Analyst Conference Summary

biotechnology

conference date: February 2, 2022 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2021 (fiscal Q1, first quarter 2022)

Forward-looking statements

Overview: Continuing to develop pipeline.

Basic data (GAAP):

Revenue was $27 million, down sequentially from $138 million, and up from $21 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $63 million, up sequentially from negative $141 million, and down from negative $21 million year-earlier.

Diluted EPS was negative $0.60, up sequentially from negative $1.36, and down from negative $0.20 year-earlier.

Guidance:

Conference Highlights:

CEO Chris Anzalone said the biotech stock index has been down both in 2021 and in January 2022. Can't do anything about that, but Arrowhead is making progress with its pipeline.

Expects the pipeline to approximately double in size over the next few years. Hopes to be able to target a new cell type every 18 to 24 months.

Plans to file a CTA for ARO-RAGE, an inhibitor of Receptor for Advanced Glycation End products, in the first half of 2022. Could stop the inflamatory cascade in asthma. An abstract will be presented at ATS this spring. Could address other pulmonary targets.

Plans to file a CTA for ARO-MUC5AC, an inhibitor of mucin 5AC, in the first half of 2022. Targets bronchial epithelium affecting asthma. An abstract will be presented at ATS this spring.

In Q1 2022 Arrowhead licensed GlaxoSmithKline ARO-HSD for NASH (nonalcoholic steatohepatitis). It is currently in a Phase 1/2 trial. As of August 2021 the study was fully enrolled and reported a high degree of target gene markdown. Only greater China rights will be retained by Arrowhead. Could receive milestone payments of up to $1.03 billion plus royalties if commercialized. An upfront payment of $120 million was received. $580 million for future milestones, plus royalties on sales.

In Q3 2021 Janssen disclosed its collaboration with Arrowhead on JNJ-75220795, in a Phase 1 clinical study designed to reduce expression in the liver of patatin like phospholipase domain containing 3 (PNPLA3), as a potential treatment for patients with NASH. Arrowhead earned a $10 million milestone from Janssen after the fifth patient was dosed earlier in the year.

In fiscal Q1 initiated a Phase 3 study of ARO-APOC3. ARO-APOC3 also began a Phase 2b combination trial. Pleased with pace of enrollment.

Data from a variety of trials, including JNJ-7373989 for Hep B, ARO-ATT, and ARO-APOC3 were present at AASLD in Q3 2021. ARO-ATT was designated a Breakthrough Therapy by the FDA; the trial data was positive for liver fibrosis.

In Q3 2021 began dosing patients in a Phase 2b clinical study of ARO-ANG3, for treatment for patients with mixed dyslipidemia. Expects enrollment to complete in 1H 2022. The discontinuation of the Ionis candidate was mentioned.

Continues to make progress on the ENAC target, but will use a new molecule to address it.

Amgen AMG-890 Phase 2 results are expected in 2022.

Amgen disclosed in Q2 2021 that Olpasiran (AMG 890) for lipoprotein(a) is expected to complete a Phase 2 study, with data in 1H 2022.

In Q3 2021 filed a CTA to begin clinical studies for ARO-C3, which is designed to reduce production of complement component 3 as a potential therapy for various complement mediated diseases.

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

Cash and equivalents ended at $548 million, down sequentially from $613 million.

Operating expenses of $91 million included $66 million for R&D and $25 million for G&A. Leaving operating income of negative $63 million. Other income $0.5 million.

Operating expenses are expected to increase over time with increased headcount and clinical activity.

Q&A summary:

ARO-AAT FDA discussions? Looking at selecting a dose based on data available. Had a good interaction with the FDA about a month and a half ago. We are on the same page on the unmet medical need and increased incidence.

FCS is the main market we are focussed on for APOC3, but possibly also mixed dyslipidemia.

New pulmonary programs compared to ENAC? We are still using the same targetting ligand approach. We hope to use less drug, and administer it less often, because we can use biomarkers to measure markdown, which had been a challenge with ENAC.

Milestones possible this year? Had not disclosed specifics, respecting partners.

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