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spk07: Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
spk02: Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2022 third quarter ended June 30, 2022. With us today for management, our president and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter. Dr. Javier San Martin, our chief medical officer, who will provide an update on our mid and later stage clinical pipeline. Dr. James Hamilton, our senior vice president of discovery and translational medicine. who will provide an update on our earlier stage programs, and Ken Muskowski, our Chief Financial Officer, who will give a review of the financials. In addition, Tracy Oliver, our newly appointed Chief Commercial Officer, and Patrick O'Brien, who was recently promoted to Chief Operating Officer and General Counsel, will both be available during the Q&A portion of the call. Before we begin, I would like to remind you the 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 are forward-looking statements and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. For further details concerning these risks and uncertainties, Please refer to our SEC violence, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. With that said, I'd like to turn the call over to Christopher Anzalone, President and CEO of the company. Chris.
spk05: Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Before I cover key events in progress during the previous quarter, I want to talk about some recent management additions that make us a stronger company today and, importantly, as we grow into a vertically integrated commercial stage pharmaceutical company. We are currently conducting one phase three study for a wholly owned drug candidate, and I expect us to begin one or two additional phase three studies next year. As such, there are important strategic decisions we need to begin considering that will affect how we ultimately commercialize these drug candidates. We are thrilled to welcome Tracy Oliver as our chief commercial officer to start to build out our commercial infrastructure and more immediately. contribute to the planning of our late stage programs to ensure that our future commercial requirements are harmonized with clinical data sets and ultimate drug labels. Tracy has over 30 years of global experience in the biopharmaceutical industry, leading both R&D and commercial organizations. Prior to joining Arrowhead, she had her own consulting practice focused on providing guidance to small emerging commercial stage biotech companies on the proper strategy, timelines, methods, and ultimately the build out of new commercial organizations. Those skills and experience are critical to Arrowhead as we look to take the next steps in our growth as a company. Prior to her consulting business, Tracy was with Shire Pharmaceuticals through the acquisition of Bexalta and was global head of new product planning and device strategy. Prior to that, she held several commercial roles at Baxter and Bexalta, including establishing a new oncology franchise and leading the North America immunology business unit and autoimmune franchise. Tracy began her career in the biopharmaceutical industry with Johnson & Johnson, and served as Head of Orthobiotech Nephrology Business Unit in Canada, Ortho McNeil Neurologics, and McNeil Pediatrics in the USA. As we continue this type of growth in personnel and departments, we need to be more deliberate in our drive to continue operational excellence. There can be a tendency toward an inverse relationship between the size of an organization and its ability to operate efficiently, creatively, and rapidly. It is important to us that we maintain our operational excellence as we grow And Patrick O'Brien, our general counsel, will now also take on the role of chief operating officer to help ensure this. I will now move on to review some of our recent progress. We view setbacks as a normal part of innovation, and if we can learn something from them, they may serve as an investment in the future. The recent progress we've made in our pulmonary platform is a good example of this and a powerful illustration of how fast Arrowhead can move. As you know, our first candidate in the clinic using the pulmonary targeted trim platform was aeroENAC for the treatment of cystic fibrosis. Last year, we decided to pause enrollment in the aeroENAC first in human clinical study as we further investigated some findings from a nonclinical toxicology study that suggested some local lung inflammation after chronic treatment at certain high doses. Many open questions remained. James will speak to what we learned in more detail later in the call, but after extensive investigation, consultation with internal and external toxicology experts, and additional studies, it appears that findings were consistent with what is called lung macrophage overload. Essentially, the volume of material, not necessarily the specific drug or target, was swamping the lung's clearance mechanisms and causing an inflammatory response. So the clear way to move forward is to understand the amount of material that triggers this phenomenon and develop more potent, longer-acting candidates to stay below the assumed cumulative dose threshold. I believe we have done that for our next generation candidates, AeroRage and AeroMuck 5AC, resulting in three important improvements. First, we think we can now achieve better knockdown with less exposure. Second, we think we can give a single dose as opposed to our previous need to dose on three consecutive days. And third, we believe we can now stretch the dose interval substantially. For example, AeroENAC was going to be dosed three times every two or three weeks And arrow rage has duration that potentially lasts multiple months after a single dose. Each of these improvements are important on their own, but together we believe they dramatically change the profile of our next generation pulmonary candidates. So where are we now? The work and lessons that went into this happened over an extended period, culminating this quarter in, this last quarter, in two important events. We held a pulmonary R&D day to go over our findings and present non-clinical data from our next generation candidates, AeroRage and AeroMuck5AC. And then shortly after, we began dosing patients in two clinical studies. As I said, I think this is a great example of what Arrowhead is capable of. We went from pausing enrollment of the AeroENAC clinical program to initiating clinical studies and dosing human subjects with next generation candidates that potentially have dramatically improved profiles in about 12 months. There was an enormous amount of work, thought, creativity, technology and innovation that enabled this result. The pulmonary trim platform is an important expansion of our technology that we expect will help a large number of patients and create a substantial amount of value. But it is just one example of how we are growing our platform. We expect many more going forward. Another set of key accomplishments during the quarter relate to execution on our later stage programs for our cardiometabolic candidates, AeroApoC3 and AeroANS3. Between the two candidates, we have five active clinical studies that range from ultra-rare disease populations to high prevalence diseases. The design and execution of clinical studies for diseases on opposite ends of the size spectrum typically have different tactics and require specialized expertise. I'm happy to report that our clinical development and clinical operations teams have been successfully running all of these studies. On the rare disease side, The Phase III Palisade study of AeroApoC3 in patients with FCS is efficiently enrolling patients, and we have worked hard during the quarter to identify and open new countries and sites that should contribute to rapid enrollment of the study. In addition, during the quarter, we initiated the Phase II Gateway study of AeroAng3 in patients with HOFH. This study is also enrolling patients efficiently, and we look forward to seeing data in the future. On the high-prevalence disease side, we have three ongoing studies. For AeroApoC3, we are running the Shasta2 Phase 2 study in patients with severe hyperglyceridemia and the Muir Phase 2 study in patients with mixed dyslipidemia. We have executed well on both studies, and we believe we are on schedule for readouts in both studies in 2023. In fact, we recently reached total planned enrollment for Muir. For AeroAng3, there is one high-prevalence disease study, the Phase II Arches II study in patients with mixed dyslipidemia. This study was fully enrolled earlier in the year and should be complete at the end of the year and enable a readout in the first half of next year. The other two accomplishments from the recent quarter that I want to highlight are related to corporate goals that aim to maximize the value of our technology over the long term. First, we announced that we broke ground on the construction of a new commercial-scale manufacturing facility and received awards of up to $18.5 million in incentives to invest in the local region and create new jobs. This is an important investment to narrow its future as a vertically integrated commercial stage Barasuba company. It helps us control the manufacturing process, both operationally and strategically, for our wholly owned programs and potentially for our partner programs in the future. It potentially reduces the cost of our clinical and commercial drug supply, and importantly, helps eliminate any future bottlenecks related to drug manufacturing. Lastly, related to corporate goals during the last quarter, we also announced that Arrowhead formed Vicerna Therapeutics, a joint venture with Bevo Capital, in which Arrowhead is a majority shareholder, to expand the reach of innovative medicines in Greater China. Arrowhead licensed four investigational RNAi therapeutics to Vicerna for cardiometabolic diseases in mainland China, Hong Kong, Macau, and Taiwan. Vivo Capital provided $60 million in initial funding to Vicerna. This transaction potentially allows us to expand our reach into geographies that are beyond our core focus while retaining a substantial economic interest. So in summary, Arrowhead had a productive quarter where we saw progress in our pipeline of industry-leading RNAi therapeutics, our wide-reaching and expanding trim technology platform, and our corporate goals. With that overview, I'd now like to turn the call over to Dr. Javier San Martin. Javier?
spk16: Thank you, Chris, and good afternoon, everyone. First, I want to highlight data on the Phase 2, 2002 study of Azircidan, formerly called ARO-AAT and TAC-999, presented in July at the ESL International Labor Congress and published simultaneously in the New England Journal of Medicine. The presentation generated significant enthusiasm within the audience, welcoming positive data to address a liver disease with no approved therapy and the validation of a New England publication. Acirciran is a potential first-in-class investigational RNAi therapy designed to reduce production of a mutant form of alpha-1 antitrypsin protein called ZAAT. as a potential treatment for the rare genetic liver disease associated with alpha-1 antidepressant deficiency. Z-AAT accumulation is believed to be the cause of progressive liver disease in patients with AAT deficiency. Reducing production of pro-inflammatory Z-AAT protein has the potential to hold the progression of liver disease and potentially allow the liver to regenerate and repair. The data from this program are exciting and encouraging. The open-label ARO-AAT 2002 phase 2 study in 16 patients with AATD liver disease suggests a strong effect and the potential to improve multiple downstream markers of liver health. Decreasing fibrosis severity of at least one stage occurred in 7 of 12 patients, or 58%, receiving the 200 mg dose, including 2 patients with cirrhosis. All patients had reduction in accumulated total mutant ZAAT in the liver with a median reduction at week 24 or 48 of 83%. Reductions in liver ZAAT concentration were also associated with histological improvement in inflammation. After treatment, all patients had a decreased histological global burden with a mean score decreasing by 69% at week 24 or 48. Higher markers of liver injury were also reduced. At baseline, mean ALT concentrations were above the upper limit of normal range in all cohorts. After treatment, ALT concentration decreased in all cohorts from week 16 through week 52. All 12 patients with ALT concentration above the upper limit of the normal range at baseline had reductions to normal level at week 52. In addition to activity and efficacy measures, safety and tolerability measures continue to be encouraged. Fasir-Sidan was generally well-tolerated in the 2002 study. Over a period of 1.5 years, there were no deaths, discontinuation of treatment with Fasir-Sidan, or dose interruptions. The most common adverse events that emerged or worsened after the first administration of Fasir-Sidan were arthralgia and transient increased concentration of low creatine kinase. There were no apparent dose-dependent increases in the frequency or severity of adverse events. So far, there have been no major pulmonary adverse events resulting in drug or trial discontinuation. Four of the six patients who entered the trial while receiving AAT augmentation therapy had a history of emphysema and non-reported exacerbation. Pacil-Ciran Phase II placebo-controlled Sequoia study has also reached the end of the treatment period. We collected the final 12-month biopsy from the final patient recently and will now be processing samples and analyzing data over the coming months. The deadline is in September to submit a laybreaker to present at the ASLD liver meeting in November. The timing will be tight to have enough data to justify a laybreaker. so it is a low probability that we will be presenting data at that congress. We should, however, have a rather complete data set on sequoia in the fourth quarter of this year, so we and our partner at Takeda will together determine the best way to communicate those results publicly. Regarding status of the Phase III study, we and Takeda are in the process of having discussions with regulators on the development path. We do not want to comment specifically on those discussions as they are ongoing. Moving on to our cardiometabolic candidates, I will provide the status of the VISTA studies of Aero-Eng3 and the Summit studies of Aero-ApoC3. The VISTA program of Aero-Eng3, our investigational medicine designed to reduce production of anti-poietin-like protein 3 as a potential treatment for patients with dyslipidemia, has two ongoing studies. The first, ARTS2 in 2004 patients with mixed dyslipidemia is fully enrolled. We anticipate that the ARTS2 will be complete around the end of 2022 and top-line data will be available to share in the first half of 2023. In addition to the planned study period, patients will be eligible to continue in an open-label extension period after completing the week 36 visits. The second active study of ARO-H3 is GATEWAY. in up to 16 subjects with homozygous familial hypercholesterolemia, or HOFH. We anticipate that this study will be fully enrolled by the end of the year, and we intend to share the data in 2023 when possible. Moving on to AeroApoC3, SAMI program, or AeroApoC3, our investigation on medicine targeting apolipoprotein C3 being studied in patients with various lipid disorders has three ongoing studies. Two Phase II studies, SHASTA-2 in patients with severe hyperpiglyceridemia or SHTG, or MUIR and MUIR in patients with mixed dyslipidemia, and the Phase III PALACE study in patients with familiar chelomic anemia syndrome or SCS. MUIR has now reached the total enrollment of 320 patients. We have a number of patients still in screening, so we will allow some additional patients to join the study but are not but are not screening any new patients. Shasta 2 has enrolled over 80% of the planned number of patients, and we anticipate full enrollment this year. This will allow for both studies to be completed in 2023. Palisades is planned to enroll approximately 72 patients with SCS. We continue to open new clinical sites around the world and enroll new patients into the study. We're still on schedule. and anticipate that Palisades will reach full enrollment in the middle of 2023, which would allow for study completion in 2024. I will now turn the call over to Dr. James Hamilton. James.
spk04: Thank you, Javier. Some updates on some of our earlier stage development programs. Let's start with the pulmonary platform. As Chris mentioned, we hosted an R&D day on our emerging pipeline of pulmonary-targeted RNAi Therapeutics and the technology platform that these candidates are built on. We have learned a great deal about the platform with details provided in the archived pulmonary R&D day webcast available on our website. In summary, we believe that we now have improved siRNA triggers with longer pharmacodynamic duration allowing less frequent dose administration which are less likely to overload lung clearance mechanisms and are less likely to induce pulmonary inflammation. This gives us increased confidence in the platform as we move forward with current and planned future clinical studies and additional toxicology studies. We also presented preclinical data on the development of our next generation pulmonary candidates, Aromuc 5AC and Arorage, which have recently begun dosing in clinical studies and Aero MMP7, which will be approaching clinical studies later this year. Aero MUC5AC is the first investigational medicine to directly silence expression of pathologic MUC5AC, a mucin protein with upregulated expression in the asthmatic airway, and potentially address mucoobstructive disease characterized by mucus hypersecretion in a fundamentally different way than current therapies. Preclinical results have shown deep silencing of up to 70 to 90% of induced MOC5AC expression in mice and primates. In a sheep model of allergic asthma, Aero MOC5AC effectively preserved airway function. AeroRage is an investigational medicine designed to reduce expression of the receptor for advanced glycation end products that aims to achieve broader anti-inflammatory effects compared to current biologics and with a more convenient inhaled mode of administration. Preclinical studies have shown that single inhaled doses of aerorage in rats and primates led to reductions of greater than 90% in lung rage mRNA and in serum S-rage protein, a circulating biomarker for rage target engagement in the lung. Chromicodynamic response appears to be highly durable, enabling bimonthly or quarterly dosing. Earlier this month, we announced that we had dosed the first subjects in Phase 1-2A clinical trials of both Aromoc5AC and Arorage. We have since completed dosing the first cohort of healthy volunteers in both studies. Both studies have three parts consisting of single ascending and multiple ascending doses in normal healthy volunteers. and multiple dose cohorts in asthma patients with dose levels selected for patient cohorts based on data from normal healthy volunteer cohorts. The third pulmonary program we discussed at the R&D day is Aero MMP7, our newest and previously undisclosed candidate designed to reduce expression of matrix metalloproteinase 7 or MMP7 as a potential treatment for idiopathic pulmonary fibrosis or IPF. MMP7 plays multiple roles in IPF pathogenesis, including promoting inflammation and aberrant epithelial repair and fibrosis. Silencing MMP7 expression in a rat IPF model reduced inflammatory cell infiltration, limited lung fibrosis, and preserved pulmonary function. We are conducting CTA-enabling work and preparation now, and we are on track to file this year to initiate first-in-human clinical studies. Our last early stage clinical program is Aero C3, our investigational RNAi therapeutic designed to reduce production of complement component three or C3 as a potential therapy for various complement mediated diseases. We are approaching the final healthy volunteer cohort in part one of a phase one two study. Data from Part 1 will inform dose selection for Part 2, which will include eligible subjects for paroxysmal nocturnal hemoglobinuria, or PNH, and complement mediated renal diseases, including IgA nephropathy and C3 glomerulopathy. We anticipate that Part 2 of the study will start before the end of the year. I will now turn the call over to Ken Muszkowski. Ken?
spk03: Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the three months ended June 30, 2022, was $72 million, or $0.68 per share, based on 105.8 million fully diluted weighted average shares outstanding. This compares with a net loss of $29.9 million, or $0.29 per share, based on 104.1 million fully diluted weighted average shares outstanding. for the three months ended June 30, 2021. Revenue for the quarter ended June 30, 2022 was $32.4 million compared to $45.9 million for the quarter ended June 30, 2021. Revenue in the current period primarily relates to our collaboration agreements with Takeda and Horizon. Revenue will be recognized as we complete our performance obligations, which include managing the ongoing AAT phase two clinical trials for Takeda and delivering a phase one ready candidate to Horizon. There remains 142.1 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over approximately two years. And there remains 13 million of revenue to be recognized for Horizon, which we anticipate will be recognized by the end of calendar 2022. Revenue in the prior period primarily related to the recognition of a portion of the milestones received from our license and collaboration agreements with Janssen and Takeda. Total operating expenses for the quarter ended June 30, 2022 were $105.3 million compared to $77.8 million for the quarter ended June 30, 2021. This increase is driven by higher employee compensation expense, including stock compensation expense, as well as higher R&D discovery expense. Net cash used by operating activities during the quarter ended June 30, 2022 was 68.9 million, compared with net cash used by operating activities of 29.6 million for the quarter ended June 30, 2021. The increase in cash used by operating activities is driven by higher expenses in research and development, and we expect our operating cash burn to be 70 to 80 million next quarter. and I will provide additional guidance during our year-end conference call. Turning to our balance sheet, our cash and investments totaled $582.4 million at June 30, 2022, compared to $613.4 million at September 30, 2021. The decrease in our cash and investments was primarily due to cash used for operating activities mostly offset by cash inflows from GSK, and the cash investment in our joint venture, Vicerna. Our common shares outstanding at June 30, 2022, were $105.8 million. That brief overview, I will now turn the call back to Chris.
spk05: Thanks, Ken. We have a large and growing pipeline of clinical drug candidates, providing us with the opportunity to help millions of patients and create a substantial amount of value. It also affords us the opportunity to regularly report clinical data so stakeholders can follow our progress. However, with the development of next generation pulmonary candidates and timing of other studies, we have been in a bit of a data desert over the last several quarters. We are now emerging from that desert. Between now and the end of next year, I expect at least 12 clinical readouts between our wholly owned and partnered programs. They include the following. One, biopsy data from the Sequoia study in AAT with Vazisaran. Two, phase 1-2 data from ARO-C3 in healthy volunteers and different patient populations. Three, phase 1-2 data from ARO-RAGE in healthy volunteers and patients. Four, phase 1-2 data from ARO-MUCC5AC in healthy volunteers and patients. Five, phase 2 data from Olpaceran in Amgen's LP little a study. Six, phase two data from the AeroAng3 Arches2 study in mixed dyslipidemia. Seven, phase two data from the AeroAng3 Gateway study in HOFH. Eight, phase two data from the AeroApoC3 Muir study in mixed dyslipidemia. Nine, phase two data from the AeroApoC3 Shasta2 study in severe hypertriglyceridemia. 10, Phase 1 data from Arrow MMP7 and Healthy Volunteers and possibly IPF patients. 11, Phase 2 data from various Janssen studies of J&J 3989 in HPV patients. And 12, Phase 1 data from Janssen's NASH study with J&J 0795. We are excited about these and other programs and look forward to updating you on our progress. Thank you for joining us today, and I would now like to open the call to your questions. Operator?
spk07: We will now begin the question and answer session. You may press star then one on your telephone keypad. If you're using a speakerphone, please pick up the handset before pressing the keys. To withdraw your question, please press star then two. For each participant, please limit yourself to one question. At this time, we will pause momentarily to assemble our roster.
spk06: Our first question comes from Luca Isi with RBC. Please go ahead.
spk12: Oh, great. Thanks so much for taking my questions. I have two quick ones. Maybe one, Javier. I mean, congrats on publishing, obviously, the New England Journal of Medicine. You know, I think the 100 milligram dose and the 200 milligram dose have essentially hyperimposable PD curves in the serum. However, the improvement in fibrosis only occurred in the high dose and not in the low dose. So just wondering what's the best way to rationalize that difference And then maybe quickly on the cash position, you're obviously still fairly well capitalized. However, your OPEX and CAPEX are both going up, so wondering how you're thinking about options to extend your runway. Thanks so much.
spk16: Thank you, Luca, for the question. This is Javier. So if you think about the 2002 study, we enrolled 12 patients in the 200 milligram dose. Four of them had a biopsy at six months and eight of them at 12 months. And we only enrolled four patients in the 100 milligram dose, and they all had a pair biopsy in between six months. With the caveat that one of the four patients, the 100 milligrams, did not have the pair biopsy, so we can't report in those patients. So we only had three patients in the 100 milligrams that had very robust effect on Z protein, ALTs, liver, C protein, globals, and inflammation, but we didn't see a change in fibrosis at that early point in those three patients. So I think it's a little bit about the small numbers. In contrast, as you said, in the 12 patients that received 200 milligrams, we saw all the improvement in the different biomarkers and parameters, but we also saw seven out of 12 improvement in fibrosis. I think the reason here is likely to be the small sample size, the variability of reading fibrosis, which is well known. And you're right that the magnitude of the PD effect is very consistent between the 100 and the 200 milligrams. But we believe that when you put all the data together, absence of any safety issue between 100 and 200, very consistent suppression of the C protein. When you look at the PK and the PD, there are small differences, but I think it favored the 200 milligram dose. So I think when you put all the information together, the reasons to see the 200 milligrams as the best dose to move forward. And as I said, the difference in fibrosis is likely to be variability in a small sample size.
spk06: And Luca, I'll take the cash question.
spk05: So, I agree. I feel comfortable with our cash position right now, in large part because We have right now six partnerships with five different companies, if I have my math right. And those partnerships are maturing. I think that we have access to a substantial amount of capital across all those partnerships over the next 12 to 24 months. So we feel good about that inflow. But also, as you know, Luca, we're really good at pushing partnerships. new drug candidates in the clinic. We've got a pipeline, a clinical pipeline right now of 10 or 11 candidates, and I think that grows to 20 in the next few years. And I think that's important ammunition to do future deals. Now, I think we'll be pretty choosy about that, and I think that ultimately the majority of our pipeline will be wholly owned and we'll commercialize ourselves, but we will have access to other non-core assets that we can partner. I would expect on average, of around a deal a year, a new deal a year, to be about the right cadence. You know, that may change from year to year, but I think on average that's probably the way to think about it. And I just think that gives us access to as much capital, you know, as we need in the near term.
spk06: Thank you so much.
spk07: Our next question comes from Mari Raycroft with Jefferies. Please go ahead.
spk14: Hi, this is Farzeen on for Maury. Thank you for taking our questions. Can you set some expectations for the Phase II AAT SQL data and the effect sizes you'd expect to achieve?
spk05: Yeah, I don't think we're going to want to get into front-running that. We haven't seen those data yet. Look, we feel... We are looking forward to seeing those data. The data so far that we've seen have been consistent, as Javier said. You know, we've seen circulating AET levels, and it's consistent, you know, across patients. You know, we've seen in a handful of patients in the open-label study, you know, a good histological response, you know, in six to 12 months. And so, we expect, you know, we're looking forward to seeing those data. I don't want to put any expectations around them, I wouldn't expect the basic story to change, and I just think my hope is that the Sequoia data just reinforced the existing story.
spk06: Okay, thank you.
spk07: Our next question comes from Ted Tenth with Piper Sandler.
spk10: Hi, everybody. Thanks so much for taking my question. So I guess picking up a little bit on the last question and, again, appreciating that, you know, we'll see what the data has to say. Walk us through sort of how you guys are seeing the potential paths forward, how you and Takeda are sort of discussing it, following the data. Thank you for AAT. Thanks, Ed. You know, I...
spk05: So look, I'm a middle child, and I like to give people what they want, but I can't give you that. You know, we are in, or Decata is in discussions with the FDA, and we're just going to have to wait to see where those go. You know, we feel comfortable that the FDA, you know, we are aligned with the FDA in appreciating the importance of this disease and the fact that there's no good treatment for it right now with liver disease, at least associated with AAT. We've got, I think, the only thing in the clinic that really offers these patients hope. And so my hope is that we can get to, you know, to alignment reasonably soon with the regulators. But I can't really give you an idea about where that's going. Now, the Sequoia data, I think, will be You know, it could be helpful because it just gives us more numbers, and hopefully we see what we've been seeing, you know, in the smaller open-label study. But, you know, that should – my hope is that that will help the discussions along. But, you know, we'll see how that goes.
spk10: Great. Thank you. Looking forward to it.
spk19: Thanks, Ted.
spk07: Our next question comes from Ellie Merrill with UBS. Please go ahead.
spk13: Hey guys, thanks for taking the question. Just on the pulmonary franchise, if I heard correctly, you completed dosing in the first cohort in Healthy Volunteers for MUX5AC and RAGE. I guess I know that we're starting with sort of single ascending dose here in Healthy Volunteers, but I guess were sort of the circulating biomarkers or measures of these protein levels taken in these Healthy Volunteers and any kind of initial data points in terms of target engagement here. And then I guess, you know, as you move into the multiple ascending dose as well as into patient dosing, I mean, even I guess early on and even just healthy than mad dosing, could we potentially get some of these biomarkers as well, just in terms of target engagement? And I guess first, if you're measuring it, but then also thinking about, you know, from our perspective where we set the timeframe under which we could potentially learn about this. Thanks.
spk05: So James, why don't you talk about what we're measuring, and then I'll address the question about information flow.
spk04: Sure. Yep. So both, you're right, we completed the first cohort for both arrow MOC5AC and arrow RAGE. Since it's an ascending, single ascending dose study, we start with the lowest dose, of course, and we measure, in the MOC5AC study, we measure sputum, MOC5AC, And then we will also in that study measure expression of MUC5AC in bronchioavial or lavage fluid. So there's not a blood biomarker for MUC5AC, but it's sputum and BAL based. And those have been drawn, but we haven't, you know, there's a lag. We haven't seen any of that yet. And similarly for RAGE, There is a blood biomarker, S-RAGE, which is drawn in all the healthy volunteer cohorts as well as in the patient cohorts. We will also look at sputum rage levels and rage in the ball fluid as well. So there's several different biomarkers that we can look at in both studies.
spk05: And regarding data flow, So my expectation is that certainly in 23, we will have results from those studies. You know, if we, you know, to be more granular, you know, are there opportunities for us to release data earlier than when the entire studies are completed? That's a possibility, but we just don't have any visibility on that right now because, you know, the – These are still ongoing, and they're still fairly early in the studies. So that's the best guidance I can give you, that I do expect full data in 23, and I just don't know about partial data upstream of that.
spk13: Got it. But I guess in terms of internally for you guys, even if these are healthy patients or healthy volunteers, you at least will, from these markers, maybe get a bit of a sense in terms of whether or not you're engaging the target, perhaps even in the near term.
spk05: Yeah, I think that's fair. I think that data from healthy volunteers will teach us a lot. As James said, we have samples. We haven't seen anything yet, so we have no data at this point. And, of course, these are very low doses, I believe, so I don't even know if we would see any knockdown at these early doses. But your point is a good one. I think that we can learn something from the healthy volunteers.
spk13: Understood. Thanks so much.
spk07: Our next question comes from Joel Beattie with Baird.
spk09: Hi, thanks for taking the question. What's the outlook currently for your platform for oncology programs?
spk05: Yeah, so I think we learned a lot this year and last year with the Arrowhead 2. As we've said in the past, I think the HIF-2 market has changed a bit, and so it didn't make sense for us to push that candidate forward. I also think that we learned a lot about about knockdown in oncology. The good news was I think we saw it, and I think we can do better. And so it's, you know, we are looking to continue to develop that platform. We have nothing in the near term. You know, don't expect anything, you know, this year in oncology, but, you know, we'll see where that goes going forward. It's not a, you know, a not a real core of ours, but we do think there is value there, and we do think that RNAi, you know, may play a role in oncology at some point, and so we're still working on it.
spk06: Okay, thank you.
spk00: You're welcome.
spk06: Our next question comes from Madhu Kumar with Goldman Sachs.
spk08: Hey, thanks for taking our questions. So, one on AAT and one on the pulmonary program. So, on AAT, I guess kind of a question we get a lot of people is, what do you think is the effective placebo rate of fibrosis improvement? And to what extent do you think you can use the fraction of patients who had a, quote, worsening of fibrosis in the Phase II open-label extension study as an effective proxy for kind of sampling variability-style placebo effects on kind of liver fibrosis improvement and worsening? And then on the pulmonary programs, we mentioned the idea of biomarker changes in healthy volunteers and in patients. I guess one question we get from people is, when do you expect to see kind of assessments of clinical benefit in the MUC5AC and RAGE programs, those kind of clinical proof of concept metrics for those pulmonary RNAi programs?
spk05: Javier, you want to address AJ?
spk16: Yes. So as you know, liver biopsies histology is very variable, particularly the fibrosis core systems, and you normally require two pathologies within the biopsies and then an adjudicator, which is what we did in both 2002 and Sequoia studies. So based on this intrinsic variability and the data from some natural history studies, about 20% of people may have a regression without any treatment, and about 20% could have, or 30% can have progression in about two to three years' time. That's what at least one relatively small study showed. When you look at NASH, the numbers are kind of similar. You see a 20% decrease without treatment. That's why sometimes it's difficult to power those studies. And I think the second part of your question had to do with how many people have an increased score in the 2002 study, and two of the 16 patients had an increase of one point. Both of them have a very significant reduction in Z protein in the liver, global burden. Actually, both of them went to zero, one of which started with nine, which is the highest score. So the drug did exactly what was designed to do across the board. Those patients decreased in inflammation, and yet they have at one point progression in fibrosis. So I think that sticks to a reality fact, which is reading liver biopsies is challenging and the consequence of that, but you need to do the appropriate study with the appropriate methodology to assist histology. And that's what we're doing.
spk04: And then on the pulmonary front, I think for MUC5AC, if you look at the, The levels of MUC5AC expression in patients in the asthmatic versus expression in a healthy volunteer, you probably need significant knockdown. So to start to see a change in phenotype based on MUC5AC knockdown, you're probably looking at 70% plus knockdown. And there's not the similar correlate for rage. Based on our animal data in the two different rodent models, Again, you need to achieve significant knockdown, a good magnitude of knockdown, so probably better than 70% to 75% knockdown, but I think the more is better for both of those.
spk08: My question is more on timing. When can we expect data to test things like force vital capacity and things in the asthma trials and the kind of mucosalillary disease trials? Yes.
spk04: Of course, we'll look at that in our current study, but that's not the focus of the current study. These are really more focused on biomarkers. So I don't know. We've talked timing on functional readouts like that.
spk05: Yeah, we have not. My expectation is that to really look at those functional changes, you'd have to rely on the phase two studies. And so I don't think you'll As James said, we'll be looking for those things, but my expectation is that we won't really see those until phase two.
spk06: Yeah, thank you very much, guys.
spk07: Our next question comes from Patrick Truffio with HC Wainwright.
spk15: Thanks. Hi. Good afternoon, and congrats on all the progress. I have a couple of follow-up questions. The first is on ARCHES II, the top line data is expected in the first half of next year. I'm wondering if you can discuss what you'd be looking for in this data and discuss the anticipated differentiation from ANG3 from buprenorphine and why we should not expect ANG3 to have a similar outcome that came from that Phase IIb translate trial.
spk16: So the first part of the question, yes, we are expecting to have the data the first half of next year. That means that we are starting to work on the next step and the end of phase two. So this will enable a phase three study. So I think I want to emphasize the relevance of this data in the first half of next year. So the comparison, I don't think, is possible with two different drugs, two different technologies. We haven't seen in our phase one study any of this finding that are not very clear yet. Jorge Mancilla- reported from from them so at this point, we have no concern with regard to seeing any unexpected safety finding will will know that very soon.
spk15: David Miller- got it and then just with the with the gateway program with hos age, the study is fully enrolled with the data to follow in 2023. I'm wondering if you can discuss the anticipated path to approval in HOFH and what you would need to demonstrate in this gateway program from safety and efficacy perspective. And is there a potential for an accelerated review? And finally, what would the potential commercialization look like in this patient population? Would you look to launch this on your own or with a partner? And just lastly, I guess, how large of an indication could this ultimately be?
spk16: Well, so HOSH is a rare condition that is a drug approved with a similar pathway or the same pathway with an antibody. We're doing our first study, proof of concept. Of course, that will be our point of reference, how we compare with the antibody to HPTL3. We know that we do have an advantage right away because the dosing will be every three or six months, who knows, subcutaneously. So we do have an advantage there. So we need to see, and we will compare that data with them and say, are we competitive to the antibody in terms of efficacy, safety, and tolerability, dose rating, and so forth. So we'll see. We're going to look at that data. As you know, the The market is relatively small. It will be competition against the antibody. And I think if we feel that we have a very good profile to compete against them, we're going to move forward. The development process or program for this indication is well established. So, you know, it would be a relatively small study, placebo control. And if we, you know, like I say, if the profile is as good as we expected and competitive to the regenerative antibody, then move forward because we think that there is a very unmet medical need and this can offer a more friendly approach to this treatment.
spk19: And also I want to say that the Gateway is not fully enrolled. So we said we were enrolling efficiently, but it's not yet fully enrolled.
spk16: Thank you by the end of the year.
spk06: Got it. Okay, that's helpful. Thank you very much.
spk07: Our next question comes from KMK. Mr. Sheridan, please go ahead.
spk11: Yes, thank you. A question about Palisade. You know, last quarter you talked about some trouble with some of the plant sites in Eastern Europe. Just wondering now, you know, what the outlook is in terms of how you're set up to enroll these patients. Again, how difficult are they to find?
spk16: Palisades. Oh, Palisades. So the only reason that we didn't have any trouble in Europe other than this is a phase three study with no phase two study. So regulatory agencies and some ERVs raised that concern and say, well, how do you know that there may be gaps in data to move from where you are to a phase three study? And we addressed all those comments and questions. And I think we're in very good shape now getting many countries around the world approved to run this study. And, you know, it's important to recognize, and we said that to regulatory agencies, that by the time that the Phase III study, the Palisade study will be done, we're going to have two relatively large Phase II studies that will be part of that regulatory process. So I think the good news is, yes, we got some pushback from regulatory agencies, and all of them so far accepted and understood the plan and the studies getting approved around the world, including Japan. But we have several meetings with them and the studies now approving final negotiation with the sites and ready to start enrollment in Japan within a month or so. So not any unexpected delay other than more regulatory work to justify that we were ready for the phase three study.
spk05: And I just want to say, to your point about sites in Eastern Europe, look, our clinical and regulatory teams have done incredible work here. We had a number of sites that were planned for Belarus, Ukraine, and Russia. And in one fell swoop, we lost all those, of course. But they've done a great job finding additional sites, and we are on track with all of those studies, thanks to their good work.
spk11: Okay, thanks.
spk07: Our next question comes from Manny Ferruvar with SVB Securities. Please go ahead.
spk18: Hey, thanks for taking the question. I want to revisit a topic that's been brought up a couple of times around the pulmonary platform. The clarity you've given around the macrophage overload is really helpful. As you pursue more effective, more potent approaches to allow a lower absolute dose, what metrics will you be tracking and what will your bar be? to disclose further evidence of macrophage activation, any additional toxicology signals that pop up as you track how effectively or ineffectively you're threading the needle on delivered dose and macrophage activation?
spk04: Yeah, I think we will run, I think we've already discussed the acute tox results at the analyst day a while back and as a reminder in the acute IND enabling or CTA enabling studies that the top dose was the no AL for both MUC5AC and for RAGE and there were no adverse findings in either of those tox studies and then we will in the near future initiate chronic tox studies as Also described during the Analyst Day event, I think we can really spread the doses out in those chronic tox studies. So just overall less exposure in those studies compared to what we did in ENAC. And then in terms of results of those studies, I don't know if we've guided on timing to disclose chronic tox study results.
spk05: And it's not our, it's not generally our, we generally don't disclose tox results. But, you know, as those come in, you know, we'll know, we'll know more about, you know, what sort of, you know, TI to expect. But, you know, we had, I think, some good slides in the pulmonary R&D day where we showed what we believe now is sort of the threshold, you know, above which we don't want to go for in terms of volume of material. And we feel good that MMP7, MUC5AC, and RAGE are substantially below that line. You know, if you look, if you compare, you know, what our expected dosing is for, for instance, MUC and RAGE, which are in the clinic now, as you know, compare that to aeroENAC, you know, not only are we, are we providing less drug, but we're also providing it, you know, less frequently. That was three consecutive days every two weeks, and now we're looking at one dose every month or less frequently and a lower dose on top of that. So we feel good that we can thread this needle. And frankly, I don't think the eye of that needle is terribly narrow. But, you know, look, we'll know more as we start to see knockdown and as we, you know, see chronic tox data.
spk06: Thanks, guys. That was really clear.
spk07: Our next question comes from Mayank Mumtani with B. Reilly FBR.
spk17: Good afternoon. Thanks for taking our question. So just a strategy question for Arrow ANG3. So will you wait for the gateway study results before determining next steps for ANG3 on the dyslipidemia indication based on ARCHES? And the reason I ask is that Lily has a similar study like Archie's listed on clinicaltrials.gov that could make it a very competitive situation now that earlier forms like the antibody or the less safe modality has cleared out. So just curious, will you wait out for your HFH results?
spk19: Yes.
spk05: Look, we have some ideas about, you know, what phase three will look like, but of course, you know, we need to see what those data look like before we design those studies. You know, we feel with respect to the competitive question, we feel good about where we sit competitively in terms of our lead with RNAi and certainly over antisense as well as antibody competitors. But anyway, I guess the short answer is, yes, we have a lot of ideas about what a phase three is going to look like, but we're not going to make any real decisions until we can sift through the data. My expectation is that, well, expectation is probably too strong a word. We're curious to see if populations, you know, present themselves as a result of this. You know, do we find certain populations that respond better than others, you know, There's just no substitute for data, so we'll wait to see that.
spk02: And I would add also that we're not going to have to wait for Gateway. So Gateway and Arches should read out right around the same time. So Gateway is an open-label study. Arches 2 is fully enrolled, and it'll complete right around the end of the year. So we should have both of those available at the same time.
spk17: Got it. Thank you. And then on ArrowRage, have you disclosed the specific dose levels you're going up to in the MADs? Because you say three times lower than ENAG, but I don't know how that cuts across absolute dose level and frequency.
spk04: I think we've disclosed the actual dose levels yet.
spk16: And then... We present the study design, so...
spk02: It showed a, there was a... I think we did. There was a slide that showed kind of the magnitude of dose levels in the tox studies, but I don't think there was, the exact doses weren't disclosed.
spk04: In any case, the dose frequency is certainly less than what we were doing with ENAC.
spk16: Yeah, remember, ENAC was day one, two, three, every two weeks. And here it's just one day every two or four weeks, right?
spk04: Yeah, either day, single dose, or day one, day 29. Day 29, so...
spk17: Very different. Okay. Thank you. And then my final question, just curious about the milestone payment structure with the Amgen LpA. Is there anything specifically structured around them initiating or along the way of executing a CV outcome study? Is there any milestone associated there?
spk05: Unfortunately, we can't give you any guidance on magnitude of milestones or milestones individual triggers, although I think it's quite common that there is a milestone payment for phase three initiations.
spk17: Got it. Looking forward to learning more about that. Thanks, Dean, for taking that question. Sure. Thank you.
spk07: Our next question comes from Prakhar Agwal. with Cantor.
spk01: Hi, thanks for taking my question. So I had two. First, a clarification on AAT. Is the biopsy sampling and the reading protocol between 202 and Phase II sequoia trial similar, or are there any changes that we should be aware of? And second, on the long-term strategy for the CV portfolio, Chris, recent CV launches continue to be slow even for companies with strong existing infrastructure in this space. Inclisaran had 35 million in sales in first half, and Novartis is still working through some of the logistical hurdles. So how much of these are these slow CV launches shaping your view about keeping the different assets in-house versus for looking for partners who already have the infrastructure? Thank you.
spk16: So with the AAT program, the biopsy assessment is identical for both studies. It's the two pathologists that were trained together to read this If they agree, that's the end of the process. If they disagree, that is a third pathology, deciding which one of the two reads is the one that is considered the final read. So that's the procedure. The process is exactly the same. The pathologies are the same. So I expect a consistent output out of this study.
spk05: And regarding our our competence or our willingness to commercialize our CV assets on our own. That hasn't changed for us. We think these are drugs. The data have been consistent. They've been good. I think there are clear places for both of these drug candidates. If you look at triglycerides, look, I think there's increasing evidence that elevated triglycerides, at least for some patients, are going to affect outcomes And there historically hasn't been a way to modulate triglycerides very much. You know, if you look at fish oils, you know, maybe 18 to maybe 30% reduction. Well, you compare that to, for instance, ApoC3, where we're seeing reductions as high as 90%, sometimes even more than that, where we really move the needle. I think these are big opportunities for us. And I think that these will help a lot of patients. And so we are as willing as ever to commercialize these on our own.
spk06: Thank you.
spk00: Welcome.
spk07: This concludes the question and answer session. I would like to turn the conference back over to Chris Anzalone for closing remarks.
spk06: Thanks, everyone, for joining today. We look forward to talking to you again next quarter. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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