Analyst Conference Summary

biotechnology

conference date: May 10, 2022 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2021 (fiscal Q2, second quarter 2022)

Forward-looking statements

Overview: Continuing to develop pipeline. Revenue is from a milestone payment, not sales.

Basic data (GAAP):

Revenue was $152 million, op sequentially from $27 million, and up from $33 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was $44 million, up sequentially from negative $63 million, and down from negative $27 million year-earlier.

Diluted EPS was $0.41, up sequentially from negative $0.60, and down from negative $0.26 year-earlier.

Guidance:

Conference Highlights:

CEO Chris Anzalone said "I want to start by saying thank you to all those who joined us yesterday in Verona, Wisconsin for the ground-breaking ceremony at the site of our new manufacturing and lab facilities . . . This is an investment in Arrowhead's future as a vertically integrated commercial stage pharmaceutical company. We are making this investment now because we have a high degree of confidence in our investigational medicines, both wholly.owned and partnered. This is an important step when a development stage company is serious about becoming a commercial entity."

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 Q1 2022 started the Phase 3 trial of ARO-APOC3 in adults with familial chylomicronemia syndrome.

In Q1 2022 Arrowhead completed enrollment of the Phase 2b stury of ARO-ANG3 in patients with mixed dyslipidemia. Trial completion expected near 2022 year-end, with topline data in Q2 2023. Also started the Phase 2 Gateway study of the drug for homozygous familial hypercholesterolemia.

In Q1 2022 started a Phase 1/2 trial of ARO-C3 healthy volunteers, PNH (paroxysmal nocturnal hemoglobinuria), and complement-mediated renal disease.

In Q1 2022 Arrowhead formed a joint venture, Visirna Therapeutics, with Vivo Capital to expand the reach of innovative medicines in Greater China

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

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

Cash and equivalents ended at $603 million, up sequentially from $548 million.

Operating expenses of $110 million included $76 million for R&D and $34 million for G&A. Leaving operating income of negative $42 million. Other income $3 million.

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

Q&A summary:

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