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. To ask a question, simply press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We do ask that all participants limit themselves to one question and one follow-up. I will now hand the conference call over to Vince 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 2024 second quarter ended March 31, 2024. With us today for management are President and CEO, Dr. Chris Anzalone, who will provide an overview of the quarter. Dr. Bruce Gibbon, our Interim Chief Medical Scientist, who will provide an update on our cardiometabolic pipeline. Dr. James Hamilton, our Chief of Discovery and Translational Medicine, will provide an update on our earlier stage programs. And Ken Muskowski, our Chief Financial Officer, will give a review of the financials. 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. As we discussed in our last conference call, Arrowhead has reached a point where our business requires a greater degree of focus. We are in the process of building out our expertise within the cardiometabolic space and focusing more of our spend in that area. These are wholly appropriate actions because our cardiometabolic programs represent a substantial amount of potential near, mid, and long-term value. We need to ensure that they are properly resourced, both from a financial and human capital standpoint, and that they are at the center of investor analysis of our business. This is a good thing for Arrowhead. We have two late-stage drug candidates, with data across diverse populations from ultra-rare to highly prevalent, spanning over 1,000 human subjects. We see a train of potential value creation with Clozaciran and Zodaciran, and expect to file NDAs or supplements to expand those labels almost every year over the next five to six years. This is a pipeline within just two drugs, and I believe we will start unlocking value in the very near term. Further, we expect to expand our cardiometabolic reach into obesity and metabolic disease with two additional drug candidates reaching the clinic this year. The Plavaciran-Palisade Phase III study in patients with familial chylomicronemia syndrome, or FCS, is clinically complete. The last patient's last visit occurred last week. The database should be locked over the next two weeks, and I expect to disclose top-line data at our cardiometabolic webinar in June with a fuller data set hopefully presented this year at an appropriate medical conference. We believe that Plazaciran will become our first commercial product, and we are preparing for an NDA submission for use in FCS patients by the end of the year with a potential launch in 2025. To this end, our commercial preparations are well underway. We have begun building our commercial team, including people with deep expertise in cardiometabolic marketing, commercial operations, and market access. We're also in the later stages of solidifying a specialty pharma and patient hub system that will be ready to help ensure FCS patients get plazaciran soon after its anticipated approval. Beyond our commercial infrastructure, we have begun building out our medical affairs team with a focus on field support to help clinicians better understand APOC3 inhibition. Additionally, we have begun helping physicians who request early access to plazaciran to do so for appropriate FCS patients prior to approval. We are also studying platycerin in the broader, severe hypertriglyceridemia, or SHTG, population. Toward that end, we have begun screening patients in two Phase III studies, SHASTA III and SHASTA IV, and are preparing a third Phase III in SHASTA V. Of course, it is early, but our aggressive goal is to complete enrollment of those studies in 2025. Shasta 3 and Shasta 4 are 52-week studies, and Shasta 5 is an acute pancreatitis study that will follow patients until a set number of pancreatitis events is reached. Turning to Zadaciran, we submitted briefing documents including phase 3 study designs for patients with homozygous familial hypercholesterolemia, or HOFH, to the FDA and expect an end of phase 2 meeting this month. We hope to initiate phase 3 soon after we receive regulatory feedback. We have also completed our analysis of how to move forward in the large mixed dyslipidemia population with a cardiovascular outcomes trial or CBOT. We have submitted our proposal to the FDA and expect feedback over the next month, and then we'll seek input from the EMA and other regulatory authorities. We will provide detailed information about our plans, expected timing, and costs once we know we have regulatory alignment on design. Dr. Matthew Sholl, M.D.: : Plus aster and answer and are important candidates for us because they offer new and expanding commercial opportunities over the next several years and because clinical data have suggested that they have a high probability of success. Dr. Matthew Sholl, M.D.: : Bruce will talk more specifically about results, but a lot of data have been presented recently. Dr. Matthew Sholl, M.D.: : And we've been encouraged by the safety and tolerability target engagement and downstream changes in lipids and lipoproteins across multiple patient populations. As I mentioned, over 1,000 people have enrolled in a plazaciran and zodaciran clinical studies. Safety and tolerability data have given us confidence that these could be appropriate therapeutics, not only for small and medium-sized populations, but also, importantly, broad mixed dyslipidemia populations. Target engagement measured by circulating protein knockdown of ApoC3 for plazaciran and AngPTL3 for zodaciran have been impressive and consistent. The exact numbers will vary a bit depending on the study population, duration of treatment, dose level, and measurement time point. However, we are consistently seeing mean max knockdown exceeding 75 to 90% with a long duration of effect that supports a quarterly dose interval for plidacerin and zodacerin. This is what we designed the programs to achieve, so we are very encouraged to see clinical results consistent with our expectations. The downstream change in various lipids and lipoproteins have been favorable and consistent with published genetic data in APOC3 and angPTL3 deficient humans and consistent with experimental data in animals receiving APOC3 and angPTL3 inhibitors. Similar to target engagement, the exact changes varied a bit between different study populations, but generally speaking, Subjects treated with posacerin and orzodacerin showed improvements in multiple atherogenic lipid and lipoprotein levels, including remnant cholesterol, which is increasingly viewed as an important target for new therapies to address atherosclerotic cardiovascular disease, or ASCVD. Numerous epidemiologic studies have shown an association between higher triglyceride-rich proteins, or TRLs, and an increased risk of ASCVD. Despite potent LDL cholesterol-lowering therapies, residual ASCVD risk persists due in part to high levels of atherogenic TRLs. Remnant cholesterol is also believed to be a major contributor to the residual risk of atherosclerotic cardiovascular disease after LDL is well-controlled. We believe Pladaciran and Zodaciran represent significant opportunities to help a lot of patients. For all the reasons I mentioned, we are moving as quickly as possible toward treatments in FCS, HOFH, SHTG, and the very large population of patients with ASCVD due to mixed dyslipidemia. We believe we can help a large number of patients and create a substantial amount of value with plazacirin and zidacirin alone. However, it makes sense to leverage our growing cardiometabolic capabilities by expanding the vertical. We expect to introduce two new candidates into the clinic in the fourth quarter aimed at obesity and metabolic disease. These are Aero, INHBE, a liver-directed candidate targeting inhibin E, and an undisclosed candidate targeting adipose directly. We will discuss those in more depth during a focused webinar in the summer. We continue to make progress beyond the cardiometabolic vertical as well. Within pulmonary, the arrow MMP7 and arrow MUC5AC phase 1 studies continue to enroll patients, and the arrow RAGE phase 1 study is enrolling high phenopatients with moderate to severe asthma. The phenol cohorts have been slow to enroll because the high baseline phenol required of the study has led to a high screen fail rate. We believe in the candidate, and the target engagement data has been what we had hoped for, so we are not going to wait for that to read out before progressing to a phase two study. We have designed a phase two study in asthma patients and are moving toward launching that in the fourth quarter. Arrow rage tolerability has been good in the phase one study. We have seen clear evidence of substantial target engagement in the phase one, and data in animal models were very encouraging. The RAGE pathway has also generated a good amount of KOL interest, so we are excited to move forward as quickly as we can. Moving to our new programs, during the last quarter we began dosing in two new clinical programs, Aero CFV for the treatment of diseases associated with activation of the complement pathway, and Aero DM1 for the treatment of type 1 myotonic dystrophy, or DM1. These programs fit well with Aero C3 and Aero DUX4, respectively. former is enrolling the patient portion of a Phase I-II study, and together with Arrow CFB, provides a focused portfolio in complement-mediated diseases. Arrow DUX4 is enrolling FSHD patients in a Phase I-II study, and together with Arrow DM1, creates a focused skeletal muscle portfolio. We now have 14 clinical stage programs, 10 of which are wholly owned. I expect we could have 18 clinical programs by the end of the year. This is a lot, and they certainly can be difficult to track and properly value by investors. We think of our wholly owned assets in a series of verticals. As we have discussed, the cardiometabolic vertical is our primary focus. But beyond that, we have a pulmonary vertical, a complement vertical, a muscular disease vertical, and by the end of the year, a CNS vertical. We expect to partner within these four verticals in order to limit our spend and bring in capital to properly fund our cardiometabolic vertical and our other research programs, but we believe this is the way investors should look at our pipeline. Understanding and properly valuing these assets can still be difficult, so we recently announced the upcoming 2024 summer series of R&D webinars to highlight some of our work. Starting this month and continuing each month through September, we will host five webcast events. Each event will feature presentations by Arrowhead team members and external key opinion leaders who will discuss disease areas and treatment landscapes. We will talk about Arrowhead's candidates, the biological rationale and preclinical data supporting each candidate, and our clinical development strategy for each pipeline program. The series is designed to highlight important value drivers in a focused way. The summer series schedule is as follows. May 23 is muscle vertical day, where we will cover Arrow DM1 and Arrow DUX4. June 25 is Cardiometabolic Day, where we will give an overview of Bladasterin and Zodasterin data to date, including Phase III Palisades FCS data, and talk about the future of the programs and the diseases we aim to treat. July 16 is Pulmonary Day, which includes Arrow Rage, Aromluck 5AC, and Arrow MMP7. August 15 is Obesity and Metabolic Disease Day, where we will talk about Arrow INHPE and the Undisclosed Adipose Candidate. And September 25 is CNS Day, where we will highlight our central nervous system programs, including updates on the platform and on a specific undisclosed candidate's plans to enter clinical development later this year. In addition to the summer series, we also recently announced a busy month of presentations at medical and scientific meetings. These include presentations at TIDES USA, the American Thoracic Society 2024 International Conference, the International Conference on Antiviral Research, European Atherosclerosis Society Congress, and the National Lipid Association Scientific Sessions. These are all planned for May. In addition, we plan to present on many of our programs at several medical meetings throughout the year. We have a lot going on, including a lot of exciting results to talk about. During the last few months, we've also strengthened our balance sheet with two inflows. The first was out in January when we announced an equity financing with gross proceeds of $450 million. The second was just announced last week. That was a $50 million milestone payment that we received from Royalty Pharma following the completion of enrollment of the Phase III Ocean A Outcomes Trial of El Pasaran being conducted by Amgen. We originally licensed El Pas- we originally licensed El Pasaran, previously called Aero LPA to Amgen in 2016, and then monetized our future royalty stream in a transaction with Royalty Pharma in 2022. AeroEd is further eligible to receive up to an additional $375 million from Amgen and $110 million from Royalty Pharma in aggregate development, regulatory, and sales milestone payments associated with El Pasaran. This is a good example of how we use partnering and creative financing structures as important parts of our long-term financing strategy. We are always working on potential future deals, and now is no exception. We are confident that we can complete additional transactions this year to further strengthen our balance sheet to support future clinical development and commercialization of our wholly-owned programs. With that overview, I'd now like to turn the call over to Bruce. Bruce?