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

Good afternoon. Thank you for joining us today. Bruce Given, 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 commercialization activities. Dr. James Hamilton, Chief of Discovery and Translational Medicine, who will discuss our earlier stage development programs. And Ken Muskowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to questions. 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 S&P 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. Chris?

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Earlier today, we announced that the license and collaboration agreement with Sarepta Therapeutics is closed. Arrowhead expects to receive a $500 million upfront payment in the next 10 days and has already received $325 million through the purchase by Sarepta of Arrowhead common stock priced at $27.25 per share. Arrowhead will also receive $250 million to be paid in annual installments of $50 million over five years and has the potential to receive an additional $300 million in near-term payments associated with the continued enrollment of a Phase 1-2 study of Arrow DM-1, which we are on track to achieve during the next 12 months. Taken together, this adds up to $1.375 billion in cash payments. We are also eligible to receive development milestone payments of between $110 million and $410 million per program and sales milestone payments between $500 million and $700 million per program. The total potential value of this deal, including upfront payments, equity investments, and potential milestone payments, exceeds $11 billion. On top of that, we are also eligible to receive tiered royalties on commercial sales. This was clearly a big deal and a critical step for Arrowhead to bring balance back to our business model, which in part relies on partnering non-core assets to provide capital for us to develop and commercialize our own wholly owned assets. In addition to the substantial immediate capital infusion, the deal also accomplishes a few equally important goals. One, brings in a partner with extensive development, regulatory, and commercial expertise for development of drugs they have in-licensed. Two, increases Arrowhead's focus in the cardiometabolic space. Three, reduces the forward growth in our R&D expenses as Sarepta assumes clinical development responsibilities for multiple programs. And four, provides the potential for substantial downstream non-dilutive capital as milestones and ultimately royalties are earned. We are now funded into 2028 and potentially through multiple commercial launches by Arrowhead and our partners. We believe we are now well positioned for growth in 2025 and beyond. We see three primary value drivers feeling this growth from our internal development activities in the near term. These are Plazasaran, Obesity, and CNS. Let's begin with Plazasaran. We expect our first commercial launch of Blizasteran to drive substantial growth. Pending positive FDA review and approval, launch could take place late this year. We see the value proposition of Blizasteran in FCS as quite clear and a substantial differentiation from any other available therapy. We think the magnitude and consistency of triglyceride lowering, the potential ability to get patients to triglyceride goal, convenient quarterly dosing schedule, and well-tolerated safety profile simply make Plozaciran a very difficult drug candidate to compete against. But this is just the first step. We are also confident that our current Phase III studies, Shasta III, IV, and V, have the potential to show similar differentiation and value in the much larger severe hyperglyceridemia, or SHTG, population, and we believe this represents an attractive and underappreciated commercial opportunity. We are now on pace to complete enrollment for the registrational Shasta III, Shasta IV, a mere three studies this year, which would enable study completion in 2026 and a subsequent SNDA filing. That would substantially broaden the reach of Plazastran and provide a large opportunity for growth. As we have said in the past, we believe Plazastran has the potential to be a $2 to $3 billion per year drug in the SHTG market alone. Turning to obesity, we believe our two early-stage programs, Arrow INHBE and Arrow ALK7, represent high-value opportunities near and midterm data readouts that can provide more clarity on where they may fit in the obesity and metabolic treatment paradigm. James will talk about the status of the programs in a moment, but we see the targets and pathways as very promising. Both programs are supported by published human genetic studies, and the preclinical data have demonstrated dramatic results with the potential to fill gaps in the current standard of care. The possibility of long-acting agents that spare muscle mass and enable visceral fat loss without dependence on caloric restriction is exciting indeed. It appears that Arrowhead is the first company to start clinical studies against the INHB target and may currently be the only company able to address the ALK7 target, which utilizes a new version of our TRMM platform capable of delivering to adipocytes. The third area that we see driving near-term growth is our emerging CNS pipeline, including the new TRMM platform, which in animal models appears capable of delivering siRNA across the blood-brain barrier, including deep brain distribution using subcutaneous injection. Near-term clinical proof of concept would truly be disruptive, and we think would open the door to treating many millions of patients without adequate options. Our initial efforts with this platform addressed Huntington's, Alzheimer's, and Parkinson's disease, all devastating conditions that lack good treatment options. We believe that HTT, MAPT, and alpha-synuclein are the most validated targets in Huntington's, Alzheimer's, and Parkinson's, respectively. And these are the targets we are addressing with aero-HTT, aero-MAPT, and aero-SNCA, respectively. Our preclinical data in non-human primates have been very compelling, and we are now focused on completing IND slash CTA enabling studies and GMP manufacturing to support early clinical trials. We anticipate having CTAs for Arrow HTT and Arrow MAPT toward the end of this year and for Arrow SNCA in early 2026. Sarepta has the right to take HTT forward, and we are currently focused on keeping MAPT wholly owned. We have not made a decision yet on partnering versus retaining Arrow SNCA. As I mentioned, we believe the triumvirate of Plazaciran, Obesity, and CNS will be our primary near-term value drivers. It is also the way investors should think about our focus. We are building a growing cardiometabolic pipeline, which includes obesity, and we will see where the new CNS platform takes us as clinical data come in. In addition to Zodaciran, Arrow-ALK7, and Arrow-INHPE, our cardiometabolic franchise includes Zodaciran, our AngPTL3 targeting drug candidate. We expect to begin a Phase III study in HOFH next quarter with Zodaciran. We have a large amount of clinical data with this candidate and feel confident that it could be an effective medicine with an attractive dosing schedule in this population. This would be a relatively simple addition to our FCS and SHTG sales representatives' bags, so the incremental commercial costs associated with this additional potential product are expected to be minimal. The phase three study will be small, and this is a good use of fairly modest resources for us. Where else can we go in cardiometabolic? As I mentioned, AeroAlk 7 is important not only because of the compelling target to treat obesity, but also as a proof of concept that we can address adipocytes. Adipose is the largest endocrine organ in the body and, as such, is expected to be a rich environment for cardiometabolic and obesity targets. We expect to build this out. Similarly, we believe the initial candidates built on our new CNS platform are important because of the neurological targets they address, representing some of the most challenging, poorly treated public health crises remaining, and also because they offer the possibility of disruptive clinical proof of concept. We also see important opportunities to develop additional obesity candidates based on new CNS targets. Remember that RNAi is a rifle shot, and as our understanding of obesity increases, we see a role for highly specific intervention that could only be practical with systemic delivery. We believe that this has the possibility to treat difficult diseases with reduced risk of safety and tolerability challenges that have led to so much disappointment in the CNS drug development space. This year, we also plan to expand our cardiometabolic presence with a CTA for our first dimer. It is designed to silence expression of both APOC3 and PCSK9, and we hope it will combine the triglyceride lowering qualities of Plozaciran with the LDL-C lowering properties of other PCSK9 inhibitors. With this focus on cardiometabolic and a wait and see with CNS, we have a number of programs that are non-core. These are potential partnering opportunities and could bring additional immediate and long-term capital. Janssen generated compelling clinical data with Aero PMPLA-3 and addressing a genetically defined MASH population that could number in the 10 million persons range in the major pharmaceutical markets could be attractive to the right company. This is a program for which we will seek a partner. We have learned much about our pulmonary platform through the various clinical programs. It appears to be well-tolerated and quite effective at delivering to the deep lungs. It is our intention to find a good partner to help identify new deep lung targets and develop a suite of candidates. Similarly, we have been very impressed with knockdown data coming out of the AeroRage clinical studies, but given the complexity and expense associated with developing this as an asthma and or COPD drug, we will seek a partner for Phase II and beyond. Clinical data from both AeroC3 and AeroCFB have been quite good, and both candidates appear to do what they are designed to do. there are clear markets one or both could address including C3 glomerulopathy, IgA nephropathy, and certain lupus populations. We would like to find the right partners to develop these candidates. This is where we are now and what we see as key growth drivers for the future. Let's review how we got here and a few key accomplishments from the quarter and since our last earnings call. First and more importantly, the U.S. FDA accepted the new drug application for investigational plasaciran for the treatment of familial colomyconemia syndrome. This is our first NDA filing, which is a key milestone for Arrowhead, and we are pleased that it was accepted for filing. The FDA provided a PDUFA action date of November 18, 2025, and indicated it is not currently planning to hold an advisory committee meeting. We now know the potential launch date pending FDA review and approval, so we continue our work to be ready for an efficient launch on day one. Andy will talk about the work in a moment. Sticking with Vasaran, in November, we announced new results from the Phase III Palisade study and the open-label extension from our Phase II Muir and Shasta II studies. These data were presented in two oral presentations at the American Heart Association Scientific Sessions 2024, and Palisade data were simultaneously published in the AHA Journal Circulations. The data continued to be promising across studies, across the spectrum of triglyceride disorders, and after short and long-term follow-up. In addition, plazasterine has been overall generally well-tolerated to date. During the quarter, we also initiated a Phase 1-2 clinical trial of our first obesity candidate, Aero-INHBE, and recently received regulatory clearance in New Zealand to initiate a clinical study of our second obesity candidate, Aero-ALK7. As I mentioned, these programs represent potential drivers for growth for Arrowhead, so we are excited to get both moving into and through early clinical studies. Lastly, we presented interim healthy volunteer results from a Phase 1-2 clinical study of Arrow CFB for the treatment of complement-mediated diseases. Data have been compelling so far, and we anticipate additional data readouts later this year. With that overview, I'd now like to turn the call over to Dr. Bruce Gibbon. Bruce?