Arrowhead Pharmaceuticals, Inc.

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal third quarter, ended June 30, 2020. With us today for management are President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter, Dr. Javier San Martin, Chief Medical Officer, who will discuss our clinical programs, and Ken Muskowski, our Chief Financial Officer, who will give a review of the financials. In addition, James Hazard, our Chief Commercial Officer, and Dr. Kirk Bradshaw, our Chief Scientific Officer, will be available during the Q&A session of today's call. Before we begin, I would like to remind you that comments made during today's call contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, all statements other than statements of historical fact including without limitation those with respect to Arrowhead's goals, plans, and strategies are forward-looking statements. These include statements regarding our expectations around the development, safety, and efficacy of our drug candidates, projected cash runway, and expected future development and commercialization activities. These statements represent management's current expectations and are inherently uncertain. Thus, actual results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward-looking statements discussed on today's call. You should refer to the discussions under risk factors in Arrowhead's annual report on Form 10-K and the company's subsequent quarterly reports on Form 10-Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call. With that said, I'll turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. We've already made a lot of progress this year, notwithstanding the challenges that COVID-19 has presented to the world broadly, and particularly to those of us developing new medicines. We took decisive action and placed a voluntary pause on new patient screening and enrollment in some of our clinical studies in order to limit the risk of participants. We take very seriously our obligation to protect the health and safety of our employees, business partners, and patients that participate in our studies. That was the right thing to do. The good news is that we don't believe any of our development programs were affected in a material way. That is a testament to the Arrowhead drive toward innovation, speed, and precision. We find a way forward even when the way is not clear. This is a hallmark of the Arrowhead culture and something that I am very proud of. Even though COVID still presents some uncertainty, we are confident that 2020 can continue to be a highly productive last part of the year as we work to one, expand our pipeline, two, make progress and provide data readouts on multiple clinical programs, and three, gain clinical proof of concept for our first extra-hepatic candidates. So what have we done and what are our plans in order to achieve these three important goals? Let's answer that by reviewing some key programs. I'll start by speaking broadly about our discovery stage programs. The partnership we signed with Janssen in 2018 included three potential new products against targets to be selected by Janssen. While I can't disclose the targets, the specific stage, or report data on these potential product candidates, we can say that we have made good progress on all three. We previously talked about Arrow J&J 1 because the first target was selected early on in the partnership and work began soon after. We are now at sufficiently advanced stage of the other two potential product candidates to add them to our pipeline and designate them as Aero J&J 2 and Aero J&J 3. The partnership with Janssen has been very productive, including for Aero HPV, now called J&J 3989, which continues to progress rapidly in multiple Phase IIb studies being conducted by Janssen. Staying with earlier stage developments, let's move on to our preclinical programs that utilize our TRIMM platform targeting the pulmonary space. Our second program, After AeroENAC is Aerolung2 designed to treat COPD by inhibiting an undisclosed target in pulmonary epithelia. We previously announced that it had officially been nominated as a candidate and moved from preclinical to pre-IND stage. We have continued to make good progress on the IND-enabling studies and are on track to potentially file a CTA for Aerolung2 at the end of this year. It has been our goal to gain clinical proof of concept and then move into a rapid pipeline expansion phase for the pulmonary platform. We think we are just on the cusp of that phase now. To that end, we continue to work in parallel on multiple additional targets in the pulmonary space. We think the lung is a target-rich environment with multiple opportunities for asthma, COPD, idiopathic pulmonary fibrosis, and other diseases that are not adequately treated. We've also made good progress on several potential candidates designed to treat the novel coronavirus that causes COVID-19. This is the first time we have disclosed that we are pursuing multiple different therapeutics at the same time, and I think it's important. This is a difficult virus, and we believe the best way forward is to address multiple strategies. One is to close the front door, if you will, by knocking down a receptor that the virus uses to gain entry into cells. A second is a direct antiviral approach that targets the viral mRNA and a third is to pursue anti-inflammatory pathways. We are pursuing all of these in parallel and believe this broad, holistic strategy gives us multiple shots on goal and a more complete approach to a poorly underscored virus. Given our experience in the lung and our work in HPV, I believe we are well positioned to play a role in addressing COVID-19 and possibly future coronavirus outbreaks. With AeroENAC, AeroLung2, our suite of COVID-19 programs, and the additional potential candidates that are progressing rapidly, we are confident in our belief that the emerging lung pipeline can be an engine that drives substantial value in the near to midterm. What we have done and continue to do in the liver, we now seek to do in the lung. Now moving on to our clinical pipeline, I'll start with Arrow AAT, our Phase 2-3 candidates against a rare genetic liver disease associated with Alpha-1 antitrypsin deficiency. We have fully enrolled, dosed, and collected six-month repeat biopsies for the first cohort of the Open Label 2002 study. Biopsies are now being analyzed, and we plan to present data before the end of the year. This is important progress and an important readout. It will be the first data for a therapeutic targeted at Alpha-1 liver disease, and it will be an important step in understanding what happens at the hepatocyte level after patients are treated. We will be looking at many measures of Alpha-1 liver disease but most focused on the change from baseline in ZAAT monomer. That is a direct measure of the drug's ability to inhibit production of the faulty mutant protein. We have a high level of confidence in our ability to show improvements here. We will also be assessing other measures that will likely require longer drug exposure to show treatment effect. That includes ZAAT polymer content and inflammation. We don't believe that six months of therapy is enough time to see changes but we are the first company to investigate the disease in humans, so we really don't know what to expect. Remember that in the Phase 2-3 Sequoia study, patients will receive around two years of treatment. If we see signs of improvement at earlier time points than expected, that would be a very exciting result and could cause us to consider working with the regulators to change the parameters of the study. I will now talk about our cardiometabolic programs. Let's start with AMG 890, the candidate we licensed to Amgen targeting LP little a for the treatment of cardiovascular disease. We announced last week that Amgen started a phase two study and that this triggered a $20 million milestone payment. These represent important steps forward for the AMG 890 program and support Arrowhead's strategy of utilizing our platform and expertise in RNAi therapeutics to build a valuable pipeline of both wholly owned and partnered drug candidates. Amgen has extensive experience in developing and commercializing innovative cardiovascular medicines and we are excited to see the program continue to advance. Our two wholly-owned cardiometabolic candidates, Arrow ApoC3 and Arrow ANZ3, are both progressing rapidly toward value inflection points, including multiple data readouts this year and advancement into the next stages of clinical development. The second half of 2020 is going to be an important time for both programs. Both candidates are in phase 1-2 studies and together have enrolled nearly 200 healthy volunteers and patients. Both studies include single and multiple dose assessments, and both have various cohorts with specific patient populations. This accelerated person-human study design yields data on safety and tolerability, dose response, duration of effect, and how different types of patients respond to the therapy. It allows us to give data readouts from both programs at two or three conferences over the next few months. It also gives us enough actionable information about each candidate to engage regulators, and discuss the next stages of clinical development up to and including potential registrational studies. We've already been communicating with the FDA on AeroApoC3 and our plan is beginning to take shape. We will have similar discussions on AeroAng3 and also engage with European authorities to gain clarity on various study design characteristics, endpoints and target patient populations. Importantly, both candidates provide a high level of optionality on which patient populations and disease characteristics to focus on and how to stage the clinical studies to assess the candidate's utility. For example, for aeroaplasty 3, there are potential patient populations that range from ultra-rare, genetically defined, such as FCS, in which patients have triglycerides in the thousands of milligrams per deciliter, to extremely high prevalence disease, such as patients with mildly elevated triglycerides above 150 milligrams per deciliter. There are also various levels in between these extremes that each have their own characteristics and would require a different clinical design with respect to size of study, duration of treatment, and acceptable endpoints. Taken together, this represents a very large market opportunity. In the U.S. alone, there are estimated to be approximately 1 million adults with triglycerides greater than 1,000 milligrams per deciliter, more than 3 million adults with triglycerides between 500 and 1,000, and more than 41 million with triglycerides between 200 and 500. Of course, not all of these patients will be potential candidates for therapy, but thinking of aeroA plus C3 solely as an orphan indication drug candidate is missing the larger breadth of opportunities ahead. This type of opportunity also exists for aeroAng3 and patients with mixed dyslipidemias, specifically triglycerides, LDL-C and other measures of cardiovascular and metabolic disease. I don't think investors fully appreciate the size of the potential commercial opportunities for both AERO APOC 3 and AERO ADS 3. This is an exciting time for these programs as we are beginning to see potential paths to commercialization. We will be talking about these paths and timelines in the future, which should provide a level of detail for investors to properly assess how significant the opportunity is to help very large populations of patients that could benefit from new treatment options. We have also made good progress on AeroHSD in development to treat alcohol and non-alcohol-related liver disease. We began dosing in a Phase 1-2 study in March. We have since completed all healthy volunteer cohorts and have activated the cohorts and enrolled patients with NASH or suspected NASH. The target, HSD17B13, is not a secreted protein, so we will be collecting liver biopsies to measure target engagement. This program experienced a short pause in screening and enrollment due to the COVID-19 situation, but similar to other programs, we don't think this had a material effect on our anticipated timelines. As long as patient screening and enrollment continue to move forward as planned, we should be generating data through the end of 2020 and be in a position to present in the first half of 2021. Lastly, I want to mention AeroENAC, our first inhaled RNAi candidate to target the pulmonary epithelium. We anticipate dosing to start this month in our Phase 1-2 study in Healthy Volunteers and in patients with cystic fibrosis. The candidate is designed to reduce expression of the epithelial sodium channel or ENAC in the lungs to help rehydrate CF-related dehydrated mucus and potentially help improve mucociliary clearance. As we discussed on our ENAC webinar last week, there has been great progress in new therapies to treat CF over the last decade, but significant unmet needs still exist. We estimate that there are approximately 14,000 patients in the U.S. alone that are either not eligible for the most advanced therapies because of their specific genotype or have been shown in clinical trials to be nonresponders or insufficient responders. This is a lot of patients who still suffer from CF and are in need of alternative treatments. We think ENAC may be the alternative, and importantly, the mechanism of action should theoretically be genotype agnostic. This is an exciting program, and we hope to generate data through the rest of 2020 that may enable us to have a data readout in the first half of 2021. Our preclinical data has been highly promising, and we are eager to see the translation of animal data to humans in our new pulmonary trim platform. With that overview, I'd now like to turn the call over to Dr. Javier San Martín. Javier?