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 over to, one moment, I will now hand the conference over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you. Good afternoon, everyone. And thank you for joining us today to discuss Arrowhead's results for its fiscal 2023 second quarter, ended March 31st, 2023. 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 chief of discovery and translational medicine. who will provide an update on our earlier stage programs, and Ken Miszkowski, 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 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 statements. 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. I'd now like to turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. In 2017, we introduced our proprietary TRIM platform. We believed then that it could become an industry-leading RNAi platform for hepatocyte-focused therapies, and importantly, one that could bring RNAi outside the liver. This was based entirely on our confidence in the potential of the science. and our stock was trading for less than $2. Six years later, we have 12 individual drug candidates in clinical studies targeting two different organ systems, three ongoing phase three studies, five strong partners, a healthy balance sheet, and reason to believe that the next six years will be characterized by even more rapid growth. We expect to have at least 14 drug candidates in clinical trials by the end of this year targeting three different organ systems, liver, lung, and CNS. Skeletal muscle targeting programs could grow this to 16 individual drug candidates across four different organ systems in 2023, but partnering opportunities make that a bit more difficult to predict, and I will touch on that later in the call. We are well on our way to reach our 20 and 25 goal to grow our pipeline of RNAi therapeutics to a total of 20 clinical stage or marketed products in the year 2025. I do not believe there is a company on the planet that can match this. We've made substantial progress over the past quarter and since our last call. Let's start with pulmonary. We recently disclosed early top-line data for arrow rage in normal, healthy volunteers. The data were very encouraging and indicated a high level of target gene knockdown with a long duration of effect in a well-tolerated manner. James will talk about these data in a moment, but I want to put this into context. I believe that Arrowhead is the first company to ever show RNAi-mediated target gene knockdown in the lung. Even more impressive was the magnitude of response. We didn't just get on the board. We saw up to 90% knockdown in serum after just two inhaled doses at the fourth of fifth of five planned doses. We do not yet have data from the highest single or multiple dose cohorts. It appears that the pulmonary platform is doing what it was designed to do, and arrow rage appears to be highly potent. I expect the durability to enable monthly or less frequent dosing. We've often said that clinical validation of the lung platform could mark the beginning of a second rapid wave of growth for our company. Cells don't care what the sequence of an RNAi drug is. Once we find that reducing expression of a specific target gene can be done in a well-tolerated manner, we have a high degree of confidence we can replicate it with any number of new gene targets, much as we have done in the liver. That is where we may be with the pulmonary franchise. I think the data we reported and the additional data we expect to present at the R&D day on June 1st represent the initial clinical validation we were hoping for. This is a big deal. I fully expect that in the near to midterm, we will have several potentially important new drug candidates targeting the lung that could address grinding unmet medical needs. Aromux 5AC will be our next pulmonary data set, and I expect that we will have some normal healthy volunteer data by the R&D day. These two programs continue to move forward and have both progressed into Part 2 of the Phase 1-2 studies where asthma patients are treated. We hope to have some data from the patient portion of these studies by the end of the year. Rounding out our current pulmonary pipeline is Arrow MMP7. In the last quarter, we initiated a Phase 1-2 study for the treatment of idiopathic pulmonary fibrosis, and we are currently dosing normal healthy volunteers. Where do we go next? The central nervous system. There are a number of untreatable and poorly treated CNS conditions and many genes that could serve as powerful targets for RNAi therapeutics. We have spent a substantial amount of time developing a CNS-focused TRMM platform and are just about ready to bring our first drug candidate to the clinic. As we announced a couple weeks back, AROSOD1 is our first CNS-targeted drug candidate to be nominated. It will be investigated as a potential treatment for patients with ALS caused by SOD1 mutations. We have already completed disease model work and CTA-enabling toxicology studies and are now on track to file a CTA next quarter. You will hear more about the platform and the candidates at the June 1st Analyst Day, and we see these as powerful tools for a new set of patients we seek to serve. Importantly, as with liver, pulmonary, and skeletal muscle delivery, we expect to follow AROSOD1 with several additional drug candidates. In addition, we have made impressive progress on different modes of administration, and while we are not quite there yet, we believe we are approaching the day where we may administer RNAi CNS drug candidates systemically to cross the blood-brain barrier. This would be a truly disruptive leap forward, and our data suggests that we are close. We look forward to discussing this as well at the analyst day. We have said in the past that we are committed to bringing RNAi to where unmet medical need is, and this means constantly expanding trim. We believe we can address a new cell type every 18 to 24 months, and while our CNS franchise meets this, it is not the only new organ system we are exploring. I believe we can now also deliver to adipose tissue and have demonstrated in non-human primates target gene silencing of greater than 90% with over six months of duration after a single subcutaneous injection using what we believe are clinically relevant dose levels. Adipose tissue is the largest endocrine organ in the body, and we believe there are many targets to address and many potential patients to help. You will hear more about this new platform next month at the analyst day. Let's now turn to our more established clinical programs. We've shared some early data from the Phase 1-2 study of ARROW-C3 for complement-mediated diseases, and they are compelling. We are seeing deep and durable knockdown in healthy volunteers and have progressed to the patient portion of the study. We also shared liver fat data that Janssen generated in a phase one, two study of arrow PNPLA3 for NASH in patients with PNPLA3 mutations. Those two were quite encouraging and demonstrated deep reductions in liver fat after only a single dose of arrow PNPLA3. We plan to move that into a multi-dose phase two study in NASH patients late this year. Moving on to our later stage pipeline, we continue to enroll patients in the phase three Palisade study of AeroApoC3 in patients with familial chylomicronemia syndrome, or FCS, and expect to meet our enrollment goal of 72 patients tomorrow. There are also some additional patients that have passed screening and who will likely be randomized over the next two weeks. At that point, enrollment will be complete, and I suspect that we will have closer to 80 patients in the study. We also received fast track designation from the FDA, for AeroApoC3 for reducing triglycerides in adult patients with FCS, which will be helpful as we advance the program rapidly. Javier will talk about this in a moment, but I expect this to be our first drug to complete a phase three study, and if efficacy and safety are established, could be the first NDA that we file. This could be next year, and it would represent an important step for us. Of course, that is not the only population of patients we intend to treat with AeroApoC3. Rather, I expect us to take steps toward pivotal studies in patients with severe hypercholesterolemia and those with mixed dyslipidemia later this year. The AROANGE-3 Phase II study in mixed dyslipidemia patients is complete, as is the Phase II study in patients with homozygous familial hypercholesterolemia, or HOFH. I expect that both of these will move toward Phase III studies later this year. Both AeroAng3 and AeroApoC3 appear to be potentially powerful drug candidates. We have included nearly 900 patients in the basket of Phase II and Phase III studies of AeroAng3 and AeroApoC3 over the past couple of years and continue to be encouraged by the drug candidates' activity and safety profiles. I believe that both of these will ultimately be important drugs for many patients. Also during the quarter, we announced that our partner, Takeda, had treated the first patient in the Phase III Redwood study of Azirciran being investigated as a potential treatment for alpha-1 antitrypsin deficiency liver disease. This is the third TRIM-enabled candidate to reach a Phase III setting, which earned Arrowhead a $40 million milestone payment. We also received a $30 million milestone payment from GSK after the start of GSK's Phase IIb trial of GSK4532990, formerly called ArrowHSD, an investigational RNAi therapeutic for the treatment of patients with NASH. These milestone payments are helpful for our balance sheet, but also represent two more important things. First, they are a confirmation that our strategy to have a healthy mix of both wholly owned and partner programs is playing out as intended. And second, they indicate that important new medicines that Arrowhead discovered are getting closer to the patients who need them. Before I hand off to Javier, let me say a few words about the Skeletal Muscle Franchise and Dux4, I'm sorry, and Arrow Dux4 specifically. We completed everything required for a CTA, including regulatory filing preparation, acute and even chronic GLP toxicology studies. We are prepared to file the CTA and begin a Phase I and II study, but several companies have expressed interest in potentially partnering on the development of AeroDux4 and potentially our next skeletal muscle targeted drug candidate that will be CTA ready in Q4. As such, we paused filing while we explore these options. course I do not know if any of these will translate into license agreements and partnerships but I expect we will either complete a deal or move forward with the arrow ducks for clinical program over the next couple of months arrowhead is executed at a very high level our platform is expanding into new areas our early pipeline is generating impressive results our mid and later stage pipeline are giving us line of sight to when continue to bear fruit. With that overview, I'd now like to turn the call over to Dr. Javier San Marquis. Javier?