10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-36828

Nexvet Biopharma
public limited company

(Exact name of registrant as specified in its charter)

Ireland	98-1205017
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Unit 5, Sragh Technology Park

Rahan Road, Tullamore

Co. Offaly, R35 FR98, Ireland

(Address of principal executive offices, including zip code)

+353 5793 24522

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act of 1934.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	ý  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934).    Yes  ¨    No  ý

As of January 29, 2016, the registrant had approximately 11,558,133 ordinary shares, nominal value $0.125, outstanding.

NEXVET BIOPHARMA PUBLIC LIMITED COMPANY

TABLE OF CONTENTS

		Page No.
Special Note Regarding Forward Looking Statements		2
	PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Convertible Preference Shares and Shareholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
Signatures		36

1

SPECIAL NOTE REGARDING FORWARD LOOKING StatementS

This Quarterly Report on Form 10‑Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements consist of all statements other than statements of historical fact, including statements regarding our future results of operations and financial position, results of any current or future pivotal safety and efficacy study, future expenditures relating to our lead product candidates, time for completion of any of our studies, ability to develop our pipeline of product candidates, business strategy, prospective products, ability to successfully manufacture our own product candidates, ability to obtain product approvals, research and development costs, timing and likelihood of success, plans and objectives of management for future operations, and future results of current and anticipated products.  These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  The words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,” “potential,” “predict,” “project,” “position,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.  These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors.

Factors that could cause actual results to differ materially from our expectations expressed in this report include those summarized under Risk Factors elsewhere in this report or included in our annual report on Form 10-K filed with the SEC on September 3, 2015.  Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.  Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report.  Except as required by law, we do not intend, and undertake no obligation, to revise or update these forward-looking statements or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Unless otherwise stated or the context otherwise indicates, references to “we,” “us,” “our,” “Nexvet,” “Nexvet Biopharma plc” or the “Company” refer to Nexvet Biopharma public limited company and its consolidated subsidiaries.

2

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed consolidated Balance Sheets
(unaudited)

(in thousands, except share and per share amounts)

	December 31, 2015			June30, 2015
Assets
Current assets
Cash	$	43,079		$	52,033
Other income receivable		1,057			3,301
Prepaid expenses and other		1,160			607
Total current assets		45,296			55,941
Noncurrent assets
Other income receivable		64			—
Prepaid expenses		149			163
Total noncurrent assets		213			163
Property, plant and equipment, net		3,097			549
Intangible assets, net		37			19
Total assets	$	48,643		$	56,672
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	1,404		$	658
Accrued expenses		2,907			2,352
Deferred grant income		106			—
Deferred lease incentive		22			23
Total current liabilities		4,439			3,033
Noncurrent liabilities
Accrued expenses		52			—
Deferred grant income		64			—
Deferred lease incentive		47			61
Total noncurrent liabilities		163			61
Total liabilities	$	4,602		$	3,094
Commitments and contingencies (Note 11)
Shareholders’ equity
Ordinary shares, $0.125 nominal value per share, 100,000,000 shares authorized as of December 31, 2015 and June 30, 2015—11,558,133 and 11,406,916 shares issued and outstanding as of December 31, 2015 and June30, 2015,  respectively	$	1,445		$	1,426
Euro deferred shares, €100 nominal value per share, 400 shares authorized as of December 31, 2015 and June 30, 2015—400 shares issued and outstanding as of December 31, 2015 and June30, 2015		13			13
Additional paid-in capital		81,214			80,275
Accumulated other comprehensive loss		(5,325	)		(4,481	)
Accumulated deficit		(33,306	)		(23,655	)
Total shareholders’ equity		44,041			53,578
Total liabilities and shareholders’ equity	$	48,643		$	56,672

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Revenue
Other	$	—		$	—		$	—		$	25
Total revenue		—			—			—			25
Operating Expenses
Research and development		3,790			2,226			7,515			4,765
General and administrative		1,779			2,440			3,649			5,258
Total operating expenses		5,569			4,666			11,164			10,023
Loss from operations		(5,569	)		(4,666	)		(11,164	)		(9,998	)
Other Income (Expense)
Research and development incentive income		457			941			1,023			1,682
Government grant income		—			22			4			319
Exchange (loss) gain		(618	)		1,270			410			3,254
Interest income		39			20			76			33
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.49	)	$	(2.01	)	$	(0.84	)	$	(4.14	)
Weighted-average ordinary shares outstanding, basic and diluted		11,506,236			1,198,828			11,474,394			1,138,520
Comprehensive Loss
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Net gain (loss) in foreign currency translation adjustments		597			(1,477	)		(844	)		(3,618	)
Total comprehensive loss	$	(5,094	)	$	(3,890	)	$	(10,495	)	$	(8,328	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

condensed Consolidated Statements of Changes in Convertible Preference shares and Shareholders’ EQUITY (Deficit)

(unaudited)

(in thousands, except share and per share amounts)

	Convertible Preference Shares						Ordinary Shares				Ordinary Shares Subject to Limited Recourse Loans					Euro Deferred Shares				Convertible Preference Shares						Additional Paid-in Capital
	Shares			Amount			Shares		Amount		Shares			Amount		Shares		Amount		Shares			Amount			Other			Share Premium			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ (Deficit) Equity
Balance as of July 1, 2014		5,937,138		$	33,826			1,014,130	$	126		254,680		$	—		—	$	—		—		$	—		$	937		$	1,405		$	373		$	(11,798	)	$	(8,957	)
Issuance of ordinary shares and Euro deferred    shares		—		$	—			2	$	—		—		$	—		400	$	13		—		$	—		$	—		$	—		$	—		$	—		$	13
Ordinary shares no longer subject to limited    recourse loan		—			—			109,611		14		(109,611	)		—		—		—		—			—			—			(14	)		—			—			—
Share repurchase		—			—			—		—		(145,069	)		—		—		—		—			—			—			—			—			—			—
Issuance of share warrants		—			—			—		—		—			—		—		—		—			—			—			5,435			—			—			5,435
Issuance of ordinary shares—conversion of    share-based compensation		—			—			126,410		16		—			—		—		—		—			—			(645	)		642			—			—			13
Issuance of ordinary shares, net of issuance costs of $3,830		6						4,176,903		522		—			—		—		—		—			—			—			37,416			—			—			37,938
Adjustment for shares issued in connection   with share consolidation		16			—			9		—		—			—		—		—		—			—			—			—			—			—			—
Reclassification into shareholders’ equity		(5,937,160	)		(33,826	)		—		—		—			—		—		—		5,937,160			33,826			—			—			—			—			33,826
Reclassification into ordinary shares		—			—			5,937,160		742		—			—		—		—		(5,937,160	)		(33,826	)		—			33,084			—			—			—
Share bonus award								42,691		6																	(304	)		304									6
Share-based compensation expense		—			—			—		—		—			—		—		—		—			—			2,081			—			—			—			2,081
Exchange difference on translation of foreign    operations		—			—			—		—		—			—		—		—		—			—			(4	)		(62	)		(4,854	)		—			(4,920	)
Net loss		—			—			—		—		—			—		—		—		—			—						—			—			(11,857	)		(11,857	)
Balance as of June 30, 2015		-		$	-			11,406,916	$	1,426		-		$	—		400	$	13		—		$	—		$	2,065		$	78,210		$	(4,481	)	$	(23,655	)	$	53,578
Issuance of ordinary shares—conversion of    share-based compensation		—		$	—			151,217	$	19		—		$	—		—	$	—		—		$	—		$	(1,125	)	$	1,125		$	—		$	—		$	19
Share-based compensation expense		—			—			—		—		—			—		—		—		—			—			939			—			—			—			939
Exchange difference on translation of foreign    operations		—			—			—		—		—			—		—		—		—			—			—						(844	)		—			(844	)
Net loss		—			—			—		—		—			—		—		—		—			—			—			—			—			(9,651	)		(9,651	)
Balance as of December 31, 2015		—		$	—			11,558,133	$	1,445		—		$	—		400	$	13		—		$	—		$	1,879		$	79,335		$	(5,325	)	$	(33,306	)	$	44,041

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

CONDENSED ConsolidaTed Statements of Cash Flows

(unaudited)

(in thousands, except share and per share amounts)

	Six Months Ended December 31,
	2015			2014
Cash Flows from Operating Activities
Net loss	$	(9,651	)	$	(4,710	)
Adjustments to reconcile net loss to cash used in operating activities:
Share-based compensation expense		939			538
Depreciation and amortization expense		160			76
Changes in assets and liabilities:
Other income receivable		2,180			844
Prepaid expenses and other		(539	)		(1,049	)
Accounts payable, accrued expenses and lease incentive liability		1,508			(355	)
Net cash used in operating activities		(5,403	)		(4,656	)
Cash Flows from Investing Activities
Purchase of property, plant and equipment and intangible assets		(2,816	)		(176	)
Net cash used in investing activities		(2,816	)		(176	)
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares		19			24
Net cash provided by financing activities		19			24
Effect of exchange rate changes on cash		(754	)		(3,568	)
Net decrease in cash		(8,954	)		(8,376	)
Cash at beginning of period		52,033			30,041
Cash at end of period	$	43,079		$	21,665
Supplemental Disclosure
Issuance of share options for accrued consulting services	$	—		$	102

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Notes to CONDENSED Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Nexvet Biopharma public limited company and its subsidiaries (the “Company”) is a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals by developing and commercializing novel, species-specific biologics based on human biologics.  Biologics are therapeutic proteins derived from biological sources.  As a class, biologics have transformed human medicine in recent decades and represent some of the top-selling therapies on the market today.  The Company’s proprietary platform, which it refers to as “PETization,” is an algorithmic approach that enables the Company to rapidly create monoclonal antibodies (“mAbs”) a type of biologic, that are designed to be recognized as “self” or “native” by an animal’s immune system, a property referred to as “100% species-specificity.”  PETization is also designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, thereby reducing clinical risk and development cost.  

Biologics generally include mAbs, which are targeted antibodies derived from identical (“clonal”) cells and fusion proteins, which are proteins created by joining two or more genes coded for separate proteins. The Company’s first product candidate, NV‑01, is a mAb that targets and inhibits the function of nerve growth factor (“NGF”) for the control of pain associated with osteoarthritis in dogs.  NGF is a protein involved in neural signaling, including pain signals, and NGF inhibitors (“anti-NGFs”) seek to interrupt those signals to reduce pain. In November 2015, the Company announced its pivotal safety and efficacy study of NV-01 met its primary efficacy endpoint: a statistically significant improvement over placebo in the assessed level of pain (p=0.038) as measured using changes in Client-Specific Outcome Measures (“CSOM”) score between enrollment and day 28.  This study’s design was agreed under protocol concurrence with the Center for Veterinary Medicine (“CVM”) at the U.S. Food and Drug Administration (“FDA”). NV-01 was found to be safe and well-tolerated with no significant adverse safety signals observed in the study. Clinically meaningful magnitudes of benefit and statistically significant differences over placebo were also achieved for the majority of the secondary endpoints measured in the study. Collectively, the results of this study constitute a substantial body of efficacy data that Nexvet intends to use as the basis of its planned submissions for marketing authorizations in both the U.S. and Europe.  The United States Adopted Name (“USAN”) Council has approved the generic name “ranevetmab” for NV-01.

The Company’s second product candidate, NV‑02, is an anti-NGF mAb for the control of pain associated with osteoarthritis in cats.  The Company announced positive top-line results from a proof-of-concept efficacy study and its pilot safety study of NV‑02 in June 2015. In October 2015, the Company announced the commencement of a placebo-controlled, blinded, multi-site pilot field safety and efficacy study targeting enrollment of 90 cats with naturally occurring osteoarthritis.  The Company anticipates results from this pilot field study in the second quarter of 2016.  The Company’s next most advanced programs are in the area of inflammation, and include NV-08, a fusion proteins that is a tumor necrosis factor (“TNF”) inhibitor for the treatment of chronic inflammatory diseases, including atopic dermatitis, in dogs.  TNF is a protein that causes inflammation, and TNF inhibitors (“anti‑TNFs”) suppress this inflammation. The Company’s is conducting proof-of-concept studies for candidates in inflammation (including NV-08), which if successful, the Company will consider for progression into formal development.  Primarily using PETization, the Company has built a research and development pipeline of 15 biologic programs in the areas of pain, allergy, inflammation and immuno-oncology.

The Company has experienced losses since its inception and had an accumulated deficit of $33.3 million and $23.7 million as of December 31 and June 30, 2015, respectively.  For the foreseeable future, management expects the Company to continue to incur losses and negative cash flows, which will increase significantly from historical levels as the Company expands its development activities, seeks regulatory approvals for its lead product candidates and begins to commercialize any approved products.  To date, the Company has been funded primarily through sales of capital shares.  Management believes the Company’s cash of $43.1 million as of December 31, 2015 will be sufficient to fund its operations for at least the next 12 months.

The Company will require additional capital until such time as the Company can generate revenue in excess of operating expenses.  The Company may seek such funding through public or private equity or debt financing or other sources, such as corporate collaborations and licensing arrangements.  The Company may not be able to obtain financing on acceptable terms, or at all.  The sale of additional equity would result in additional dilution to the Company’s shareholders, and the terms of any financing may adversely affect the rights of the Company’s shareholders.  The incurrence of any debt financing could result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict the Company’s operations.  If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate its research and development programs or commercialization efforts, which could adversely affect its business prospects.

In August 2014, Nexvet Australia Pty Ltd (“Nexvet Australia”) completed a one-for-four share consolidation pursuant to which each holder of ordinary shares and preference shares received one ordinary share or preference share for every four ordinary shares or preference shares as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a one-for-four basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

7

In September2014, Nexvet Biopharma Limited, a newly formed Irish private company, became the parent company of Nexvet Australiaand its subsidiaries pursuant to a transaction in which all of the holders of securities of Nexvet Australia exchanged their holdings for equivalent securities, as applicable, of Nexvet Biopharma Limited.  Nexvet Biopharma Limited then re-registered as an Irish public limited company in September 2014 (such exchange and re-registrationis referred to as the “Irish Reorganization”).  Nexvet Biopharma public limited company became the parent company of Nexvet Australia pursuant to the Irish Reorganization, and for financial reporting purposes the historical consolidated financial statements of Nexvet Australia became the historical consolidated financial statements of Nexvet Biopharma public limited company and its subsidiaries as a continuation of the predecessor.  The capital structure presented is that of Nexvet Biopharma public limited company.

In November 2014, the Company completed a four-for-five share consolidation pursuant to which each holder of ordinary shares and preference shares received four ordinary shares or four preference shares for every five ordinary shares or five preference shares as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a four-for-five basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

In February 2015, the Company closed its initial public offering of 4.0 million ordinary shares at a price to the public of $10.00 per share.  In March 2015, the underwriters partially exercised their over-allotment option and purchased an additional 0.2 million shares. Following the sales of these securities, the Company received aggregate gross proceeds of $41.8 million and aggregate net proceeds of $38.0 million, after deducting the underwriting discount of $2.9 million and offering expenses of $0.9 million payable by the Company.  Upon the initial closing, an amended Memorandum and Articles of Association became effective for the Company and all 5,937,160 convertible preference shares then outstanding were converted into 5,937,160 ordinary shares.

In September 2015, the Company secured a biologics manufacturing facility in Tullamore, Ireland. The Company secured the manufacturing assets within the facility for $2.0 million and have entered into a 10‑year lease on the facility, with an option to purchase the building.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements of the Company include the operations of all its wholly‑owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).  Such operations include the Company, Nexvet Australia, NVIP Pty Limited, Nexvet Ireland Limited, Tevxen Limited, BioNua Limited, Nexvet UK Limited and Nexvet US, Inc.  All intercompany balances and transactions have been eliminated on consolidation.  The Company’s fiscal year ends on June 30, and references to any fiscal year are to the Company’s year ended June 30 in that year.  

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements and related disclosures as of December 31, 2015 and for the three and six months ended December 31, 2015 and 2014 are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of December 31, 2015 and the results of its operations and comprehensive loss and its cash flows for the three and six months ended December 31, 2015 and 2014. The financial data and other information disclosed in these notes related to the three and six months ended December 31, 2015 and 2014 are unaudited. The results for the three and six months ended December 31, 2015 and 2014 are not necessarily indicative of results to be expected for a full year, any other interim periods or any future year or period.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended June 30, 2015 included in the Company’s annual report on Form 10‑K filed with the SEC on September 3, 2015. The condensed consolidated balance sheet data as of June 30, 2015 was derived from audited consolidated financial statements.

8

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period.  Significant items subject to such estimates and assumptions include research and development incentive income, research and development accruals, the likelihood that attaching conditions will be met for government grants, share-based payments, valuation of warrants, options and restricted share units and deferred income taxes.  Actual results could differ from those estimates.

Net Loss Per Share

Net loss per share information is determined using the two-class method, which includes the weighted-average number of ordinary shares outstanding during the period and other securities that participate in dividends (a participating security).  The Company’s convertible preference shares were participating securities as defined by Accounting Standards Codification (“ASC”) Topic 260‑10, Earnings Per Share.  Net loss per share disclosures have been revised to give effect to the share consolidations that took place in the reporting period.

Under the two-class method, basic net loss per share applicable to ordinary shareholders is computed by dividing the net loss applicable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the reporting period.

Diluted net loss per share gives effect to all potentially dilutive securities, including convertible preference shares and shares issuable upon the exercise or conversion, as applicable, of outstanding warrants, share options and restricted share units, using the treasury shares method.  The Company has excluded the effects of all potentially dilutive shares, which include convertible preference shares, warrants to purchase ordinary shares, ordinary share options, restricted share units and the ordinary shares issued subject to limited recourse loans, from the weighted-average number of ordinary shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses.

Cash

As of December 31, 2015 and June 30, 2015, the Company’s cash consisted of cash deposited in a business operating account or in short-term deposit accounts of less than 90 days’ original duration.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company receives research and development incentive income and grants from two sources, the Australian government and the Irish government.

The Company’s cash is deposited with several large commercial banks located in the United States, Ireland and Australia that are federally insured or guaranteed, limiting the amount of credit exposure to any one financial institution.  The Company’s cash balances with these financial institutions often exceed the amount insured.

The Company is subject to risks common to companies in the biotechnology industry.  The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, any products developed may not obtain necessary government regulatory approval and any approved products may not be commercially viable.  The Company operates in an environment of substantial competition from other animal health companies, some of which have substantially more resources at their disposal.  In addition, the Company is dependent upon the services of its employees and consultants, as well as third-party contract research organizations and manufacturers.

Fair Value Measurements

The Company records certain assets and liabilities at fair value in accordance with the provisions of ASC Topic 820, Fair Value Measurements.  As defined in the guidance, fair value, defined as an exit price, represents the amount that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants.  As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability.  As a basis for considering these assumptions, the guidance defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

· Level 1—Unadjusted quoted prices in active, accessible markets for identical assets or liabilities.

· Level 2—Other inputs that are directly or indirectly observable in the marketplace.

· Level 3—Unobservable inputs that are supported by little or no market activity.

9

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s material financial instruments include cash, other income receivables, accrued liabilities and warrants.  The carrying amounts of these instruments are considered to be representative of their respective fair values because of the short-term nature of those investments.  

Other Income Receivable

Other income receivable is recorded at the invoiced amount where available. Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the Australian Taxation Office (“ATO”).  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Specifically, Nexvet Australia must have revenue of less than A$20 million and cannot be controlled by income tax exempt entities.  

Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost, net of accumulated depreciation and impairment.  Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  The estimated useful life of machinery and equipment is three to 10 years.  Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset.  Upon retirement or sale of an asset, its cost and related accumulated depreciation or accumulated amortization are removed from the property accounts and any gain or loss is included in the results of operations.  Maintenance and repairs are expensed as incurred.

Foreign Currency

The Company’s functional currency is U.S dollars, and the functional currency for most subsidiaries is their local currency.  Foreign currency transactions are translated into the functional currency using the current exchange rate as of the date of the transaction.  At period end, monetary items denominated in a foreign currency are translated into the functional currency of the relevant entity using the period-end spot rate.  

In preparing the Company’s consolidated financial statements, the financial statements of the subsidiaries are translated at period-end exchange rates as to assets and liabilities and weighted-average rates as to revenue and expenses.  The resulting translation adjustments are recognized in other comprehensive income (loss) (“OCI”).  

Income Taxes

The Company has historically filed income tax returns in Australia, the United States and Ireland.

The Company applies ASC Topic 740, Income Taxes, which establishes financial accounting and reporting requirements for the effects of income taxes that result from the Company’s activities during the current and preceding years.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities on their respective tax bases, and operating losses and tax loss carry forwards.  Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the jurisdictions and years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

When the Company determines that it is more likely than not that some portion or all of the deferred tax assets will not be realized in the future, the deferred tax assets are reduced by a valuation allowance.  The valuation allowance is sufficient to reduce the deferred tax assets to the amount that the Company determines is more likely than not to be realized.

The income tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on technical merits of the position.  The Company evaluates and adjusts these accruals based on changing facts and circumstances.  The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

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Government Grant Income

Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Research and Development Expense

Research and development costs are expensed as incurred and consist primarily of (i) payroll and related expense for all employees engaged in scientific research and development functions, including wages, related benefits and share-based compensation, (ii) fees for regulatory, professional and other consultants and (iii) development costs, including costs of drug discovery, safety, proof‑of‑concept, pilot and pivotal safety and efficacy studies, development of biological materials and service providers.  The Company uses its employee and infrastructure resources across multiple development programs.  The Company allocates outsourced development costs by lead product candidates but does not allocate personnel or other internal costs related to development to specific product candidates.

General and Administrative Expense

General and administrative expense consists primarily of non-research and development-related payroll and related expense for employees, consultants and directors, including wages, related benefits and share-based compensation.  General and administrative expense also includes professional and consulting fees for legal, accounting, tax services and other general business services, as well other expenses such as travel, rent and facilities costs.

Other Income (Expense)

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the ATO.  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Although the tax incentive is administered through the ATO, the Company has accounted for the tax incentive outside the scope of ASC Topic 740, Income Taxes, as an income tax benefit since Nexvet Australia meets the applicable requirements to participate in the program and the incentive is not linked to Nexvet Australia’s income tax liability and can be realized regardless of whether Nexvet Australia has generated taxable income.  Research and development incentive income is recognized when the research and development activities have been undertaken and the Company has completed its assessment of whether such activities meet the relevant qualifying criteria.

The Company recognizes government grant income at fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.  

Exchange (loss) gain consists primarily of losses or gains due to foreign exchange translation, primarily reflecting changes in Australian and U.S. foreign exchange rates.  Under U.S. GAAP, these (losses) gains relate to a translation of U.S. dollar-denominated bank accounts into Nexvet Australia’s Australian dollar functional currency and represent a non-cash item.

The Company earns interest on the cash balances held with financial institutions and recognizes interest when earned on an accrual basis over time.

Comprehensive Loss

Comprehensive loss is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders, which for the Company includes net change in foreign currency translation adjustments.

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Share-Based Compensation

The Company’s share-based compensation plan (see Note 9) provides for the grant of share options, restricted share units and other share-based awards.  The fair value of share options is determined as of the date of grant using the binomial option-pricing model.  This method incorporates the fair value of the Company’s ordinary shares at the date of each grant and various assumptions such as the risk-free interest rate, expected volatility based on the historic volatility of peer companies, expected dividend yield, and expected term of the share option.  Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant. The Company classifies share-based compensation expense in the statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified.

The Company recognizes share-based compensation expense based on the grant date fair value of the entire award over the total period during which an employee is required to provide service in exchange for the award.   In accordance with ASC 718, the amount of compensation expense recognized at each balance date is at least equal to the grant date fair value of the vested portion of the award on that date.  Where performance conditions are attached to the awards, compensation expense is recognized in the period in which it becomes probable that the performance target will be achieved, net of estimated pre-vesting forfeitures over the requisite service period.  The probability of vesting is reassessed at each reporting period for awards with performance conditions and compensation expense is adjusted based on its probability assessment.  

Equity instruments issued to non-employees, including consultants, are accounted for in accordance with Financial Accounting Standards Board (“FASB”) guidance.  All transactions in which services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur.

For transactions where the fair value of the equity instrument issued to non-employees is the more reliable measurement and a measurement date has not been reached, the fair value is re-measured at each balance sheet date using the binomial option-pricing model.  Compensation expense for these share-based awards is recognized over the term of the consulting agreement or until the award is approved and settled.

Segment Data

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.  The Company is a clinical-stage biopharmaceutical company focusing on developing therapies for companion animals.

Total assets, property and equipment, net and total property and equipment additions by geography, reconciled to the consolidated amounts are:

	December 31,		June30,
	2015		2015
United States	(in thousands)
Total assets	$	36,160	$	38,973
Property and equipment, net		10		4
Total property and equipment additions		3		4
Australia
Total assets	$	9,054	$	17,259
Property and equipment, net		1,122		538
Total property and equipment additions		695		283
Ireland
Total assets	$	3,429	$	440
Property and equipment, net		1,965		7
Total property and equipment additions		2,096		7
Consolidated
Total assets	$	48,643	$	56,672
Property and equipment, net		3,097		549
Total property and equipment additions		2,794		294

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Recently Adopted Accounting Pronouncements

The Company has early adopted the provisions of Accounting Standards Update (“ASU”), No. 2014-10, Elimination of Certain Financial Requirements, Including an Amendment to Variable Interest Entities Guidance Topic in Topic 810, Consolidation, starting in fiscal year 2014.  In June 2014, the FASB, issued guidance removing the definition of a development stage entity from the Master Glossary of the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.  This guidance also eliminates an exception provided to development stage entities in ASC Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk.  On adoption, the Company was not required to present or disclose any information required by ASC Topic 915, Development Stage Entities.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This guidance requires an entity to recognize 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 goods or services.  This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about:

· Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

· Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

· Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In July 2015, the FASB delayed the effective date of this guidance.  As a result, this guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  The Company is currently evaluating the impact that this guidance will have on the Company’s consolidated results of operations, financial position and cash flows.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation.  This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  A reporting entity should apply the existing guidance in ASC Topic 718, Compensation—Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award.  Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.  If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.  The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest.  The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.  This guidance will be effective for annual reporting periods beginning after December 15, 2015.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position and cash flows.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40).  This guidance defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.  Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued. When management identifies substantial doubt about the entity’s ability to continue as a going concern, additional disclosures are required.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

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In September2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805) simplifying the accounting for measurement–period adjustments.  The guidance permits an acquirer to recognize adjustments to provisional purchase accounting amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined.  The acquirer would adjust its financial statements as needed, including recognizing in current-period earnings the full effect of changes in depreciation, amortization or other income effects, by line item, if any as a result of the change to the provisional amounts calculated as it the accounting had been completed at the acquisition date.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’sconsolidated results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes.  This guidance simplifies the presentation of deferred income taxes, in that it requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  This amendment applies to all entities that present a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax–paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This guidance will be effective for annual reporting periods beginning after December 15, 2016, however, early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities.  This guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments, eliminates certain disclosure requirements, requires public companies to use the exit price notion when measuring fair value, and requires certain changes to the presentation of financial assets and financial liabilities.  This guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption for public entities is allowable only for the provisions related to elimination of fair value disclosure requirements and related presentation of fair value changes resulting from instrument-specific credit risk in other comprehensive income. Early adoption is not allowed for any other provisions. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

3. Other Income Receivable

Other income receivable consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Research and development incentive receivable	$	916	$	3,242
Government grant receivable		111		—
Other		30		59
Other income receivable	$	1,057	$	3,301
Noncurrent
Government grant receivable	$	64	$	—

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4. Property Plant and Equipment

Property, plant and equipment, consisted of the following as of the dates indicated:

	Computer Equipment			Research and Development Equipment			Office Equipment			Plant and Equipment			Leasehold Improvements			Total
	(in thousands)
Opening balance July 1, 2014	$	57		$	214		$	92		$	—		$	151		$	514
Additions	$	35		$	258		$	1		$	—		$	—		$	294
Disposals		—			—			—			—			—			—
Depreciation		(25	)		(86	)		(12	)		—			(29	)		(152	)
Exchange rate adjustment		(11	)		(52	)		(19	)		—			(25	)		(107	)
Closing balance June 30, 2015	$	56		$	334		$	62		$	—		$	97		$	549
Additions	$	71		$	800		$	68		$	449		$	1,406		$	2,794
Disposals		—			—			—			—			—			—
Depreciation		(15	)		(70	)		(9	)		(13	)		(52	)		(159	)
Exchange rate adjustment		(2	)		(2	)		(6	)		(18	)		(59	)		(87	)
Closing balance December 31, 2015	$	110		$	1,062		$	115		$	418		$	1,392		$	3,097

In September 2015, the Company acquired certain manufacturing assets in Ireland as follows:

	Assets Acquired and Consideration
	(in thousands)
Assets acquired
Leasehold improvements	$	1,397
Plant & equipment		449
Office equipment (including furniture and fittings)		67
Laboratory equipment		64
Total assets acquired	$	1,977
Consideration
Cash paid	$	1,887
Retention amount withheld		90
Total consideration	$	1,977

5. Accrued Expenses

Accrued expenses consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Accrued payroll and related expenses	$	925	$	1,027
Accrued professional fees		233		361
Accrued research and development costs		1,749		964
Accrued expenses	$	2,907	$	2,352
Noncurrent
Accrued payroll and related expenses	$	49	$	—
Accrued professional fees		3		—
Accrued expenses	$	52	$	—

6. Ordinary Shares

As of December 31, 2015 and June 30, 2015, there were 11,558,133 and 11,406,916 ordinary shares outstanding, respectively.

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7. Fair Value Measurement

Assets and liabilities carried at fair value on a recurring basis as of December 31, 2015 and June 30, 2015, including financial instruments, which the Company accounts for under the fair value option, are summarized in the following tables.

December 31, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
	(in thousands)
Assets
Cash	$	43,079	$	—	$	—	$	43,079
June 30, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets
Cash	$	52,033	$	—	$	—	$	52,033

There were no transfers between the levels within the reporting periods.

8. Net Loss Per Share

The calculation of net loss per participating securities (“EPS”) for the three and six months ended December 31, 2015 and 2014 is presented below.  

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
	(in thousands, except share and per share amounts)						(in thousands, except share and per share amounts)
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Weighted-average ordinary shares issued and    outstanding—basic and diluted		11,506,236			1,198,828			11,474,394			1,138,520
Net loss per ordinary share—basic and diluted	$	(0.49	)	$	(2.01	)	$	(0.84	)	$	(4.14	)

The following ordinary share equivalents were excluded from the calculation of diluted net loss per share for the periods ended on the dates indicated because including them would have an anti-dilutive effect:

	Three Months Ended September30,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands, except share and per share amounts)				(in thousands, except share and per share amounts)
Preference Shares		—		5,937,160		—		5,937,160
Share-based awards		1,052,420		477,392		1,052,420		477,392
Warrants		1,766,998		1,766,998		1,766,998		1,766,998
Total		2,819,418		8,181,550		2,819,418		8,181,550

Unaudited basic and diluted net loss per share is computed using the weighted-average number of ordinary shares outstanding after giving effect to the conversion of all convertible preference shares into ordinary shares as if such conversion had occurred at the beginning of the period presented, or the date of original issuance, if later.

9. Share-Based Awards

As permitted by Australian law, the Company’s board of directors has historically granted share options and restricted share units with an exercise or conversion price, as applicable, of zero to recipients in Australia.  Contemporaneously with these awards and based upon information available at the time of grant, the Company’s board of directors, with the assistance of management, also determined the fair value of the shares underlying these share options for financial reporting purposes.  To determine the best estimate of the fair value of the Company’s ordinary shares at each grant date, the Company’s board of directors considered numerous factors, including contemporaneous third-party valuations, current business conditions and projections, risks inherent to the development of the Company’s research and development programs, including the status of pivotal safety and efficacy studies for its lead product candidates, the Company’s financial condition, the Company’s need for future financing to fund its research and development efforts and the commercialization of its lead product candidates, and other relevant factors.

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Option Terms of Issue

The Company previously issued to its employees, consultants and directors under the Company’s Employee Share Option Plan (the “2012 Plan”) ordinary shares subject to an interest-free, limited recourse loan payable to the Company for the purchase price of the ordinary shares.  The 2012 Plan is no longer in use, and all of the limited recourse loans were either repaid in cash or satisfied by the repurchase by the Company of certain ordinary shares subject to such loan.  The Company issued to each former holder of such repurchased ordinary shares an option to purchase a number of ordinary shares equal to the number of ordinary shares repurchased with an exercise price of $6.35 per ordinary share and subject to the Option Terms of Issue.  The new options expire in February 2018, consistent with the original repayment date of the loan.

2013 Long Term Incentive Plan

In September 2013, the Company’s board of directors approved a long-term incentive plan for its employees (including executive officers), directors and consultants pursuant to which in November 2013 the Company issued share options to purchase 215,799 ordinary shares and restricted share units to acquire 29,214 ordinary shares to employees, directors and consultants.  The underlying ordinary shares had a fair value of $5.15 per share, but the awards had an exercise or conversion price, as applicable, of zero, as permitted under Australian law. Because Irish law requires the payment to an issuer of at least the nominal value of shares in order to acquire such shares from the issuer, any options or restricted share units with a zero exercise or conversion price became exercisable or convertible, as applicable, at the nominal value per ordinary share in August 2014 in anticipation of the Irish Exchange.  This nominal value became $0.10 per ordinary share in September 2014 in connection with the Irish Exchange and was revised to $0.125 per ordinary share in connection with the four-for-five share consolidation in November 2014.  In September 2014, the Company also issued share options to purchase 16,800 ordinary shares and restricted share units to acquire 21,240 ordinary shares to employees, directors and consultants.  The underlying ordinary shares had a fair value of $6.35 per ordinary share, but the awards had an exercise or conversion price of the nominal value of $0.10 per ordinary share, which nominal value became $0.125 per ordinary share in connection with the four-for-five share consolidation in November 2014. Except for share options and restricted share units held by directors (which vested either beginning in September 2014 and quarterly thereafter or in November 2014), share options and restricted share units held by employees and consultants vest in three equal tranches in November 2014, November 2015 and November 2016.  The Company revised this plan in September 2014 and refers to this plan as its “2013 Plan.”

In November 2014, the Company awarded employees share options to purchase 141,792 ordinary shares and restricted share units to acquire 16,427 ordinary shares.  The underlying ordinary shares had a grant date fair value of $9.37.  The share options and restricted share units have an exercise price or conversion price, as applicable, of $0.125 per ordinary share.  The awards are subject to a specified performance condition and service period and they vest in tranches over one to three years.

The 2013 Plan was terminated in connection with the Company’s initial public offering.  The 2013 Plan will continue to govern outstanding awards granted thereunder.  Appropriate adjustments will be made in the number of authorized ordinary shares and other numerical limits in the 2013 Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a share split or other change in the Company’s capital structure.

Prior to its termination, the 2013 Plan was administered by the Company’s board of directors. Subject to the provisions of the 2013 Plan, the board of directors determined, in its discretion, the persons to whom, and the times at which, awards were granted, as well as the size, terms and conditions of each award, under the 2013 Plan.  All awards are evidenced by a written agreement between the Company and the holder of the award.  The compensation committee has the authority to construe and interpret the terms of the 2013 Plan and awards granted under the 2013 Plan.

In the event of a change of control as described in the 2013 Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the 2013 Plan or substitute substantially equivalent awards.  Any awards which are not assumed or continued in connection with a change of control or are not exercised or settled prior to the change of control will terminate effective as of the time of the change of control.  The compensation committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all awards held by members of the board of directors who are not employees will automatically be accelerated in full.  The compensation committee, in its discretion and without the consent of any participant, may also cancel each or any outstanding award denominated in ordinary shares upon a change of control in exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per ordinary share in the change of control transaction over the exercise price per ordinary share, if any, under the award.

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2015 Equity Incentive Plan

In September 2014, the Company’s board of directors adopted, and in November 2014 the Company’s shareholders approved, the 2015 Equity Incentive Plan (“2015 Plan”).  The 2015 Plan was amended by the board of directors in January 2015, became effective on the date immediately prior to the date of the prospectus for initial public offering and was further amended by the compensation committee in September 2015.  The 2015 Plan is intended to provide incentives that will assist the Company to attract, retain and motivate employees, including officers, consultants and directors.  The Company may provide these incentives through the grant of share options, restricted share units, performance shares and units and other cash-based or share-based awards.

A total of 1,280,000 of the Company’s ordinary shares were initially authorized and reserved for issuance under the 2015 Plan.  This reserve has or will automatically increase on July 1 of each year through 2024 by an amount equal to the lesser of:

· Four percent of the number of the Company’s ordinary shares issued and outstanding on the immediately preceding June 30; and

· An amount determined by the Company’s board of directors.

The ordinary shares available under the 2015 Plan will not be reduced by awards settled in cash, but will be reduced by ordinary shares withheld to satisfy tax withholding obligations with respect to ordinary share options (but not other types of awards).  The gross number of ordinary shares issued upon the exercise of options exercised by means of a net exercise or by tender of previously-owned ordinary shares will be deducted from the ordinary shares available under the 2015 Plan.  Notwithstanding the foregoing, and subject to adjustment as described below, the maximum aggregate number of ordinary shares that may be subject to issuance at any given time under the 2015 Plan in connection with outstanding awards shall not exceed a number equal to ten percent of the Company’s total issued and outstanding ordinary shares (calculated on a non-diluted basis).  

Appropriate adjustments will be made in the number of authorized ordinary shares and other numerical limits in the 2015 Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a share split or other change in the Company’s capital structure.  Ordinary shares subject to awards which expire or are cancelled or forfeited will again become available for issuance under the 2015 Plan.

In May 2015, the Company awarded employees and directors share options to purchase 360,000 ordinary shares and restricted share units to acquire 20,280 ordinary shares with a grant date fair value of $5.93 and $6.99 per share, respectively.  The share options and restricted share units have an exercise price of $15.00 and a conversion price of $0.125 per ordinary share, respectively.  Except for restricted share units to acquire 2,280 ordinary shares held by directors (which vest immediately), the awards vest in tranches over one to five years.

In June 2015, the Company awarded employees bonus share awards to purchase 42,691 ordinary shares subject to the payment of $0.125 per ordinary share.  The underlying ordinary shares had a grant date fair value of $7.12 per ordinary share.

In August 2015, the Company awarded employees share options to purchase 60,000 ordinary shares and restricted share units to acquire 8,500 ordinary shares with a grant date fair value of $2.71 and $4.97 per share, respectively.  The share option and restricted share units have an exercise price of $5.10 and a conversion price of $0.125 per ordinary share, respectively.  The awards vest in tranches over one to five years.

In September 2015, the Company awarded employees and directors restricted share units to acquire 298,834 ordinary shares with grant date fair values of $4.26‑$4.27.  The restricted share units have a conversion price of $0.125 per ordinary share. The restricted shares units granted to employees vest annually over four years commencing on July 1, 2016.  The restricted share units granted to directors vest on July 1, 2016.

In November 2015, the Company awarded a new employee restricted share units to acquire 2,000 ordinary shares with a grant date fair value of $4.76.  The restricted share units have a conversion price of $0.125 per ordinary share.  The restricted share units granted vest on September 21, 2016.

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10. Valuation of Share Awards

The fair value of each share option is estimated on the date of grant using the binomial option-pricing model. The Company was a private company until February 2015 and lacked company-specific historical and implied volatility information. Therefore, it has estimated its expected share volatility based on the historical volatility of its publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s share options has been determined utilizing the “simplified” method as the Company has insufficient historical experience for share options overall, rendering existing historical experience irrelevant to expectations for current grants. The risk-free interest rate is determined by reference to the appropriate reserve bank yield in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The fair value of the underlying ordinary shares considered the price per share paid by investors in the Company’s private financings, including the Series B Preference Shares in May 2014. The fair value of the share awards was estimated using the following assumptions:

	Three Months Ended December 31, 2015		Six Months Ended December 31, 2015
Risk free interest rate		1.7%		1.7%
Expected term (in years)	1 year		1 - 4 years
Expected volatility		75%		75%
Forfeiture rate		0%		7.5%
Expected dividend yield	zero		zero

Since completion of the Company’s initial public offering, the fair value of the underlying ordinary shares has been based on the price per share quoted on the NASDAQ Global Market at the date of grant.

The following table summarizes share option activity for fiscal year 2015 and the six months ended December 31, 2015:

	Shares Issuable Under Options				Weighted- Average Exercise Price
Outstanding as of July 1, 2014		470,479			$	2.33
Granted		663,661				9.55
Exercised		(96,540	)			0.125
Ordinary shares no longer subject to limited recourse loans		(109,611	)	(1)		4.20
Repurchased		(145,069	)			6.35
Expired or forfeited		(6,289	)			0.125
Outstanding as of June30, 2015		776,631			$	8.18
Granted		60,000			$	5.10
Exercised		(126,017	)			0.125
Repurchased		—				—
Expired or forfeited		—				—
Outstanding as of December 31, 2015		710,614			$	9.35
Options vested and expected to vest, as of June30, 2015		159,937			$	5.77
Options vested and expected to vest, as of December 31, 2015		329,812			$	9.63

(1) Reflects ordinary shares issued subject to limited recourse loans.

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In addition to the share options described above, the Company has granted restricted share units to its directors, employees and consultants. Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant. The fair value of the ordinary shares issuable upon conversion of restricted share units is considered the price per share paid by investors in the Company’s private financings, including the Series A investment preference shares in July 2013. The ordinary shares subject to the restricted share units are generally issued when they vest.  The table below presents the Company’s restricted share unit activity for fiscal year 2015 andthe six months ended December 31, 2015:

	Number of Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding as of July 1, 2014		29,214		$	5.15
Granted		57,947			7.83
Converted		(29,489	)		5.85
Forfeited		—			—
Outstanding as of June30, 2015		57,672		$	7.48
Granted		309,334		$	4.28
Converted		(25,200	)		7.61
Forfeited		—			—
Outstanding as of December 31, 2015		341,806		$	4.57
Converted and expected to convert, as of June30, 2015		4,400		$	9.19
Converted and expected to convert, as of December 31, 2015		—		$	—

Share-Based Compensation

The Company recognizes share-based compensation expense for only the portion of awards that are expected to vest. In developing a forfeiture rate estimate, the Company has considered its historical experience to estimate pre-vesting forfeitures for service-based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially different from the Company’s estimate, the Company may be required to record adjustments to share-based compensation expense in future periods.  The weighted average remaining contract life on all outstanding options and restricted share units as of December 31, 2015 was 5.2 years and 1.8 years, respectively.

The Company recorded share-based compensation expense related to share options and restricted share units for the three and six months ended December 31, 2015 and 2014 as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Research and development	$	193	$	131	$	402	$	173
General and administrative		286		212		537		365
Total	$	479	$	343	$	939	$	538

The Company had an aggregate of $3.7 million and $3.1 million of unrecognized share-based compensation expense for share awards outstanding as of December 31, 2015 and June 30, 2015, respectively, which is expected to be recognized over an estimated period of 5.5 years and 4.0 years, respectively.

11. Commitments and Contingencies

Indemnities and Guarantees

The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions. The Company indemnifies its officers and directors to the maximum extent permitted under the laws of Ireland. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. These indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheets.

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Operating Leases and Purchase Obligations

Commitments consisted of the following as of the dates indicated:

	Total		Less than 1 Year			1-3 Years			3-5 Years			After 5 Years
December 31, 2015	(in thousands)
Operating leases	$	1,405		$	190		$	400		$	253		$	562
Purchase obligations		2,007			2,007			—			—			—
Total	$	3,412		$	2,197		$	400		$	253		$	562

	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
June 30, 2015	(in thousands)
Operating leases	$	352	$	109	$	190	$	53	$	—
Purchase obligations		680		680		—		—		—
Total	$	1,032	$	789	$	190	$	53	$	—

Operating Leases

The Company entered into a lease for its office in Melbourne, Australia commencing December 2013 for a period of five years. As of December 31, 2015 and June 30, 2015 commitments totaled $0.3 million and $0.4 million, respectively.  Rent expense was $106,000 and $0.2 million for the six months ended December 31, 2015 and fiscal year 2015, respectively. Included in rent expense is a build-out incentive of $11,000 and $26,000 for the six months ended December 31, 2015 and fiscal year 2015, respectively. A portion of the incentive paid by the landlord is to be repaid by the Company if the lease is terminated early, determined by the unexpired term of the lease over the original 60‑month lease term. There are no escalation clauses in the lease agreement.

The Company entered into a lease for a facility in Tullamore, Ireland commencing September 2015 for a period of 10 years, with an option to purchase the building. As of December 31, 2015, commitments on this lease totalled $1.1 million.  

Purchase Obligations

In connection with the development of biologics, the Company had open contracts with suppliers for goods and services of $2.0 million and $0.7 million as of December 31, 2015 and June 30, 2015, respectively.

12. Related Party Transaction

Ridge Biotechnology Consulting, LLC is owned and operated by Dr. Robert Gearing, the brother of David Gearing, a co-founder of the Company and its Chief Scientific Officer. In October 2010, the Company entered into a consulting agreement with Ridge Biotechnology Consulting, LLC for the provision of services to the Company. The agreement was superseded by agreements entered into in April 2011 and April 2012, and a new consulting agreement with Ridge Biotechnology Consulting, LLC was entered into in January 2014. The Company recorded expenses of $Nil, $67,000, $39,000 and $100,000 for the three and six months ended December 31, 2015 and 2014, respectively, related to these agreements. As of December 31, 2015 and June 30, 2015, there was Nil and $13,000 payable to Ridge Biotechnology Consulting, LLC, respectively.

Dr. Andrew Gearing is a former director, a co-founder of the Company and a brother of David Gearing, a co-founder of the Company and its Chief Scientific Officer.  Dr. Andrew Gearing serves on the board of directors of Biocomm Square Pty Ltd. In August 2010 and August 2013, the Company entered into consulting agreements with Biocomm Square Pty Ltd for research and development support services.  These agreements were superseded by a new consulting agreement in December 2013, which was amended in April 2014 and in August 2015. In addition, the Company entered into an agreement with Biocomm Square Pty Ltd in November 2011 for assistance in obtaining partnering arrangements with Japanese entities.  This agreement was amended and terminated in August 2015. The Company recorded expenses of $57,000, $62,000, $90,000 and $115,000 for the three months ended December 31, 2015 and 2014, respectively, related to these agreements. As of December 31, 2015 and June 30, 2015, there was $24,000 and $17,000 payable to Biocomm Square Pty Ltd, respectively.

13. Subsequent Events

There were no material subsequent events occurring after December 31, 2015 requiring disclosure.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10‑Q. The information contained in this discussion and analysis and set forth elsewhere in this report includes forward-looking statements that involve risks and uncertainties.  As a result of many factors, including those factors set forth in the section of this report titled “Risk Factors,” our actual results could differ materially from the results described in or implied by the forward-looking statements.

Overview

We are a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals by developing and commercializing novel, species-specific biologics based on human biologics. Biologics are therapeutic proteins derived from biological sources. As a class, biologics have transformed human medicine in recent decades and represent some of the top-selling therapies on the market today. Our proprietary platform, which we refer to as “PETization,” is an algorithmic approach that enables us to rapidly create monoclonal antibodies, a type of biologic, that are designed to be recognized as “self” or “native” by an animal’s immune system, a property we refer to as “100% species-specificity.” PETization is also designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, thereby reducing clinical risk and development cost.

Biologics generally include monoclonal antibodies, or mAbs, which are targeted antibodies derived from identical, or clonal cells, and fusion proteins, which are proteins created by joining two or more genes coded for separate proteins.  Our first product candidate, NV‑01, is a mAb that targets and inhibits the function of nerve growth factor, or NGF, for the control of pain associated with osteoarthritis in dogs. NGF is a protein involved in neural signaling, including pain signals, and NGF inhibitors (“anti-NGFs”) seek to interrupt those signals to reduce pain.  In November 2015 we announced that our pivotal safety and efficacy study of NV-01 met its primary efficacy endpoint: as statistically significant improvement over placebo in the assessed level of pain (p=0.038) as measured using changes in Client-Specific Outcome Measures (“CSOM”) score between enrollment and day 28.  This study’s design was agreed under protocol concurrence with the Center for Veterinary Medicine (“CVM”) at the U.S. Food and Drug Administration (“FDA”). NV-01 was found to be safe and well-tolerated with no significant adverse safety signals observed in the study. Clinically meaningful magnitudes of benefit and statistically significant differences over placebo were also achieved for the majority of the secondary endpoints measured in the study. Collectively, the results of this study constitute a substantial body of efficacy data that we intend to use as the basis of our planned submissions for marketing authorizations in both the U.S. and Europe. The United States Adopted Name (“USAN”) Council has approved the generic name “ranevetmab” for NV-01.

Our second product candidate, NV‑02, is an anti-NGF mAb for the control of pain associated with osteoarthritis, in cats. We announced positive top-line results from our proof-of-concept efficacy study and our pilot safety study of NV‑02 in June 2015. In October 2015, we announced that commencement of a placebo-controlled, blinded, multi-site pilot field safety and efficacy study targeting enrollment of 90 cats with naturally occurring osteoarthritis. We anticipate results from this pilot field study in the second quarter of 2016. Our next most advanced programs are in the area of inflammation and include NV-08, a fusion protein that is a tumor necrosis factor, or TNF, inhibitor for the treatment of chronic inflammatory diseases, including atopic dermatitis, in dogs.  TNF is a protein that causes inflammation and TNF inhibitors (“anti-TNFs”) suppress this inflammation.  We are conducting proof-of-concept studies for candidates in inflammation (including NV‑08), which if successful, we will consider for progression into formal development. Primarily using PETizaion, we have built a research and development pipeline of 15 biologic programs in the areas of pain, allergy, inflammation and immuno-oncology.

We have incurred losses since our inception and had an accumulated deficit of $33.3 million and $23.7 million as of December 31, 2015 and June 30, 2015, respectively. For the foreseeable future, we expect to continue to incur losses and negative cash flows, which will increase significantly from historical levels as we expand our development activities, seek regulatory approvals for our lead product candidates and begin to commercialize any approved products.  To date, we have been funded primarily through sales of capital shares.  Management believes our cash of $43.1 million as of December 31, 2015 will be sufficient to fund our operations for at least the next 12 months.

We will require additional capital until such time as we can generate revenue in excess of operating expenses. We may seek such funding through public or private equity or debt financing or other sources, such as corporate collaborations and licensing arrangements. We may not be able to obtain financing on acceptable terms, or at all. The sale of additional equity would result in additional dilution to our shareholders, and the terms of any financing may adversely affect the rights of our shareholders. The incurrence of any debt financing could result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate our research and development programs or commercialization efforts, which could adversely affect our business prospects.

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In February2015, we closed our initial public offering of 4.0 million ordinary shares at a price to the public of $10.00 per share. In March2015, the underwriters partially exercised their over-allotment option and purchased an additional 0.2 million shares. Following the sales of these securities, we received aggregate gross proceeds of $41.8 million and net proceeds of $38.0 million, after deducting the underwriting discount of $2.9 million and offering expenses of $0.9 million payable by us. Upon the initial closing, all preference shares were converted into ordinary shares. Our ordinary shares are listed on the Nasdaq Global Market under the symbol “NVET.”

In November 2015, our pivotal safety and efficacy study of NV‑01 met its primary efficacy endpoint.  NV‑01 was found to be safe and well-tolerated with no significant adverse safety signals observed in the study. Clinically meaningful magnitudes of benefit and statistically significant differences over placebo were also achieved for the majority of the secondary endpoints measured in the study. Collectively, the results of this study constitute a substantial body of efficacy data that we intend to use as the basis of our planned submissions for marketing authorizations in both the U.S. and Europe.

In September 2015, we secured a biologics manufacturing facility in Tullamore, Ireland. We have secured the manufacturing assets within the facility for $2.0 million and have entered into a 10‑year lease on the facility, with an option to purchase the building.

Share Consolidations and Irish Reorganization

In August 2014, Nexvet Australia Pty Ltd, or Nexvet Australia, completed a one‑for‑four share consolidation pursuant to which each holder of ordinary shares and preference shares received one ordinary share or preference share for every four ordinary shares or preference shares, as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a one-for-four basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

In September 2014, Nexvet Biopharma Limited, a newly formed Irish private company, became the parent company of Nexvet Australia and its subsidiaries pursuant to a transaction in which all of the holders of securities of Nexvet Australia exchanged their holdings for equivalent securities of Nexvet Biopharma Limited. We refer to this transaction as the “Irish Exchange.”   Nexvet Biopharma Limited then re-registered as an Irish public limited company in September 2014.  We refer to this re-registration and the Irish Exchange collectively as the “Irish Reorganization.”Nexvet Biopharma plc became the parent company of Nexvet Australia pursuant to the Irish Reorganization, and for financial reporting purposes the historical condensed consolidated financial statements of Nexvet Australia became the historical condensed consolidated financial statements of Nexvet Biopharma plc and its subsidiaries as a continuation of the predecessor.

In November 2014, we completed a four-for-five share consolidation pursuant to which each holder of ordinary shares and preference shares received four ordinary shares or four preference shares for every five ordinary shares or five preference shares, as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a four-for-five basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

Basis of Presentation

Operating Expenses

The majority of our operating expenses have been research and development activities related to our lead product candidates and general and administrative costs associated with our business.

Research and Development Expense

Research and development costs are expensed as incurred and consist primarily of (i) payroll and related expense for all employees engaged in scientific research and development functions, including wages, related benefits and share-based compensation, (ii) fees for regulatory, professional and other consultants and (iii) development costs, including costs of drug discovery, safety, proof-of-concept studies and pivotal safety and efficacy studies, development of biological materials, and service providers. We use our employee and infrastructure resources across multiple development programs.  We allocate outsourced development costs by lead product candidate for billing and research and development incentive income purposes, but we do not allocate personnel or other internal costs related to development to specific product candidates.

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We expect research and development expense to increase significantly for the foreseeable future as we continue to increase our headcount, commence and conduct pilot and pivotal safety and efficacy studies and further develop our lead product candidates. We expect future research and development costs associated with NV‑01 to be approximately $8.0 million in total.  This includes $0.4million for a pilotfield safety and efficacy study, $1.0 million for the cost of pivotal safety and efficacy studies plus an additional $6.6 million for chemistry, manufacturing and controls studies, stability studies and regulatory compliance and other miscellaneous costs.  Our development of NV‑02 and NV‑08 is not as advanced as our development of NV‑01.  However, assuming development costs similar to those anticipated for NV‑01, we estimate research and development expense for the development of each of NV‑02 and NV‑08 (if selected as a development candidate) to be approximately $12.0 million.

Drug development is inherently unpredictable and the nature, specific timing and estimated costs of the efforts that will be necessary to complete the development of our lead product candidates are subject to numerous factors.  For example, the nature, timing and amount of research and development expense incurred will depend largely upon the outcomes of current and future pivotal safety and efficacy studies for our lead product candidates as well as the related regulatory requirements, manufacturing costs and other costs associated with the development of our lead product candidates.  Factors that can influence the duration, cost and timing of our pivotal safety and efficacy studies and development of our lead product candidates include:

· the scope, rate of progress and expense of our ongoing, as well as any additional pivotal safety and efficacy studies and other research and development activities;

· results of future pivotal safety and efficacy studies;

· chemistry, manufacturing and control studies (“CMC”);

· potential changes in government regulation; and

· the timing and receipt of any regulatory approvals.

A change in the outcome of any of these variables with respect to the development of a lead product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

General and Administrative Expense

General and administrative expense consists primarily of non-research and development related payroll and related expense for employees, consultants and directors, including wages, related benefits and share-based compensation.  General and administrative expense also includes professional and consulting fees for legal, accounting, tax services and other general business services, as well other expenses such as travel, rent and facilities costs.  We expect general and administrative expense to increase significantly as we operate as a public company, continue to build our corporate infrastructure globally and prepare to commercialize and market our products.

Other Income (Expense)

Research and Development Incentive Income

We are eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the Australian Taxation Office.  The tax incentive is available to us on the basis of specific criteria with which we must comply.  Although the research and development assistance is administered through the Australian Taxation Office, we have accounted for the government assistance outside the scope of Accounting Standards Codification, or ASC, Topic 740, Income Taxes, as an income tax benefit since we meet the applicable requirements to participate in the plan and the incentive is not linked to our income tax liability and can be realized regardless of whether we have generated taxable income.  Research and development incentive income is recognized when the research and development activities have been undertaken and we have completed its assessment of whether such activities meet the relevant qualifying criteria.  We intend to continue conducting research and development in Australia, and we expect to therefore remain eligible for this incentive.

Government Grant Income

We recognize government grants at their fair value when there is a reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income and is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset, and on the balance sheet as other income receivable until cash is received. When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

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Exchange (Loss) Gain

Exchange (loss) gain consists primarily of losses or gains due to foreign exchange translation, primarily reflecting changes in Australian and U.S. foreign exchange rates. Under accounting principles generally accepted in the United States, or U.S. GAAP, these items relate to a translation of U.S. dollar-denominated bank accounts into Nexvet Australia’s Australian dollar functional currency and represent a non-cash item.

Interest Income

We earn interest on the cash balances held with financial institutions and recognize interest when earned on an accrual basis over time.

Results of Operations

Results of operations for the three and six months ended December 31, 2015 and 2014 were as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Revenue
Other	$	—		$	—		$	—		$	25
Total revenue		—			—			—			25
Operating expenses
Research and development		3,790			2,226			7,515			4,765
General and administrative		1,779			2,440			3,649			5,258
Total operating expenses		5,569			4,666			11,164			10,023
Loss from operations		(5,569	)		(4,666	)		(11,164	)		(9,998	)
Other income and expense
Research and development incentive income		457			941			1,023			1,682
Government grant income		—			22			4			319
Exchange (loss) gain		(618	)		1,270			410			3,254
Interest income		39			20			76			33
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)

Foreign Currency

Our functional currency is U.S. dollars, and the functional currency for most subsidiaries is their local currency.  Foreign currency transactions are translated into the functional currency using the current exchange rate as of the date of the transaction.  At period-end, monetary items denominated in a foreign currency are translated into the functional currency of the relevant entity using the period-end spot rate.  The exchange gain of $1.3 million, $0.4 million and $3.3 million, respectively, in the three months ended December 31, 2014 and six months ended December 31, 2015 and 2014, respectively, and an exchange loss of $0.6 million, in the three months ended December 31, 2015, primarily related to the translation of Nexvet Australia’s U.S. dollar-denominated bank accounts to its Australian dollar functional currency.

In preparing our consolidated financial statements, the financial statements of the subsidiaries are translated at period-end exchange rates for assets and liabilities and at weighted-average rates for revenue and expenses.  The resulting translation adjustments are recognized in other comprehensive income (loss), or OCI.  The non-cash translation adjustment in accumulated OCI was a loss of $1.5 million, $0.8 million, and $3.6 million for the three months ended December 31, 2014 and six months ended December 31, 2015 and 2014, respectively and a gain of $0.6 million for the three months ended December 31, 2015.  These adjustments primarily related to the translation of U.S. dollar-denominated bank accounts within Nexvet Australia’s balance sheet to the U.S. dollar presentation currency of the consolidated balance sheet.

Although the two foreign exchange-related items both relate to our U.S. dollar-denominated bank accounts, which in substance offset each other, under U.S. GAAP, there is no offset of these two items within the condensed consolidated statements of operations and comprehensive loss.  Accordingly, in addition to U.S. GAAP measures, management uses net loss excluding exchange loss or gain, which is a non‑GAAP financial measure, to evaluate the business as management believes that it is a better reflection of the underlying business performance.

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Net loss excluding exchange(loss) gain for the three and six months ended December 31, 2015 and 2014, and a reconciliation to net loss in each respective period, is presented below:

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Net loss as reported	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Exchange (loss) gain		(618	)		1,270			410			3,254
Net loss excluding exchange (loss) gain	$	(5,073	)	$	(3,683	)	$	(10,061	)	$	(7,964	)

Comparison of Three Months Ended December 31, 2015 to Three Months Ended December 31, 2014

Research and Development Expense

Research and development expense for the three months ended December 31, 2015 and 2014 was as follows:

	Three Months Ended December 31,
	2015		2014
	(in thousands)
Payroll and related	$	1,271	$	576
Consulting		7		25
Development costs		2,512		1,625
Total	$	3,790	$	2,226

Research and development expense increased $1.6 million, or 73%, from $2.2 million in the three months ended December 31, 2014 to $3.8 million in the three months ended December 31, 2015.  The increase was primarily attributable to a $0.7 million increase in payroll and related costs and a $0.9 million increase in development costs.  The increase in payroll and related costs was mainly due to expanding our research and development team, including a $0.1 million increase in share-based compensation expense.  The increase in development costs was mainly attributable to advancing the development of our lead product candidates, including NV‑01’s pilot and pivotal safety and efficacy studies, NV‑02’s pilot field safety and efficacy study and CMC costs.

In the three months ended December 31, 2015 and 2014, outsourced development costs were $0.9 million and $1.0 million, respectively, for NV‑01, $1.1 million and $0.3 million, respectively, for NV‑02, $44,000 and $0.2 million, respectively, for NV‑08 and $0.4 million and $0.1 million, respectively, for general research.

In the three months ended December 31, 2015 and 2014, research and development expense associated with our new manufacturing facility in Ireland were $0.4 million and nil, respectively.

General and Administrative Expense

General and administrative expense for the three months ended December 31, 2015 and 2014 was as follows:

	Three Months Ended December31,
	2015		2014
	(in thousands)
Payroll and related	$	966	$	722
Consulting and legal fees		303		1,098
Other costs		510		620
Total	$	1,779	$	2,440

Our general and administrative expense decreased $0.6 million, or 25%, from $2.4 million in the three months ended December 31, 2014 to $1.8 million in the three months ended December 31, 2015.  The decrease was primarily attributable to a $0.8 million reduction in consulting and legal costs offset by a $0.2 million increase in payroll and related costs.  The increase in payroll and related costs wasmainly due to expanding our general and administrative team, including a $0.1 million increase in share-based compensation expense.  Consulting and legal fees decreased $0.8 million, primarily due to incurring costs in 2014 associated with preparation for our initial public offering and Irish reorganization.  Other costs decreased by $0.1 million, mainly due to less travel costs.

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Research and Development Incentive Income

Research and development incentive income decreased by $0.4 million, or 44%, from $0.9 million in the three months ended December 31, 2014 to $0.5 million in the three months ended December 31, 2015, primarily due to a decrease in Australian qualifying expenditures as lead programs progressed from the research phase (where expenditure is predominantly incurred in Australia) into the clinical and manufacturing scale-up phases (where expenditure is incurred outside of Australia).

Comparison of Six Months Ended December 31, 2015 to Six Months Ended December 31, 2014

Research and Development Expense

Research and development expense for the six months ended December 31, 2015 and 2014 was as follows:

	Six Months Ended December31,
	2015		2014
	(in thousands)
Payroll and related	$	2,338	$	1,040
Consulting		97		121
Development costs		5,080		3,604
Total	$	7,515	$	4,765

Research and development expense increased $2.7 million, or 56%, from $4.8 million in the six months ended December 31, 2014 to $7.5 million in the six months ended December 31, 2015.  The increase was primarily attributable to a $1.3 million increase in payroll and related costs and $1.5 million increase in development costs.  The increase in payroll and related costs was mainly due to expanding our research and development team, including a $0.2 million increase in share-based compensation expense.  The increase in development costs was mainly attributable to advancing the development of our lead product candidates, including NV‑01’s pilot and pivotal safety and efficacy studies, NV‑02’s pilot field safety and efficacy study and CMC costs.

In the six months ended December 31, 2015 and 2014, outsourced development costs were $2.2 million and $1.8 million, respectively, for NV‑01, $1.9 million and $1.2 million, respectively, for NV‑02, $0.1 million and $0.2 million, respectively, for NV‑08 and $0.9 million and $0.4 million, respectively, for general research.

In the six months ended December 31, 2015 and 2014, research and development expense associated with our new manufacturing facility in Ireland were $0.5 million and nil, respectively.

General and Administrative Expense

General and administrative expense for the six months ended December 31, 2015 and 2014 was as follows:

	Six Months Ended December 31,
	2015		2014
	(in thousands)
Payroll and related	$	1,977	$	1,481
Consulting and legal fees		740		2,634
Other costs		932		1,143
Total	$	3,649	$	5,258

Our general and administrative expense decreased $1.7 million, or 32%, from $5.3 million in the six months ended December 31, 2014 to $3.6 million in the six months ended December 31, 2015.  The decrease was primarily attributable to a $1.9 million reduction in consulting and legal costs offset by a $0.5 million increase in payroll and related costs.  The increase in payroll and related costs wasmainly due to expanding our general and administrative team, including a $0.2 million increase in share-based compensation expense.  Consulting and legal fees decreased $1.9 million, primarily due to incurring costs in 2014 associated with preparation for our initial public offering and Irish reorganization.  Other costs decreased by $0.2 million, mainly due to less travel costs.

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Research and Development Incentive Income

Research and development incentive income decreased by $0.7 million, or 41%, from $1.7 million in the six months ended December 31, 2014 to $1.0 million in the six months ended December 31, 2015, primarily due to a decrease in Australian qualifying expenditures as lead programs progressed from the research phase (where expenditure is predominantly incurred in Australia) into the clinical and manufacturing scale-up phases (where expenditure is incurred outside of Australia).

We held an allowance of $0.1 million at June 30, 2015 due to official notification that a reduced rate would be applied to our research and development incentive income claim.  We have released this allowance to our income in the six months ended December 31, 2015, given the cash for the full amount of our claim has now been paid.  

Government Grant Income

In the six months ended December 31, 2015 and 2014, we recognized $4,000 and $0.3 million, respectively, in income from government grants.

Liquidity and Capital Resources

We have incurred losses and negative cash flows from operations since our inception.  As of December 31, 2015, we had an accumulated deficit of $33.3 million. From our inception, we raised aggregate gross proceeds of $41.4 million from the sale of preference shares, ordinary shares, convertible notes and warrants. In February and March 2015, we raised a further aggregate gross proceeds of $41.8 million and aggregate net proceeds of $38.0 million, after deducting the underwriting discount of $2.9 million and offering expenses of $0.9 million payable by us, from the sale of ordinary shares in our initial public offering.  We believe our cash balance of $43.1 million as of December 31, 2015 will be sufficient to fund our anticipated level of operations for at least the next 12 months.  For the foreseeable future, we expect to continue to incur losses, which will increase from historical levels as we expand our product development activities, seek regulatory approvals for our lead product candidates and begin commercialization activities in anticipation of regulatory approval.

However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations.  Such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business.  In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plan.

Our future capital requirements will depend on many factors, including:

· the scope, progress, results and costs of researching and developing our current or future product candidates, including conducting proof-of-concept and pilot and pivotal safety and efficacy studies;

· the timing of, and the costs involved in, obtaining regulatory approvals for any of our current or future product candidates;

· the number and characteristics of the product candidates we pursue;

· whether we acquire or license any other companies, assets, intellectual property or technologies in the future;

· the cost of commercialization activities such as marketing, sales and distribution costs, including if any of our current or future product candidates are approved for sale;

· the cost of manufacturing our current and future product candidates and any approved products we successfully commercialize;

· our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

· the expenses needed to attract and retain skilled personnel;

· the costs associated with being a public company; and

· the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, if any arise, including litigation costs and the outcome of such litigation.

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Cash Flows

The following table shows a summary of our cash flows for the periods set forth below:

	Six Months Ended December 31,
	2015			2014
	(in thousands)
Net cash used in operating activities	$	(5,403	)	$	(4,656	)
Net cash used in investing activities		(2,816	)		(176	)
Net cash provided by financing activities		19			24

Net Cash Used in Operating Activities

For the six months ended December 31, 2015, net cash used in operating activities was $5.4 million. Net cash used in operating activities was primarily attributable to our net loss of $9.7 million offset by non-cash share-based compensation expense of $0.9 million and non-cash depreciation and amortization of $0.2 million and by changes in our operating assets and liabilities of $3.2 million. The key change in operating assets and liabilities was the receipt of $3.2 million for the 2015 fiscal year Research and Development incentive income.

For the six months ended December 31, 2014, net cash used in operating activities was $4.7 million.  Net cash used in operating activities was primarily attributable to our net loss of $4.7 million, and changes in our operating assets and liabilities of $0.6 million offset by non-cash share-based compensation expense of $0.5 million and non-cash depreciation and amortization of $0.1 million.

Net Cash Used in Investing Activities

For the six months ended December 31, 2015, net cash used in investing activities was $2.8 million, which was attributable to purchases of property, plant and equipment, including $2.0 million for the initial acquisition of manufacturing assets in our facility in Tullamore, Ireland.

For the six months ended December 31, 2014, net cash used in investing activities was $0.2 million, which was attributable to purchases of property, plant and equipment.

Net Cash Provided by Financing Activities

For the six months ended December 31, 2015, net cash provided by financing activities was $19,000, which was attributable to gross proceeds from the exercise or conversion of share awards issued to employees and directors.

For the six months ended December 31, 2014, net cash provided by financing activities was $24,000, which was attributable to gross proceeds from the sale of our ordinary shares.

Contractual Obligations and Commitments

Our principal contractual obligations and commitmentswere reported in our annual report on Form 10‑K filed with the SEC on September 3, 2015.  In September 2015, we entered a 10 year lease for a manufacturing facility in Tullamore, Ireland, with an option to purchase the building.  As of December 31, 2015, commitments on this lease totalled $1.1 million.  There have been no other material changes from the contractual obligations and commitments previously disclosed in our annual report on Form 10‑K.

Off-Balance Sheet Arrangements

Since inception, we have not engaged in the use of any off-balance sheet arrangements, such as structured finance entities, special purpose entities or variable interest entities.

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Critical Accounting Policies and Significant Judgments and Estimates

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP.  The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and revenue, costs and expenses and related disclosures during the reporting periods.  On an ongoing basis, we evaluate our estimates and judgments, including those described below.  We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to our condensed consolidated financial statements included elsewhere in this report, we believe that the estimates and assumptions involved in the following accounting policies may have the greatest potential impact on our condensed consolidated financial statements.

Research and Development Accruals

As part of the process of preparing our condensed consolidated financial statements, we are required to estimate accrued research and development expenses.  Examples of estimated accrued expenses include fees paid to vendors and clinical sites in connection with our field safety and efficacy studies, to contract research organizations in connection with our proof‑of‑concept, pilot field and pivotal safety and efficacy studies and to contract manufacturers in connection with the production of our product candidates and formulated biologics.

We review new and open contracts and communicate with applicable internal and vendor personnel to identify services that have been performed on our behalf and estimate the level of service performed and the associated costs incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost for accrued expenses.  The majority of our service providers invoice us monthly in arrears for services performed or as milestones are achieved in relation to our contract manufacturers.  We make estimates of our accrued expenses as of each balance sheet date.

We base our accrued expenses related to proof-of-concept, pilot and pivotal safety and efficacy studies on our estimates of the services received and efforts expended pursuant to contracts with vendors, our internal resources, and payments to clinical sites based on animal enrollments.  The financial terms of the vendor agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.  Payments under some of these contracts depend on factors such as the successful enrollment of animals and the completion of development milestones.  We estimate the time period over which services will be performed and the level of effort to be expended in each period.  If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the related expense accrual accordingly on a prospective basis.  If we do not identify costs that have been incurred or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates.  To date, we have not made any material adjustments to our estimates of accrued research and development expenses or the level of services performed in any reporting period presented.

Share-Based Compensation

We measure share-based compensation expense based on the fair value of share-based awards on the date of grant and recognize the corresponding compensation expense of the awards, net of estimated forfeitures, over the requisite service periods, which correspond to the vesting periods of the awards.  To date, we have issued share options and restricted share units with service-based vesting conditions, and we record compensation expense for these awards using the straight-line method.

Determining the fair value of share-based awards at the grant date requires judgment, and our estimates of the fair value of our ordinary shares are complex and subjective.  Following the completion of our initial public offering, the fair value of our ordinary shares is based on the closing price of our ordinary shares on the Nasdaq Global Market.

We use the binomial option-pricing model to determine the fair value of share options.  This determination is affected by our estimated fair value per ordinary share as well as assumptions regarding a number of other complex and subjective variables.  These variables include the fair value of our ordinary shares, the expected term of the share option, our volatility over that expected term, expected dividend yield and risk-free interest rates.  Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant.  See Note 9 to our condensed consolidated financial statements included elsewhere in this report for further details.

In addition to these assumptions, we estimate forfeitures based upon our historical experience.  At each period end, we review the estimated forfeiture rate and make changes as factors affecting the forfeiture rate calculations and assumptions change.

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If any assumptions used in the binomial option-pricing model change significantly, share-based compensation for future awards may differ materially compared with the awards granted previously.  For the three and six months ended December 31, 2015 and 2014, share-based compensation expense was $0.5 million, $0.3million, $0.9million and $0.5million respectively.  We had an aggregate of $3.7 million of unrecognized share-based compensation expense as of December 31, 2015, which we expect to recognize over an estimated period of 5.5years for awards outstanding.

As permitted by Australian law, the board of directors of Nexvet Australia historically granted share options and restricted share units with an exercise or conversion price of zero. Because Irish law requires the payment to an issuer of at least the nominal value of shares in order to acquire such shares from the issuer, any options or restricted share units with a zero exercise or conversion price became exercisable or convertible, as applicable, at the nominal value per ordinary share in August 2014 in anticipation of the Irish Exchange.  This nominal value became $0.10 per ordinary share in September 2014 in connection with the Irish Exchange and was revised to $0.125 per ordinary share in connection with the four-for-five share consolidation in November 2014. Contemporaneously with these awards and based upon information available at the time of grant, the board of directors, with the assistance of management, also determined the fair value of the shares underlying these awards for financial reporting purposes.  The intention has been that all awards granted have been ascribed a value per ordinary share for financial reporting purposes equal to the fair value per ordinary share underlying those awards on the date of grant.  Prior to our initial public offering, when there was no public trading market for our ordinary shares, and in accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, our board of directors has exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our ordinary shares at each grant date.  These factors included:

· contemporaneous third-party valuations;

· current business conditions and projections;

· risks inherent to the development of our research and development programs, including the status of pivotal safety and efficacy studies for our lead product candidates;

· our financial condition, including cash on hand;

· our need for future financing to fund our research and development efforts and the commercialization of our lead product candidates;

· the composition of, and changes to, our management team and board of directors;

· the rights and preferences of our preference shares relative to our ordinary shares;

· the lack of marketability of our ordinary shares; and

· external market and economic conditions and other trends and conditions affecting the pharmaceutical, veterinary care and biotechnology industries.

Jumpstart Our Business Startups Act

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, provides that an “emerging growth company” can delay adopting new or revised accounting standards until those standards apply to private companies.  We have irrevocably elected not to avail ourselves of this delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as public companies that are not emerging growth companies.

Income Taxes

We have historically filed income tax returns in Australia, the United States and Ireland.

As of December 31, 2015, we had total deferred tax assets of $4.2 million.  Our management has evaluated the factors bearing upon the ability to realize our deferred tax assets, which are comprised largely of tax loss carry forwards.  Our management concluded that a full valuation allowance was necessary to offset our net deferred tax assets due to our lack of taxable income prospects for the foreseeable future.

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Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers.  This guidance requires an entity to recognize 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 goods or services.  This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about:

· Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

· Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

· Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In July 2015, the FASB delayed the effective date of this guidance. As a result, this guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently evaluating the impact that this guidance will have on our condensed consolidated results of operations, financial position and cash flows.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation.  This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  A reporting entity should apply the existing guidance in ASC Topic 718, Compensation—Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award.  Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.  If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.  The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest.  The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.  This guidance will be effective for annual reporting periods beginning after December 15, 2015.  We do not expect the adoption of this guidance to have a material impact on our consolidated results of operations, financial position and cash flows.

In August 2014, the FASB issued ASU 2014‑15, Presentation of Financial Statements—Going Concern (Subtopic 205‑40).  This guidance defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.  Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued. When management identifies substantial doubt about the entity’s ability to continue as a going concern, additional disclosures are required.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  We do not expect the adoption of this guidance to have a material impact on our consolidated results of operations, financial position and cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805) simplifying the accounting for measurement–period adjustments.  The guidance permits an acquirer to recognize adjustments to provisional purchase accounting amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined.  The acquirer would adjust its financial statements as needed, including recognizing in current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any as a result of the change to the provisional amounts calculated as it the accounting had been completed at the acquisition date.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  We do not expect the adoption of this guidance to have a material impact on our consolidated results of operations, financial position and cash flows.

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In November2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes.  This guidance simplifies the presentation of deferred income taxes, in that it requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  This amendment applies to all entities that present a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax–paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This guidance will be effective for annual reporting periods beginning after December 15, 2016, however early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities.  This guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments, eliminates certain disclosure requirements, requires public companies to use the exit price notion when measuring fair value, and requires certain changes to the presentation of financial assets and financial liabilities.  This guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption for public entities is allowable only for the provisions related to elimination of fair value disclosure requirements and related to presentation of fair value changes resulting from instrument-specific credit risk in other comprehensive income. Early adoption is not allowed for any other provisions. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our cash as of December 31, 2015 was deposited with several large commercial banks located in the United States and Australia.  Our primary exposure to market risk for our cash is interest income sensitivity, which is affected by changes in the general level of U.S. and, to a lesser extent, Australian interest rates.  However, because our cash is held in bank accounts, a sudden change in the interest rates associated with our cash balances would not be expected to have a material impact on our financial condition or results of operations.

We do not have any major foreign currency or derivative financial instruments.  Cash is predominantly held in U.S. dollars.  We have operations in different economic environments that use the local currency as the functional currency.  This exposes us to currency exchange fluctuations.

Item 4.  Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.  There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our Form 10‑K for the year ended June 30, 2015 and Form 10‑Q for the three months ended September 30, 2015.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from Initial Public Offering

On February 4, 2015, our registration statement on Form S‑1 (File No. 333-201309) was declared effective by the SEC for our initial public offering, pursuant to which we sold an aggregate of 4.2 million ordinary shares (including the underwriters’ partial exercise of their overallotment option) at a price to the public of $10.00 per share.  Merrill Lynch, Pierce, Fenner & Smith Incorporated, Cowen and Company, LLC, Piper Jaffray & Co. and JMP Securities LLC acted as underwriters.  Following the sale of the securities registered in the registration statement, the offering terminated. On February 10, 2015 and March 11, 2015, we closed the sale of such shares, resulting in aggregate gross proceeds to us of $41.8 million and net proceeds to us of $38.0 million, after deducting the underwriting discount of $2.9 million and offering expenses payable by us of $0.9 million.  As of December 31, 2015, we have used $3.3 million of the proceeds from our initial public offering to fund the purchase of assets in a biologics manufacturing facility in Ireland and associated operating expenses.  We have not made any payments to our directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates.  Otherwise, there has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC on February 5, 2015 pursuant to Rule 424(b).

34

Item 6. Exhibits

		Incorporated by Reference			Filed/Furnished Herewith
Exhibit Number	Exhibit Description	Form	File No.	Exhibit Filing Date
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a‑14(a)/15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a‑14(a)/15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1*	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2*	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	XBRL Instance Document.				X
101.SCH	XBRL Taxonomy Extension Schema Document.				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.				X

* This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Nexvet Biopharma public limited company
Date: February 16, 2016	By:	/s/ Mark Heffernan
		Mark Heffernan, Ph.D.
		Chief Executive Officer and Director
Date: February 16, 2016	By:	/s/ Damian Lismore
		Damian Lismore
		Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification Pursuant to Exchange Act Rule 13a-14(a)/15d-14a

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark Heffernan, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Nexvet Biopharma public limited company;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 16, 2016	/s/ Mark Heffernan, Ph.D.
	Mark Heffernan, Ph.D.
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Pursuant to Exchange Act Rule 13a-14(a)/15d-14a

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Damian Lismore, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Nexvet Biopharma public limited company;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 16, 2016	/s/ Damian Lismore
	Damian Lismore
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant To 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Nexvet Biopharma public limited company (the “Company”) on Form 10‑Q for the quarterly period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents in all material respects the financial condition and results of operations of the Company.

Date: February 16, 2016	/s/ Mark Heffernan, Ph.D.
	Mark Heffernan, Ph.D.
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant To 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Nexvet Biopharma public limited company (the “Company”) on Form 10‑Q for the quarterly period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents in all material respects the financial condition and results of operations of the Company.

Date: February 16, 2016	/s/ Damian Lismore
	Damian Lismore
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2015	Jan. 29, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	NVET
Entity Registrant Name	Nexvet Biopharma plc
Entity Central Index Key	0001618561
Current Fiscal Year End Date	--06-30
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		11,558,133

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Dec. 31, 2015	Jun. 30, 2015
Current assets
Cash	$ 43,079	$ 52,033
Other income receivable	1,057	3,301
Prepaid expenses and other	1,160	607
Total current assets	45,296	55,941
Noncurrent assets
Other income receivable	64
Prepaid expenses	149	163
Total noncurrent assets	213	163
Property, plant and equipment, net	3,097	549
Intangible assets, net	37	19
Total assets	48,643	56,672
Current liabilities
Accounts payable	1,404	658
Accrued expenses	2,907	2,352
Deferred grant income	106
Deferred lease incentive	22	23
Total current liabilities	4,439	3,033
Noncurrent liabilities
Accrued expenses	52
Deferred grant income	64
Deferred lease incentive	47	61
Total noncurrent liabilities	163	61
Total liabilities	$ 4,602	$ 3,094
Commitments and contingencies (Note 11)
Shareholders’ equity
Ordinary shares, $0.125 nominal value per share, 100,000,000 shares authorized as of December 31, 2015 and June 30, 2015—11,558,133 and 11,406,916 shares issued and outstanding as of December 31, 2015 and June 30, 2015, respectively	$ 1,445	$ 1,426
Euro deferred shares, €100 nominal value per share, 400 shares authorized as of December 31, 2015 and June 30, 2015—400 shares issued and outstanding as of December 31, 2015 and June 30, 2015	13	13
Additional paid-in capital	81,214	80,275
Accumulated other comprehensive loss	(5,325)	(4,481)
Accumulated deficit	(33,306)	(23,655)
Total shareholders’ equity	44,041	53,578
Total liabilities and shareholders’ equity	$ 48,643	$ 56,672

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical)	Dec. 31, 2015 $ / shares shares	Dec. 31, 2015 € / shares shares	Jun. 30, 2015 $ / shares shares	Jun. 30, 2015 € / shares shares
Statement Of Financial Position [Abstract]
Ordinary shares, nominal value per share | $ / shares	$ 0.125		$ 0.125
Ordinary shares, shares authorized	100,000,000	100,000,000	100,000,000	100,000,000
Ordinary shares, shares issued	11,558,133	11,558,133	11,406,916	11,406,916
Ordinary shares, shares outstanding	11,558,133	11,558,133	11,406,916	11,406,916
Euro deferred shares, nominal value per share | € / shares		€ 100		€ 100
Euro deferred shares, shares authorized	400	400	400	400
Euro deferred shares, shares issued	400	400	400	400
Euro deferred shares, shares outstanding	400	400	400	400

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Revenue
Other				$ 25
Total revenue				25
Operating Expenses
Research and development	$ 3,790	$ 2,226	$ 7,515	4,765
General and administrative	1,779	2,440	3,649	5,258
Total operating expenses	5,569	4,666	11,164	10,023
Loss from operations	(5,569)	(4,666)	(11,164)	(9,998)
Other Income (Expense)
Research and development incentive income	457	941	1,023	1,682
Government grant income		22	4	319
Exchange (loss) gain	(618)	1,270	410	3,254
Interest income	39	20	76	33
Net loss	$ (5,691)	$ (2,413)	$ (9,651)	$ (4,710)
Net loss per share attributable to ordinary shareholders, basic and diluted	$ (0.49)	$ (2.01)	$ (0.84)	$ (4.14)
Weighted-average ordinary shares outstanding, basic and diluted	11,506,236	1,198,828	11,474,394	1,138,520
Comprehensive Loss
Net loss	$ (5,691)	$ (2,413)	$ (9,651)	$ (4,710)
Net gain (loss) in foreign currency translation adjustments			(844)
Total comprehensive loss	(5,094)	(3,890)	(10,495)	(8,328)
Accumulated Other Comprehensive Income
Comprehensive Loss
Net gain (loss) in foreign currency translation adjustments	$ 597	$ (1,477)	$ (844)	$ (3,618)

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERENCE SHARES AND SHAREHOLDERS' EQUITY (DEFICIT) (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Ordinary Shares Subject To Limited Resource Loans	Euro Deferred Shares	Convertible Preferred Stock	Additional Paid-in Capital Other	Additional Paid-in Capital Share Premium	Accumulated Other Comprehensive Income	Accumulated Deficit	Convertible Preferred Stock
Convertible Preference Shares, Beginning balance at Jun. 30, 2014										$ 33,826
Balance at Jun. 30, 2014	$ (8,957)	$ 126				$ 937	$ 1,405	$ 373	$ (11,798)
Convertible Preference Shares, Beginning balance, shares at Jun. 30, 2014										5,937,138
Balance, shares at Jun. 30, 2014		1,014,130	254,680
Issuance of ordinary shares and Euro deferred shares, amount	$ 13			$ 13
Issuance of ordinary shares and Euro deferred shares, shares		2		400
Issuance of ordinary shares-payment of limited recourse loan, amount		$ 14					(14)
Issuance of ordinary shares-payment of limited recourse loan, shares		109,611	(109,611)
Share repurchase, shares	(145,069)		(145,069)
Issuance of share warrants	$ 5,435						5,435
Issuance of ordinary shares-conversion of share-based compensation, amount	13	$ 16				(645)	642
Issuance of ordinary shares- conversion of share- based compensation, shares		126,410
Issuance of ordinary shares	37,938	$ 522					37,416
Issuance of ordinary shares, shares		4,176,903								6
Adjustment for convertible preference shares issued in connection with share consolidation		9								16
Reclassification into shareholders' equity	33,826				$ 33,826					$ (33,826)
Reclassification into shareholders' equity, shares					5,937,160					(5,937,160)
Reclassification into ordinary shares		$ 742			$ (33,826)		33,084
Reclassification to ordinary shares, shares		5,937,160			(5,937,160)
Share bonus award	6	$ 6				(304)	304
Share bonus award, shares		42,691
Share-based compensation expense	2,081					2,081
Exchange difference on translation of foreign operations	(4,920)					(4)	(62)	(4,854)
Net loss	(11,857)								(11,857)
Balance at Jun. 30, 2015	53,578	$ 1,426		$ 13		2,065	78,210	(4,481)	(23,655)
Balance, shares at Jun. 30, 2015		11,406,916		400
Issuance of ordinary shares-conversion of share-based compensation, amount	19	$ 19				(1,125)	1,125
Issuance of ordinary shares- conversion of share- based compensation, shares		151,217
Share-based compensation expense	939					939
Exchange difference on translation of foreign operations	(844)							(844)
Net loss	(9,651)								(9,651)
Balance at Dec. 31, 2015	$ 44,041	$ 1,445		$ 13		$ 1,879	$ 79,335	$ (5,325)	$ (33,306)
Balance, shares at Dec. 31, 2015		11,558,133		400

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERENCE SHARES AND SHAREHOLDERS' EQUITY (DEFICIT) (unaudited) (Parenthetical) $ in Thousands	3 Months Ended
	Sep. 30, 2015 USD ($)
Common Stock
Issuance costs	$ 3,830

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash Flows from Operating Activities
Net loss	$ (9,651)	$ (4,710)
Adjustments to reconcile net loss to cash used in operating activities:
Share-based compensation expense	939	538
Depreciation and amortization expense	160	76
Changes in assets and liabilities:
Other income receivable	2,180	844
Prepaid expenses and other	(539)	(1,049)
Accounts payable, accrued expenses and lease incentive liability	1,508	(355)
Net cash used in operating activities	(5,403)	(4,656)
Cash Flows from Investing Activities
Purchase of property, plant and equipment and intangible assets	(2,816)	(176)
Net cash used in investing activities	(2,816)	(176)
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares	19	24
Net cash provided by financing activities	19	24
Effect of exchange rate changes on cash	(754)	(3,568)
Net decrease in cash	(8,954)	(8,376)
Cash at beginning of period	52,033	30,041
Cash at end of period	$ 43,079	21,665
Supplemental Disclosure
Issuance of share options for accrued consulting services		$ 102

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Organization and Description of Business

6 Months Ended

Dec. 31, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Description of Business

1. Organization and Description of Business

Nexvet Biopharma public limited company and its subsidiaries (the “Company”) is a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals by developing and commercializing novel, species-specific biologics based on human biologics.  Biologics are therapeutic proteins derived from biological sources.  As a class, biologics have transformed human medicine in recent decades and represent some of the top-selling therapies on the market today.  The Company’s proprietary platform, which it refers to as “PETization,” is an algorithmic approach that enables the Company to rapidly create monoclonal antibodies (“mAbs”) a type of biologic, that are designed to be recognized as “self” or “native” by an animal’s immune system, a property referred to as “100% species-specificity.”  PETization is also designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, thereby reducing clinical risk and development cost.  

Biologics generally include mAbs, which are targeted antibodies derived from identical (“clonal”) cells and fusion proteins, which are proteins created by joining two or more genes coded for separate proteins. The Company’s first product candidate, NV‑01, is a mAb that targets and inhibits the function of nerve growth factor (“NGF”) for the control of pain associated with osteoarthritis in dogs.  NGF is a protein involved in neural signaling, including pain signals, and NGF inhibitors (“anti-NGFs”) seek to interrupt those signals to reduce pain. In November 2015, the Company announced its pivotal safety and efficacy study of NV-01 met its primary efficacy endpoint: a statistically significant improvement over placebo in the assessed level of pain (p=0.038) as measured using changes in Client-Specific Outcome Measures (“CSOM”) score between enrollment and day 28.  This study’s design was agreed under protocol concurrence with the Center for Veterinary Medicine (“CVM”) at the U.S. Food and Drug Administration (“FDA”). NV-01 was found to be safe and well-tolerated with no significant adverse safety signals observed in the study. Clinically meaningful magnitudes of benefit and statistically significant differences over placebo were also achieved for the majority of the secondary endpoints measured in the study. Collectively, the results of this study constitute a substantial body of efficacy data that Nexvet intends to use as the basis of its planned submissions for marketing authorizations in both the U.S. and Europe.  The United States Adopted Name (“USAN”) Council has approved the generic name “ranevetmab” for NV-01.

The Company’s second product candidate, NV‑02, is an anti-NGF mAb for the control of pain associated with osteoarthritis in cats.  The Company announced positive top-line results from a proof-of-concept efficacy study and its pilot safety study of NV‑02 in June 2015. In October 2015, the Company announced the commencement of a placebo-controlled, blinded, multi-site pilot field safety and efficacy study targeting enrollment of 90 cats with naturally occurring osteoarthritis.  The Company anticipates results from this pilot field study in the second quarter of 2016.  The Company’s next most advanced programs are in the area of inflammation, and include NV-08, a fusion proteins that is a tumor necrosis factor (“TNF”) inhibitor for the treatment of chronic inflammatory diseases, including atopic dermatitis, in dogs.  TNF is a protein that causes inflammation, and TNF inhibitors (“anti‑TNFs”) suppress this inflammation. The Company’s is conducting proof-of-concept studies for candidates in inflammation (including NV-08), which if successful, the Company will consider for progression into formal development.  Primarily using PETization, the Company has built a research and development pipeline of 15 biologic programs in the areas of pain, allergy, inflammation and immuno-oncology.

The Company has experienced losses since its inception and had an accumulated deficit of $33.3 million and $23.7 million as of December 31 and June 30, 2015, respectively.  For the foreseeable future, management expects the Company to continue to incur losses and negative cash flows, which will increase significantly from historical levels as the Company expands its development activities, seeks regulatory approvals for its lead product candidates and begins to commercialize any approved products.  To date, the Company has been funded primarily through sales of capital shares.  Management believes the Company’s cash of $43.1 million as of December 31, 2015 will be sufficient to fund its operations for at least the next 12 months.

The Company will require additional capital until such time as the Company can generate revenue in excess of operating expenses.  The Company may seek such funding through public or private equity or debt financing or other sources, such as corporate collaborations and licensing arrangements.  The Company may not be able to obtain financing on acceptable terms, or at all.  The sale of additional equity would result in additional dilution to the Company’s shareholders, and the terms of any financing may adversely affect the rights of the Company’s shareholders.  The incurrence of any debt financing could result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict the Company’s operations.  If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate its research and development programs or commercialization efforts, which could adversely affect its business prospects.

In August 2014, Nexvet Australia Pty Ltd (“Nexvet Australia”) completed a one-for-four share consolidation pursuant to which each holder of ordinary shares and preference shares received one ordinary share or preference share for every four ordinary shares or preference shares as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a one-for-four basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

In September 2014, Nexvet Biopharma Limited, a newly formed Irish private company, became the parent company of Nexvet Australia and its subsidiaries pursuant to a transaction in which all of the holders of securities of Nexvet Australia exchanged their holdings for equivalent securities, as applicable, of Nexvet Biopharma Limited.  Nexvet Biopharma Limited then re-registered as an Irish public limited company in September 2014 (such exchange and re-registration is referred to as the “Irish Reorganization”).  Nexvet Biopharma public limited company became the parent company of Nexvet Australia pursuant to the Irish Reorganization, and for financial reporting purposes the historical consolidated financial statements of Nexvet Australia became the historical consolidated financial statements of Nexvet Biopharma public limited company and its subsidiaries as a continuation of the predecessor.  The capital structure presented is that of Nexvet Biopharma public limited company.

In November 2014, the Company completed a four-for-five share consolidation pursuant to which each holder of ordinary shares and preference shares received four ordinary shares or four preference shares for every five ordinary shares or five preference shares as applicable, held by such holder.  The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a four-for-five basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

In February 2015, the Company closed its initial public offering of 4.0 million ordinary shares at a price to the public of $10.00 per share.  In March 2015, the underwriters partially exercised their over-allotment option and purchased an additional 0.2 million shares. Following the sales of these securities, the Company received aggregate gross proceeds of $41.8 million and aggregate net proceeds of $38.0 million, after deducting the underwriting discount of $2.9 million and offering expenses of $0.9 million payable by the Company.  Upon the initial closing, an amended Memorandum and Articles of Association became effective for the Company and all 5,937,160 convertible preference shares then outstanding were converted into 5,937,160 ordinary shares.

In September 2015, the Company secured a biologics manufacturing facility in Tullamore, Ireland. The Company secured the manufacturing assets within the facility for $2.0 million and have entered into a 10‑year lease on the facility, with an option to purchase the building.

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Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements of the Company include the operations of all its wholly‑owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).  Such operations include the Company, Nexvet Australia, NVIP Pty Limited, Nexvet Ireland Limited, Tevxen Limited, BioNua Limited, Nexvet UK Limited and Nexvet US, Inc.  All intercompany balances and transactions have been eliminated on consolidation.  The Company’s fiscal year ends on June 30, and references to any fiscal year are to the Company’s year ended June 30 in that year.  

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements and related disclosures as of December 31, 2015 and for the three and six months ended December 31, 2015 and 2014 are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of December 31, 2015 and the results of its operations and comprehensive loss and its cash flows for the three and six months ended December 31, 2015 and 2014. The financial data and other information disclosed in these notes related to the three and six months ended December 31, 2015 and 2014 are unaudited. The results for the three and six months ended December 31, 2015 and 2014 are not necessarily indicative of results to be expected for a full year, any other interim periods or any future year or period.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended June 30, 2015 included in the Company’s annual report on Form 10‑K filed with the SEC on September 3, 2015. The condensed consolidated balance sheet data as of June 30, 2015 was derived from audited consolidated financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period.  Significant items subject to such estimates and assumptions include research and development incentive income, research and development accruals, the likelihood that attaching conditions will be met for government grants, share-based payments, valuation of warrants, options and restricted share units and deferred income taxes.  Actual results could differ from those estimates.

Net Loss Per Share

Net loss per share information is determined using the two-class method, which includes the weighted-average number of ordinary shares outstanding during the period and other securities that participate in dividends (a participating security).  The Company’s convertible preference shares were participating securities as defined by Accounting Standards Codification (“ASC”) Topic 260‑10, Earnings Per Share.  Net loss per share disclosures have been revised to give effect to the share consolidations that took place in the reporting period.

Under the two-class method, basic net loss per share applicable to ordinary shareholders is computed by dividing the net loss applicable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the reporting period.

Diluted net loss per share gives effect to all potentially dilutive securities, including convertible preference shares and shares issuable upon the exercise or conversion, as applicable, of outstanding warrants, share options and restricted share units, using the treasury shares method.  The Company has excluded the effects of all potentially dilutive shares, which include convertible preference shares, warrants to purchase ordinary shares, ordinary share options, restricted share units and the ordinary shares issued subject to limited recourse loans, from the weighted-average number of ordinary shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses.

Cash

As of December 31, 2015 and June 30, 2015, the Company’s cash consisted of cash deposited in a business operating account or in short-term deposit accounts of less than 90 days’ original duration.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company receives research and development incentive income and grants from two sources, the Australian government and the Irish government.

The Company’s cash is deposited with several large commercial banks located in the United States, Ireland and Australia that are federally insured or guaranteed, limiting the amount of credit exposure to any one financial institution.  The Company’s cash balances with these financial institutions often exceed the amount insured.

The Company is subject to risks common to companies in the biotechnology industry.  The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, any products developed may not obtain necessary government regulatory approval and any approved products may not be commercially viable.  The Company operates in an environment of substantial competition from other animal health companies, some of which have substantially more resources at their disposal.  In addition, the Company is dependent upon the services of its employees and consultants, as well as third-party contract research organizations and manufacturers.

Fair Value Measurements

The Company records certain assets and liabilities at fair value in accordance with the provisions of ASC Topic 820, Fair Value Measurements.  As defined in the guidance, fair value, defined as an exit price, represents the amount that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants.  As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability.  As a basis for considering these assumptions, the guidance defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

· Level 1—Unadjusted quoted prices in active, accessible markets for identical assets or liabilities.

· Level 2—Other inputs that are directly or indirectly observable in the marketplace.

· Level 3—Unobservable inputs that are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s material financial instruments include cash, other income receivables, accrued liabilities and warrants.  The carrying amounts of these instruments are considered to be representative of their respective fair values because of the short-term nature of those investments.  

Other Income Receivable

Other income receivable is recorded at the invoiced amount where available. Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the Australian Taxation Office (“ATO”).  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Specifically, Nexvet Australia must have revenue of less than A$20 million and cannot be controlled by income tax exempt entities.  

Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost, net of accumulated depreciation and impairment.  Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  The estimated useful life of machinery and equipment is three to 10 years.  Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset.  Upon retirement or sale of an asset, its cost and related accumulated depreciation or accumulated amortization are removed from the property accounts and any gain or loss is included in the results of operations.  Maintenance and repairs are expensed as incurred.

Foreign Currency

The Company’s functional currency is U.S dollars, and the functional currency for most subsidiaries is their local currency.  Foreign currency transactions are translated into the functional currency using the current exchange rate as of the date of the transaction.  At period end, monetary items denominated in a foreign currency are translated into the functional currency of the relevant entity using the period-end spot rate.  

In preparing the Company’s consolidated financial statements, the financial statements of the subsidiaries are translated at period-end exchange rates as to assets and liabilities and weighted-average rates as to revenue and expenses.  The resulting translation adjustments are recognized in other comprehensive income (loss) (“OCI”).  

Income Taxes

The Company has historically filed income tax returns in Australia, the United States and Ireland.

The Company applies ASC Topic 740, Income Taxes, which establishes financial accounting and reporting requirements for the effects of income taxes that result from the Company’s activities during the current and preceding years.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities on their respective tax bases, and operating losses and tax loss carry forwards.  Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the jurisdictions and years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

When the Company determines that it is more likely than not that some portion or all of the deferred tax assets will not be realized in the future, the deferred tax assets are reduced by a valuation allowance.  The valuation allowance is sufficient to reduce the deferred tax assets to the amount that the Company determines is more likely than not to be realized.

The income tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on technical merits of the position.  The Company evaluates and adjusts these accruals based on changing facts and circumstances.  The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

Government Grant Income

Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Research and Development Expense

Research and development costs are expensed as incurred and consist primarily of (i) payroll and related expense for all employees engaged in scientific research and development functions, including wages, related benefits and share-based compensation, (ii) fees for regulatory, professional and other consultants and (iii) development costs, including costs of drug discovery, safety, proof‑of‑concept, pilot and pivotal safety and efficacy studies, development of biological materials and service providers.  The Company uses its employee and infrastructure resources across multiple development programs.  The Company allocates outsourced development costs by lead product candidates but does not allocate personnel or other internal costs related to development to specific product candidates.

General and Administrative Expense

General and administrative expense consists primarily of non-research and development-related payroll and related expense for employees, consultants and directors, including wages, related benefits and share-based compensation.  General and administrative expense also includes professional and consulting fees for legal, accounting, tax services and other general business services, as well other expenses such as travel, rent and facilities costs.

Other Income (Expense)

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the ATO.  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Although the tax incentive is administered through the ATO, the Company has accounted for the tax incentive outside the scope of ASC Topic 740, Income Taxes, as an income tax benefit since Nexvet Australia meets the applicable requirements to participate in the program and the incentive is not linked to Nexvet Australia’s income tax liability and can be realized regardless of whether Nexvet Australia has generated taxable income.  Research and development incentive income is recognized when the research and development activities have been undertaken and the Company has completed its assessment of whether such activities meet the relevant qualifying criteria.

The Company recognizes government grant income at fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.  

Exchange (loss) gain consists primarily of losses or gains due to foreign exchange translation, primarily reflecting changes in Australian and U.S. foreign exchange rates.  Under U.S. GAAP, these (losses) gains relate to a translation of U.S. dollar-denominated bank accounts into Nexvet Australia’s Australian dollar functional currency and represent a non-cash item.

The Company earns interest on the cash balances held with financial institutions and recognizes interest when earned on an accrual basis over time.

Comprehensive Loss

Comprehensive loss is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders, which for the Company includes net change in foreign currency translation adjustments.

Share-Based Compensation

The Company’s share-based compensation plan (see Note 9) provides for the grant of share options, restricted share units and other share-based awards.  The fair value of share options is determined as of the date of grant using the binomial option-pricing model.  This method incorporates the fair value of the Company’s ordinary shares at the date of each grant and various assumptions such as the risk-free interest rate, expected volatility based on the historic volatility of peer companies, expected dividend yield, and expected term of the share option.  Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant. The Company classifies share-based compensation expense in the statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified.

The Company recognizes share-based compensation expense based on the grant date fair value of the entire award over the total period during which an employee is required to provide service in exchange for the award.   In accordance with ASC 718, the amount of compensation expense recognized at each balance date is at least equal to the grant date fair value of the vested portion of the award on that date.  Where performance conditions are attached to the awards, compensation expense is recognized in the period in which it becomes probable that the performance target will be achieved, net of estimated pre-vesting forfeitures over the requisite service period.  The probability of vesting is reassessed at each reporting period for awards with performance conditions and compensation expense is adjusted based on its probability assessment.  

Equity instruments issued to non-employees, including consultants, are accounted for in accordance with Financial Accounting Standards Board (“FASB”) guidance.  All transactions in which services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur.

For transactions where the fair value of the equity instrument issued to non-employees is the more reliable measurement and a measurement date has not been reached, the fair value is re-measured at each balance sheet date using the binomial option-pricing model.  Compensation expense for these share-based awards is recognized over the term of the consulting agreement or until the award is approved and settled.

Segment Data

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.  The Company is a clinical-stage biopharmaceutical company focusing on developing therapies for companion animals.

Total assets, property and equipment, net and total property and equipment additions by geography, reconciled to the consolidated amounts are:

	December 31,		June30,
	2015		2015
United States	(in thousands)
Total assets	$	36,160	$	38,973
Property and equipment, net		10		4
Total property and equipment additions		3		4
Australia
Total assets	$	9,054	$	17,259
Property and equipment, net		1,122		538
Total property and equipment additions		695		283
Ireland
Total assets	$	3,429	$	440
Property and equipment, net		1,965		7
Total property and equipment additions		2,096		7
Consolidated
Total assets	$	48,643	$	56,672
Property and equipment, net		3,097		549
Total property and equipment additions		2,794		294

Recently Adopted Accounting Pronouncements

The Company has early adopted the provisions of Accounting Standards Update (“ASU”), No. 2014-10, Elimination of Certain Financial Requirements, Including an Amendment to Variable Interest Entities Guidance Topic in Topic 810, Consolidation, starting in fiscal year 2014.  In June 2014, the FASB, issued guidance removing the definition of a development stage entity from the Master Glossary of the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.  This guidance also eliminates an exception provided to development stage entities in ASC Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk.  On adoption, the Company was not required to present or disclose any information required by ASC Topic 915, Development Stage Entities.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This guidance requires an entity to recognize 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 goods or services.  This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about:

· Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

· Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

· Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In July 2015, the FASB delayed the effective date of this guidance.  As a result, this guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  The Company is currently evaluating the impact that this guidance will have on the Company’s consolidated results of operations, financial position and cash flows.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation.  This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  A reporting entity should apply the existing guidance in ASC Topic 718, Compensation—Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award.  Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.  If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.  The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest.  The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.  This guidance will be effective for annual reporting periods beginning after December 15, 2015.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position and cash flows.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40).  This guidance defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.  Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued.  When management identifies substantial doubt about the entity’s ability to continue as a going concern, additional disclosures are required.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805) simplifying the accounting for measurement–period adjustments.  The guidance permits an acquirer to recognize adjustments to provisional purchase accounting amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined.  The acquirer would adjust its financial statements as needed, including recognizing in current-period earnings the full effect of changes in depreciation, amortization or other income effects, by line item, if any as a result of the change to the provisional amounts calculated as it the accounting had been completed at the acquisition date.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes.  This guidance simplifies the presentation of deferred income taxes, in that it requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  This amendment applies to all entities that present a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax–paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This guidance will be effective for annual reporting periods beginning after December 15, 2016, however, early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities.  This guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments, eliminates certain disclosure requirements, requires public companies to use the exit price notion when measuring fair value, and requires certain changes to the presentation of financial assets and financial liabilities.  This guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption for public entities is allowable only for the provisions related to elimination of fair value disclosure requirements and related presentation of fair value changes resulting from instrument-specific credit risk in other comprehensive income. Early adoption is not allowed for any other provisions. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

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Other Income Receivable

6 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Other Income Receivable

3. Other Income Receivable

Other income receivable consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Research and development incentive receivable	$	916	$	3,242
Government grant receivable		111		—
Other		30		59
Other income receivable	$	1,057	$	3,301
Noncurrent
Government grant receivable	$	64	$	—

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Property Plant and Equipment

6 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Property Plant and Equipment

4. Property Plant and Equipment

Property, plant and equipment, consisted of the following as of the dates indicated:

	Computer Equipment			Research and Development Equipment			Office Equipment			Plant and Equipment			Leasehold Improvements			Total
	(in thousands)
Opening balance July 1, 2014	$	57		$	214		$	92		$	—		$	151		$	514
Additions	$	35		$	258		$	1		$	—		$	—		$	294
Disposals		—			—			—			—			—			—
Depreciation		(25	)		(86	)		(12	)		—			(29	)		(152	)
Exchange rate adjustment		(11	)		(52	)		(19	)		—			(25	)		(107	)
Closing balance June 30, 2015	$	56		$	334		$	62		$	—		$	97		$	549
Additions	$	71		$	800		$	68		$	449		$	1,406		$	2,794
Disposals		—			—			—			—			—			—
Depreciation		(15	)		(70	)		(9	)		(13	)		(52	)		(159	)
Exchange rate adjustment		(2	)		(2	)		(6	)		(18	)		(59	)		(87	)
Closing balance December 31, 2015	$	110		$	1,062		$	115		$	418		$	1,392		$	3,097

In September 2015, the Company acquired certain manufacturing assets in Ireland as follows:

	Assets Acquired and Consideration
	(in thousands)
Assets acquired
Leasehold improvements	$	1,397
Plant & equipment		449
Office equipment (including furniture and fittings)		67
Laboratory equipment		64
Total assets acquired	$	1,977
Consideration
Cash paid	$	1,887
Retention amount withheld		90
Total consideration	$	1,977

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Accrued Expenses

6 Months Ended

Dec. 31, 2015

Payables And Accruals [Abstract]

Accrued Expenses

5. Accrued Expenses

Accrued expenses consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Accrued payroll and related expenses	$	925	$	1,027
Accrued professional fees		233		361
Accrued research and development costs		1,749		964
Accrued expenses	$	2,907	$	2,352
Noncurrent
Accrued payroll and related expenses	$	49	$	—
Accrued professional fees		3		—
Accrued expenses	$	52	$	—

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Ordinary Shares

6 Months Ended

Dec. 31, 2015

Equity [Abstract]

Ordinary Shares

6. Ordinary Shares

As of December 31, 2015 and June 30, 2015, there were 11,558,133 and 11,406,916 ordinary shares outstanding, respectively.

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Fair Value Measurement

6 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement

7. Fair Value Measurement

Assets and liabilities carried at fair value on a recurring basis as of December 31, 2015 and June 30, 2015, including financial instruments, which the Company accounts for under the fair value option, are summarized in the following tables.

December 31, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
	(in thousands)
Assets
Cash	$	43,079	$	—	$	—	$	43,079
June 30, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets
Cash	$	52,033	$	—	$	—	$	52,033

There were no transfers between the levels within the reporting periods.

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Net Loss Per Share

6 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Net Loss Per Share

8. Net Loss Per Share

The calculation of net loss per participating securities (“EPS”) for the three and six months ended December 31, 2015 and 2014 is presented below.  

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
	(in thousands, except share and per share amounts)						(in thousands, except share and per share amounts)
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Weighted-average ordinary shares issued and    outstanding—basic and diluted		11,506,236			1,198,828			11,474,394			1,138,520
Net loss per ordinary share—basic and diluted	$	(0.49	)	$	(2.01	)	$	(0.84	)	$	(4.14	)

The following ordinary share equivalents were excluded from the calculation of diluted net loss per share for the periods ended on the dates indicated because including them would have an anti-dilutive effect:

	Three Months Ended September30,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands, except share and per share amounts)				(in thousands, except share and per share amounts)
Preference Shares		—		5,937,160		—		5,937,160
Share-based awards		1,052,420		477,392		1,052,420		477,392
Warrants		1,766,998		1,766,998		1,766,998		1,766,998
Total		2,819,418		8,181,550		2,819,418		8,181,550

Unaudited basic and diluted net loss per share is computed using the weighted-average number of ordinary shares outstanding after giving effect to the conversion of all convertible preference shares into ordinary shares as if such conversion had occurred at the beginning of the period presented, or the date of original issuance, if later.

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Share Based Awards

6 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Awards

9. Share-Based Awards

As permitted by Australian law, the Company’s board of directors has historically granted share options and restricted share units with an exercise or conversion price, as applicable, of zero to recipients in Australia.  Contemporaneously with these awards and based upon information available at the time of grant, the Company’s board of directors, with the assistance of management, also determined the fair value of the shares underlying these share options for financial reporting purposes.  To determine the best estimate of the fair value of the Company’s ordinary shares at each grant date, the Company’s board of directors considered numerous factors, including contemporaneous third-party valuations, current business conditions and projections, risks inherent to the development of the Company’s research and development programs, including the status of pivotal safety and efficacy studies for its lead product candidates, the Company’s financial condition, the Company’s need for future financing to fund its research and development efforts and the commercialization of its lead product candidates, and other relevant factors.

Option Terms of Issue

The Company previously issued to its employees, consultants and directors under the Company’s Employee Share Option Plan (the “2012 Plan”) ordinary shares subject to an interest-free, limited recourse loan payable to the Company for the purchase price of the ordinary shares.  The 2012 Plan is no longer in use, and all of the limited recourse loans were either repaid in cash or satisfied by the repurchase by the Company of certain ordinary shares subject to such loan.  The Company issued to each former holder of such repurchased ordinary shares an option to purchase a number of ordinary shares equal to the number of ordinary shares repurchased with an exercise price of $6.35 per ordinary share and subject to the Option Terms of Issue.  The new options expire in February 2018, consistent with the original repayment date of the loan.

2013 Long Term Incentive Plan

In September 2013, the Company’s board of directors approved a long-term incentive plan for its employees (including executive officers), directors and consultants pursuant to which in November 2013 the Company issued share options to purchase 215,799 ordinary shares and restricted share units to acquire 29,214 ordinary shares to employees, directors and consultants.  The underlying ordinary shares had a fair value of $5.15 per share, but the awards had an exercise or conversion price, as applicable, of zero, as permitted under Australian law. Because Irish law requires the payment to an issuer of at least the nominal value of shares in order to acquire such shares from the issuer, any options or restricted share units with a zero exercise or conversion price became exercisable or convertible, as applicable, at the nominal value per ordinary share in August 2014 in anticipation of the Irish Exchange.  This nominal value became $0.10 per ordinary share in September 2014 in connection with the Irish Exchange and was revised to $0.125 per ordinary share in connection with the four-for-five share consolidation in November 2014.  In September 2014, the Company also issued share options to purchase 16,800 ordinary shares and restricted share units to acquire 21,240 ordinary shares to employees, directors and consultants.  The underlying ordinary shares had a fair value of $6.35 per ordinary share, but the awards had an exercise or conversion price of the nominal value of $0.10 per ordinary share, which nominal value became $0.125 per ordinary share in connection with the four-for-five share consolidation in November 2014. Except for share options and restricted share units held by directors (which vested either beginning in September 2014 and quarterly thereafter or in November 2014), share options and restricted share units held by employees and consultants vest in three equal tranches in November 2014, November 2015 and November 2016.  The Company revised this plan in September 2014 and refers to this plan as its “2013 Plan.”

In November 2014, the Company awarded employees share options to purchase 141,792 ordinary shares and restricted share units to acquire 16,427 ordinary shares.  The underlying ordinary shares had a grant date fair value of $9.37.  The share options and restricted share units have an exercise price or conversion price, as applicable, of $0.125 per ordinary share.  The awards are subject to a specified performance condition and service period and they vest in tranches over one to three years.

The 2013 Plan was terminated in connection with the Company’s initial public offering.  The 2013 Plan will continue to govern outstanding awards granted thereunder.  Appropriate adjustments will be made in the number of authorized ordinary shares and other numerical limits in the 2013 Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a share split or other change in the Company’s capital structure.

Prior to its termination, the 2013 Plan was administered by the Company’s board of directors. Subject to the provisions of the 2013 Plan, the board of directors determined, in its discretion, the persons to whom, and the times at which, awards were granted, as well as the size, terms and conditions of each award, under the 2013 Plan.  All awards are evidenced by a written agreement between the Company and the holder of the award.  The compensation committee has the authority to construe and interpret the terms of the 2013 Plan and awards granted under the 2013 Plan.

In the event of a change of control as described in the 2013 Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the 2013 Plan or substitute substantially equivalent awards.  Any awards which are not assumed or continued in connection with a change of control or are not exercised or settled prior to the change of control will terminate effective as of the time of the change of control.  The compensation committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all awards held by members of the board of directors who are not employees will automatically be accelerated in full.  The compensation committee, in its discretion and without the consent of any participant, may also cancel each or any outstanding award denominated in ordinary shares upon a change of control in exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per ordinary share in the change of control transaction over the exercise price per ordinary share, if any, under the award.

2015 Equity Incentive Plan

In September 2014, the Company’s board of directors adopted, and in November 2014 the Company’s shareholders approved, the 2015 Equity Incentive Plan (“2015 Plan”).  The 2015 Plan was amended by the board of directors in January 2015, became effective on the date immediately prior to the date of the prospectus for initial public offering and was further amended by the compensation committee in September 2015.  The 2015 Plan is intended to provide incentives that will assist the Company to attract, retain and motivate employees, including officers, consultants and directors.  The Company may provide these incentives through the grant of share options, restricted share units, performance shares and units and other cash-based or share-based awards.

A total of 1,280,000 of the Company’s ordinary shares were initially authorized and reserved for issuance under the 2015 Plan.  This reserve has or will automatically increase on July 1 of each year through 2024 by an amount equal to the lesser of:

· Four percent of the number of the Company’s ordinary shares issued and outstanding on the immediately preceding June 30; and

· An amount determined by the Company’s board of directors.

The ordinary shares available under the 2015 Plan will not be reduced by awards settled in cash, but will be reduced by ordinary shares withheld to satisfy tax withholding obligations with respect to ordinary share options (but not other types of awards).  The gross number of ordinary shares issued upon the exercise of options exercised by means of a net exercise or by tender of previously-owned ordinary shares will be deducted from the ordinary shares available under the 2015 Plan.  Notwithstanding the foregoing, and subject to adjustment as described below, the maximum aggregate number of ordinary shares that may be subject to issuance at any given time under the 2015 Plan in connection with outstanding awards shall not exceed a number equal to ten percent of the Company’s total issued and outstanding ordinary shares (calculated on a non-diluted basis).  

Appropriate adjustments will be made in the number of authorized ordinary shares and other numerical limits in the 2015 Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a share split or other change in the Company’s capital structure.  Ordinary shares subject to awards which expire or are cancelled or forfeited will again become available for issuance under the 2015 Plan.

In May 2015, the Company awarded employees and directors share options to purchase 360,000 ordinary shares and restricted share units to acquire 20,280 ordinary shares with a grant date fair value of $5.93 and $6.99 per share, respectively.  The share options and restricted share units have an exercise price of $15.00 and a conversion price of $0.125 per ordinary share, respectively.  Except for restricted share units to acquire 2,280 ordinary shares held by directors (which vest immediately), the awards vest in tranches over one to five years.

In June 2015, the Company awarded employees bonus share awards to purchase 42,691 ordinary shares subject to the payment of $0.125 per ordinary share.  The underlying ordinary shares had a grant date fair value of $7.12 per ordinary share.

In August 2015, the Company awarded employees share options to purchase 60,000 ordinary shares and restricted share units to acquire 8,500 ordinary shares with a grant date fair value of $2.71 and $4.97 per share, respectively.  The share option and restricted share units have an exercise price of $5.10 and a conversion price of $0.125 per ordinary share, respectively.  The awards vest in tranches over one to five years.

In September 2015, the Company awarded employees and directors restricted share units to acquire 298,834 ordinary shares with grant date fair values of $4.26‑$4.27.  The restricted share units have a conversion price of $0.125 per ordinary share. The restricted shares units granted to employees vest annually over four years commencing on July 1, 2016.  The restricted share units granted to directors vest on July 1, 2016.

In November 2015, the Company awarded a new employee restricted share units to acquire 2,000 ordinary shares with a grant date fair value of $4.76.  The restricted share units have a conversion price of $0.125 per ordinary share.  The restricted share units granted vest on September 21, 2016.

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Valuation of Share Awards

6 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Valuation of Share Awards

10. Valuation of Share Awards

The fair value of each share option is estimated on the date of grant using the binomial option-pricing model. The Company was a private company until February 2015 and lacked company-specific historical and implied volatility information. Therefore, it has estimated its expected share volatility based on the historical volatility of its publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s share options has been determined utilizing the “simplified” method as the Company has insufficient historical experience for share options overall, rendering existing historical experience irrelevant to expectations for current grants. The risk-free interest rate is determined by reference to the appropriate reserve bank yield in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The fair value of the underlying ordinary shares considered the price per share paid by investors in the Company’s private financings, including the Series B Preference Shares in May 2014. The fair value of the share awards was estimated using the following assumptions:

	Three Months Ended December 31, 2015		Six Months Ended December 31, 2015
Risk free interest rate		1.7%		1.7%
Expected term (in years)	1 year		1 - 4 years
Expected volatility		75%		75%
Forfeiture rate		0%		7.5%
Expected dividend yield	zero		zero

Since completion of the Company’s initial public offering, the fair value of the underlying ordinary shares has been based on the price per share quoted on the NASDAQ Global Market at the date of grant.

The following table summarizes share option activity for fiscal year 2015 and the six months ended December 31, 2015:

	Shares Issuable Under Options				Weighted- Average Exercise Price
Outstanding as of July 1, 2014		470,479			$	2.33
Granted		663,661				9.55
Exercised		(96,540	)			0.125
Ordinary shares no longer subject to limited recourse loans		(109,611	)	(1)		4.20
Repurchased		(145,069	)			6.35
Expired or forfeited		(6,289	)			0.125
Outstanding as of June30, 2015		776,631			$	8.18
Granted		60,000			$	5.10
Exercised		(126,017	)			0.125
Repurchased		—				—
Expired or forfeited		—				—
Outstanding as of December 31, 2015		710,614			$	9.35
Options vested and expected to vest, as of June30, 2015		159,937			$	5.77
Options vested and expected to vest, as of December 31, 2015		329,812			$	9.63

(1) Reflects ordinary shares issued subject to limited recourse loans.

In addition to the share options described above, the Company has granted restricted share units to its directors, employees and consultants. Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant. The fair value of the ordinary shares issuable upon conversion of restricted share units is considered the price per share paid by investors in the Company’s private financings, including the Series A investment preference shares in July 2013. The ordinary shares subject to the restricted share units are generally issued when they vest.  The table below presents the Company’s restricted share unit activity for fiscal year 2015 and the six months ended December 31, 2015:

	Number of Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding as of July 1, 2014		29,214		$	5.15
Granted		57,947			7.83
Converted		(29,489	)		5.85
Forfeited		—			—
Outstanding as of June30, 2015		57,672		$	7.48
Granted		309,334		$	4.28
Converted		(25,200	)		7.61
Forfeited		—			—
Outstanding as of December 31, 2015		341,806		$	4.57
Converted and expected to convert, as of June30, 2015		4,400		$	9.19
Converted and expected to convert, as of December 31, 2015		—		$	—

Share-Based Compensation

The Company recognizes share-based compensation expense for only the portion of awards that are expected to vest. In developing a forfeiture rate estimate, the Company has considered its historical experience to estimate pre-vesting forfeitures for service-based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially different from the Company’s estimate, the Company may be required to record adjustments to share-based compensation expense in future periods.  The weighted average remaining contract life on all outstanding options and restricted share units as of December 31, 2015 was 5.2 years and 1.8 years, respectively.

The Company recorded share-based compensation expense related to share options and restricted share units for the three and six months ended December 31, 2015 and 2014 as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Research and development	$	193	$	131	$	402	$	173
General and administrative		286		212		537		365
Total	$	479	$	343	$	939	$	538

The Company had an aggregate of $3.7 million and $3.1 million of unrecognized share-based compensation expense for share awards outstanding as of December 31, 2015 and June 30, 2015, respectively, which is expected to be recognized over an estimated period of 5.5 years and 4.0 years, respectively.

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Indemnities and Guarantees

The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions. The Company indemnifies its officers and directors to the maximum extent permitted under the laws of Ireland. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. These indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheets.

Operating Leases and Purchase Obligations

Commitments consisted of the following as of the dates indicated:

	Total		Less than 1 Year			1-3 Years			3-5 Years			After 5 Years
December 31, 2015	(in thousands)
Operating leases	$	1,405		$	190		$	400		$	253		$	562
Purchase obligations		2,007			2,007			—			—			—
Total	$	3,412		$	2,197		$	400		$	253		$	562

	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
June 30, 2015	(in thousands)
Operating leases	$	352	$	109	$	190	$	53	$	—
Purchase obligations		680		680		—		—		—
Total	$	1,032	$	789	$	190	$	53	$	—

Operating Leases

The Company entered into a lease for its office in Melbourne, Australia commencing December 2013 for a period of five years. As of December 31, 2015 and June 30, 2015 commitments totaled $0.3 million and $0.4 million, respectively.  Rent expense was $106,000 and $0.2 million for the six months ended December 31, 2015 and fiscal year 2015, respectively. Included in rent expense is a build-out incentive of $11,000 and $26,000 for the six months ended December 31, 2015 and fiscal year 2015, respectively. A portion of the incentive paid by the landlord is to be repaid by the Company if the lease is terminated early, determined by the unexpired term of the lease over the original 60‑month lease term. There are no escalation clauses in the lease agreement.

The Company entered into a lease for a facility in Tullamore, Ireland commencing September 2015 for a period of 10 years, with an option to purchase the building. As of December 31, 2015, commitments on this lease totalled $1.1 million.  

Purchase Obligations

In connection with the development of biologics, the Company had open contracts with suppliers for goods and services of $2.0 million and $0.7 million as of December 31, 2015 and June 30, 2015, respectively.

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Related Party Transaction

6 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transaction

12. Related Party Transaction

Ridge Biotechnology Consulting, LLC is owned and operated by Dr. Robert Gearing, the brother of David Gearing, a co-founder of the Company and its Chief Scientific Officer. In October 2010, the Company entered into a consulting agreement with Ridge Biotechnology Consulting, LLC for the provision of services to the Company. The agreement was superseded by agreements entered into in April 2011 and April 2012, and a new consulting agreement with Ridge Biotechnology Consulting, LLC was entered into in January 2014. The Company recorded expenses of $Nil, $67,000, $39,000 and $100,000 for the three and six months ended December 31, 2015 and 2014, respectively, related to these agreements. As of December 31, 2015 and June 30, 2015, there was Nil and $13,000 payable to Ridge Biotechnology Consulting, LLC, respectively.

Dr. Andrew Gearing is a former director, a co-founder of the Company and a brother of David Gearing, a co-founder of the Company and its Chief Scientific Officer.  Dr. Andrew Gearing serves on the board of directors of Biocomm Square Pty Ltd. In August 2010 and August 2013, the Company entered into consulting agreements with Biocomm Square Pty Ltd for research and development support services.  These agreements were superseded by a new consulting agreement in December 2013, which was amended in April 2014 and in August 2015. In addition, the Company entered into an agreement with Biocomm Square Pty Ltd in November 2011 for assistance in obtaining partnering arrangements with Japanese entities.  This agreement was amended and terminated in August 2015. The Company recorded expenses of $57,000, $62,000, $90,000 and $115,000 for the three months ended December 31, 2015 and 2014, respectively, related to these agreements. As of December 31, 2015 and June 30, 2015, there was $24,000 and $17,000 payable to Biocomm Square Pty Ltd, respectively.

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Subsequent Events

6 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

There were no material subsequent events occurring after December 31, 2015 requiring disclosure.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements of the Company include the operations of all its wholly‑owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).  Such operations include the Company, Nexvet Australia, NVIP Pty Limited, Nexvet Ireland Limited, Tevxen Limited, BioNua Limited, Nexvet UK Limited and Nexvet US, Inc.  All intercompany balances and transactions have been eliminated on consolidation.  The Company’s fiscal year ends on June 30, and references to any fiscal year are to the Company’s year ended June 30 in that year.  

Unaudited Interim Financial Information

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements and related disclosures as of December 31, 2015 and for the three and six months ended December 31, 2015 and 2014 are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of December 31, 2015 and the results of its operations and comprehensive loss and its cash flows for the three and six months ended December 31, 2015 and 2014. The financial data and other information disclosed in these notes related to the three and six months ended December 31, 2015 and 2014 are unaudited. The results for the three and six months ended December 31, 2015 and 2014 are not necessarily indicative of results to be expected for a full year, any other interim periods or any future year or period.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended June 30, 2015 included in the Company’s annual report on Form 10‑K filed with the SEC on September 3, 2015. The condensed consolidated balance sheet data as of June 30, 2015 was derived from audited consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period.  Significant items subject to such estimates and assumptions include research and development incentive income, research and development accruals, the likelihood that attaching conditions will be met for government grants, share-based payments, valuation of warrants, options and restricted share units and deferred income taxes.  Actual results could differ from those estimates.

Net Loss Per Share

Net Loss Per Share

Net loss per share information is determined using the two-class method, which includes the weighted-average number of ordinary shares outstanding during the period and other securities that participate in dividends (a participating security).  The Company’s convertible preference shares were participating securities as defined by Accounting Standards Codification (“ASC”) Topic 260‑10, Earnings Per Share.  Net loss per share disclosures have been revised to give effect to the share consolidations that took place in the reporting period.

Under the two-class method, basic net loss per share applicable to ordinary shareholders is computed by dividing the net loss applicable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the reporting period.

Diluted net loss per share gives effect to all potentially dilutive securities, including convertible preference shares and shares issuable upon the exercise or conversion, as applicable, of outstanding warrants, share options and restricted share units, using the treasury shares method.  The Company has excluded the effects of all potentially dilutive shares, which include convertible preference shares, warrants to purchase ordinary shares, ordinary share options, restricted share units and the ordinary shares issued subject to limited recourse loans, from the weighted-average number of ordinary shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses.

Cash

Cash

As of December 31, 2015 and June 30, 2015, the Company’s cash consisted of cash deposited in a business operating account or in short-term deposit accounts of less than 90 days’ original duration.

Concentration of Credit Risk and Other Risks and Uncertainties

Concentration of Credit Risk and Other Risks and Uncertainties

The Company receives research and development incentive income and grants from two sources, the Australian government and the Irish government.

The Company’s cash is deposited with several large commercial banks located in the United States, Ireland and Australia that are federally insured or guaranteed, limiting the amount of credit exposure to any one financial institution.  The Company’s cash balances with these financial institutions often exceed the amount insured.

The Company is subject to risks common to companies in the biotechnology industry.  The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, any products developed may not obtain necessary government regulatory approval and any approved products may not be commercially viable.  The Company operates in an environment of substantial competition from other animal health companies, some of which have substantially more resources at their disposal.  In addition, the Company is dependent upon the services of its employees and consultants, as well as third-party contract research organizations and manufacturers.

Fair Value Measurements

Fair Value Measurements

The Company records certain assets and liabilities at fair value in accordance with the provisions of ASC Topic 820, Fair Value Measurements.  As defined in the guidance, fair value, defined as an exit price, represents the amount that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants.  As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability.  As a basis for considering these assumptions, the guidance defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

· Level 1—Unadjusted quoted prices in active, accessible markets for identical assets or liabilities.

· Level 2—Other inputs that are directly or indirectly observable in the marketplace.

· Level 3—Unobservable inputs that are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s material financial instruments include cash, other income receivables, accrued liabilities and warrants.  The carrying amounts of these instruments are considered to be representative of their respective fair values because of the short-term nature of those investments.  

Other Income Receivable

Other Income Receivable

Other income receivable is recorded at the invoiced amount where available. Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the Australian Taxation Office (“ATO”).  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Specifically, Nexvet Australia must have revenue of less than A$20 million and cannot be controlled by income tax exempt entities.  

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost, net of accumulated depreciation and impairment.  Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  The estimated useful life of machinery and equipment is three to 10 years.  Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset.  Upon retirement or sale of an asset, its cost and related accumulated depreciation or accumulated amortization are removed from the property accounts and any gain or loss is included in the results of operations.  Maintenance and repairs are expensed as incurred.

Foreign Currency

Foreign Currency

The Company’s functional currency is U.S dollars, and the functional currency for most subsidiaries is their local currency.  Foreign currency transactions are translated into the functional currency using the current exchange rate as of the date of the transaction.  At period end, monetary items denominated in a foreign currency are translated into the functional currency of the relevant entity using the period-end spot rate.  

In preparing the Company’s consolidated financial statements, the financial statements of the subsidiaries are translated at period-end exchange rates as to assets and liabilities and weighted-average rates as to revenue and expenses.  The resulting translation adjustments are recognized in other comprehensive income (loss) (“OCI”).  

Income Taxes

Income Taxes

The Company has historically filed income tax returns in Australia, the United States and Ireland.

The Company applies ASC Topic 740, Income Taxes, which establishes financial accounting and reporting requirements for the effects of income taxes that result from the Company’s activities during the current and preceding years.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities on their respective tax bases, and operating losses and tax loss carry forwards.  Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the jurisdictions and years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

When the Company determines that it is more likely than not that some portion or all of the deferred tax assets will not be realized in the future, the deferred tax assets are reduced by a valuation allowance.  The valuation allowance is sufficient to reduce the deferred tax assets to the amount that the Company determines is more likely than not to be realized.

The income tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on technical merits of the position.  The Company evaluates and adjusts these accruals based on changing facts and circumstances.  The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

Government Grant Income

Government Grant Income

Government grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Research and Development Expense

Research and Development Expense

Research and development costs are expensed as incurred and consist primarily of (i) payroll and related expense for all employees engaged in scientific research and development functions, including wages, related benefits and share-based compensation, (ii) fees for regulatory, professional and other consultants and (iii) development costs, including costs of drug discovery, safety, proof‑of‑concept, pilot and pivotal safety and efficacy studies, development of biological materials and service providers.  The Company uses its employee and infrastructure resources across multiple development programs.  The Company allocates outsourced development costs by lead product candidates but does not allocate personnel or other internal costs related to development to specific product candidates.

General and Administrative Expense

General and Administrative Expense

General and administrative expense consists primarily of non-research and development-related payroll and related expense for employees, consultants and directors, including wages, related benefits and share-based compensation.  General and administrative expense also includes professional and consulting fees for legal, accounting, tax services and other general business services, as well other expenses such as travel, rent and facilities costs.

Other Income (Expense)

Other Income (Expense)

Nexvet Australia is eligible under the AusIndustry research and development tax incentive program to obtain a cash amount from the ATO.  The tax incentive is available to Nexvet Australia on the basis of specific criteria with which Nexvet Australia must comply.  Although the tax incentive is administered through the ATO, the Company has accounted for the tax incentive outside the scope of ASC Topic 740, Income Taxes, as an income tax benefit since Nexvet Australia meets the applicable requirements to participate in the program and the incentive is not linked to Nexvet Australia’s income tax liability and can be realized regardless of whether Nexvet Australia has generated taxable income.  Research and development incentive income is recognized when the research and development activities have been undertaken and the Company has completed its assessment of whether such activities meet the relevant qualifying criteria.

The Company recognizes government grant income at fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.  When the grant relates to an asset, the fair value is included in the balance sheet as deferred grant income, which is released to income over the expected useful life in a manner consistent with the depreciation method for the relevant asset and subject to meeting other relevant conditions, and recorded on the balance sheet as other income receivable until cash is received.  When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.  

Exchange (loss) gain consists primarily of losses or gains due to foreign exchange translation, primarily reflecting changes in Australian and U.S. foreign exchange rates.  Under U.S. GAAP, these (losses) gains relate to a translation of U.S. dollar-denominated bank accounts into Nexvet Australia’s Australian dollar functional currency and represent a non-cash item.

The Company earns interest on the cash balances held with financial institutions and recognizes interest when earned on an accrual basis over time.

Comprehensive Loss

Comprehensive Loss

Comprehensive loss is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders, which for the Company includes net change in foreign currency translation adjustments.

Share-Based Compensation

Share-Based Compensation

The Company’s share-based compensation plan (see Note 9) provides for the grant of share options, restricted share units and other share-based awards.  The fair value of share options is determined as of the date of grant using the binomial option-pricing model.  This method incorporates the fair value of the Company’s ordinary shares at the date of each grant and various assumptions such as the risk-free interest rate, expected volatility based on the historic volatility of peer companies, expected dividend yield, and expected term of the share option.  Restricted share units are valued at the fair value of the underlying ordinary shares as of the date of grant. The Company classifies share-based compensation expense in the statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified.

The Company recognizes share-based compensation expense based on the grant date fair value of the entire award over the total period during which an employee is required to provide service in exchange for the award.   In accordance with ASC 718, the amount of compensation expense recognized at each balance date is at least equal to the grant date fair value of the vested portion of the award on that date.  Where performance conditions are attached to the awards, compensation expense is recognized in the period in which it becomes probable that the performance target will be achieved, net of estimated pre-vesting forfeitures over the requisite service period.  The probability of vesting is reassessed at each reporting period for awards with performance conditions and compensation expense is adjusted based on its probability assessment.  

Equity instruments issued to non-employees, including consultants, are accounted for in accordance with Financial Accounting Standards Board (“FASB”) guidance.  All transactions in which services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur.

For transactions where the fair value of the equity instrument issued to non-employees is the more reliable measurement and a measurement date has not been reached, the fair value is re-measured at each balance sheet date using the binomial option-pricing model.  Compensation expense for these share-based awards is recognized over the term of the consulting agreement or until the award is approved and settled.

Segment Data

Segment Data

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.  The Company is a clinical-stage biopharmaceutical company focusing on developing therapies for companion animals.

Total assets, property and equipment, net and total property and equipment additions by geography, reconciled to the consolidated amounts are:

	December 31,		June30,
	2015		2015
United States	(in thousands)
Total assets	$	36,160	$	38,973
Property and equipment, net		10		4
Total property and equipment additions		3		4
Australia
Total assets	$	9,054	$	17,259
Property and equipment, net		1,122		538
Total property and equipment additions		695		283
Ireland
Total assets	$	3,429	$	440
Property and equipment, net		1,965		7
Total property and equipment additions		2,096		7
Consolidated
Total assets	$	48,643	$	56,672
Property and equipment, net		3,097		549
Total property and equipment additions		2,794		294

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The Company has early adopted the provisions of Accounting Standards Update (“ASU”), No. 2014-10, Elimination of Certain Financial Requirements, Including an Amendment to Variable Interest Entities Guidance Topic in Topic 810, Consolidation, starting in fiscal year 2014.  In June 2014, the FASB, issued guidance removing the definition of a development stage entity from the Master Glossary of the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.  This guidance also eliminates an exception provided to development stage entities in ASC Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk.  On adoption, the Company was not required to present or disclose any information required by ASC Topic 915, Development Stage Entities.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This guidance requires an entity to recognize 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 goods or services.  This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about:

· Contracts with customers—including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

· Significant judgments and changes in judgments—determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

· Certain assets—assets recognized from the costs to obtain or fulfill a contract.

In July 2015, the FASB delayed the effective date of this guidance.  As a result, this guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  The Company is currently evaluating the impact that this guidance will have on the Company’s consolidated results of operations, financial position and cash flows.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation.  This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  A reporting entity should apply the existing guidance in ASC Topic 718, Compensation—Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award.  Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.  If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.  The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest.  The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.  This guidance will be effective for annual reporting periods beginning after December 15, 2015.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position and cash flows.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40).  This guidance defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.  Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued.  When management identifies substantial doubt about the entity’s ability to continue as a going concern, additional disclosures are required.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805) simplifying the accounting for measurement–period adjustments.  The guidance permits an acquirer to recognize adjustments to provisional purchase accounting amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined.  The acquirer would adjust its financial statements as needed, including recognizing in current-period earnings the full effect of changes in depreciation, amortization or other income effects, by line item, if any as a result of the change to the provisional amounts calculated as it the accounting had been completed at the acquisition date.  This guidance will be effective for annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes.  This guidance simplifies the presentation of deferred income taxes, in that it requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  This amendment applies to all entities that present a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax–paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This guidance will be effective for annual reporting periods beginning after December 15, 2016, however, early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.  The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities.  This guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments, eliminates certain disclosure requirements, requires public companies to use the exit price notion when measuring fair value, and requires certain changes to the presentation of financial assets and financial liabilities.  This guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption for public entities is allowable only for the provisions related to elimination of fair value disclosure requirements and related presentation of fair value changes resulting from instrument-specific credit risk in other comprehensive income. Early adoption is not allowed for any other provisions. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Reconciliation of Total Assets, Property and Equipment, Net and Total Property and Equipment Additions by Geography to Consolidated

Total assets, property and equipment, net and total property and equipment additions by geography, reconciled to the consolidated amounts are:

	December 31,		June30,
	2015		2015
United States	(in thousands)
Total assets	$	36,160	$	38,973
Property and equipment, net		10		4
Total property and equipment additions		3		4
Australia
Total assets	$	9,054	$	17,259
Property and equipment, net		1,122		538
Total property and equipment additions		695		283
Ireland
Total assets	$	3,429	$	440
Property and equipment, net		1,965		7
Total property and equipment additions		2,096		7
Consolidated
Total assets	$	48,643	$	56,672
Property and equipment, net		3,097		549
Total property and equipment additions		2,794		294

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Other Income Receivable (Tables)

6 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Schedule of Other Income Receivable

Other income receivable consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Research and development incentive receivable	$	916	$	3,242
Government grant receivable		111		—
Other		30		59
Other income receivable	$	1,057	$	3,301
Noncurrent
Government grant receivable	$	64	$	—

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Property Plant and Equipment (Tables)

6 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Summary of Movement in Property Plant and Equipment

Property, plant and equipment, consisted of the following as of the dates indicated:

	Computer Equipment			Research and Development Equipment			Office Equipment			Plant and Equipment			Leasehold Improvements			Total
	(in thousands)
Opening balance July 1, 2014	$	57		$	214		$	92		$	—		$	151		$	514
Additions	$	35		$	258		$	1		$	—		$	—		$	294
Disposals		—			—			—			—			—			—
Depreciation		(25	)		(86	)		(12	)		—			(29	)		(152	)
Exchange rate adjustment		(11	)		(52	)		(19	)		—			(25	)		(107	)
Closing balance June 30, 2015	$	56		$	334		$	62		$	—		$	97		$	549
Additions	$	71		$	800		$	68		$	449		$	1,406		$	2,794
Disposals		—			—			—			—			—			—
Depreciation		(15	)		(70	)		(9	)		(13	)		(52	)		(159	)
Exchange rate adjustment		(2	)		(2	)		(6	)		(18	)		(59	)		(87	)
Closing balance December 31, 2015	$	110		$	1,062		$	115		$	418		$	1,392		$	3,097

Schedule of Acquired Certain Manufacturing Assets

In September 2015, the Company acquired certain manufacturing assets in Ireland as follows:

	Assets Acquired and Consideration
	(in thousands)
Assets acquired
Leasehold improvements	$	1,397
Plant & equipment		449
Office equipment (including furniture and fittings)		67
Laboratory equipment		64
Total assets acquired	$	1,977
Consideration
Cash paid	$	1,887
Retention amount withheld		90
Total consideration	$	1,977

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Accrued Expenses (Tables)

6 Months Ended

Dec. 31, 2015

Payables And Accruals [Abstract]

Accrued Expenses

Accrued expenses consisted of the following as of the dates indicated:

	December 31,		June30,
	2015		2015
Current	(in thousands)
Accrued payroll and related expenses	$	925	$	1,027
Accrued professional fees		233		361
Accrued research and development costs		1,749		964
Accrued expenses	$	2,907	$	2,352
Noncurrent
Accrued payroll and related expenses	$	49	$	—
Accrued professional fees		3		—
Accrued expenses	$	52	$	—

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Fair Value Measurement (Tables)

6 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities carried at fair value on a recurring basis as of December 31, 2015 and June 30, 2015, including financial instruments, which the Company accounts for under the fair value option, are summarized in the following tables.

December 31, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
	(in thousands)
Assets
Cash	$	43,079	$	—	$	—	$	43,079
June 30, 2015	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets
Cash	$	52,033	$	—	$	—	$	52,033

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Net Loss Per Share (Tables)

6 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Calculation of Net Loss Per Participating Securities

The calculation of net loss per participating securities (“EPS”) for the three and six months ended December 31, 2015 and 2014 is presented below.  

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
	(in thousands, except share and per share amounts)						(in thousands, except share and per share amounts)
Net loss	$	(5,691	)	$	(2,413	)	$	(9,651	)	$	(4,710	)
Weighted-average ordinary shares issued and    outstanding—basic and diluted		11,506,236			1,198,828			11,474,394			1,138,520
Net loss per ordinary share—basic and diluted	$	(0.49	)	$	(2.01	)	$	(0.84	)	$	(4.14	)

Ordinary Share Equivalents Excluded from Calculation of Diluted Net Loss Per Share

The following ordinary share equivalents were excluded from the calculation of diluted net loss per share for the periods ended on the dates indicated because including them would have an anti-dilutive effect:

	Three Months Ended September30,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands, except share and per share amounts)				(in thousands, except share and per share amounts)
Preference Shares		—		5,937,160		—		5,937,160
Share-based awards		1,052,420		477,392		1,052,420		477,392
Warrants		1,766,998		1,766,998		1,766,998		1,766,998
Total		2,819,418		8,181,550		2,819,418		8,181,550

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Valuation of Share Awards (Tables)

6 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Estimated Fair Value of Share Awards

The fair value of the share awards was estimated using the following assumptions:

	Three Months Ended December 31, 2015		Six Months Ended December 31, 2015
Risk free interest rate		1.7%		1.7%
Expected term (in years)	1 year		1 - 4 years
Expected volatility		75%		75%
Forfeiture rate		0%		7.5%
Expected dividend yield	zero		zero

Summary of Share Option Activities

The following table summarizes share option activity for fiscal year 2015 and the six months ended December 31, 2015:

	Shares Issuable Under Options				Weighted- Average Exercise Price
Outstanding as of July 1, 2014		470,479			$	2.33
Granted		663,661				9.55
Exercised		(96,540	)			0.125
Ordinary shares no longer subject to limited recourse loans		(109,611	)	(1)		4.20
Repurchased		(145,069	)			6.35
Expired or forfeited		(6,289	)			0.125
Outstanding as of June30, 2015		776,631			$	8.18
Granted		60,000			$	5.10
Exercised		(126,017	)			0.125
Repurchased		—				—
Expired or forfeited		—				—
Outstanding as of December 31, 2015		710,614			$	9.35
Options vested and expected to vest, as of June30, 2015		159,937			$	5.77
Options vested and expected to vest, as of December 31, 2015		329,812			$	9.63

(1) Reflects ordinary shares issued subject to limited recourse loans.

Summary of Restricted Share Unit Activity

The table below presents the Company’s restricted share unit activity for fiscal year 2015 and the six months ended December 31, 2015:

	Number of Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding as of July 1, 2014		29,214		$	5.15
Granted		57,947			7.83
Converted		(29,489	)		5.85
Forfeited		—			—
Outstanding as of June30, 2015		57,672		$	7.48
Granted		309,334		$	4.28
Converted		(25,200	)		7.61
Forfeited		—			—
Outstanding as of December 31, 2015		341,806		$	4.57
Converted and expected to convert, as of June30, 2015		4,400		$	9.19
Converted and expected to convert, as of December 31, 2015		—		$	—

Share Based Compensation Expense Related to Share Options and Restricted Share Units

The Company recorded share-based compensation expense related to share options and restricted share units for the three and six months ended December 31, 2015 and 2014 as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Research and development	$	193	$	131	$	402	$	173
General and administrative		286		212		537		365
Total	$	479	$	343	$	939	$	538

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Commitments and Contingencies (Tables)

6 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Summary of Commitments for Operating Leases and Purchase Obligations

Operating Leases and Purchase Obligations

Commitments consisted of the following as of the dates indicated:

	Total		Less than 1 Year			1-3 Years			3-5 Years			After 5 Years
December 31, 2015	(in thousands)
Operating leases	$	1,405		$	190		$	400		$	253		$	562
Purchase obligations		2,007			2,007			—			—			—
Total	$	3,412		$	2,197		$	400		$	253		$	562

	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
June 30, 2015	(in thousands)
Operating leases	$	352	$	109	$	190	$	53	$	—
Purchase obligations		680		680		—		—		—
Total	$	1,032	$	789	$	190	$	53	$	—

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Organization and Description of Business - Addtional Information (Details) $ / shares in Units, $ in Thousands	1 Months Ended					6 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Mar. 31, 2015 USD ($) shares	Feb. 28, 2015 $ / shares shares	Nov. 30, 2014	Aug. 31, 2014	Dec. 31, 2015 USD ($) Program	Jun. 30, 2015 USD ($) shares	Oct. 31, 2015 Cat
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Number of cats expected for new study enrollment | Cat								90
Number of biological programs | Program						15
Accumulated deficit						$ (33,306)	$ (23,655)
Cash						$ 43,100
Share consolidation, ratio				0.8
Convertible preference shares, shares outstanding | shares		5,937,160
Preference shares converted into ordinary shares | shares		5,937,160
Operating lease expiration period						5 years
Common Stock
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Issuance of ordinary shares, shares | shares							4,176,903
Initial public offering
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Offering expenses payable		$ 900
Initial public offering | Common Stock
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Issuance of ordinary shares, shares | shares		200,000	4,000,000
Public offering price (in dollars per share) | $ / shares			$ 10.00
Proceeds from Initial Public Offering, Gross		$ 41,800
Proceeds from Initial Public Offering, Net		38,000
Underwriting discount		$ 2,900
Tullamore, Ireland
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Payments to secure manufacturing assets on lease	$ 2,000
Operating lease expiration period	10 years					10 years
Nexvet Australia Pty Ltd
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Share consolidation, ratio					0.25
Stockholders' Equity, Reverse Stock Split						In August 2014, Nexvet Australia Pty Ltd (“Nexvet Australia”) completed a one-for-four share consolidation pursuant to which each holder of ordinary shares and preference shares received one ordinary share or preference share for every four ordinary shares or preference shares as applicable, held by such holder. The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a one-for-four basis, with a proportionate adjustment to the exercise or conversion price, as applicable.
Nexvet Biopharma
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Share consolidation, ratio				0.8
Stockholders' Equity, Reverse Stock Split						In November 2014, the Company completed a four-for-five share consolidation pursuant to which each holder of ordinary shares and preference shares received four ordinary shares or four preference shares for every five ordinary shares or five preference shares as applicable, held by such holder. The number of ordinary shares that may be acquired upon exercise of options or warrants or upon conversion of restricted share units was similarly reduced on a four-for-five basis, with a proportionate adjustment to the exercise or conversion price, as applicable.

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Summary of Significant Accounting Policies - Additional Information (Details) AUD in Millions	6 Months Ended
	Dec. 31, 2015 AUD
Accounting Policies [Line Items]
Revenues	AUD 20
Property plant and equipment depreciation methods	Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.
Property plant and equipment amortization methods	Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset.
Minimum
Accounting Policies [Line Items]
Estimated useful life of property plant and equipment	3 years
Maximum
Accounting Policies [Line Items]
Estimated useful life of property plant and equipment	10 years

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Summary of Significant Accounting Policies - Reconciliation of Total Assets, Property and Equipment, Net and Total Property and Equipment Additions by Geography to Consolidated (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Asset Reconciling Item [Line Items]
Total assets	$ 48,643	$ 56,672
Property, plant and equipment, net	3,097	549	$ 514
Total property and equipment additions	2,794	294
United States
Segment Reporting Asset Reconciling Item [Line Items]
Total assets	36,160	38,973
Property, plant and equipment, net	10	4
Total property and equipment additions	3	4
Australia
Segment Reporting Asset Reconciling Item [Line Items]
Total assets	9,054	17,259
Property, plant and equipment, net	1,122	538
Total property and equipment additions	695	283
Tullamore, Ireland
Segment Reporting Asset Reconciling Item [Line Items]
Total assets	3,429	440
Property, plant and equipment, net	1,965	7
Total property and equipment additions	$ 2,096	$ 7

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Other Income Receivable - Schedule of Other Income Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Jun. 30, 2015
Current
Research and development incentive receivable	$ 916	$ 3,242
Government grant receivable	111
Other	30	59
Other income receivable	1,057	$ 3,301
Noncurrent
Government grant receivable	$ 64

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Property Plant and Equipment - Summary of Movement in Property Plant and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Property Plant And Equipment [Line Items]
Opening balance	$ 549	$ 514
Additions	2,794	294
Depreciation	(159)	(152)
Exchange rate adjustment	(87)	(107)
Closing balance	3,097	549
Computer Equipment
Property Plant And Equipment [Line Items]
Opening balance	56	57
Additions	71	35
Depreciation	(15)	(25)
Exchange rate adjustment	(2)	(11)
Closing balance	110	56
Research and Development Equipment
Property Plant And Equipment [Line Items]
Opening balance	334	214
Additions	800	258
Depreciation	(70)	(86)
Exchange rate adjustment	(2)	(52)
Closing balance	1,062	334
Office Equipment
Property Plant And Equipment [Line Items]
Opening balance	62	92
Additions	68	1
Depreciation	(9)	(12)
Exchange rate adjustment	(6)	(19)
Closing balance	115	62
Plant and Equipment
Property Plant And Equipment [Line Items]
Additions	449
Depreciation	(13)
Exchange rate adjustment	(18)
Closing balance	418
Leasehold Improvements
Property Plant And Equipment [Line Items]
Opening balance	97	151
Additions	1,406
Depreciation	(52)	(29)
Exchange rate adjustment	(59)	(25)
Closing balance	$ 1,392	$ 97

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Property Plant and Equipment - Schedule of Acquired Certain Manufacturing Assets (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2015 USD ($)
Assets acquired
Total assets acquired	$ 1,977
Consideration
Cash paid	1,887
Retention amount withheld	90
Total consideration	1,977
Leasehold Improvements
Assets acquired
Total assets acquired	1,397
Plant and Equipment
Assets acquired
Total assets acquired	449
Office Equipment (Including Furniture and Fittings)
Assets acquired
Total assets acquired	67
Laboratory Equipment
Assets acquired
Total assets acquired	$ 64

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Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Jun. 30, 2015
Current
Accrued payroll and related expenses	$ 925	$ 1,027
Accrued professional fees	233	361
Accrued research and development costs	1,749	964
Accrued expenses	2,907	$ 2,352
Noncurrent
Accrued payroll and related expenses	49
Accrued professional fees	3
Accrued expenses	$ 52

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Ordinary Shares - Additional Information (Details) - shares	Dec. 31, 2015	Jun. 30, 2015
Equity [Abstract]
Ordinary shares, shares outstanding	11,558,133	11,406,916

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Fair Value Measurement - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Dec. 31, 2015	Jun. 30, 2015
Assets
Cash	$ 43,079	$ 52,033
Level 1
Assets
Cash	$ 43,079	$ 52,033

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Net Loss Per Share - Calculation of Net Loss Per Participating Securities (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2015
Earnings Per Share Basic And Diluted [Abstract]
Net loss	$ (5,691)	$ (2,413)	$ (9,651)	$ (4,710)	$ (11,857)
Weighted-average ordinary shares issued and outstanding—basic and diluted	11,506,236	1,198,828	11,474,394	1,138,520
Net loss per ordinary share—basic and diluted	$ (0.49)	$ (2.01)	$ (0.84)	$ (4.14)

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Net Loss Per Share - Ordinary Share Equivalents Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	2,819,418	8,181,550	2,819,418	8,181,550
Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		5,937,160		5,937,160
Share-Based Awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	1,052,420	477,392	1,052,420	477,392
Warrants
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	1,766,998	1,766,998	1,766,998	1,766,998

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Share Based Awards - Option Terms of Issue - Additional Information (Details) - $ / shares	6 Months Ended
	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary shares repurchased exercise price per share	$ 9.35	$ 8.18	$ 2.33
2012 Employee Share Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary shares repurchased exercise price per share	$ 6.35
Options expire date	Feb. 28, 2018

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Share Based Awards - 2013 Long Term Incentive Plan - Additional Infromation (Details)	1 Months Ended					6 Months Ended	12 Months Ended
	Aug. 31, 2015 $ / shares shares	Jun. 30, 2015 $ / shares shares	Nov. 30, 2014 $ / shares shares	Sep. 30, 2014 $ / shares shares	Nov. 30, 2013 $ / shares shares	Dec. 31, 2015 $ / shares shares	Jun. 30, 2015 $ / shares shares	Jun. 30, 2014 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share options to purchase ordinary shares | shares						60,000	663,661
Incentive awards, fair value per share of underlying ordinary shares		$ 7.12
Ordinary shares, nominal value per share		$ 0.125	$ 0.125			$ 0.125	$ 0.125
Share consolidation, ratio			0.8
Previously Reported Value
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary shares, nominal value per share				$ 0.10
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share options to purchase ordinary shares | shares	60,000		141,792	16,800	215,799
Incentive awards, fair value per share of underlying ordinary shares	$ 2.71		$ 9.37	$ 6.35	$ 5.15
Ordinary share exercise price	$ 5.10
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share units to acquire ordinary shares | shares	8,500	57,672	16,427	21,240	29,214	341,806	57,672	29,214
Incentive awards, fair value per share of underlying ordinary shares	$ 4.97
Ordinary share exercise price	$ 0.125
2013 Long Term Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary share exercise price			$ 0.125	$ 0.10	$ 0
Share options and restricted share units vesting description						Except for share options and restricted share units held by directors (which vested either beginning in September 2014 and quarterly thereafter or in November 2014), share options and restricted share units held by employees and consultants vest in three equal tranches in November 2014, November 2015 and November 2016.
Vesting period of share options and restricted share units held by held by employees and consultants						3 years
2013 Long Term Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants			1 year
2013 Long Term Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants			3 years

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Share Based Awards - 2015 Long Term Incentive Plan - Additional Infromation (Details) - $ / shares	1 Months Ended								6 Months Ended	12 Months Ended
	Nov. 30, 2015	Sep. 30, 2015	Aug. 31, 2015	Jun. 30, 2015	May. 31, 2015	Nov. 30, 2014	Sep. 30, 2014	Nov. 30, 2013	Dec. 31, 2015	Jun. 30, 2015	May. 13, 2015	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive awards, fair value per share of underlying ordinary shares				$ 7.12
Share options to purchase ordinary shares									60,000	663,661
Bonus Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary shares issued				42,691
Ordinary shares issued per share				$ 0.125						$ 0.125
Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of shares					2,280
Employees And Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share units to acquire ordinary shares		298,834
Ordinary share exercise price		$ 0.125
New Employee
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share units to acquire ordinary shares	2,000
Incentive awards, fair value per share of underlying ordinary shares	$ 4.76
Ordinary share exercise price	$ 0.125
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive awards, fair value per share of underlying ordinary shares			$ 2.71			$ 9.37	$ 6.35	$ 5.15
Ordinary share exercise price			$ 5.10
Share options to purchase ordinary shares			60,000			141,792	16,800	215,799
Employee Stock Option | Employees
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share options to purchase ordinary shares					360,000
Incentive awards, fair value per share of underlying ordinary shares					$ 5.93
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share units to acquire ordinary shares			8,500	57,672		16,427	21,240	29,214	341,806	57,672		29,214
Incentive awards, fair value per share of underlying ordinary shares			$ 4.97
Ordinary share exercise price			$ 0.125
Restricted Stock | Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share units to acquire ordinary shares											20,280
Incentive awards, fair value per share of underlying ordinary shares					6.99
Minimum | Employees And Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive awards, fair value per share of underlying ordinary shares		4.26
Maximum | Employees And Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive awards, fair value per share of underlying ordinary shares		$ 4.27
2015 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance		1,280,000
Percentage of shares issued under equity incentive plan				4.00%						4.00%
Vesting period of share options and restricted share units held by held by employees and consultants		4 years
2015 Equity Incentive Plan | Employees
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary share exercise price					15.00
2015 Equity Incentive Plan | Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary share exercise price					$ 0.125
2015 Equity Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants			1 year
2015 Equity Incentive Plan | Minimum | Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants					1 year
2015 Equity Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants			5 years
2015 Equity Incentive Plan | Maximum | Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of share options and restricted share units held by held by employees and consultants					5 years

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Valuation of Share Awards - Estimated Fair Value of Share Awards (Details)	3 Months Ended	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk free interest rate	1.70%	1.70%
Expected term (in years)	1 year
Expected volatility	75.00%	75.00%
Forfeiture rate	0.00%	7.50%
Expected dividend yield	0.00%	0.00%
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)		1 year
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)		4 years

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Valuation of Share Awards - Summary of Share Option Activities (Details) - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Shares Issuable Under Options, Outstanding	776,631	470,479
Shares Issuable Under Options, Granted	60,000	663,661
Shares Issuable Under Options, Exercised	(126,017)	(96,540)
Shares Issuable Under Options, Ordinary shares no longer subject to limited recourse loans		(109,611)
Shares Issuable Under Options, Repurchased		(145,069)
Shares Issuable Under Options, Expired or forfeited		(6,289)
Shares Issuable Under Options, Outstanding	710,614	776,631
Shares Issuable Under Options, vested and expected to vest	329,812	159,937
Weighted Average Exercise Price, Outstanding	$ 8.18	$ 2.33
Weighted Average Exercise Price, Granted	5.10	9.55
Weighted Average Exercise Price, Exercised	0.125	0.125
Weighted Average Exercise Price, Ordinary shares no longer subject to limited recourse loans		4.20
Weighted Average Exercise Price, Repurchased		6.35
Weighted Average Exercise Price, expired or forfeited		0.125
Weighted Average Exercise Price, Outstanding	9.35	8.18
Weighted Average Exercise Price, Options vested and expected to vest	$ 9.63	$ 5.77

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Valuation of Share Awards - Summary of Restricted Share Unit Activity (Details) - Restricted Stock - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Restricted Share Units, Outstanding	57,672	29,214
Number of Restricted Share Units, Granted	309,334	57,947
Number of Restricted Share Units, Converted	(25,200)	(29,489)
Number of Restricted Share Units, Outstanding	341,806	57,672
Number of Restricted Share Units , Converted and expected to convert		4,400
Weighted Average Grant Date Fair Value, Outstanding	$ 7.48	$ 5.15
Weighted Average Grant Date Fair Value, Granted	4.28	7.83
Weighted Average Grant Date Fair Value, Converted	7.61	5.85
Weighted Average Grant Date Fair Value, Outstanding	$ 4.57	7.48
Weighted Average Grant Date Fair Value, Converted and expected to convert		$ 9.19

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Valuation of Share Awards - Share Based Compensation Expense Related to Share Options and Restricted Share Units (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Recognized share-based compensation expense	$ 479	$ 343	$ 939	$ 538
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Recognized share-based compensation expense	193	131	402	173
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Recognized share-based compensation expense	$ 286	$ 212	$ 537	$ 365

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Valuation of Share Awards - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted average remaining contract life of outstanding options	5 years 2 months 12 days
Weighted average remaining contract life of outstanding restricted share units	1 year 9 months 18 days
Unrecognized share-based compensation expenses share awards	$ 3.7	$ 3.1
Unrecognized compensation expense weighted average period	5 years 6 months	4 years

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Commitments and Contingencies - Summary of Commitments for Operating Leases and Purchase Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Jun. 30, 2015
Commitments And Contingencies Disclosure [Abstract]
Operating leases	$ 1,405	$ 352
Operating leases Less than1 Year	190	109
Operating leases 1-3Years	400	190
Operating leases 3-5Years	253	53
Operating leases After 5Years	562
Purchase obligations	2,007	680
Purchase obligations next 12 months	2,007	680
Total contractual	3,412	1,032
Total contractual, next 12 months	2,197	789
Total contractual, 1-3 years	400	190
Total contractual, 3-5 years	253	$ 53
Total contractual, After 5 years	$ 562

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Commitments and Contingencies - Additional Information (Details) - USD ($)	1 Months Ended	6 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2013
Commitments and Contingencies [Line Items]
Operating lease expiration period		5 years
Operating lease commitments		$ 300,000	$ 400,000
Rent expense		106,000	200,000
Build-out incentive		$ 11,000	26,000
Rental commitments				$ 0
Unexpired term of lease		60 months
Contracts with suppliers for goods and services		$ 2,007,000	$ 680,000
Tullamore, Ireland
Commitments and Contingencies [Line Items]
Operating lease expiration period	10 years	10 years
Operating lease commitments		$ 1,100,000

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Related Party Transaction - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2015
Related Party Transaction [Line Items]
General and administrative	$ 1,779,000	$ 2,440,000	$ 3,649,000	$ 5,258,000
Research and development	3,790,000	2,226,000	7,515,000	4,765,000
Ridge Biotechnology Consulting L L C
Related Party Transaction [Line Items]
General and administrative		39,000	67,000	100,000
Payable to related party					$ 13,000
Biocomm Squared Pty Ltd
Related Party Transaction [Line Items]
Payable to related party	24,000		24,000		$ 17,000
Research and development	$ 57,000	$ 90,000	$ 62,000	$ 115,000