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. Good afternoon, everyone. Thank you for joining me. June 30th, 2021. 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 and the rest of the company.

Chris? Thanks, Vince. Good afternoon, number one, and thank you for joining us today. The fiscal third quarter and the period since our last conference call has been incredibly busy for Arrowhead. We made important advances in several of our development programs. This includes discovery stage programs and early, mid, and later stage clinical programs. It also includes programs from existing partnerships as well as a new business development transaction. As a platform company, there are a few areas of critical importance where we focus our attention. Thank you for your time. and lastly, we need to selectively use partnering to expand the reach and maximize the value of our trim platform and bring in non-dilutive capital that helps to fund our internal development. I think we're doing well in all these areas. Let's take a moment to briefly review some key events in the last quarter that are good examples of this. For our discovery and early stage clinical pipeline, we had a very productive quarter. We completed discovery and optimization work on two new pulmonary programs and nominated them both as clinical candidates. They are now in the IMD enabling stage, which includes GLB toxicology studies and manufacturing of drug products for clinical studies. We have not yet disclosed the gene and disease targets, but we will be talking more about these programs later in the year. We also presented very promising preclinical data on AeroDux4, our first muscle-targeted program being developed as a treatment for patients with fascioscapulohumeral muscular dystrophy, or FSHD, at the 28th Annual FSHD Society International Research Congress. The data showed that the TRIM muscle delivery platform can achieve functional delivery to various types of skeletal muscle and achieve deep, durable, and dose-dependent knockdown target genes. of FSHD-like muscle phenotype in relevant preclinical animal models. As DUX4 expression is recognized as the cause of muscle pathology in FSHD patients, Ehren believes that the selective targeting and knockdown of DUX4 using RNAi may prevent or reverse downstream myotoxicity and lead to muscle repair and improvement in muscle function in patients. There are currently no effective treatments specifically for FSHD so patients need new therapeutic options that address the root cause of the disease. We've been pushing aggressively toward the clinic with Aerodux 4, as well as the two new pulmonary candidates we nominated this year. We expected to file CTAs for all three of them by the end of the year, but securing timely slots at CROs for IMD-enabling toxicology studies has been challenging, so scheduling on the CTAs will be pushed into the first half of next year. That is unfortunate, but we have seen this become more of a bottleneck in the industry since the beginning of the pandemic. We have continued work on a number of other early programs and I am pleased to announce a previous AeroC3 as a hepatocyte-directed candidate against complement C3. Overactivation of the complement cascade is thought to be causative of a number of diseases, including paroxysmal nocturnal hemoglobinuria and C3 glomerulopathy, and complement-mediated injuries involved in many other conditions, including IgA nephropathy, as well as many other renal, vascular, hemologic, and neurologic conditions. Complement C3 is a central node in all three of the complement pathways, including the classical, lectin, and alternative pathways of complement activation. And it has recently been shown that inhibition of C3 can be both safe and effective in the treatment of complement-mediated diseases. We have a strong track record in trim-enabled hepatocyte-directed candidates, including AeroHBV, AeroLPA, AeroAET, AeroAng3, AeroApoC3, and AeroHST. These programs give us confidence that positive non-clinical data from the Arrow C3 may translate well in humans. We believe that an siRNA capable of substantially reducing C3 levels for three months or more could be the modality of choice for C3 inhibition, and we expect to file CTA for Arrow C3 by the end of this year. During the quarter, we also announced positive interim data for two of our early states, Thank you for joining us. of efficacy in at least one patient. Specifically, the HIF-2-alpha protein H score was assessed via immunohistochemistry. Nine of 17 patients had tumor samples that could be evaluated, and seven of those nine demonstrated reductions in HIF-2-alpha protein H scores. These reductions ranged from minus 9% to minus 82%, with a mean reduction of minus 48%. Thank you for watching. We also presented positive interim data for AeroHSD, being developed as a potential treatment for patients with liver diseases, such as NASH, at the Easel International Liver Congress. AeroHSD was well tolerated in healthy volunteers, given a single dose at 25 mg, 50 mg, 100 mg, or 200 mg, and in 5 patients with suspected NASH, given a 100 mg dose of AeroHSD on days 1 and 29. All five patients with suspected NASH showed a strong pharmacodynamic effect as measured by liver biopsy at day 71. HSD17-Beta13 protein was reduced by 92% and 97% in two patients, while the other three patients' day 71 measurements were reduced below the lower limit of quantitation. Importantly, ALT showed... We believe that Arrow HST is the first investigational therapeutic to demonstrate robust inhibition of hepatic HST17B13 mRNA and protein expression. We are also highly encouraged to see ALT levels Thank you for joining us. Thank you for your time. First, we presented additional positive interim 48-week liver biopsy results at the Easel International Liver Congress. These results demonstrated that arrow AAT treatment led to rapid improvements in multiple measures of liver health, including fibrosis, with substantial and sustained reductions in the level of mutant AAT protein. Mutant AAT protein has been identified as the cause of progressive liver disease in patients with alpha-1 antitrypsin deficiency. AAT treatment was generally well tolerated after up to one year of treatment. This is very important data and suggests to us that the drug is doing what it is designed to do and that removing the mutant AAT protein can give the liver a chance to begin the healing process even when intervening in patients with late stage liver disease. We and our partners at Takeda were thrilled to see these results and we have received similar responses from physicians and others in the Alpha-1 treating community. We also fully enrolled the Arrow AAT Phase II Sequoia Study with the 40th patient being dosed recently. Combined with the various cohorts in the Open Label 2002 Study, we will have paired biopsies from approximately 50 patients receiving various dose levels and various treatment durations. Lastly, for Arrow AAT, we are granted Breakthrough Therapy designation by the U.S. FDA. Arrow AAT was also previously granted Orphan Drug designation and Fast Track designation from the FDA and Orphan designation from the European Commission. Our goal is to expedite the development path of Arrow AAT, and each of these important designations provide potential ways to achieve that. We will work with regulatory authorities and our partners from Takeda to identify the best path to bring this important drug to patients quickly. Now moving on to progress that we've made with partnering. As I mentioned, we believe a platform company should use partnering selectively to expand the reach and maximize the value of the platform technology and to bring in non-dilutive capital that helps to fund internal development. This is a key component of our business strategy and an area where we've seen important recent progress. The collaboration with Janssen, which was executed toward the end of 2018 for Arrow HBB against Thank you for watching. Also during the quarter, we announced a global collaboration and license agreement with Horizon Therapeutics for Arrow XDH, a previously undisclosed discovery stage candidate being developed by Arrowhead as a potential treatment for people with uncontrolled gout. Arrowhead received $40 million as an upfront payment from Horizon and is eligible to receive up to $660 million in potential development, regulatory, and commercial milestones, and is further eligible to receive royalties in the low to mid-teens range on net product sales. will receive a worldwide exclusive license to the therapeutic and will be wholly responsible for clinical development and commercialization. This is a great example of an attractive partnering opportunity. It expanded the reach of our technology to an area that we had not intended to enter independently and brought in non-dilutive capital. It also brought in needed expertise in the gout field to help understand the disease, the clinical path, the tremendous unmet medical need, and a dominant player in the space with an existing commercial organization. For all these reasons, we thought Horizon was the ideal partner, and the deal made perfect sense for both of our companies. We look forward to working closely with Horizon as we advance this potential new therapy for patients in need. We experienced the latter in the AeroENAC program, our candidate being developed as a potential treatment for cystic fibrosis last quarter. To review, we voluntarily paused the clinical study of AeroENAC after receiving a preliminary update from an ongoing chronic toxicology study in rats that contained unexpected signals of local lung inflammation. Because of this preliminary update, we instructed investigators to pause new screening enrollment in any further dosing of investigational aeroenac, pending additional data from the ongoing chronic rat toxicology study and an additional ongoing chronic primate toxicology study. We have not seen any concerning safety or tolerability signals in people enrolled in the aeroenac 1001 study. They participate in our clinical trials above all else, so we will continue to keep the Aeroline Act clinical study on pause for now. We do not yet have full data back from the toxicology studies nor from additional studies that we are conducting internally, so we do not yet know the extent of the findings. We are investigating this fully and are still in the information gathering stage. We should know more in the coming weeks and months, and we intend to provide an update when we are able. Javier San Martín.