Arrowhead Pharmaceuticals, Inc.

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 Vince Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you. And good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2024, third quarter, ended June 30, 2024. With us today for management are President and CEO, Dr. Chris Anzalone, who will provide an overview of the quarter, Dr. Bruce Gibbon, Interim Chief Medical Scientist, who will provide an update on our cardiometabolic pipeline, Andy Davis, Senior Vice President and Head of Global Cardiometabolic Franchise, who will provide an update on commercial activities, and Ken Muskowski, Chief Financial Officer, who will give a review of the financials. Dr. James Hamilton, Chief of Discovery and Translational Medicine, and Patrick O'Brien, COO and General Counsel, will also 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. Thank you for joining us today. Arrowhead has spent a substantial amount of time building a scalable platform on which a large number of diverse and innovative new medicines have been and will continue to be built. This is the basis of our 20 and 25 initiative where we expect to grow our pipeline to at least 20 clinical stage or marketed products by next year. Think about what that means for any company, much less one of our size. This initiative represents our commitment to reduce the overall risk profile of the company while expanding our upside potential and this is important for our long-term value creation. In the short term, however, we need to balance our platform development work with intense focus on bringing our first wholly owned drug candidate to market as quickly and efficiently as possible. We expect that candidate will be plazaciran, and we expect the initial launch to be next year if approved for use in familial colomicronemia syndrome, or FCS. We're working hard to ensure that plazaciran moves rapidly through regulatory NDA and MA filings, or FCS, while executing phase three clinical studies for SHTG, the second potential indication, and our cardiovascular outcomes trial, or CBOT, for mixed hyperlipidemia, the third potential indication. We believe that plazaciran represents a pipeline within a single drug, given the multiple patient populations we can address with it. Bruce will talk about the progress in this program in a moment. We are currently building out our commercial infrastructure to enable an initial launch in 2025 and then scale to support progressively larger patient populations over the coming years. Andy will talk about where we are with this process in a moment. On September 1, 1987, the first statin was approved by the FDA. This event changed the world because it ushered in an era during which physicians would appreciate the risks associated with high LDL cholesterol, and importantly, would have the tools to lower it. It feels to us like we are at a similar point with triglycerides, with a few notable differences. First, we have the luxury of being able to grow our way into a large market. We expect to begin commercializing plazasterin in a small FCS market, then grow into the large SHTG market around 2027, and ultimately serve the very large mixed hyperlipidemia market after a C-BOT is complete. Second, we feel like we are virtually alone in our ability to drastically lower triglycerides and therefore serve these markets appropriately. While there have been eight FDA-approved statins to compete to compete to lower LDL, our data suggests to us that there is simply no other near-term therapy that can match Pladaciran's activity. If triglycerides are bad actors, wouldn't patients and physicians want to lower them as much as possible? We believe they will. This is a big commercial opportunity, and we believe Arrowhead has the most promising medicine that is poised to make a big impact over the coming years. Before discussing other progress we've made recently, I want to talk about the announcement we made this afternoon. I think it's clear that we have dramatic upside opportunities in Plaza Saran in the near term and in multiple other programs over the medium and long term. What was less clear to investors was how we would finance these development programs until we get to a point where commercial revenue becomes a significant source of capital and ultimately brings us to cash flow positive position. To that end, today we announced a transaction with Sixth Street that provides an immediate and meaningful strengthening of our balance sheet with long-term, low-cost, non-dilutive capital to fund innovative, I'm sorry, to fund innovation and growth opportunities across Arrowhead's pipeline. The $500 million senior secured credit facility includes $400 million funded at close with an additional $100 million available at Arrowhead's option subject to mutual agreement between 6th Street and Arrowhead during the seven-year term of the agreement. This is debt, but the risk-sharing structure is very attractive to us. There are no scheduled amortization payments during this term, and no scheduled cash pay coupon interest payments. In addition, it has an attractive seven year term during which we hope to be building our commercial revenue substantially. It has other risk sharing characteristics where payments are to be made to partially repay loans under the credit facility with a portion of the proceeds from certain transactions such as future inflows from partnerships and collaborations and commercial revenue. So we don't really have cash outflow obligations unless we have cash inflows from other sources. This deal makes a lot of sense for us, and the great team at Sixth Street has been creative in building a custom-structured product that is appropriate for Arrowhead. This growth capital comes at a perfect time. During the quarter, we also announced 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 Opasaran being conducted by Amgen. These are important steps to build our balance sheet, but not the last. We view our capital needs through the lens of Pladasteran development and see the potential for significant revenues coming out of the SHTG market. As such, we want to ensure that we have a financial bridge to that market, which we believe we could launch into in 2027. We have many tools to fund operations over those three years, including potential milestone payments from our existing four partnerships, new partnerships and license agreements, possible financing in return for capped royalties on plidaster end sales, and revenue from commercializing into the FCS market, which we expect to begin next year. Before turning the call over to Bruce to discuss the Pladasteran clinical programs and data, I want to review a few other key accomplishments from the recent period. First, we announced top-line results from the pivotal Phase III Palisade study of Pladasteran in patients with FCS. The study met its primary endpoint and all key secondary endpoints. We see these data as best in class. This is Arrowhead's first therapy to show clinical efficacy in a Phase III study, which represents validation of all the hard work from so many talented Arrowhead employees our collaborators, and the FCS community over the years. Also during the quarter, we presented new interim clinical data on AeroRage, our investigational RNAi-based medicine for the treatment of inflammatory lung diseases, such as asthma, at the American Thoracic Society 2024 International Conference. These were important data as they represent not only translation of preclinical data to clinical data in normal healthy volunteers, but also to an asthma patient population. We are currently working on the design of a phase two study of arrow rage. Turning to the earlier side of our pipeline, we presented preclinical data on arrow INHBE at the American Diabetes Association, or ADA, 84th Scientific Sessions. INHBE is an investigational RNAi-based medicine that we are studying for the treatment of obesity and metabolic diseases. In pharmacological studies in obese and diabetic mouse models, INHPE siRNA administration resulted in multiple promising findings, including the following, 95% reduction in INHPE mRNA expression, 19% suppression of body weight compared to saline controls, 26% loss of fat mass, and importantly, preservation of lean mass. Our preclinical data presented at ADA suggests that INHPE reduction with siRNA is a promising new approach to address obesity and metabolic diseases, and we think support advancing arrow INHPE into clinical trials. We'll be discussing these data and also announcing a new program that directly targets adipose tissue next week at our R&D webinar on obesity and metabolic diseases. These are exciting additions indeed to our cardiometabolic franchise. Please note the new date of this event is August 14. It was originally planned for August 15, but the date was changed to accommodate the schedule of an external speaker who will be joining us. Be sure to listen in as these early stage programs in our cardiometabolic pipeline are particularly interesting and fit well with our growing development and commercial presence in the space. Lastly, since we have so much going on in our broad pipeline, during the quarter we launched the 2024 summer series of R&D webinars to highlight some of our work. Each month, starting in May and ending in September, we highlight different therapeutic areas and programs in our pipeline. We have now completed webinars on our muscle programs, our late-stage cardiometabolic programs, and our pulmonary programs. As I mentioned, next week on August 14, we will cover our obesity and metabolic programs. And in September, we will cover our CNS programs, including updates on the delivery platforms and on undisclosed candidates planned to enter clinical development this year. Clearly, there's a lot going on and a lot to be excited about at Arrowhead. With that overview, I'd now like to turn the call over to Bruce. Bruce?