Organization And Basis Of Presentation

3 Months Ended

Mar. 31, 2012

Organization And Basis Of Presentation [Abstract]

Organization And Basis Of Presentation

1. ORGANIZATION AND BASIS OF PRESENTATION

AVI BioPharma, Inc. (the "Company") is a biopharmaceutical company incorporated in the State of Oregon on July 22, 1980. The Company is focused on the discovery and development of unique RNA-based therapeutics for the treatment of rare and infectious diseases. Applying the Company's proprietary platform technologies, the Company is able to target a broad range of diseases and disorders through distinct RNA-based mechanisms of action. The Company is focused on rapidly advancing the development of its Duchenne muscular dystrophy drug candidates, including its lead product candidate, eteplirsen. In April 2012, the Company announced results from its Phase IIb placebo controlled trial in eteplirsen. Following completion of this study, the Company initiated an open label extension study with the same participants from the original Phase IIb placebo controlled trial. The Company is also focused on developing therapeutics for the treatment of infectious diseases, including its lead infectious disease programs aimed at the development of drug candidates for the Ebola and Marburg hemorrhagic fever viruses for which the Company has historically received and expects to continue to receive significant financial support from U.S. government research contracts.

The accompanying unaudited condensed consolidated financial statements reflect the accounts of the Company and its consolidated subsidiaries. The accompanying unaudited condensed consolidated balance sheet data as of December 31, 2011 was derived from audited financial statements not included in this report. The accompanying unaudited condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

Management has determined that the Company operates in one segment: the development of pharmaceutical products on its own behalf or in collaboration with others.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2011. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Since its inception in 1980, the Company has incurred losses of approximately $327.7 million, substantially all of which resulted from expenditures related to research and development, general and administrative charges and acquired in-process research and development resulting from two acquisitions. The Company has not generated any material revenue from product sales to date, and there can be no assurance that revenues from product sales will be achieved. Moreover, even if the Company does achieve revenue from product sales, the Company expects to incur operating losses over the next several years.

In the periods presented, nearly all of the revenue generated by the Company was derived from research contracts and grants with the U.S. government. As of March 31, 2012, the Company had had substantially completed all of its contracts with the U.S. government except for the July 2010 agreement for the development of therapeutics against Ebola and Marburg. Pursuant to this agreement, as of March 31, 2012, the Company is currently entitled to receive up to an aggregate of $126.5 million for development of its product candidates, of which $63.9 million has been recognized as revenue and $62.6 million relates to development that has not yet been completed and has not been billed or recognized as revenue. In addition, if the U.S. government elects to exercise all its options under the agreement, an additional $161.5 million in funding is available. See "Note 6 — U.S. Government Contracts" for additional information.

At March 31, 2012, cash and cash equivalents were $30.6 million. The Company's principal sources of liquidity have been equity financings and revenue from its U.S. government research contracts. The Company's principal uses of cash have been research and development expenses, general and administrative expenses and other working capital requirements.

The Company believes it has sufficient cash to fund operations at least through the following 12 months. The Company anticipates receiving continued funding from the U.S. government to pursue the development of its therapeutics against Ebola and Marburg, and has assumed certain revenues from these awards in providing this guidance. Should the Company's funding from the U.S. government cease or be delayed, it would have a significant negative impact on the Company's financial condition and on this guidance and the Company would likely be forced to significantly curtail its research and development efforts unless additional funding was obtained. The Company is also likely to pursue additional funding through public or private financings and cash generated from establishing collaborations or licensing its technology to other companies.

Estimates and Uncertainties

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of liability classified warrants and stock-based awards, long lived asset impairment, and revenue recognition.

Commitments and Contingencies

As of the date of this report, the Company is not a party to any material legal proceedings with respect to itself, its subsidiaries, or any of its material properties. In the normal course of business, the Company may from time to time be named as a party to various legal claims, actions and complaints, including matters involving employment, intellectual property, effects from the use of therapeutics utilizing its technology, professional services or others. It is impossible to predict with certainty whether any resulting liability would have a material adverse effect on the Company's financial position, results of operations or cash flows.

Reclassifications

Certain inception to date amounts have been reclassified to conform to current year presentation. These changes did not have a significant impact on the Company's net loss, assets, liabilities, shareholders' equity or cash flows.