Analyst Conference Summary

biotechnology

conference date: February 6, 2024 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2023 (fiscal Q1, first quarter 2024)

Forward-looking statements

Overview: Continuing to develop pipeline.

Basic data (GAAP):

Revenue was $3.6 million, sequentially from $na million, and down from $63 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $133 million, sequentially from negative $na million, and down from negative $41 million year-earlier.

Diluted EPS was negative $1.24, down sequentially from negative $na, and down from negative $0.39 year-earlier.

Guidance:

none

Conference Highlights:

CEO Christopher Anzalone said "Arrowhead has made a name for itself as a company capable of rapid innovation and development that is building a broad-based, diverse business. This is exemplified by our 20 in 25 initiative, where we expect to grow our pipeline of RNAi therapeutics to at least 20 clinical stage or marketed products by the year 2025. This commitment to creating a very large number of new medicines as quickly as we can speaks to our dual mandate: to maximize the number of patients we can help, and to maximize our ability to create durable value for our shareholders. . . we are currently building out late-stage development and commercial infrastructure to serve the cardiometabolic vertical. This is the primary engine of our near-term value proposition." Could also raise money by more partnership transactions and Amgen's advancement of Olpasiran.

Arrowhead will focus on late-stage development in order to reduce cash burn by up to $100 million, or $30 million per quarter. Development of ARO-SOD1 and HZN-457 has been terminated. A common stock offering raised $450 million in the March 2024 quarter.

ARO-APOC3 (now plozasiran) for hypertriglyceridemia read out additional Phase 2 data at AHA in November 2023, showing robust improvements. Enrollment completed in Q3 2022 for Phase 2 for SHTG (severe hypertriglyceridemia), with Phase 3 expected to begin in Q2 2024. Planning several new studies. The Phase 3 trial for FCS (familial chylomicronemia syndrome) completed enrollment in Q2 2023, with data readout expected in Q3 2024. Could launch commercially in 2025.

Zodasiran (formerly ARO-ANG3) also read out Phase 2 data at AHA showing reduced levels of triglicerides and LDL cholesterol for mixed dyslipidemia. Hope to launch Phase 3 after regulatory feedback.

In Q4 filed to initiate a Phase 1/2a study of ARO-CFB for complement renal disease.

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

See also the Arrowhead Pharmaceuticals pipeline page.

Cash and equivalents (including investments) ended at $220 million, down sequentially from $403 million. Raised cash after the quarter ended, in January 2024.

Operating expenses of $140 million included $116 million for R&D and $24 million for G&A. Leaving operating income of negative $137 million. Other exense $2 million. Tax benefit $3 million.

Q&A selective summary:

Mild to moderate asthma cohorts did not have a pheno cutoff, so will have to wait for high pheno cutoffs.

Plan to use debt now? Despite higher interest rates, the cost of debt is less than the cost of equity capital. It is part of non-dilutive financing. We are close enough to commercialization that it makes sense to explore that option.

Commercial buildout for FCS? Partners? Phase 2 data was compelling, we hope for similar Phase 3 data. FCS is a baby step into the commercial market. As we grow and do more Phase 3 studies we can go after harder to identify patients, though their numbers should be larger. We can handle some of the international FCS markets, some we may look for local partners.

Zodasiran? There is a lot of interest in the remnant cholesterol concept. Both zodasiran and plazasiran are really good drugs, they can each address that particular question. But we need clinical trials to prove that specifically.

Rage cutoff for high pheno? The pheno cutoff is 35, there are 38 patients in the cohort including placebo patients. Can't say yet on how it will compare to other agents.

SOD1 bail? There was nothing bad in the data. It provided proof of concept for the platform, but it was commercially unviable.

Op ex reduction timeline? We should see results immeditely. Burn was high in December quarter, should go back to normal in March quarter.

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