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Commitments and Contingencies | 12 Months Ended
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Sep. 30, 2019
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | NOTE 7. COMMITMENTS AND CONTINGENCIES Leases In April 2019, the Company entered a new lease for its corporate headquarters in Pasadena, California. The 91 month office building lease between the Company and 177 Colorado Owner, LLC is for approximately 24,000 square feet of office space located at 177 E. Colorado Blvd, Pasadena, California, and this lease will replace the Company’s current corporate headquarters office lease. The increased capacity of this new office space compared to the Company’s current corporate headquarters will accommodate increased personnel as the Company’s pipeline of drug candidates expands and moves closer to market. Lease payments began on September 30, 2019 and are estimated to total approximately $8.8 million over the term. The Company expects to pay approximately $3.5 million for leasehold improvements, net of tenant improvement allowances. Monthly rental payments are approximately $65,700 per month for the first year and will increase approximately 3% annually. The Company also leases approximately 61,000 square feet of office and laboratory space for its research facility in Madison, Wisconsin. In January 2019, the Company amended its existing lease to add an additional 13,000 square feet of laboratory and office space to the facility. The amended lease will expire in September 2029. As part of this lease, the Company was provided a primary tenant improvement allowance of $2.1 million which is accounted for as Deferred Rent and a secondary tenant improvement allowance of $2.7 million which was accounted for as a Note Payable on the Company’s Consolidated Balance Sheet. In October 2018, the Company paid off the remaining $2.3 million balance on the note payable. Monthly rental payments are approximately $135,800 per month and will increase approximately 2.5% annually. Facility rent expense for the years ended September 30, 2019, 2018 and 2017 was $1,654,800, $1,288,000 and $1,441,000, respectively. As of September 30, 2019, future minimum lease payments due in fiscal years under operating leases are as follows:
2020 | $ | 1,521,451 |
2021 |  | 2,256,379 |
2022 |  | 2,521,446 |
2023 |  | 2,590,558 |
2024 |  | 2,661,512 |
2025 and thereafter |  | 10,834,206 |
Total | $ | 22,385,552 |
Litigation – The Company and certain of its officers and directors were named as defendants in a putative consolidated class action in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s hepatitis B drug research. The consolidated class action, initially filed as Wang v. Arrowhead Research Corp., et al., No. 2:14-cv-07890 (C.D. Cal., filed Oct. 10, 2014), and Eskinazi v. Arrowhead Research Corp., et al., No. 2:14-cv-07911 (C.D. Cal., filed Oct. 13, 2014), asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and sought damages in an unspecified amount. Additionally, three putative stockholder derivative actions captioned Weisman v. Anzalone et al., No. 2:14-cv-08982 (C.D. Cal., filed Nov. 20, 2014), Bernstein (Backus) v. Anzalone, et al., No. 2:14-cv-09247 (C.D. Cal., filed Dec. 2, 2014); and Johnson v. Anzalone, et al., No. 2:15-cv-00446 (C.D. Cal., filed Jan. 22, 2015), were filed in the United States District Court for the Central District of California, alleging breach of fiduciary duty by the Company’s Board of Directors in connection with the alleged facts underlying the securities claims. An additional consolidated derivative action asserting similar claims was filed in Los Angeles County Superior Court, initially filed as Bacchus v. Anzalone, et al., (L.A. Super., filed Mar. 5, 2015); and Jackson v. Anzalone, et al. (L.A. Super., filed Mar. 16, 2015). Each of these suits seeks damages in unspecified amounts and some seek various forms of injunctive relief. On October 7, 2016, the federal district court dismissed the consolidated class action with prejudice. Following the dismissal of the consolidated class action, the parties for the Weisman and Johnson actions jointly stipulated to dismiss the actions, with the parties bearing their own fees and costs. The parties to the Bernstein and consolidated derivative action agreed to stay the matters pending the resolution of the Ninth Circuit appeal of the dismissal of the consolidated class action. On February 15, 2018, the Ninth Circuit issued a memorandum affirming the district court’s dismissal of all claims. Plaintiffs in the consolidated derivative action voluntarily dismissed their case. The parties to the Bernstein action filed a stipulation to continue the stay of the action pending resolution of the Ninth Circuit appeal in Meller v. Arrowhead Pharmaceuticals, Inc., Case No. 2:16-cv-08505 (C.D. Cal.). The Bernstein matter was dismissed on September 4, 2019. All actions relating to the Company’s hepatitis B drug research have been dismissed. The Company and certain executive officers were named as defendants in a putative consolidated class action in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s drug research programs. The consolidated class action, initially filed as Meller v. Arrowhead Pharmaceuticals, Inc., et al., No. 2:16-cv-08505 (C.D. Cal, filed Nov. 15, 2016 ), Siegel v. Arrowhead Pharmaceuticals, Inc., et al., No. 2:16-cv-8954 (C.D. Cal., filed Dec. 2, 2016), and Unz v. Arrowhead Pharmaceuticals, Inc., et al., No.2:17-cv-00310 (C.D. Cal., filed Jan. 13, 2017) asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 regarding certain public statements in connection with the Company’s drug research programs and seek damages in an unspecified amount. Additionally, a putative stockholder derivative action captioned Johnson v. Anzalone, et al., (Los Angeles County Superior Court, filed January 19, 2017) asserting substantially similar claims is pending in Los Angeles County Superior Court and is stayed pending the related consolidated class action. Two additional putative stockholder derivative actions, captioned Lucas v. Anzalone, et al., No. 2:17-cv-03207 (C.D. Cal., filed April 28, 2017), and Singh v. Anzalone, et al., No. 2:17-cv-03160 (C.D. Cal., filed April 27, 2017), alleging breach of fiduciary duty by the Company’s Board of Directors in connection with the alleged facts underlying the securities claims, are pending in the United States District Court for the Central District of California. The Lucas and Singh actions have been consolidated. On December 21, 2017, the federal district court dismissed the consolidated class action with prejudice. On July 23, 2019, the Ninth Circuit issued a memorandum affirming the district court’s dismissal of all claims in the consolidated class action. The Lucas and Singh actions have been voluntarily dismissed. The Johnson action was dismissed on November 13, 2019. All actions relating to public statements in connection with the Company’s drug research programs have been dismissed. With regard to legal fees, such as attorney fees related to these matters or any other legal matters, the Company recognizes such costs as incurred. Purchase Commitments In the normal course of business, we enter into various purchase commitments for the manufacture of drug components, for toxicology studies, and for clinical studies. As of September 30, 2019, these future commitments were estimated at approximately $60.2 million, of which approximately $50.9 million is expected to be incurred in fiscal 2020, and $9.3 is expected to be incurred beyond fiscal 2020. Technology License Commitments The Company has licensed from third parties the rights to use certain technologies for its research and development activities, as well as in any products the Company may develop using these licensed technologies. These agreements and other similar agreements often require milestone and royalty payments. Milestone payments, for example, may be required as the research and development process progresses through various stages of development, such as when clinical candidates enter or progress through clinical trials, upon NDA and upon certain sales level milestones. These milestone payments could amount to the mid to upper double-digit millions of dollars. During the years ended September 30, 2019, 2018 and 2017, the Company did not trigger any of these milestone payments. In certain agreements, the Company may be required to make mid to high single-digit percentage royalty payments based on a percentage of the sales of the relevant products.

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