Analyst Conference Summary

biotechnology

conference date: May 9, 2024 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2024 (fiscal Q2, second quarter 2024)

Forward-looking statements

Overview: Continuing to develop pipeline.

Basic data (GAAP):

Revenue was $0 million, sequentially from $3.6 million, and down from $146 million year-earlier. Revenue is from up-front payments and milestones, not sales.

Net income was negative $125 million, up sequentially from negative $133 million, and down from $49 million year-earlier.

Diluted EPS was negative $1.02, up sequentially from negative $1.24, and down from $0.45 year-earlier.

Guidance:

none

Conference Highlights:

CEO Christopher Anzalone said "Arrowhead has achieved significant progress across our broad pipeline of investigational RNAi-based medicines that leverage the proprietary TRiM platform and we continued to strengthen our focus on and investment in our late-stage cardiometabolic programs. As we approach completion of the Palisade Phase 3 study of plozasiran and initiate additional Phase 3 trials of both plozasiran and zodasiran, we will continue to efficiently execute our clinical studies. Simultaneously, we plan to begin the regulatory submission process, refine our commercial strategy, and build the commercial infrastructure to support it."

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.

After the second fiscal quarter ended Arrowhead received a $50 million milestone payment from Royalty Pharma for completing enrollment in the Phase 3 trial of Olpasiran with Amgen. It is for lowering lipoprotein(a) levels.

ARO-APOC3 (now plozasiran) for hypertriglyceridemia read out additional Phase 2 data at ACC in Q2 2024, 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 June 2024. In FCS an expanded access program was initiated. 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 Q2 initiated 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 Q2 2024 started a Phase 1/2a study of ARO-DM1 for type 1 myotonic dystrophy.

In the fall plans to announce a modality that can cross the blood-brain barrier.

See also the Arrowhead Pharmaceuticals pipeline page.

Cash and equivalents (including investments) ended at $523 million, up sequentially from $na million. Raised $400 million in a stock offering in January. Raised $50 million cash post fiscal Q2.

Operating expenses of $126 million included $101 million for R&D and $25 million for G&A. Leaving operating income of negative $126 million. Other expense $1 million. Tax benefit $0 million.

Will have webinars for Muscalar (5/23/2024); cardiometabolic (6/25/2024); pulmonary (7/16/2024); obesity/metabolic (8/15/2024); and nervous system (9/25/2024).

Q&A selective summary:

Rage enrollment rate? It is hard to enroll patients with moderate to severe asthma because we are requiring high pheno. We do not have good visibility on when it will complete. We will start Phase 2 in the 4th quarter regardless.

LP(a) Lilly trial, Novartis trial, trial size? Don't see the reason for the large study size for Lilly. Amgen study seems adequately powered.

Ionis program ahead in timeline for FCS? Plozasiran is very powerful at knocking down APOc3. But we do not know what the new data will show. We expect a good outcome. Just 75 patients, results can depend on the placebo group. Competition will be data dependent, and our dosing interval is longer, so should be more attractive. Tolerance will matter too.

Upcoming RAGE data? Healthy volunteer data and knockdown data.

Strategy, plozasiran v. zodasiran? Some diseases are dominated more by ANG3 than by APOC3. A lot of patients are on statins but are not in control in the triglerides. At one end you have hypercholestrerolemia and at the other end you have FCS. Many patients are in the middle of the spectrum, where each drug helps some for mixed hyperlipidemia.

Both Shasta studies are way overpowered for efficacy.

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