Analyst Conference Summary

biotechnology

conference date: August 5, 2020 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2020 (fiscal Q3, third quarter 2020)

Forward-looking statements

Overview:

Basic data (GAAP):

Revenue was $27.4 million, up sequentially from $23.5 million, and down from $42.7 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $13.6 million, up sequentially from negative $19.8 million, and down from negative $ million year-earlier.

Diluted EPS was negative $, down sequentially from negative $0.20, and down from $20.3 year-earlier.

Guidance:

None.

Conference Highlights:

CEO Christopher Anzalone said "We took decisive action, pausing our studies to protect patients, but do not think that had a material effect on our timelines. Jansen program continues to make progress on all three targets. On the cusp of rapid expansion of our pulmonary platform. We are pursuing multiple potential therapies for Covid, in parallel."

After fiscal Q3 ended, earned a $20 million milestone from Amgen for first dose in Phase 2 study of AMG 890 for ARO-LPA. Will have about 240 patients.

In Q2 completed dosing in healthy volunteer cohorts in AROHSD1001, a Phase 1/2 clinical study of ARO-HSD, a therapeutic being developed as a treatment for patients with alcohol related and nonalcohol related liver diseases.

Began the Phase 1 ARO-HIF2 trial for renal carcinoma in Q2 2020.

Phase 2/3 trial, SEQUOIA, a potentially pivotal registrational study of ARO-AAT, completed enrollment of its first cohort. The pandemic caused an 8 week delay. Patients will receive around 2 years of treatment, but if we see earlier efficacy, we could talk to regulators about changing the parameters. Is second generation subcutaneously administered RNAi therapeutic for a rare genetic liver disease associated with alpha-1 antitrypsin deficiency. Also dosing an open label Phase 2 study. [WM: Dicerna and Alnylam are competing together in this disease, but they are behind ARWR in their development timeline]

Arrowhead completed enrollment in AROANG1001, a Phase 1/2 clinical study of ARO-ANG3, an investigational RNAi therapeutic being developed for the treatment of mixed dyslipidemia, in Q1 2020. Data so far is very encouraging and will be presented later this year. Could start a Phase 2b study in 2021.

In Q2 2020 Arrowhead started a development program to address the current novel coronavirus that causes COVID-19 and other possible future pulmonary-borne pathogens. No additional details about this program are being disclosed at this time.

ARO-HSD, a liver-targeted candidate targeting HSD17B13, a hydroxysteroid dehydrogenase involved in the metabolism of hormones, fatty acids and bile acids, resulting in NASH. Phase 1 study dosed its first patient in March 2020, but despite enrollment paused due to pandemic, has completed healthy volunteer dosing. Believes this is a highly-sought target for larger pharma companies.

In Q2 2020 Arrowhead completed enrollment and reported interim multiple-dose results on two cardiometabolic candidates: ARO-APOC3, being developed as a potential treatment for patients with severe hypertriglyceridemia. Preliminary results showed high levels of reduction in APOC3, ANGPTL3, triglycerides, and other lipid parameters. Will release more data later in 2020, including for healthy volunteers and patients. Planning Phase 3 study.

Plans to begin a Phase 1/2a clinical trial of ARO-ENaC, an RNAi therapeutic for cystic fibrosis, in August 2020.

Other potential drugs are under development, some potentially could be partnered.

Cash and equivalents ended at $465 million, down sequentially from $498 million. $ million cash used.

Operating expenses of $43 million included $33 million for R&D and $11 million for G&A. Leaving operating income of negative $16 million. Other income $2 million. Stock compensation expense has been increasing.

Q&A:

HIF2 program has been delayed by the pandemic. Hoping to start doing that shortly.

HSD program? We are the first company to get an HSD therapeutic to the clinic. Should be a good therapeutic. But it is not secreted, so it has to be a biopsy study. Genetic validation is clear, but the biology of NASH is still somewhat obscure. We do not expect polymer reduction after 6 months, just monomer reduction.

ENAC differentiation from competitors? 25% of total dose should be delivered to lung. It is a well-validated target, but it is hard to reduce in the lungs and spare the kidneys. Our preclinical model shows we do that. We believe an antisense therapy will have toxic issues [WM: meaning Ionis's].

We are looking to commercialize some of our assets with partners, possibly AAT, ANG, APOc3.

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