Analyst Conference Summary

biotechnology

conference date: August 4, 2022 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2022 (fiscal Q3, third quarter 2022)

Forward-looking statements

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

Basic data (GAAP):

Revenue was $32 million, down sequentially from $152 million, and down from $46 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $72 million, down sequentially from $44 million, and down from negative $32 million year-earlier.

Diluted EPS was negative $0.68, down sequentially from $0.41, and down from negative $0.29 year-earlier.

Guidance:

Cash burn in September quarter $80 to $90 million.

Conference Highlights:

CEO Chris Anzalone said Arrowhead has one drug in Phase 3 and hopes to have two more in 2023. Adding personnel to prepare for commercial launch. Expects 12 clinical readouts in next year.

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.

Initiated Phase 1/2a clinical trial of ARO-RAGE, an inhibitor of Receptor for Advanced Glycation End products, in August 2022. Could stop the inflamatory cascade in asthma. An abstract will be presented at ATS this spring. Could address other pulmonary targets.

Initiated Phase 1/2a clinical trial of ARO-MUC5AC, an inhibitor of mucin 5AC, in August 2022. Targets bronchial epithelium affecting asthma. An abstract was presented at ATS 2022.

Results from the Phase 2 study of fazirsiran (ARO-AAT) for liver disease associated with alpha-1 antitrypsin deficiancy were published in the New England Journal of Medicine and given in an oral presentation at EASL in Q2 2022. Showed signs of efficacy.

ARO-APOC3 Phase 3 study for hypertriglyceridemia study is in Phase 3 and should see readouts in 2023.

In Q2 2022 initiated the Phase 2 GATEWAY clinical study of ARO-ANG3, which is designed to silence the hepatic expression of angiopoietin-like protein 3 (ANGPTL3), in patients with homozygous familial hypercholesterolemia (HoFH). 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 Q2 2022 formed a joint venture with Visirna Therapeutics for China.

In Q2 2022 Arrowhead began construction of a new drug manufacturing facility and announced awards of up to $18.5 million in tax incentives from the city of Verona and the Wisconsin Economic Development Corporation.

ENAC pulmonary investigation showed the non-clinical adverse results were due to lung macrophage overload, an inflamatory response. Believes newer sRNA compounds can avoid this problem with lower drug amounts and fewer doses. MMP7 program for lung fibrosis is being prepared for a possible filing 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 mid 2022.

Cash and equivalents ended at $582 million, down sequentially from $603 million. $69 million used in operating activities. Cash infusions from Visirna and GSK.

Operating expenses of $105 million included $72 million for R&D and $33 million for G&A. Leaving operating income of negative $73 million. Other income $1 million.

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

Q&A selective summary:

100 mg v. 200 mg dose in AAT? 12 patients at 200 mg. Only 4 at 100 mg. So differences are likely about small sample size. No safety issues at either dose, PK does favor 200 mg dose, likely the one we will move forward with.

Cash? We are comfortable, partly because we have 6 partnerships with 5 companies, which should give us access to more capital. We could have 20 clinical candidates in the next few years, so we could partner more of them. A deal a year would be about the right cadence for access to capital.

Takeda is in discussions with the FDA for AAT liver disease, so we cannot give you an update at this time. We are in basic alignment with the FDA.

RAGE and MUC5AC first cohorts? We do measure sputum biomarkers in MUC5AC, but no data back yet. RAGE has a blood biomarker and sputum, again no data yet. We should have results in 2023.

In Europe there was concern with moving to a Phase 3 study without having a Phase 2 study. But we worked that out with regulators. And will have Phase 2 study data later. We lost our Belaruse, Ukraine, and Russia, but found other sites.

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