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spk01: Ladies and gentlemen, welcome to 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 over to Vincent Angeloni, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
spk03: Thank you, Justin. Good afternoon, everyone, and thank you for joining us today to discuss Arrowhead's results for its fiscal 2022 fiscal year, ended December 30th, 2022. With us today from 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 Chief Commercial Officer, and Patrick O'Brien, our 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 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 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 statement. For further details concerning these risks and uncertainties, please refer to our SEC filings, 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 Chris Anzalone, President and CEO of the company. Chris?
spk04: Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Quickly, Vince Exalema spoke, and he said that our fiscal fourth quarter ended December 30th. What he meant was September 30th of 2021. 2022 our fourth fiscal quarter in periods since our last call has been highly productive we've seen clear progress across across our large and balanced pipeline large because it now includes 12 drug candidates in clinical trials and balanced because it spans multiple therapeutic areas and includes six partner programs and six that are wholly owned it is a good representation of that which makes us different we are a company built on an increasingly validated technological platform applied to a large number of varied diseases across multiple organ systems, where development is uncommonly rapid from idea to the patients in need, and we use targeted, disciplined partnering to help finance development of our wholly-owned drugs. This is who we are, and these factors are not new. What is new is the growing sense of clarity we are achieving. I think that this is a recurring theme of this update. We have increased clarity as to the makeup of our multiple phase three programs, increased clarity as to how we intend to use our late stage drug candidates in different patient populations, increased clarity as to when we expect proof of concept from our earlier stage programs, increased clarity as to where we plan to go next with the expansion of our platforms into new cell types, increased clarity as to how large we think our pipeline of clinical candidates will be over the next few years, and increased clarity about how we intend to finance our growing pipeline. Let's touch on some of these. First, we expect to report on progress for the CSRN, our AAT program partnered with Takeda in the near term. We would like to report top line data from the phase two sequoia study at the same time we provide guidance on the phase three study design. Ideally, Takeda and Arrowhead would do these together. Takeda submitted a phase three protocol to the US FDA at the end of last quarter and is waiting for feedback. We expect Takeda to receive that feedback shortly if there are any comments at all. We believe the FDA's feedback from prior meetings has been appropriately incorporated into the study design, so we do not expect any major surprises. I believe we have clarity on the future development paths and timelines as well as what the Sequoia data are telling us, and we will share that as soon as we can. Second, we are gaining a clear understanding about how our cardiometabolic programs perform in different patient populations, and thus are better able to determine the positioning of each, and importantly, the development paths and studies needed to seek approval for various indications. Javier will talk about this in a moment, but the interim analyses for the Shasta 2 and Muir studies of AeroApoC3 and the Arches 2 study of AeroANS3, which we presented at AHA and at an analyst investor event shortly thereafter, gave us some critical insights that are helping to accelerate the path to phase three studies. We are working on determining the optimal paths, and we expect to have further clarity, including from multiple anticipated regulatory interactions in 2023. At present, we plan to pursue studies to enable us to treat patients with homozygous familial hypercholesterolemia, or HOFH, and heterozygous familial hypercholesterolemia, or HEFH, with AROANGE3. We hope this would enable us to pursue a staged commercial strategy whereby we could serve the small HOFH market first and grow into the HEFH market after those larger studies are complete and supplemental regulatory approval is obtained. For AeroApoC3, we are conducting studies now to enable us to treat FCS patients, followed by treating patients with severe hypertriglyceridemia, and eventually the broad population with mixed dyslipidemia. As with the HOFH to HEFH approach, we like the staged commercial strategy and hope we can serve a small FCS market rather quickly, then expand to the larger SHTG population, and eventually the even larger mixed dyslipidemia populations when those studies are complete and their respective supplemental regulatory approvals are obtained. Third, we have line of sight on timelines for initial interim clinical results for two of our pulmonary programs. James will give details on the status but Arrow RAGE and Arrow MUC5AC are progressing well, and we anticipate being able to provide interim data publicly in the first half of 2023. Should we have data that provides clinical proof of concept, I think this would be a potentially big de-risking event for the candidates and for the pulmonary platform generally. We believe we've made a lot of progress with the platform since our Generation 1 candidate, Arrow ENAC, and gaining clarity on how the Generation 2 candidates perform will be exciting. Importantly, we are performing various analyses to assess pharmacodynamics using different methods, so we are confident that we should be able to define knockdown and duration of effect at different dose levels and different time points. The arrow MMP7 Phase I started later than arrow RAGE and arrow MUC5AC, but dosing healthy volunteers should begin imminently. Fourth, our Arrow C3 program continues to progress well, and we expect to have interim knockdown and safety data in the first half of 2023. This is an important program for us because, A, it is squarely in our wheelhouse as an hepatocyte target, and B, because of the variety of opportunities we can pursue in various complement-mediated and complement-associated diseases. Fifth, we continue to expand our platform into new cell types and have made enough progress to give us line of sight as to when we can discuss one of them publicly. I expect to provide guidance about our next cell type and initial targets by the end of the first half of 2023. Our goal is to continually expand our platform to gain access to a new cell type every 18 to 24 months. So far, we are ahead of that goal, and you should be hearing more about the work that has gone into the newest cell type and encouraging preclinical results we are generating. Sixth, we have a good idea about how large we think we can grow our pipeline in the near to midterm and are announcing our 20 and 25 program. We plan to have 20 individual drug candidates in clinical trials or in the market in 2025. Between our hepatocyte directed programs, our pulmonary programs, potential skeletal muscle targeted programs, and new cell types, we believe we'll hit 20 in the year 2025 between wholly owned drug candidates and partner programs. This will be a remarkable achievement that has the potential to touch millions of lives and create substantial value. Seventh, we have better clarity about our financial resources. We currently have partnerships with five different companies, and we expect to receive milestone payments from each over the next 12 months. Further, our expanding platforms give us the ability to continue to do new business development deals that could continue to provide capital to fund our own programs. Notwithstanding access to capital via these means, we recently decided to sell the potential royalties we would receive from Amgen on future El Paso Rand sales to Royalty Pharma. We received $250 million in cash up front and up to $160 million in additional payments contingent on the achievement of certain clinical, regulatory, and sales milestones. This allows us to continue investing in our wholly owned programs, which we think are advancing rapidly toward potential commercialization, and also continue to invest in our expanding pipeline and platform technology. Our overarching goal is to bring important medicines to patients as quickly as possible. I believe there are two critical interrelated pieces to that. One, develop and commercialize some drugs ourselves, and two, substantially increase our market capitalization so we can do more of number one. That is a prize we need to keep our eye on, so every decision we consider should be made by asking ourselves if it gets us closer to or farther from that goal. In my mind, the decision to sell these future royalties clearly gets us closer to that goal. With that overview, I'd now like to turn the call over to Dr. Javier San Martín. Javier?
spk07: Thank you, Chris, and good afternoon, everyone. I want to give updates on two main areas of our late-stage development efforts. on our cardiometabolic pipeline, and second on facircidam, formerly called ERO-AAT and TAG999. Earlier this month, data was presented on all three of our cardiometabolic programs, ERO-ApoC3, ERO-AH3, and olfacidam at the American Heart Association Scientific Sessions 2022, and at a virtual analyst and investor event that we hosted a couple days after the AHA. It was a very comprehensive review of the data and our plans for the program, so if you want to hear more from us and from external key opinion leaders in the cardiometabolic space, you can listen to a replay of the webcast or view the presentation slides. Both are available on the ROH website. Today, I want to give some context about why we perform an interim analysis, highlight some of the important results, and provide guidance on where we see the progress going in the future. Chris mentioned earlier that we are gaining clarity across multiple programs, and this is a key point, especially for the cardiometabolic programs. We now have more clarity on how each of the candidates perform in various patient populations, and importantly, where we should focus late-stage development. So let me start with context on the interim analysis that led to the American Heart Association presentation. Our wholly-owned cardiometabolic candidate, 808-PC3, and ARO-H3 each target different gene based on human genetic studies, preclinical animal model, each affect lipid and lipoprotein levels in different ways. Remember that we have data from different patient population in the completed Phase I-II studies and multiple additional clinical studies going on now for each program. For ARO-ApoC-3, we have the following stats. The SHASTA-2 Phase II study in patients with severe hypertrilicidemia, the MUIR Phase II study in patients with mixed dyslipidemia, and the PALACEID Phase III in patients with familial calomicrolimia syndrome. For ARCHES III, we have the following studies, the ARCHES II Phase II study in patients with mixed dyslipidemia, and the GATEWAY Phase II in patients with homozygous familial hypercholesterolemia. We combined with the Phase I data within these studies to give us a good picture of how the different candidates may affect lipid and lipoprotein levels and that's which patient populations we should focus on for each. Therefore, the interim analysis enabled us to start the important work required to prepare for Phase III studies. This includes dose and interval, patient population selection, length of the study, modeling to estimate event rates and effect size, registration paths and Phase III designs, and where and how to execute these studies. We essentially gave ourselves a six-month head start on all that work. This is critical since we plan on having multiple NO Phase II meeting and moving forward with multiple Phase III studies over the next 12 months. Next, I want to highlight some of the key results from the Phase II study that we presented at the American Heart Association and our webcast event. AeroApoC3, AeroH3, and Olpacidin were all highly active at silencing their respective gene targets. which resulted in encouraging changes in multiple relevant lipids and lipoprotein levels. In the SHASTA-2 study with severe hyperthelicidemia, who had baseline triglycerides or TG greater than 500 milligrams per deciliter, treatment with 808 plus 3 at doses of 10 milligrams, 25 milligrams, and 50 milligrams, all durable decreased A plus 3 up to 87 percent, TGs up to 86 percent, non-HDL up to 45% and increased HDL cholesterol up to 99% through the week 16 time point. AeroAposite 3 has been well-tolered with treatment emerging adverse events reported today that reflect the underlying comorbidities and conditions of the population under study. The new study with mixed dyslipidemia who have baseline average TGE of 220 milligrams per deciliter, non-HDL, of 150, LDL cholesterol of 110, and ApoB of 95, Raman cholesterol at 46, and HDL cholesterol of 42 mcg per deciliter. Treatment with 80-ApoC-3 at doses of 10 mcg, 25 mg, and 50 mg resulted in substantial reduction of ApoC-3 of 80%, Fitch's of 65%, non-HDL cholesterol of 25%, LDL cholesterol of 20%, and ApoB 20%. Permanent cholesterol decreased by 60%, and HDL cholesterol increased by 50%. We believe these changes all represent key reduction in residual cardiovascular disease risk. In the ARCHES II study, inception with mixed dyslipidemia who had baseline median TG of 226 milligrams per deciliter, treatment with aero-H3 at dose of 50 milligrams, 100 milligrams, or 200 milligrams resulted in a substantial reduction of HPTL3 up to 71% at week 8, TGS up to 59% at week 16, and LDL cholesterol up to 32% at week 16. ROH3 was also associated with median relative reduction in liver fat fraction at week 24 of 28% for the 100 and 200 milligram dose, with no adverse event related to liver function test changes reported to date. ERO-H3 has been well-tolerated with treatment emerging adverse event reported today, consistent with those expected in this patient population and with associated underlying comorbidities. AMCHIN also presented enough treatment data from its Phase II OCEAN-A dose study of olfacidam in adults with LFA, lactoprotein little a, level greater than 150 nanomoles per liter, and a history of arteriosclerosis cardiovascular disease. These data were also published in the New England Journal of Medicine. Placebo-adjusted mean percent reduction of LP little a were 70.5% for patients receiving 10 milligrams every 12 weeks, 97.4% for patients receiving 75 milligrams every 12 weeks, 101.1% for patients receiving 225 milligrams every 12 weeks, and 100.5% for patients receiving 225 milligrams every 24 weeks. The totality of these data demonstrate the significant progress achieved in RNAi drug development, and specifically, which is a potential future treatment paradigm where ROHS proprietary treatment technology may be prominently leveraged in preventive cardiology. So what do we do with AROA-3 and AROA-H3? For AROA-H3, we're focusing on patients with hypercholesterolemia. NHPTL-3 is a key regulator of lipid and lipoprotein metabolites that inhibit lipoprotein lipase and endothelial lipase. ROH-3 has a unique mechanical function to address hypercholesterolemia distinct from other LDL cholesterol-lowering therapies. It may address unmet need in patients with specific genetic mutations, for example, patients with dysfunctional LDL receptors. It may also be added to other LDL cholesterol lowering therapies in patients not reaching goal. Patients with heterozygous familial hypercholesterolemia, or HEFH, typically have LDL cholesterol greater than 190 milligrams per deciliter and have increased rates of ASCVD. There are estimated to be around 1.4 million patients in the U.S. with HEFH. Patients with homozygous familial hypercholesterolemia, or HOFH, typically have LDL cholesterol greater than 400 milligrams per deciliter. There are around 1,200 patients with HOFH in the U.S. These are the two indications that we're focusing on initially for ARO-H3. Our plan is to have a phase two meeting in the first half of 2023 and then potentially begin phase three studies in the second half of 2023. We view ARO-H3 as having potentially broader set of indications on patient population where it might provide a benefit. It potentially addressed the risk of pancreatitis and severe hypothyroidism syndrome. Aeroeposy-3 also modulates multiple lipids and lipoproteins that contribute to the residual risk of cardiovascular in patients with mixed dyslipidemia, which has the potential to translate into a decrease in arteriosclerosis and coronary disease progression. APOC-3 is a key regulator of lipid and lipoprotein metabolites that inhibit lipoprotein lipase and mediate hepatic uptake of Riemann particles in the LPL-independent pathway. Aero-APOC-3 improves multiple lipid parameters and may provide clinical benefit in a broad population with dyslipidemias. In clinical studies, it has reduced stitches in patients with severe hypertriglyceridemia, including FCS, which has the potential to decrease the risk of acute pancreatitis. It has also reduced multiple residual cardiovascular risk factors, such as APOC3, LDL cholesterol, APOB, Redman cholesterol, and others in patients at risk of ASCVD. We're already conducting the PALACEI Phase III study of aero-APOC3 in patients with FCS, which is approximately 50% enrolled at this time. Our plan for the additional indication is to have regulatory interactions in the second half of 2023 and begin Phase III studies in the first half of 2024. These additional indications are SHTG with a prevalence of around 4 million in the U.S. and patient at risk for ASCVD despite maximally tolerated statins with a prevalence of around 12 million in the U.S. Now I want to move on to Fasir-Sidan, our investigational RNAi therapeutic designed to reduce production of a mutant from the alpha-1 antidepressant protein called ZAAT. The potential treatment for the rare genetic liver disease associated with alpha-1 antidepressant deficiency. ZAAT accumulation is believed to be the cause of progressive liver disease in patients with AAT deficiency. Production of the pro-inflammatory ZAAT protein has the potential to halt the progression of liver disease and potentially allow the liver to regenerate and repair. Data from our label, our open label phase two study were published earlier this year in the New England Journal of Medicine. Those data suggested that falcicida was very effective at reducing the production of the CAAT protein and that the livers of this patient were able to begin the process of healing. This includes breaking down and clearing the accumulated CAAT in the liver, decreasing the histology global burden, demonstrating histology improvement in inflammation, reducing in biomarkers of liver injury, and ultimately decreased fibrosis severity. These were very encouraging signs for the potential of farcicidam to help patients with AATD liver disease. We now look to the farcicidam phase 2 placebo-controlled sequoia study and to regulatory interactions on the phase 3 study. The Sequoia data are mostly in now, and we're waiting to receive feedback, if any, from the FDA on the proposed design for the Phase III studies. These are expected soon, so we and our partner at Takeda will together determine the best way to communicate this publicly. Takeda is still on schedule to begin the Phase III study in the first quarter of 2023, and we're confident that we can have an update publicly on Sequoia and guidance on the Phase III prior to that. I will now turn the call over to Dr. James Hamilton. James.
spk06: Thank you, Javier. I want to give updates on four of our earlier stage programs that include three pulmonary candidates targeting RAGE, MUC5AC, and MMP7, and on our candidate targeting complement C3. Let's start with C3. AeroC3 is an investigational RNAI therapeutic designed to reduce hepatocyte expression of complement component 3, or C3, as a potential therapy for various complement-mediated hematologic and renal diseases. We are conducting a phase 1-2 clinical study now that includes two parts. Part 1 is placebo-controlled and healthy volunteers and includes single ascending dose or SAD cohorts. and multiple ascending dose or MAD cohorts. All of the SAD and MAD cohorts are fully enrolled and participants are being followed to assess safety and tolerability, dose response based on serum C3 levels, and duration of effect at various dose levels. We are confident that we will have sufficient data in the first half of 2023 to report interim results from part one of this study. Part two is open label in eligible subjects with paroxysmal nocturnal hemoglobinuria, or PNH, and complement mediated renal diseases, including IgA nephropathy and C3 glomerulopathy. Data from part one will inform part two dose selection, which we expect to happen in the coming months, and then the patient cohorts will be open for enrollment in the first half of 2023. We are very excited about this program and believe it has the potential to address multiple serious complement-mediated or complement-associated diseases with unmet need in the renal and hematologic spaces. We know that complement C5 inhibitors are disease-modifying in conditions such as PNH and believe that proximal C3 inhibition may confer advantages over C5 blockade. For example, C5 monoclonal antibodies only block the terminal complement pathway, and many of the proximal complement actions remain intact. In addition, clinical validation exists for C3 inhibitors, and we believe RNAi-based C3 inhibition could have cleared dosing advantages over other mechanisms. Furthermore, alternative pathway inhibition is likely of key relevance for treatment of conditions such as IgA nephropathy, C3 glomerulopathy, and potentially other glomerular diseases. AeroC3 is a subcutaneously administered candidate with an expected long dosing interval of once every three months or less frequent. We think this would be much more patient-friendly than current C3 inhibitors that require a high volume infusion multiple times per week. I will now move on to our three pulmonary candidates, starting with Arrow MMP7. Arrow MMP7 is designed to reduce expression of matrix metalloproteinase 7, or MMP7, as a potential treatment for idiopathic fibrosis, or IPF. MMP7 is thought to play multiple roles in IPF pathogenesis, including promoting inflammation and aberrant epithelial repair and fibrosis. Silencing MMP7 expression in a rat IPS model reduced inflammatory cell infiltration, limited lung fibrosis, and preserved pulmonary function. In August, we filed a CTA to begin a phase 1-2 clinical study of arrow MMP7. The phase 1-2 study will be similar in design to our other first in human studies and includes a healthy volunteer portion followed by a patient portion. Now, moving on to our two other pulmonary programs, ARROW MUC5AC and ARROW RAGE, are investigational RNAi therapeutics designed to reduce production of mucin 5AC or MUC5AC and the receptor for advanced glycation end products or RAGE, respectively, as potential treatments for various nucleobstructive and inflammatory pulmonary diseases. These two programs are on largely parallel paths and at approximately the same stage. They are both in Phase 1-2 studies designed to assess safety and tolerability, pharmacokinetics, and pharmacodynamics in healthy volunteers first, and then in patients with asthma. For both programs, we are approaching full enrollment of the Healthy Volunteer SAD cohorts and are well into enrollment of the Healthy Volunteer MAD cohorts. In both the SAD and MAD, we have various methods to assess target engagement, including induced sputum, and bronchial alveolar lavage fluid. And for RAGE, we are also measuring serum S-RAGE protein, a circulating biomarker for RAGE target engagement in the lung. We anticipate that we will be able to report interim results from part one of these studies and begin part two in patients with asthma in the first half of 2023. These are potentially important new medicines that address targets that have been difficult to drug with other modalities and are designed to treat mucoobstructive and inflammatory lung diseases in fundamentally new ways. We are excited to see and share these results, and we are confident in the progress we've made on our pulmonary trim platform and these generation two candidates. I will now turn the call over to Ken Miszkowski. Ken?
spk05: Thank you, James, and good afternoon, everyone. As we reported today, our net loss for fiscal 2022 was 176.1 million, or $1.67 per share, based on 105.4 million fully diluted weighted average shares outstanding. This compares to the net loss of 140.9 million, or $1.36 per share, based on 103.7 million fully diluted weighted average shares outstanding for 2021. Revenue for fiscal 22 was 243.2 million, compared to $138.3 million for 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 includes managing the ongoing AAT Phase II clinical trials for Takeda and delivering a Phase I Ready Candidate to Horizon. There remains $128.4 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over the next two to three years. And there remains $6.7 million of revenue to be recognized for Horizon, which we anticipate will be recognized
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