Analyst Conference Summary

biotechnology

conference date: November 29, 2023 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2023 (fiscal Q4, fourth quarter 2023)

Forward-looking statements

Overview: Continuing to develop pipeline.

Basic data (GAAP):

2023 revenue was $241 million, down from $243 million year-earlier. Revenue is from up-front payments and milestones, not sales.

2023 net income was negative $205 million, down from negative $176 million year-earlier.

2023 diluted EPS was negative $1.92, down from negative $1.67 year-earlier.

Guidance:

none

Conference Highlights:

CEO Christopher Anzalone said Arrowhead is still on track to have 20 clinical or commerical candidates by 2025. Already has 15 clinical programs. "We expect these 15 clinical programs to grown to 16 by the end of the year."

However, will require significant amounts of capital in the coming years. Hopes to do that in a shareholder friendly way. Possibly by more discoveries and licensing to partners.

ARO-APOC3 (now plozasiran) Phase 3 study for hypertriglyceridemia read out additional Phase 2 data at AHA, showing robust improvements. Enrollment completed in Q3 2022 for Phase 2 for SHTG (severe hypertriglyceridemia), with Phase 3 expected to begin in 2024. The Phase 3 trial for FCS (familial chylomicronemia syndrome) completed enrollment in Q2 2024, with data readout expected in Q3 2024. Received Fast Track FDA designation in Q1 2023.

Zodasiran (formerly ARO-ANG3) also read out Phase 2 data at AHA showing reduced levels of triglicerides and LDL cholesterol for mixed dyslipidemia.

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 Q3 Arrowhead completed animal chronic GLP toxicology studies for ARO-RAGE. Goal is to treat inflammatory pulmonary disease. Believes safe to proceed to Phase 2 asthma study; data in 2024. At European Repiratory Congress data demonstrated deep and durable gene silencing for asthma.

In Q3 Arrowhead completed chronic GLP toxicology studies for ARO-MMP7 for treatment of idiopathic pulmonary fibrosis (in animals). Believes safe to proceed to Phase 2 study.

In Q3 2023 at ERS presented data across pulmonary programs suggesting broad clinical applications for TRiM platform.

In Q4 2023 filed to start a Phase 1/2a study of ARO-DM1 for type 1 myotonic dystrophy.

In Q3 2023 Arrowhead announced that GSK reached an agreement with Janssen to take over the exclusive worldwide rights to further develop and commercialize JNJ-3989 (formerly ARO-HBV).

Cash and equivalents (including investments) ended at $403 million, down sequentially from $494 million.

2023 operating expenses of $446 million included $353 million for R&D and $93 million for G&A. Leaving operating income of negative $205 million. Other income $2 million. Taxes $3 million.

Q&A selective summary:

DM!, DUX4, as core muscle therapy area? We think these could treat large numbers of patients with no good therapy options. Looking at additional targets, but it is early in the process.

ARO-RAGE? Large reductions in IL-13 should translate to reduction in FeNO, in the same range as texepelumab or Dupixent. We are fully enrolled in subcutaneous, but not ready to share data yet. Because of small cohort sizes it is too early to say our in human FEV1 results. We have not seen data for the 2 higher doses yet.

Financing using potential royalties? We are not waiting for interest rates to come down, we do not know the timing of that. We believe capital will be available at a reasonable rate, but we have made no decisions yet.

Timing of licensing agreements? It depends on the asset. Our pipeline will only get larger. But we want to keep many drugs to sell through our commercial team. We would license the outliers.

APOC3 and ANG3 cardiovascular outcome trial plans? Things have changed in the last year, we are now looking at the concept of totality of atherogenic lipoproteins, which can reduce LDL and remnant cholesterol. That may change the patient population. Within the next month or so we will be making a decision about clinical trial design. We are increasingly interested in ANG3, but that is not due to lack of confidence in APOC3.

We stopped partnering discussions on DUX4, but we could still partner it or DM1 in the future.

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