Drexel covering epigenetic modifiers of cccDNA and STING agonists. In consideration for these exclusive licenses, Arbutus Inc. made an upfront payment of $50,000. Under this agreement, the Company will be required to pay up to $1,000,000 for each licensed product upon the achievement of a specified regulatory milestone and a low single digit royalty, based upon the proportionate net sales of compounds covered by this intellectual property in any commercialized combination. The Company is also obligated to pay Blumberg and Drexel a double digit percentage of all amounts received from its sub-licensees, subject to exclusions. Research Collaboration and Funding Agreement with Blumberg In October 2014, Arbutus Inc. entered into a research collaboration and funding agreement with Blumberg under which the Company will provide $1,000,000 per year of research funding for three years, renewable at the Company’s option for an additional three years, for Blumberg to conduct research projects in HBV and liver cancer pursuant to a research plan to be agreed upon by the parties. Blumberg has exclusivity obligations to Arbutus with respect to HBV research funded under the agreement. In addition, the Company has the right to match any third party offer to fund HBV research that falls outside the scope of the research being funded under the agreement. Blumberg has granted the Company the right to obtain an exclusive, royalty bearing, worldwide license to any intellectual property generated by any funded research project. If the Company elects to exercise its right to obtain such a license, the Company will have a specified period of time to negotiate and enter into a mutually agreeable license agreement with Blumberg. This license agreement will include the following pre negotiated upfront, milestone and royalty payments: an upfront payment in the amount of $100,000 ; up to $8,100,000 upon the achievement of specified development and regulatory milestones; up to $92,500,000 upon the achievement of specified commercialization milestones; and royalties at a low single to mid-single digit rates based upon the proportionate net sales of licensed products from any commercialized combination. NeuroVive Pharmaceutical AB (“NeuroVive”) In September 2014, Arbutus Inc. entered into a license agreement with NeuroVive that granted them an exclusive, worldwide, sub-licensable license to develop, manufacture and commercialize, for the treatment of HBV, oral dosage form sanglifehrin based cyclophilin inhibitors (including OCB-030). Under this license agreement, the Company has been granted a non-exclusive, royalty free right and license and right of reference to NeuroVive’s relevant regulatory approvals and filings for the sole purpose of developing, manufacturing and commercializing licensed products for the treatment of HBV. Under this license agreement, the Company has (1) an option to expand its exclusive license to include treatment of viral diseases other than HBV and (2) an option, exercisable upon specified conditions, to expand its exclusive license to include development, manufacture and commercialization of non-oral variations of licensed products for treatment of viral diseases other than HBV. NeuroVive retains all rights with respect to development, manufacture and commercialization of licensed products and non-oral variations of licensed products for all indications (other than HBV) for which the Company has not exercised its option. In partial consideration for this license, Arbutus Inc. paid NeuroVive a license fee of $1 million. As described in note 3 above, Arbutus Inc. became our wholly owned subsidiary by way of a Merger Agreement, which does not trigger any milestone payments. We have conducted significant research and analysis on the NeuroVive Product, OCB-030. Based on this research and analysis, we have decided to discontinue the OCB-030 development program. Otherwise, the license agreement and ongoing relationship with NeuroVive remains in full effect at this time. Cytos Biotechnology Ltd (“Cytos”) On December 30, 2014, Arbutus Inc. entered into an exclusive, worldwide, sub-licensable (subject to certain restrictions with respect to licensed viral infections other than hepatitis) license to six different series of compounds. The licensed compounds are Qbeta-derived virus-like particles that encapsulate TLR9, TLR7 or RIG-I agonists and may or may not be conjugated with antigens from the hepatitis virus or other licensed viruses. The Company has an option to expand this license to include additional viral infections other than influenza and Cytos will retain all rights for influenza, all non-viral infections, and all viral infections (other than hepatitis) for which it has not exercised its option. In partial consideration for this license, the Company is obligated to pay Cytos up to a total of $67,000,000 for each of the six licensed compound series upon the achievement of specified development and regulatory milestones; for hepatitis and each additional licensed viral infection, up to a total of $110,000,000 upon the achievement of specified sales performance milestones; and tiered royalty payments in the high-single to low-double digits, based upon the proportionate net sales of licensed products in any commercialized combination.

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159000

54000

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4000 4000 10000

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3690000

300000 200000 3250000 250000

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6665000

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3500000 92500000

50000

1000000 1000000 100000 8100000 92500000

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67000000 110000000 P3Y