Arrowhead Pharmaceuticals Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
February 10, 2025

There are 13 speakers on the call.

Operator

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. Throughout today's recorded presentation, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference over to Vince Angiolone, Vice President of Investor Relations of Arrowhead. Please go ahead, Vince.

Speaker 1

Good afternoon. Thank you for joining us today to discuss Arrowhead's results for its fiscal twenty twenty five first quarter ended 12/31/2024. With us today from management are President and CEO, Doctor. Chris Anzalone, who will provide an overview of the quarter Doctor. Bruce Gibbon, Interim Chief Medical Scientist, who will provide an update on our Cardiometabolic Pipeline Andy Davis, Senior Vice President and Head of Global Cardiometabolic Franchise, who will provide an update on commercialization activities Doctor.

Speaker 1

James Hamilton, Chief of Discovery and Translational Medicine, who who will discuss our earlier stage development programs and Ken Miskowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to questions. Before we begin, I would like to remind you that comments made during today's call contain certain forward looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange. All statements other than statements of historical facts are forward looking statements and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10 K and our quarterly reports on Form 10 Q.

Speaker 1

I'd now like to turn the call over to Chris Ambalone, President and CEO. Chris?

Speaker 2

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Earlier today, we announced that the license and collaboration agreement with Sarepta Therapeutics is closed. Arrowhead expects to receive a $500,000,000 upfront payment in the next ten days and has already received $325,000,000 through the purchase by Sarepta of Arrowhead common stock priced at $27.25 per share. Arrowhead will also receive $250,000,000 to be paid in annual installments of $50,000,000 over five years and has a potential to receive an additional $300,000,000 in near term payments associated with the continued enrollment of a Phase onetwo study of ARO DM1, which we are on track to achieve during the next twelve months.

Speaker 2

Taken together, this adds up to $1,375,000,000 in cash payments. We are also eligible to receive development milestone payments of between 110,000,000 and $410,000,000 per program and sales milestone payments between $500,000,000 and $700,000,000 per program. The total potential value of this deal including upfront payments, equity investments and potential milestone payments exceeds $11,000,000,000 On top of that, we are also eligible to receive tiered royalties on commercial sales. This was clearly a big deal and a critical step for Arrowhead to bring balance back to our business model, which in part relies on partnering non core assets to provide capital for us to develop and commercialize our own wholly owned assets. In addition to the substantial immediate capital infusion, the deal also accomplishes a few equally important goals.

Speaker 2

One, brings in a partner with extensive development, regulatory and commercial expertise for development of drugs they have in licensed two, increases Arrowhead's focus in the cardiometabolic space three, reduces the forward growth in our R and D expenses as Sarepta assumes clinical development responsibilities for multiple programs and four, provides a potential for substantial downstream non dilutive capital as milestones and ultimately royalties are earned. We are now funded into 2028 and potentially through multiple commercial launches by Arrowhead and our partners. We believe we are now well positioned for growth in 2025 and beyond. We see three primary value drivers feeling this growth from our internal development activities in the near term. These are Plazasiran, Obesity and CNS.

Speaker 2

Let's begin with Plazasiran. We expect our first commercial launch of Plazasiran to drive substantial growth. Pending positive FDA review and approval, launch could take place late this year. We see the value proposition of Plazasiran in FCS is quite clear and a substantial differentiation from any other available therapy. We think the magnitude and consistency of triglyceride lowering, the potential ability to get patients to triglyceride goal, convenient quarterly dosing schedule and well tolerated safety profile simply make bosasiran a very difficult drug candidate to compete against.

Speaker 2

But this is just the first step. We are also confident that our current Phase three studies, SHASTA-three, four and five have the potential to show similar differentiation and value in the much larger severe hypertrophyroidemia or SHTG population and we believe this represents an attractive and underappreciated commercial opportunity. We are now on pace to complete enrollment for the registrational SHASTA-three, SHASTA-four and MIR three studies this year, which would enable study completion in 2026 and a subsequent sNDA filing. That would substantially broaden the reach of plazasiran and provide a large opportunity for growth. As we have said in the past, we believe plazasiran has the potential to be a $2,000,000,000 to $3,000,000,000 per year drug in the SHTG market alone.

Speaker 2

Turning to obesity, we believe our two early stage programs ARO INHBE and ARO ALK7 represent high value opportunities with near and mid term data readouts that could provide more clarity on where they may fit in the obesity and metabolic treatment paradigm. James will talk about the status of the programs in a moment, but we see the targets and pathways as very promising. Both programs are supported by published human genetic studies and the preclinical data have demonstrated dramatic results with the potential to fill gaps in the current standard of care. The possibility of long acting agents that spare muscle mass and enable visceral fat loss without dependence on caloric restriction is exciting indeed. It appears that Arrowhead is the first company to start clinical studies against the INHB target and may currently be the only company able to address the ALK7 target, which utilizes a new version of our TRIM platform capable of delivering to adipocytes.

Speaker 2

The third area that we see driving near term growth is our emerging CNS pipeline, including the new TRIM platform, which in animal models appears capable of delivering siRNA across the blood brain barrier, including deep brain distribution using subcutaneous injection. Near term clinical proof of concept would truly be disrupted and we think would open the door to treating many millions of patients without adequate options. Our initial efforts with this platform addressed Huntington's, Alzheimer's and Parkinson's disease, all devastating conditions that lack good treatment options. We believe that HTT MAPT and alpha synuclein are the most validated targets in Huntington's Alzheimer's and Parkinson's respectively. And these are the targets we are addressing with ARO HTT, ARO MAPT and ARO SNCA respectively.

Speaker 2

Our preclinical data in non human primates have been very compelling and we are now focused on completing INDCTA enabling studies and GMP manufacturing to support early clinical trials. We anticipate having CTAs for ARO HTT and ARO MAPT toward the end of this year and for ARO SNCA in early twenty twenty six. Sarepta has the right to take HTT forward and we are currently focused on keeping MAPT wholly owned. We have not made a decision yet on partnering versus retaining ARO SNCA. As I mentioned, we believe the triumvirate of plazasiran obesity and CNS will be our primary near term value drivers.

Speaker 2

It is also the way investors should think about our focus. We are building a growing cardiometabolic pipeline, which includes obesity and we will see where the new CNS platform takes us as clinical data come in. In addition to tublidaseran, AROOUT7 and ARO INHPE, our cardiometabolic franchise includes zodasiran, our ANGPTL3 targeting drug candidate. We expect to begin a Phase three study in HoFH next quarter with zodasiran. We have a large amount of clinical data with this candidate and feel confident that it could be an effective medicine with an attractive dosing schedule in this population.

Speaker 2

This would be a relatively simple addition to our FCS and SHTG sales representatives bags, so the incremental commercial costs associated with this additional potential product are expected to be minimal. The Phase three study will be small and this is a good use of fairly modest resources for us. Where else can we go in cardiometabolic? As I mentioned, AROALC7 is important not only because of the compelling target to treat obesity, but also as a proof of concept that we can address adipocytes. Catapost is the largest endocrine organ in the body and as such is expected to be a rich environment for cardiometabolic and obesity targets.

Speaker 2

We expect to build this out. Similarly, we believe the initial candidates built on our new CNS platform are important because of the neurological targets they address representing some of the most challenging poorly treated public health crises remaining and also because they offer the possibility of disruptive clinical proof of concept. We also see important opportunities to develop additional obesity candidates based on new CNS targets. Remember that RNAi is a rifle shot and as our understanding of obesity increases, we see a role for highly specific intervention that could only be practical with systemic delivery. We believe that this has the possibility to treat difficult diseases with reduced risk of safety and tolerability challenges that have led to so much disappointment in the CNS drug development space.

Speaker 2

This year, we also plan to expand our cardiometabolic presence with a CTA for our first dimer. It is designed to silence expression of both APOC3 and PCSK9 and we hope it will combine the triglyceride lowering qualities of Plazasiran with the LDL C lowering properties of other PCSK9 inhibitors. With this focus on cardiometabolic and wait and see with CNS, we have a number of programs that are non core. These are potential partnering opportunities and could bring additional immediate and long term capital. Janssen generated compelling clinical data with ARO PMPLA3 and addressing a genetically defined MASH population that could number in the 10,000,000 persons range in the major pharmaceutical markets could be attractive to the right company.

Speaker 2

This is a program for which we will seek a partner. We have learned much about our pulmonary platform to the various clinical programs. It appears to be well tolerated and quite effective at delivering to the deep lung. It is our intention to find a good partner to help identify new deep lung targets and develop a suite of candidates. Similarly, we have been very impressed with knockdown data coming out of the ARROW RAGE clinical studies, but given the complexity and expense associated with developing this as an asthma and or COPD drug, we will seek a partner for Phase II and beyond.

Speaker 2

Clinical data from both ARO C3 and ARO CFB have been quite good and both candidates appear to do what they are designed to do. There are clear markets one or both could address including C3 glomerulopathy, IgA nephropathy and certain lupus populations. We would like to find the right partners to develop these candidates. This is where we are now and where and what we see as key growth drivers for the future. Let's review how we got here and a few key accomplishments from the quarter and since our last earnings call.

Speaker 2

First and more importantly, the U. S. FDA accepted the new drug application for investigational Plazasiran for the treatment of familial cholomiconemia syndrome. This is our first NDA filing, which is a key milestone for Arrowhead and we are pleased that it was accepted for filing. The FDA provided a PDUFA action date of 11/18/2025 and indicated it is not currently planning to hold an advisory committee meeting.

Speaker 2

We now know the potential launch date pending FDA review and approval, so we continue our work to be ready for an efficient launch on day one. Andy will talk about the work in a moment. Sticking with fludasiran, in November we announced new results from the Phase three PALISADE study and the open label extension from our Phase two MUR and CHASTA-two studies. These data were presented in two oral presentations at the American Heart Association Scientific Sessions twenty twenty four and PALISADE data were simultaneously published in the journal Circulation. The data continued to be promising across studies across the spectrum of triglyceride disorders and after short and long term follow-up.

Speaker 2

In addition, Plazasiran has been overall generally well tolerated to date. During the quarter, we also initiated a Phase onetwo clinical trial of our first obesity candidate AROI NHBE and recently received regulatory clearance in New Zealand to initiate a clinical study of our second obesity candidate AROALC7. As I mentioned, these programs represent potential drivers for growth for AROHEAD, so we are excited to get both moving into and through early clinical studies. Lastly, we presented interim healthy volunteer results from a Phase onetwo clinical study of ARO CFB for the treatment of complement mediated diseases. Data have been compelling so far and we anticipate additional data readouts later this year.

Speaker 2

With that overview, I'd now like to turn the call over to Doctor. Bruce Gibbon. Bruce?

Speaker 3

Thank you, Chris. Good afternoon, everyone. As Chris mentioned, the big highlight for the clinical and regulatory teams was the submission and subsequent acceptance of our first new drug application or NDA by the U. S. FDA for investigational plazasiram for the treatment of familial chylomicronemia syndrome or FCS.

Speaker 3

The FDA provided a PDUFA action date of 11/18/2025 and indicated it is not currently planning to hold an advisory committee meeting. We also expect to submit approval applications to additional global regulatory authorities in coming months for plazasirab for the treatment of patients with FCS. FCS is a severe and rare disease that often is caused by various biogenic mutations that lead to extremely high triglyceride levels. The normal level is triglycerides below 150 milligrams per deciliter, but patients with FCS typically have triglycerides in the thousands. Such severe elevations can lead to various serious signs and symptoms, including acute and potentially fatal pancreatitis, chronic abdominal pain, which can be as frequently as daily, diabetes and cognitive issues.

Speaker 3

The clinical basis of the NDA submission is comprised of the findings in the Phase III PALISADE study, which were positive, with supportive confirmatory evidence from the Phase two clinical studies of the SUMMIT program. PALISADE successfully met its primary endpoint in all multiplicity controlled secondary endpoints, including statistically significant reductions in triglycerides, APOC3 and the incidence of acute pancreatitis. In PALISADE, plazasiran achieved deep and durable reductions in triglycerides with median changes from baseline of approximately eighty percent in the plazasiran twenty five milligram group and a statistically significant eighty three percent reduction in the risk of developing acute pancreatitis compared to placebo in the pooled plazasiran twenty five milligram and fifty milligram group. Overall, flizasran has been generally well tolerated to date. In the PALISADE study, the most frequently reported treatment emergent adverse events for the twenty five milligram dose that is proposed for marketing approval were abdominal pain, COVID-nineteen, nasopharyngitis and nausea.

Speaker 3

In addition to FCS, we are making good progress on the other Phase three studies in the SUMMIT program. These are SHASTA-three, SHASTA-four in patients with severe hypertriglyceridemia or SHTG and MIRROR3 in patients with mixed hyperlipidemia. The SHASTA studies are designed to assess safety and efficacy and the MIRROR study is to provide additional safety data needed for the expected SHTG supplement to our plazasiran NDA. The SHASA studies are global, randomized, double blind, placebo controlled Phase III studies to evaluate the efficacy and safety of plazasiran in adult patients with SHTG and prior documented evidence of fasting triglyceride levels greater than 500. Eligible subjects will be randomized to receive either plazasiran at twenty five milligrams or placebo.

Speaker 3

The double blind treatment period duration will be one year, where subjects receive a total of four quarterly doses. After month twelve, eligible subjects will be offered an opportunity to continue in an optional open label extension. Shasta three and four and MIRR three are all enrolling well and we are on schedule to reach full planned enrollment this year, which would enable study completion in 2026 and subsequent sNDA filing. We are also working towards initiating SHASTA V, a Phase three study in patients with SHTG that are at high risk of acute pancreatitis. We intend to initiate that study this year.

Speaker 3

In addition to the Phase three program for blazasiran, we are actively working on a study design and preparations for a Phase three study of zodasiran, our investigational RNAi therapeutic candidate designed to reduce production of angiopoietin like protein three or ANGPTL3, which is a liver synthesized inhibitor of lipoprotein lipase and endothelial lipase in patients with homozygous familial hypercholesterolemia or HoFH, following a successful Phase II study called Gateway. We will provide more details on that study when it is initiated later this year. This is another program that makes sense as it is potentially complementary to the medical affairs and commercial organizations we are building to support a plazasiran launch and there is significant overlap in types of physicians who treat FCS and HoFH, both rare lipid disorders. I'll now turn the call over to Andy Davis. Andy?

Speaker 4

Thank you, Bruce. The recent acceptance of our first NDA by the U. S. FDA for investigational posaccharin is incredibly energizing for the FCS community. The frequent feedback we receive from both physicians and patient societies who have read about plazasarin in last year's publications continues to be very encouraging.

Speaker 4

They cite several potential differentiating attributes of plazasarin that I will discuss briefly. First, the reduction in triglycerides is both deep and durable. As Bruce mentioned in his remarks, in Palisade, Plazastrin reduced triglycerides from baseline by an unprecedented approximately minus 80% as early as month one and maintained this reduction with minimal variation throughout the full twelve month treatment period. Second, people living with FCS for the first time have real hope of achieving triglyceride levels below guideline directed risk thresholds associated with acute pancreatitis, such as eight eighty and even five hundred milligrams per deciliter. At least half of the patients at the twenty five milligram dose in Palisade saw TGs below five hundred milligrams per deciliter with approximately seventy five percent achieving levels below eight eighty milligrams per deciliter.

Speaker 4

To support physician education on guideline directed risk thresholds, we previously announced the launch of our disease awareness campaign. A key focus of our messaging is to educate the community about expert guidelines, which recommend maintaining triglyceride levels below five hundred milligrams per deciliter to reduce the risk of acute pancreatitis. Third, the triglyceride reductions from baseline were consistent in patients with genetically confirmed and clinically diagnosed FCS. Results from Palisade published in the journal Circulation showed that Plazastrin at the twenty five milligram dose induced rapid, deep and sustained reductions from baseline in APOC3 of greater than minus 90% and in triglycerides of approximately minus 80% independent of gene variance causing FCS. We believe this supports the potential value of Plazasiran in patients with clinically diagnosed disease regardless of genetic status.

Speaker 4

Fourth, Plazasiran is the first and only investigational medicine to achieve a statistically significant reduction in the risk of developing acute pancreatitis in patients with genetically confirmed and clinically diagnosed FCS. This is truly the outcome of most importance for physicians, patients and payers. And lastly, Plazasiran demonstrated generally favorable safety and tolerability with low rates of discontinuation for adverse events and is conveniently dosed every three months, potentially reducing the treatment burden on both physicians and patients. As we prepare for the potential launch of Plazasrin at the end of this year, we have built highly experienced market access and marketing organizations and our clinical development colleagues have established a fully operational medical affairs function. Medical science liaisons from medical affairs are in the field conducting scientific exchange.

Speaker 4

Our market access colleagues are presently engaging with payers to communicate clinical and economic evidence and our national sales director will be executing our final field force hiring plans in the coming months. We are on track and we're incredibly excited about the possibility of bringing investigational Plazasiran to FCS patients and their families. I'll now turn the call over to Doctor. James Hamilton.

Speaker 5

Thank you, Andy. First, I want to give a quick review and update on two of the programs that are part of the Sarepta collaboration, ARO Dx4 and ARO DM1. These are both muscle targeted programs in Phase onetwo studies, which Arrowhead will continue to run until study completion, at which time Sarepta will assume responsibility for clinical development and ultimately commercialization. We are currently conducting a Phase one, 2a double blinded placebo controlled dose escalating study to evaluate single and multiple ascending doses of ARO DM1 in up to 48 subjects with myotonic dystrophy. We're in the dose escalation stage of the study and we are enrolling patients at a good pace.

Speaker 5

We expect to reach the enrollment targets in the Sarepta agreement, which would trigger an additional $300,000,000 in payments and potentially have first data to report this year, pending discussions with Sarepta and agreement on disclosure timing. Moving on to the second Sarepta partnered muscle targeted program, ARO DUX4. This is also in a Phase one, two way dose escalating study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of ARODEX4 in adult patients with FSHD Type one. The study is designed to enroll up to 52 subjects. Like ARODM1, we are in the dose escalation stage and should have first data available to report this year also pending discussion and agreement with Sarepta.

Speaker 5

These are both very interesting programs for muscle diseases with no adequate treatments available. Our preclinical data have been very compelling and we believe the programs have the potential to be best in class. Our colleagues at SURESA have extensive neuromuscular development, regulatory and commercial expertise, so their input at this time is helpful and their strategic direction and involvement in the future clinical development and commercialization will be critical. We have a high degree of confidence that the Sarepta team can can help accelerate the programs and maximize the chances for clinical commercial success. I also wanted to give a quick update on our obesity programs ARO Inhibiny and ARO ALK7.

Speaker 5

These programs are both designed to intervene in a biological pathway regulating fat storage, which in an environment of nutrient excess can become dysfunctional and overactive. AROINHIBINAE is designed to reduce expression of ACTIVINAE, which is a ligand for adipose ALK7, while AROALK7 is designed to reduce expression of the ALK7 receptor itself. In preclinical models, both programs demonstrated substantial reductions in fat mass versus control while simultaneously preserving lean mass. In addition, both targets are supported by human genetics where loss of function carriers have favorable body composition and metabolic characteristics compared to non carriers. We always prefer genetically validated targets because we think they reduce biology risk and give important insight into predicted safety and tolerability.

Speaker 5

For ARENHIBANI, in December, we began dosing in a Phase one2a dose escalating study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of ARO inhibitors in up to seventy eight adult volunteers with obesity. And Part one of the study is designed to assess single and multiple doses of ARO inhibitors monotherapy and Part II of the study is designed to assess ARO inhibitors E in combination with tirzepatide, a subcutaneously administered GLP-one GIP receptor coagonist. We see the potential to have initial data from Part I of the study later this year. For AROALC7, we recently received a regulatory clearance in New Zealand to initiate a Phase one2a first in human dose escalating study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of ARO ALK7 and up to 90 adult volunteers with obesity. We are completing manufacturing of drugs supply as we speak and anticipate dosing to initiate in the middle of the year.

Speaker 5

During the last quarter, we also presented interim clinical data from a Phase one2a clinical study of ARROW CFB, which targets complement factor B and is being developed as a potential treatment for various complement mediated diseases. The data were presented at the eighth complement based drug development summit. Complement Factor B plays an important regulatory role in amplifying complement alternative pathway activation and has been identified as a promising therapeutic target for complement mediated kidney disease such as IgA nephropathy, which is the most common glomerular disease worldwide and carries a high lifetime risk of progression to end stage renal disease. In the Phase onetwo way study circulating levels of CFB protein were reduced by a mean of up to 90% to date with a duration of response greater than three months. Additional data from the higher dose levels and multi dose cohorts are pending and will be presented at an appropriate medical conference.

Speaker 5

ARO CFB also demonstrated reductions in measures of alternative complement pathway activation with mean reductions at or approaching 100% in Ah50 and WeisLab AP at multiple dose levels. ARO CFB has been generally well tolerated to date with safety data supportive of further clinical development. Treatment emergent adverse events have been mostly mild in severity with none leading to study drug discontinuation. We look forward to completing Part one of the study over the coming months and subsequently look ahead to Part two of the study in patients with IgA nephropathy. I will now turn the call over to Ken Miskowski.

Speaker 6

Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the quarter ended 12/31/2024 was $173,100,000 or $1.39 per share based on $124,800,000 fully diluted weighted average shares outstanding. This compares with a net loss of $132,900,000 or $1.24 per share based on 107,400,000.0 fully diluted weighted average shares outstanding for the quarter ended 12/31/2023. Revenue for the quarter ended 12/31/2024 was $2,500,000 compared to $3,600,000 for the quarter ended 12/31/2023. Revenue in the current period relates to our collaboration agreements with GSK.

Speaker 6

Revenue in the prior period primarily related to the recognition of revenue from our license and collaboration agreements with Takeda and GSK. Revenue recognition related to the Sarepta license and collaboration agreement will begin during the quarter ending 03/31/2025. Revenue will be recognized over a period during which we are providing key performance obligations. This is primarily related to our responsibilities to manage certain clinical trials for the clinical candidates to which we granted Sarepta an exclusive license agreement. Total operating expenses for the quarter ended 12/31/2024, were $163,900,000 compared to $140,100,000 for the quarter ended 12/31/2023.

Speaker 6

The key drivers of this change were increased candidate costs and salaries as the company's pipeline of clinical candidates has both increased and advanced into later stages of development. Net cash used by operating activities during the quarter ended 12/31/2024, was $146,300,000 compared to $117,800,000 for the quarter ended 12/31/2023. The increase in cash used by operating activities is driven primarily by higher research and development expenses. Turning to our balance sheet, our cash and investments totaled $552,900,000 at 12/31/2024. Including the $825,000,000 in upfront payments from the Sarepta agreements, our pro form a cash and investments would be $1,400,000,000 at 12/31/2024.

Speaker 6

Based on our expected cash inflows from the Sarepta agreement, debt repayments as well as other cash burn, we expect our cash and investments balance to be approximately $1,000,000,000 at the end of calendar twenty twenty five, and we expect to have cash runway into 2028. Our common shares outstanding at 12/31/2024 were $125,600,000,000 With that brief overview, I will now turn the call back to Chris.

Speaker 2

Thanks, Ken. Not only do we see several growth drivers over the coming years, we have a robust potential catalyst calendar in 2025. Throughout the year, we expect multiple events that we believe are important. For plazasiran, we expect the following key events initiate SHASTA V in patients at high risk of acute pancreatitis fully enroll SHASTA III, SHASTA IV and MIRROR3 make additional global regulatory submissions commercial launch in FCS in The U. S.

Speaker 2

And potentially the EU pending review and approval for zadasiran initiate Phase three HoFH study For the obesity programs, we expect to initiate dosing in the Phase III study of ARO ALT7 and potentially have the first data for Part I of the Phase III study of ARO I and HBE. For pacisiran, our investigational RNAi candidate partnered with Takeda and being developed to treat the liver disease associated with alpha-one antitrypsin deficiency, we have the potential to reach full enrollment of the Phase three REDWOOD study. For ARO DUX4, ARO DM1 and ARO MMP7, we have the potential for initial data in the Phase onetwo studies and the potential to achieve $300,000,000 milestones payments from Sarepta. For both complement programs ARO CFV and ARO C3, we have potential data readouts. And lastly, for the emerging CNS pipeline, we anticipate filing CTAs for our first systemically delivered and subcutaneously administered programs.

Speaker 2

As always, there's a lot going on at Arrowhead to be excited about. Thank you for joining us today. And I would now like to open the call to your questions. Operator?

Operator

Thank Our first question will come from the line of Luca Eze of RBC Capital. Your line is open.

Speaker 7

Great. Thanks so much for taking my question. And obviously congrats on closing the deal with Sarepta. Maybe James, on obesity, can you just talk a little bit more about INHIBI? I know you're testing both, but is this fundamentally a monotherapy play in your head or this is more like an add on therapy to GLP-one or whatever is next for this category?

Speaker 7

And maybe related, can you just talk about what will be a downside case for the data later this year or maybe an upside case for the data later this year? What's the bogey here? So any color there, much appreciated. And then maybe Bruce, super quickly, we've obviously seen Novartisys pushing out their data to next year for LPWA. Just wondering what was your reaction to that news and what does this mean for the broader category including alpaca run?

Speaker 7

Again, any color there much appreciated. Thanks so much.

Speaker 5

Sure. Thanks, Luca. I can take a shot at the first question. Like you said, we are studying ARO inhibitors in monotherapy as well as in combination with tirzepatide. And we'll have to wait and see how the data look.

Speaker 5

We haven't really made a call on what the future path development path look like for that molecule. And similarly, I think we'll just have to wait and see. We don't have really a specific bogey to hit. I think we'll see how the data evolve on both the monotherapy side and in the combination arms.

Speaker 2

And just to be clear, look, obesity is not a one size fits all condition. And I don't think people who are in it are thinking of it that way. This is a huge number of patients with a variety of different needs. And so we are developing over time a suite of drug candidates, again, that could be used in combination with each other, in combination with others, in combination with existing therapies, in combination with new therapies. We are really excited about these two pathways and we think they're a great step forward.

Speaker 2

And it's just not clear how the world is going to use these or frankly any other obesity drugs that are coming online.

Speaker 3

And finally your question about LPD, I don't have a lot of insight here. We're not on the inside of certainly the Novartis program. We're not on the inside of the Amgen program. So we really don't know. I mean, I think in general, I would say that I'm more excited about El Paso Ranch just because I think it's a more effective agent with respect to knocking down Lp.

Speaker 3

It's certainly more convenient than an antisense approach and probably better tolerated as well. So I'm generally more excited about opaciran from a cardiovascular disease perspective. But what's going on with Novartis' compound and frankly even what's going on with Amgen's compound, I don't have an inside track on that information.

Speaker 7

Got it. Thanks so much, guys.

Operator

Thank you. One moment for the next question, please. And our next question will be coming from the line of David Dubois of Citi. Your line is open.

Speaker 7

Thank you very much for taking my question. I'm curious in the early days from what you've seen, talking to your doctors regarding APOC3 and current commercial large launches. Is there any feedback you're getting from doctors on what they're seeing?

Speaker 4

Yes. I'm just happy to comment on the feedback that we continue to receive with respect to Plazastrin, which as I mentioned, they view as highly differentiating based on the attributes I spoke to on the call. So I would say despite the fact that there is an option available, physicians and patient societies continue to remain really enthusiastic about Plazastrin.

Speaker 7

Thanks for taking my question.

Operator

Thank you. And one moment please for the next question. Our next question will come from the line of Eli Murrell of UBS. Your line is open.

Speaker 8

Hi, this is Jasmine on for Ellie. Thanks for taking our question and congratulations on the announcements today. I just wanted to follow-up on an earlier question. So for INHIPANI and ALKS7, will we see weight loss data or anything on body composition from the Phase one2a trials? And if at this early time point we won't see that yet, what are you looking for to see from the PKPD results to give you confidence to move forward?

Speaker 8

Thanks.

Speaker 2

Yes. I think

Speaker 5

from the Part one of the study, the monotherapy arms, we will be looking at body composition based on full body MRI as well as, of course, weight loss. And we'll look at the usual Phase one metrics, of course, safety and plasma PK, which will likely look like the other Galmak sRNAs. And then we can measure the biomarker active in the blood. So that's the direct biomarker of gene target knockdown.

Speaker 8

Great. Thank you.

Operator

Thank you. And one moment for the next question. Our next question will come from the line of Marie Raycroft of Jefferies. Your line is open.

Speaker 9

Hi, congrats on the progress and thanks for taking my question. I was going to ask about the Shasta V study. I know you plan to start this study in second quarter and you've mentioned it could include 140 patients and the purpose is mostly for payers. For this study, do you have estimates on what the timeline to data could look like? And can you talk more about the strategy here?

Speaker 9

I guess could the totality of acute pancreatitis data derisk an outcomes, study or potentially even replace the need to run a CVOT study?

Speaker 3

So, Mari, it's hard to predict. No one's ever attempted a trial like this before that

Speaker 10

it will be

Speaker 3

the first ever outcome study focused on pancreatitis as the primary endpoint. It will be enrolling patients that are at clear risk for pancreatitis. So the enrollment timeline is a sort of to be determined, you might say. And in addition to that, as with the CBOT, for instance, it is an outcome study. So we will go until we get the required number of events.

Speaker 3

So it's not a fixed duration after enrollment is complete, but in fact it will keep going until the required number of events are seen. So a couple levels of uncertainty there. We feel good about it. We think it will be we think it will be well received by clinicians. But in reality, it's hard to really predict exactly when it will happen.

Speaker 3

We think it will be a very important study though. And we think it will especially be a very important study to payers and to health assessment organizations, especially outside The U. S. Where places like The U. K.

Speaker 3

And Germany, these health assessment organizations are very, very important health technology assessment organizations are very important. They really determine whether or not patients are going to have access to a new drug. So we think this is going to be a revolutionary study, first of its kind, practice changing. And it will impact The U. S.

Speaker 3

As well, but we anticipate less so than it will in Europe. The second part of your question, I didn't quite understand if you were asking whether it would limit the need for CVAD. I don't really think so, just because I think that the question of episclerotic risk related to triglycerides is really separate from the question of pancreatitis risk. So I think there are two very important risks, but they are really independent questions and especially for patients with milder forms of hypertriglyceridemia where the pancreatitis risk is quite low, but the atherosclerosis risk is still very important. And we think, based on genetic data, represents an area of really unmet medical need and persistent residual risk of atherosclerotic cardiovascular disease, we think we're the first drug that's really in a position to truly assess that risk and assess the opportunity for a drug that quite effectively reduces triglycerides to impact that cardiovascular risk.

Speaker 9

Got it. It's all helpful perspective. Thanks for taking my question.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Edward Tenthoff of Piper Sandler. Your line is open.

Speaker 10

Great. Thanks guys. Thanks for all the updates and for everybody as well out there. Question with respect to Europe overseas with Clozapstor, now that we've gotten The U. S.

Speaker 10

Situation sort of laid out, what are plans for Europe and would you be partnering overseas? Are there certain thresholds we're waiting for, would there have to be additional studies? Just maybe you can update us on sort of what taking is overseas, both for FCS, but also longer term for severe hypertrophic surgery in The UK?

Speaker 4

Yes. Thanks for the call. This is Andy. So we're currently planning for commercialization in European markets along with a commercial partner. And so there'll be more details on that in the future.

Speaker 4

We're incredibly excited about the large European markets and bringing Plazastrin, investigational Plazastrin to those patients there as well.

Speaker 11

Okay. Thank you.

Operator

Thank you. One moment for the next question please. And our next question will be coming from the line of Patrick Trucchio of H. C. Randwick.

Operator

Please go ahead.

Speaker 11

Thanks. Good afternoon and congrats on all the progress here. I have a couple of follow ups. The first is just can you review how you envision Clozapcerin's competitive positioning relative to olezarsen in both FCS, but also in the broader severe high triglyceride population and how these product profiles could compare in the real world setting, particularly as we look towards the launch upcoming for Plazasone, potential launch upcoming for Plazasone FCS? And then just separately, just mentioned the adipose tissue targeting platform.

Speaker 11

I'm just curious what targets or disease areas do you view as being attractive as you look to build out this program from this part of the pipeline? And when may you have an update for us on this build out?

Speaker 4

Thank you for the question. This is Andy. I'll address the first part of your question related to differentiation. I'll speak primarily to the Plazasiran data, but

Speaker 6

I would encourage you to do your

Speaker 4

own comparison between the BALANCE and PALISADE studies to the extent you want to understand the key differences yourself. I think one of the primary differentiators that we see is around the reduction in triglycerides. As we've talked about from PALISADE, we see a triglyceride reduction from baseline, which is largely unprecedented approximately minus 80% from baseline and we see that as early as month one and then continued throughout that full twelve month treatment period. So I think that's the first point of differentiation one would focus on. I think the second point of differentiation is what that means for FCS patients as far as achieving guideline directed risk thresholds.

Speaker 4

So many of these society guidelines point to less than five hundred milligrams per deciliter as the goal to which they want to get FCS patients below in order to reduce the risk of acute pancreatitis. So obviously the larger the tg reduction from baseline, the greater the proportion of FCS patients who are likely to achieve that guideline directed goal. So we think that's a key area of differentiation as well. And third, in comparison those studies, you'd have an appreciation for the fact that PALISADE studied both genetically confirmed and clinically diagnosed patients. And what we saw was that Plazastrin was the first and only investigational medicine to achieve a statistically significant reduction in the risk of acute pancreatitis in that population.

Speaker 4

So again, an important point of differentiation. We spoke to acute pancreatitis as an important outcome for payers and patients and physicians. And so seeing a statistically significant difference in Palisade is an important differentiator. And then lastly, the safety profile has been generally very tolerable with low rates of discontinuation for adverse events. And importantly, we see in every three month dosing with Plazasterine.

Speaker 4

That's different from the alternative. That's only four injections a year and what patients tell us is they prefer fewer injections and what physicians tell us is that helps with compliance and adherence. And so they're quite excited about an every three month dosing regimen. So that would be I think the final point of differentiation I might point you towards. So those are just a handful of differentiating attributes of Plazastrin that we recognize as a team.

Speaker 3

So let me chime in too. This is Bruce Gibbon again. I think it's a little easier to kind of put balance in Palisade side by side than it is to necessarily put Shasta2 and the currently available data for SHTG with ole's arsine side by side because the BRIDGE TIMI study covered both mixed hyperlipidemia and a small number of patients that reached into SHTG. So it's a little harder to sort of understand what they're going to look like, what olecarsone is going to look like in SHTG. I think we have a pretty good idea of what we would predict is going to be seen with plus AstraZen because I think it's very likely that Shasta2 gives us a pretty good idea of what we're going to see there.

Speaker 3

I do want to just say generally speaking, I think both for FCS and for SHTG, this is one of these markets where the industry, both us and IONIS, it's going to be an education market. We're going to be opening up this market. This has been a these essentially have been almost untreatable diseases, very poorly treated diseases with available currently available agents that have been around for decades, mostly generic, mostly not promoted. So I'm not sure while the Street tends to think about head to head, I think this is more going to be expansion and in fact having a couple of players in the market is going to help us expand. I mean, we obviously like that side to side comparison that Andy talked about.

Speaker 3

But I actually think the thing that's going to benefit the patients most here is that there's going to be two sets of voices out there trying to be sure that physicians get well educated about these markets, understand that there are treatments now that these treatments make a difference. And I think it's probably more a question of how much the two of us can expand the pie than necessarily competing for a fixed pie, because at this point, I don't think there's I don't think that's the case. So I would just add that from a medical perspective.

Speaker 5

And on the obesity question, the adipose question, Patrick, this is James. So the indications that we're looking at, of course, include things like obesity, type two diabetes, lipodystrophy is also on the list. And we have a lot of targets that are of interest in the Adipo site. Of course, we're not going to share these targets publicly at this time. I think we're evaluating those targets pre clinically and you'll learn about the individual targets as they reach the clinic.

Speaker 11

Great. Thank you so much.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Mayank Mamtani of B. Riley Securities. Your line is open.

Speaker 10

Yes, good afternoon. Thanks for taking our questions and congrats on the Sarepta deal close. So on that Sarepta partnership, maybe a couple of quick questions on AODM1. You have cohorts four and five exploring twelve mgkg quarterly and semiannual dosing. Just to clarify, when you'd have day 180 biopsy data from both cohorts four and five, is that part of disclosure within this year or is that sort of a follow-up to initial sort of SAD early MAD update you have this year?

Speaker 10

And then similarly for Aerodux four, which is, I understand, it's a larger study. How further would you be along in the MAD when you and your partners, Sarepta, may look to put out an initial update this year?

Speaker 2

Hey, Mike. So our job here is to continue these programs moving forward as quickly as we can. We think these are important drugs. We look forward to handing them over to Sarepta once we finish the current studies. We really can't give you any guidance on data readouts because that's entirely up to Sarepta.

Speaker 2

We will be generating data all year when they decide to present data, when data are interpretable and such will be really up to them.

Speaker 10

Okay, understood. And just a quick one on zodasiran and HF H. If you could contrast the Phase three target patient population with that of Keesa and could patients theoretically get both antibody and siRNA to have optimal outcomes? Thanks again for taking the question.

Speaker 3

Yes. I don't think that they'll be used together. And I think the target population is basically very much the AKCEA target population. AKCEA, of course, is an intravenous infusion. It has the same liability as all the monoclonal antibodies have for patients that occasionally develop severe allergic reactions, which doesn't tend to characterize the siRNAs.

Speaker 3

And of course, we would be quarterly dosing as opposed to monthly dosing. But I think the patient population itself, which is essentially patients that are still have high LDL cholesterol despite high dose statins and PCSK9 inhibitors. That's basically the patient population. There is a nuance there. You also pick up some patients that are intolerant to statins.

Speaker 3

But essentially, the biggest part of the population are patients that despite high dose statins and PCSK9s are still not at goal, which is basically the FQs of population as well.

Speaker 12

Got it. Thank you.

Operator

Thank you. Thank you. One moment for the next question. And our next question will be coming from the line of Andrea Newkirk of Goldman Sachs. Your line is open.

Speaker 8

Good afternoon. Thanks so much for taking our question. Maybe a follow-up to the prior one. Could you just speak a little bit more on this decision to restart efforts with sodastron? And maybe quantify for us the magnitude of the commercial opportunity that you do see in HoFH to justify the incremental investment that you expect to see on both the R and D as well as the commercial side?

Speaker 8

Thanks so much.

Speaker 2

Sure. So the SREP deal, of course, gave us capital that we could reconsider that opportunity. That to us felt like as close to a no brainer as exists in this industry. The data so far have been good in the clinical programs and it was just it was sitting frankly waiting for us to have the capital that we can allocate to it, now we do. It's not a very expensive Phase III program.

Speaker 2

It's going to be a fairly small study. It's not a gigantic market, of course, but the incremental commercial costs there are quite low because we are going to be addressing this market with posasiran anyway. And so as I mentioned in the prepared remarks, we're almost just adding this to the bag of existing sales representatives. And so it doesn't cost very much more to do the Phase III. It costs almost nothing more to do the added commercial.

Speaker 2

So we just saw that as a market that we could take share, and so we plan to.

Operator

Thank you. One moment for the next question. And the next question is coming from the line of Manny Ferrajo of Leerink. Your line is open.

Speaker 3

Hey guys, thanks for taking the question.

Speaker 9

A couple of quick ones to clarify. When you talked about your pro form a cash balance, etcetera, $1,000,000,000 you said that was one of the things that took into account was debt service. You described as debt repayment. Are we to assume that you're going to be putting capital to paying down the 15% debt that you took out? Or should we just assume that that is debt service in the form of interest?

Speaker 9

And then I have a follow-up.

Speaker 6

So we do need to make certain payments when we bring capital in from milestone payments and such. So that is included in the cash balance that I referred to earlier. And to the extent there are further milestones down the road, certain percentage of those would be considered debt repayments, but we wouldn't be making anything beyond that.

Speaker 9

Okay, that's helpful. And then apropos of your answer to the last question regarding having more capital in hand, the feeling you sort of reinvigorate this Aspiram program for the outpacing opportunity at OFH. I want to hop back to close Aspiram how you should think about the CVOT, how you think about potential gating to restart that, timing to pursue a CVOT, and how to think about your own view on what are gating events to begin such a study and the capital that you put into place and how that might affect your willingness to partner other assets to continue to keep the balance sheet running given that that adds meaningful OpEx?

Speaker 2

Yes. It's a great question. I don't have a firm answer for you other than the fact that we would like to do that CVOT. The rationale for that is clear and I'll let Bruce expand upon that in a second. We'd like to do that.

Speaker 2

What we're waiting on is additional capital. And so we're just not prepared to start that until we've got better line of sight on additional capital to fund that. We do have a lot of capital now, that's good, but we're going to need an influx of additional capital, substantial additional capital before we would consider starting that. I sort of listed some of the current programs that we are interested in partnering at some point at least. ARROWRAGE is one.

Speaker 2

We'd like to do a discovery partnership in pulmonary. We'd like to do a partnership with C3, with Factor B, with PMPLA3. We've got a number of these that are not core to our business, we're happy to let go of. We are we and we'll see what kind of capital can come in with those. What's importantly, there are some programs that are just off limits at least for right now.

Speaker 2

ALK7 and INHIBON E, we think have too much value in them, at least in the near to midterm to think about partnering. So we're just not going to do that. MAFT is another one. We're going to hold on to that at least for right now and see where that goes. We would certainly consider doing a discovery partnership in CNS with some limited number of targets.

Speaker 2

Let's see if some capital comes in with that type of partnership. We could consider an Alpha's Nuclear Partnership. It's not something that we're really focused on right now, but it's something that we would consider. It's not off limits like MAPT, I guess is what I'm saying. Adiphyseyes, there are a ton of new targets there.

Speaker 2

We will absolutely go after some of those ourselves and we will keep some wholly owned to expand our cardiometabolic franchise. But there's probably enough targets there for us to bring in partners as well to interrogate new targets. Cardiomyocytes, that's a new space. We are not in the clinic with cardiomyocytes right now, but we have technology we think is pretty good and just about ready for prime time. And so that's another place that we think we can play ourselves, but also there's probably room to do some partnering there.

Speaker 2

So there's an awful lot of potential there. We'll just see what happens. We'll see when it happens. We'll see what kind of capital comes in before we can make a decision on if and when we start that CVOT. Bruce, do you want to add anything on it?

Speaker 3

No. Just again for those of you who may not be up to date on the case for doing a CVOT, there's just an increasing body of information from Mendelian randomization studies, especially indicating that some of this unmet need and some of this residual risk, despite our ability to take LDLs to very, very low levels, looks like from these Mendelian randomization studies at GWASes that a significant amount of that residual risk is explainable by elevations in triglyceride rich lipoproteins. And again, plazasiran, the strongest drug we think that has ever been seen in its ability to lower those. And if you use the Mendelian randomization data to sort of model what you expect, there's a pretty good expectation that this could be very effective in patients with mixed hyperlipidemia and patients whose severe hypertriglyceridemia kind of stays out of the chylomicronemia range, so sort of from that five hundred to eight hundred or so milligrams per deciliter in that range, We think that a CVOT would have a very good chance of demonstrating substantial reduction in residual risk despite LDL being well controlled. We would like very much to do this.

Speaker 3

This is the drug to finally answer that question in our minds. So scientifically, this would be an extremely interesting study to cardiologists. Probably not that different from how they feel about Lp at this point from the standpoint of just a very, very important question to answer scientifically. So we'd love to do it and it's just a function of being able to feel confident that we can properly fund it.

Speaker 2

And let's also be clear that the FHTG market alone, which of course would not require the cBot, we have ongoing Phase 3s now. We said we're going to be fully enrolled this year, we believe, and we think those studies will be finished in 2026. Those enable addressing a market that we think makes plazasiran a $2,000,000,000 to $3,000,000,000 per year drug alone. So yes, we do like the idea of continuing to expand the reach of plazasiran, but even with what we're doing right now, we think that makes plazasiran a large drug.

Speaker 9

I'm sorry, can I I just want to clarify? So what I'm taking away from this is that you've given us some updated clarity on your cash position that net of sort of contractually agreed upon payments for debt service, but not including additional voluntary pay down of principal beyond that, you expect to have cash pro form a

Speaker 10

near the end of this

Speaker 9

year about $1,000,000,000 Despite that, given your existing OpEx and CapEx you expect for your platform, you still need more capital to be able to feel comfortable moving forward into the CBOT. Is that a correct interpretation

Speaker 5

of what you just said?

Speaker 2

That's a correct interpretation of what I said. Because again, remember that we got other stuff going on that we think are going to drive value as well in obesity and the CNS and the existing SHDG studies alone. So yes, those will absorb capital as well. That's why we would need additional capital to come in, in order to start a CMOT.

Speaker 9

Okay. Thank you for clarifying

Speaker 5

that. That was really helpful.

Operator

Thank you. One moment for the next question. And our next question will come from the line of Brendan Smith of TD Cowen. Your line is open.

Speaker 12

Hi, great. Thanks guys for taking the questions. Actually just a really quick one on zodasiran. I know you referenced the Phase three in HoFH that's going to start next quarter. But given the development cost synergies that you mentioned with plazasiran and kind of the taking a look at the whole balance sheet and everything within the cardiometabolic pipeline, I'm just wondering if you have any plans to potentially pursue heterozygous FH with lodasiran, like maybe if it works in HoFH or potentially simultaneously, I'm guessing not that though.

Speaker 12

Or have you kind of just decided to put the idea to vet at HoFH and just kind of pursue any other indications with other drugs? Thanks.

Speaker 3

Yes. So, I mean, we've looked at that very carefully. And we actually think that if you take the patients that receive appropriate doses of statins and you add on to that PCSK9 inhibition, there is a persistent unmet medical need in patients that cannot get to goal inside of that HEFH market. Unfortunately, there is no regulatory pathway to actually get at those patients other than just trying to do the full development program for HEFH. HEFH, frankly, probably to include a commitment for CVOT.

Speaker 3

And we simply don't think the we simply don't think in that case, the juice is worth the squeeze. If there were a way to do a tailored program that focused on where the unmet medical needs still is after PCSK9 addition to statins. That would be worth going after, but we've explored that and there does not appear to be a regulatory path to do that. So the answer is no, we're not looking at HEFH for that reason.

Speaker 12

Got you. Okay. Thanks very much guys.

Operator

Thank you. One moment for the next question. And our next question is coming from the line of Jason Goldberg of Bank of America. Your line is open.

Speaker 9

Hey guys, thanks for squeezing me in. For me, I'm just kind of curious how you guys are thinking about this two to three year window where you launch Clazasiran for SES and if you think that's enough time for revenues to be meaningful. And as you think about the challenge really of taking this largely undiagnosed patient group and getting them into what sounds like if you talk to a clinician who are already prescribing TRINGOLS, a small number of specialist centers to prescribe the script? Or if you look at it more as sort of an educational launch and it's really all about at the HTG, just kind of curious to get your perspective there?

Speaker 4

Yes. Thanks, Jason. This is Andy. So as I mentioned in my remarks, we're incredibly enthusiastic about Plazasterin, specifically for FCS patients. We do think there is a community of FCS patients who for a long time have been have not had great options for them with respect to pharmacotherapy.

Speaker 4

And so Plazastrin being available, we think will truly be a game changer for many of these FCS patients. That's what they've told us. And so we do believe in the return on investment over the next two to three years for plazasone and FCS specifically. And we're heavily focused on bringing those patients a treatment option that didn't exist previously. I would just say as it relates to any future markets, there is a high degree of overlap as you would know between those physicians that will be interested in treating for SHTG versus those that will be focused on patients who have familial chylomicronemia syndrome.

Speaker 4

So any medical and commercial related activities conducted over the next two to three years focused on FCS, no doubt there'll be an overlap of those physicians that will be interested in understanding that therapy for patients who have SHTG as well.

Speaker 12

Got it. Thanks.

Operator

Thank you. And that does conclude today's Q and A session. I would like to go ahead and turn the call back over to Chris for closing remarks. Please go ahead.

Speaker 2

Thanks everyone for joining us today and we look forward to seeing you next quarter.

Operator

This does conclude today's conference call. Thank you for joining. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Arrowhead Pharmaceuticals Q1 2025
00:00 / 00:00