Analyst Conference Summary

biotechnology

conference date: August 7, 2023 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2023 (fiscal Q3, third quarter 2023)

Forward-looking statements

Overview: Continuing to develop pipeline.

Basic data (GAAP):

Revenue was $16 million, down sequentially from $146 million, and down from $34 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $103 million, down sequentially from $49 million, and up from negative $72 million year-earlier.

Diluted EPS was negative $0.96, down sequentially from $0.45, and down from negative $0.68 year-earlier.

Guidance:

none

Conference Highlights:

CEO Christopher Anzalone said " Arrowhead's mission is to bring important new medicines to the people who need them and save lives and alleviate suffering where we can. While this is our guiding principle and focusing on this promise has given us purpose and the motivation to, I believe, innovate at industry-leading levels and operate at speeds not seen before, it is not the only important focus for us. Another is risk." We appear to be the only company that can use RNAi in the lungs. Will continue to refine and expand the reach of the TRiM platform. Hope to have 20 clinical stage or marketed products by 2025.

Takeda began a Phase 3 study in Q2 2023 of fazirsiran for alpha-1 antitrypsin deficiency, with up to 160 patients. Arrowhead received a $40 million milestone payment from Takeda when the study began. In Q2 updated results were released from the Phase 2 SEQUOIA clinical study of fazirsiran (TAK-999/ARO-AAT) for the treatment of liver disease associated with alpha-1 antitrypsin deficiency at the European Association for the Study of the Liver (EASL) Congress 2023. In January 2023 topline results for fazirsiran for the treatment of liver disease associated with alpha-1 antitrypsin deficiency, in the Phase 2 trial, were reported as positive.

ARO-APOC3 Phase 3 study for hypertriglyceridemia should see more readouts in 2023 after enrollment completed in Q3 2022 for SHTG (severe hypertriglyceridemia). The Phase 3 trial for FCS (familial chylomicronemia syndrome) completed enrollment in Q2 2023, with data readout expected in Q3 2024. Received Fast Track FDA designation in Q1 2023.

In Q2 2023 Arrowhead Presented interim data from the ongoing Phase 2 GATEWAY clinical study of ARO-ANG3 in patients with homozygous familial hypercholesterolemia at the 91st European Atherosclerosis Society Congress, showing that ARO-ANG3 achieved 44-48% mean reductions in LDL-C on top of continued standard of care.

ARO-SOD1 filed an NDA to start Phase 1, in Q3 2023, to reduce expression of superoxide dismutase 1 (SOD1) in the CNS as a potential treatment for patients with amyotrophic lateral sclerosis (ALS) caused by SOD1 mutations.

In Q2 2023 Arrowhead filed an application to initiate a Phase 1/2 clinical trial of ARO-DUX4,for facioscapulohumeral muscular dystrophy (FSHD). ARO-DUX4 is the first clinical candidate utilizing the TRiMTM platform to target disease associated genes in skeletal muscle. But continues to discuss possible partnering.

In Q2 2023 Arrowhead earned a $30 million milestone payment from GSK, following the start of GSK's Phase 2b trial of GSK4532990, formerly called ARO-HSD, an investigational RNAi therapeutic for the treatment of patients with non-alcoholic steatohepatitis (NASH)

In Q2 ARO-ANG3 presented data at the European Atherosclerosis Society Congress demonstrating that ARO-ANG3 achieved LDL-C reductions of 44% to 48% when added to existing standard-of-care treatments. These results are similar to results seen in studies of an approved monoclonal antibody targeting ANGPTL3 in patients with HoFH. These are important derisking data as we move toward one or more Phase 3 programs, which we are currently designing.

Cash and equivalents ended at $494 million, down sequentially from $560 million. $na million used in operating activities.

Operating expenses of $119 million included $95 million for R&D and $24 million for G&A. Leaving operating income of negative $103 million. Other income $0 million. Taxes $1 million.

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

Q&A selective summary:

Roche and Alnylam deal, v. your cardiovascular franchise? We are not working on that target. We do not see that as an opportunity in the space.

Pulmonary platform update? Data will be an update on healthy volunteers, mainly duration. The toxic study will be from rats, we are waiting on the monkey data. We are needing substantially less material than on the older, discontinued series.

RAGE chronic tox data timing? Doses are lower and less frequent than we used for ENAC. ENAC needed 4 to 20 times more material to achieve the same potency.

Pulmonary targets possible? We will be looking at genetically validated targets. We want to minimize target risk.

C3 data timeline? Likely end of 2024.

MMP7 pulmonary program? We think the focus should be on patients with upregulated MMP7, but are still in the healthy volunteer portion of the study. We could have some data by the end of 2024.

All the asthma patient cohorts for MUC5AC are open we could have data in late 2024.

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