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

Thank you.

Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2025 third quarter ended June 30, 2025. With us today for management are President and CEO, Dr. Chris Anzalone, who will provide an overview. Dr. Bruce Gibbon, Interim Chief Medical Scientist, who will provide an update on late clinical and regulatory. Andy Davis, Senior Vice President and Head of the Global Cardiometabolic Franchise, who will provide an update on commercialization activities. Dr. James Hamilton, Chief Medical Officer and Head of R&D, who will discuss our earlier stage development programs. and Dan Appel, Chief Financial Officer, who will give a review of the financials. Following management's prepared remarks, we will open the call to questions. Before we begin, I would like to remind you the 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. Before discussing the progress we've made over the past quarter, I'd like to address questions surrounding our partnership with Sarepta Therapeutics. Sarepta has recently experienced high-profile setbacks in products and programs that are unrelated to those licensed from Arrowhead. Nevertheless, the situation has negatively affected our stock price, so I'd like to talk about what we think is important from an Arrowhead shareholder perspective. Sarepta recently announced a strategic restructuring plan that includes cost-cutting measures and a pipeline review that prioritizes funding, development, and commercialization of the programs the company can license from Arrowhead. Sarepta management has clearly stated that it believes this represents the future of the company, and this gives us confidence that Sarepta will continue to meet its financial, development, and commercial obligations under the agreement. The collaboration is continuing to operate as expected, which is, of course, a good thing for Arrowhead. It represents a source of capital to fund internal programs, platforms, and commercial build-out while ensuring the assets licensed to Sarepta are developed and commercialized. Should Sarepta fail to meet its obligations, the agreement has clear termination provisions that in our view would cause potentially valuable assets and associated intellectual property to be returned to Arrowhead without Arrowhead having to repay any of the capital we have received from Sarepta. That would also be an acceptable outcome. Let's now move on to our progress in the recent period. The biotech market has been challenging over the past several years, but we have no control over the broader sentiments. What we can control is our drive to serve patients and create shareholder value. We view these broadly as three interrelated mandates. To create value, to create novel medicines capable of real impacts on human health, to generate the capital to fund development of them, and to build an engine to drive the growth of both. We made important progress in all these areas during the recent period. Let's begin with development. This is clearly led by Pledacere. We continue to have productive interactions with regulators in the U.S. and Europe about our market authorization applications for the treatment of SDS, and we look forward to our November 18 U.S. producer date. We are also on track with commercial build-out, and our complete team is nearly assembled to support an SDS launch. Further, we achieved full enrollment in SHASTA-3, SHASTA-4, and MIRA-3, Arrowhead's Phase III studies designed to support regulatory submissions for clozacirin in the treatment of severe hyperglycerinemia, or SHTG. These studies enrolled approximately 2,200 patients in 24 countries in a very short period of time. The primary endpoint is focused on triglyceride reduction at 12 months, so with full enrollment reached in June 2025, we are on track for study completion by mid-2026. Zidasteran, Arrowhead's candidate designed to reduce the compression of ANG-PTL3, is being developed as a potential treatment for homozygous familial hypocholesterolemia, or HOFH, a rare genetic condition that leads to severely elevated LDL cholesterol and early-onset cardiovascular disease. We initiated the Yosemite Phase III study and enrolled the first patients in July. Approximately 60 subjects over the age of 12 will be randomized to receive four quarterly doses of 200 milligrams of Zidasteran or placebo. The primary endpoint of Yosemite is the percent change in fasting LDL cholesterol from baseline to month 12. We think that given our Phase 2 data, this feels like a relatively low-risk Phase 3, potentially enabling a commercial opportunity that overlays well with the team wearability for cladesserin. Therefore, with a relatively small investment in a one-year, 60-subject Phase 3 study, we see an opportunity to extract more value from the commercial infrastructure we are already building. Beyond Valdaceran and Zodaceran, there are two additional investigational RNAi-based candidates developed by Arrowhead that are currently in late-stage pivotal studies. Vazirceran, being developed for Alpha-1 antitrypsin liver disease, is partnered with Takaia. Arrowhead retains 50-50 profit share in the U.S., 20-25% royalties outside the U.S., and up to $527.5 million of remaining regulatory and commercial milestones. SCADA has guided that its Phase III study could be fully enrolled this year, and the study has a primary endpoint at two years. While PasserN, being developed for ASCVD, is licensed to Amgen, which announced that its Phase III cardiovascular outcomes trial was fully enrolled in the first half of 2024. We are eligible for up to $485 million of remaining milestones related to this program. I highlight these four late-stage drug candidates because we expect them to be substantial value drivers in the near to mid-term. They also set the possibility of multiple launches between November 2025 and the end of 2028. As we discussed in the past, Pledasteran and our later stage drug candidates together form the basis of our near-term value proposition. But these are enhanced by several programs underneath them, all of which made good progress in the recent period. Broadening out, the cardiometabolic franchise, are our first two obesity candidates, Aero-INHBE and Aero-ALK7. Aero-INHBE began a Phase 1-2 study early in the year, and we recently announced that we dosed the first subject in a Phase 1-2 clinical trial of Aero-ALK7, which we believe is the first investigational RNAi therapeutic to enter clinical studies targeting adipose tissue. We expect to have initial early datasets for both candidates at the end of the year. Expanding the cardiometabolic franchise, we expect to reach the clinic this year for what we believe will be the first RNAi dimer in clinical studies. It is designed to reduce expression of both PCSK9 and APOC3 and could be a powerful agent in the treatment of ASCVD in patients with mixed hyperlipidemia. There is substantial unmet medical need in this large patient population, and we should have a good idea how well this drug candidate lowered LDL-C and triglycerides in 2026. We continue to make good progress in manufacturing, toxicology studies, and clinical trial planning, and we are on track to file a CTA in the coming months. Our Virginian systemically delivered CNS franchise is also a potential near-to-mid-term value driver. Should this platform translate from primates to humans, we think it would represent a transformational leap forward in CNS therapy. our wholly-owned candidates against Alzheimer's disease and various . We are hopeful that we can achieve initial proof of concept with this platform and candidates as early as late 2026. Beyond these, we have a wealth of other clinical stage programs to drive longer-term value and service sources of capital through business development. In fact, we are on track to meet our 20 and 25 initiative, whereby we would have 20 individual drawn candidates in clinical studies or at market by the end of 2025. Nine of these are partnered. The 11 wholly owned clinical candidates serve as potential partnering targets and provide value redundancy for our other programs, and we expect several data readouts through the end of the year. Together, these give us tremendous amounts of ammunition to create value. This brings us to the second important component of building durable value, an adequate source of financing independent of the capital markets. We currently have a strong balance sheet relative to our needs over the next few years, In addition, we have made important progress sourcing new capital in the recent period. We recently announced that our Bicernus Therapeutics majority-owned subsidiary signed an asset purchase agreement whereby Sanofi will acquire rights to develop and commercialize Clodaciran as a potential treatment for FCS and SHTG in Greater China. Vicerna will receive an upfront payment of $130 million and be eligible to receive milestone payments of up to $265 million upon approval of Flizasterin in FCS and FHTG in mainland China. Arrowhead is further eligible to receive royalties on net commercial product sales in greater China as part of the Arrowhead Vicerna license, which was assigned in part to Senobi. When we co-founded Vicerna in 2022, We saw Greater China as an important but undervalued potential future market for multiple programs in AeroEd's pipeline. We licensed Chinese rights for Cladoceran, Zodaceran, and AeroHSD to Vicerda, which received outside funding to support developments. Sanofi has a strong presence in China and is well-positioned to assume commercialization of Cladoceran should it be approved by Chinese regulatory authorities. We have not used any AeroEd funds to advance China-specific development or regulatory activities, and upon closing, we will own approximately 56% of BICERN. There are tax considerations and other costs, but we ultimately expect to realize a sizable amount from the steel. We hope that over time, we may monetize Chinese rights to Zodaciran and AeroHSC in a similar fashion. The next key capital building event I want to mention is reaching the first of two pre-specified enrollment targets in Phase 1-2 clinical study of AeroDM1 from treatment of type 1 myotonic dystrophy, which is partnered with Sarepta. Reaching this milestone triggered a $100 million payment, which is due from Sarepta within 60 days of when it was earned. We believe we're on track to meet the second enrollment target at the end of the year, which would trigger an additional $200 million payment. Our large pipeline and expectation that we have cash into fiscal 2028 suggests that we have the first two categories of value creation under control. This leads us to the third priority, creating an engine to drive the growth of both. I think it is rather clear that we have built this as well. We are now able to address gene targets in five different areas, hepatocytes, pulmonary, adipose, skeletal muscle, and CNS. We also believe we are capable of silencing two genes with a single molecular entity using our dimer technology. This gives us broad reach to go where disease is, and coupled with our expectation of introducing three to four new drug candidates into clinical studies every year, we expect to continue to grow our ability to impact human health very rapidly. This also reads on our ability to continue to access significant capital through business development before and after achieving substantial product revenue. Ultimately, we are doing all of this to bring important medicines to the patients who need them, and this does not happen without careful preparation. We are building a right-sized commercial organization staffed with what we think are the top people in the field with extensive experience in cardiometabolic and rare disease. We've made strong progress in market access, analytics, operations, marketing, and building a commercial sales team. U.S. launch preparations are now in full swing for Prozacerin and SDS, and we intend to be launch ready even before our Paducah date on November 18th. With that overview, I'd now like to turn the call over to Bruce Gibbons.

Thanks, Chris, and good afternoon, everyone. Since we last spoke, we've continued the forward momentum in our development of plasaciran to treat FCS and severe hypertriglyceridemia. Our USNDA to support FCS treatment was submitted last year, and our PDUPA date is November 18, 2025. Filings in Europe, Australia, and Canada are all progressing as well. We are reassured that the cadence of our interactions with U.S. and global regulators has not changed, nor have any expectations of adhering to established timelines. Two months ago, we completed enrollment in our Shasta severe hypertriglyceridemia development program well ahead of expectations. The Shasta program is comprised of Shasta 3 and Shasta 4. two adequate and well-controlled trials designed to meet the statutory requirement of substantial evidence requirement for effectiveness, along with the support of MIRA3 trial in mixed hyperlipidemia, which provides additional safety data in a relevant patient population to satisfy regulatory requirements for a complete file. The sizing of the Phase III, Shasta III, and IV studies was informed by the needs of regulatory authorities to demonstrate safety while confirming the efficacy suggested by the Phase II Shasta II trial, where the primary endpoint of difference in triglycerides at week 24 compared to baseline for the 25 milligram dose was minus 53%, with a p-value less than 0.0001, which was accompanied by a numerical decrease in adjudicated events of acute pancreatitis. The two Shasta Phase III trials are similarly designed, totaling around 700 patients, and are very highly powered to demonstrate statistically significant improvement in triglycerides with 25 milligrams of plazaciran compared with placebo over 12 months of treatment. After accounting for randomization allocation in the Shasta studies, the placebo-controlled double-blind MIRA3 study was designed to demonstrate statistically significant improvement in triglycerides with 25 milligrams of plazaciran compared with placebo over 12 months of treatment, and is also expected to achieve a high level of significance, while primarily serving to enhance the safety database for the SHTG filing. Assuming positive data, these three separate Phase III studies should support our planned SNDA filing for SHTG in the fourth quarter of 2026. Although SHASA III and IV were not prospectively designed to be outcome studies, Given the sizing of the combined studies and the observed event rate in the SHASTA-2 study, we hope to observe at least a favorable trend in Plazaciran's impact on documented acute pancreatitis within the studies. However, the SHTG program also features a unique outcome study named SHASTA-5, designed to directly assess the ability of Plazaciran to reduce the time to first event of positively adjudicated acute pancreatitis in high-risk SHTG patients. While it is possible that this trial will be submitted to regulatory agencies for possible inclusion in labeling, the primary audience and impetus for this study is actually National Health Technology Assessment Organizations. On the basis of observational data demonstrating the causal link between elevated triglycerides and risk of pancreatitis and observed effects of plazacrin in SHTG patients, is expected that less than 150 patients will be recruited to accrue sufficient events in this outcome study. We look forward to presenting more details on design and rationale of this study at an upcoming major medical meeting. The broader cross-functional cardiometabolic clinical team has been present at key medical congresses this past quarter, including ENDO, National Lipid Association, and the American Society of Preventive Cardiology. We continue to share new data to demonstrate the value of plazaciran, and the reception from the scientific and clinical communities has been engaged and enthusiastic. Turning our attention to zodaciran, another genetically validated RNAi drug designed to reduce expression of angiopointin protein-like 3, or angPTL3, is now in development for the treatment of homozygous familial hypercholesterolemia, a rare genetic disorder characterized by exceptionally high LDL cholesterol levels due to very low or absent LDL receptor function. The results of GATEWAY, our open-label Phase II study in this population, were presented this year at the European Atherosclerosis Society and showed robust and durable reductions in LDL-C and other atherogenic lipoproteins. The efficacy results were similar to those of evanacumab, a monoclonal antibody against the HPT-L3 that requires monthly infusions. But with plazaciran, the dosing is convenient quarterly subcutaneous dosing. We are pleased to report Yosemite, the phase three study of zodaciran and HOFH, began earlier this year and the first patient was randomized last month. Assuming successful demonstration of safety and efficacy, Data from Yosemite could support regulatory filings for Zodaciran as early as 2028 or 2029. I will now turn the call over to Andy Davis. Andy?

Thank you, Bruce. The FDA PDUPA date for Zodaciran set for November 18th is now less than four months away, and I'm pleased to report that our commercialization preparations are fully on track. When I last updated you in May, we were in the midst of building out our commercial sales organization. I'm proud to share that as of this month, our national sales leader, full team of regional sales leaders, and fit-for-purpose field force of rare disease specialists are now on board and undergoing training. By the end of this month, the team will begin engaging with key healthcare professionals, advancing FCS disease education in preparation for launch. Our market access team continues to execute exceptionally well against our pre-approval information exchange strategy. To date, we've connected with payers representing over 85% of U.S.-covered lives, delivering compelling data on the clinical value and anticipated profile of clizasterin. We remain highly encouraged by payer interest, particularly in clizasterin's potential to deeply lower triglycerides, support achievement of guideline-directed goals, namely less than 500 milligrams per deciliter, and significantly reduce the risk of acute pancreatitis. We're also seeing positive developments in the FCS landscape, which reinforce our confidence heading into launch. The significant unmet need in the FCS community is clear and acknowledged by both payers and providers. On the payer front, dynamics appear to be favorable, with access being granted to both genetically confirmed patients and those patients satisfying the diagnostic scoring tools designed to discriminate patients with SHCG from those whose signs, symptoms, and medical history mimic genetic FCS. This is especially motivating given that plizacrin is currently the only ApoC3 inhibitor to demonstrate clinical results in both genetic and clinical FCS in a phase three registrational study. And from a provider perspective, the specialty mix we're observing preventative cardiologists, endocrinologists, and lipidologists is exactly what we anticipated and aligns well with our launch targeting strategy. In summary, we remain on schedule and energized by the opportunity to bring investigational plasastrin to individuals living with FCS and their families. We're excited for what plasastrin, a potential first-in-class siRNA therapy, could mean to those suffering from this difficult disease. I'll now turn the call over to James Hamilton. James? Thank you, Andy. I'd like to provide an overview and updates on several of our early stage clinical and translational development programs. In obesity, our AeroInhibine and AeroAlk7 programs, both targeting the active and pathway, are currently being investigated as treatments for obesity in Phase 1 studies. The INHIB&E study is currently enrolling multi-dose cohorts using aero-INHIB&E in combination with terzapatide.

The aero-ALK7 study is in the single-dose escalation phase with multi-dose and combination cohorts opening soon. We anticipate sharing data from both the ALK7 and INHIB&E studies at the end of the year.

Regarding our muscle clinical programs partnered with Sarepta, the AeroDM1 Phase 1-2A study has completed the single-dose cohorts and is now enrolling multi-dose cohorts of patients with myotonic dystrophy. Similarly, the AeroDUX4 Phase 1-2A study has nearly completed enrollment of single-dose cohorts, and the first year-long multi-dose cohort is open for enrollment. Consistent with previous guidance, we are on track for data availability by year end. However, final timing on data release is determined by Sarepta. Our wholly owned AeroMAP-T program is on track for submission of a CTA by year end. As a reminder, Aeromapti uses subcutaneous administration of a novel siRNA delivery platform designed to deliver an siRNA targeting CNS tau protein expression across the blood-brain barrier. Tau aggregated into neurofibrillary tangles is believed to be one of the causative factors of Alzheimer's disease and is also causative of various other tauopathies. Nonclinical evaluations in monkeys with subcutaneous administration of AeroMAT-T using clinically translatable doses have shown better than 75% knockdown of tissue-level MAT-T mRNA in the CNS. Importantly, monkey tissue level knockdown has translated into CSF tau protein reductions of better than 75%, with duration of effect supportive of either monthly or potentially quarterly subcutaneous dose regimens. The monkey CSF tau protein knockdown data are an important translational step as we move this program towards the clinic. Full preclinical data will be presented at an upcoming scientific conference. I will now turn the call over to Dan Appel.

Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the quarter into June 30, 2025, was $175.2 million, or a loss of $1.26 per share, based on 139 million fully diluted weighted average shares outstanding. This compares with a net loss of $170.8 million, or a loss of $1.38 per share for the prior year quarter ended June 30, 2024, based on $124.2 million fully diluted weighted average shares outstanding in that prior year quarter. Revenue for the quarter ended June 30, 2025 was $27.8 million, DRIVEN ALMOST ENTIRELY BY THE RECOGNITION OF REVENUE RELATED TO OUR LICENSED AND COLLABORATION AGREEMENT SURREPTA. OF THE $27.8 MILLION, ROUGHLY $20 MILLION RELATED TO THE ONGOING RECOGNITION OF INITIAL SURREPTA CONSIDERATION AND $7 MILLION RELATED TO REIMBURSEMENT OF COLLABORATION RELATED COSTS. AFTER THE END OF OUR THIRD FISCAL QUARTER, WE ANNOUNCED TWO IMPORTANT EVENTS. each of which will have a positive impact on our financial position. First, there is the $100 million DM1 milestone payment from Sarepta, which Chris mentioned earlier on the call. As this event occurred after June 30th, revenue associated with this milestone will be recognized in our fiscal fourth quarter financial results. We anticipate achieving the second DM1 development milestone valued at $200 million by the end of the calendar year. Second, on August 1st, we announced that Sanofi signed an agreement to acquire exclusive rights to develop and commercialize investigation of Prozacerin in Greater China from Vicerna Therapeutics, Arrowhead's majority-owned subsidiary. Vicerna will receive $130 million upfront upon closing. Additionally, Vicerna will receive up to $265 million in potential future regulatory milestone payments and potential royalties associated with the sales of Prozacin in Greater China. We expect to record revenue of $130 million in the fourth quarter associated with the upfront payment only. Turning to expenses, total operating expenses for the quarter ended June 30, 2025 were $193.3 million compared to $176.1 million in the prior year quarter. or an increase of $17.2 million. The year-over-year increase was driven by, amongst other things, roughly $10 million of higher R&D costs, primarily as a result of our Phase III registration of trials for Pazasaran in SHTD, as well as higher costs related to active candidates in the preclinical stage. It's worth bearing in mind that, year-to-date, approximately 70% of our clinical trial spend can be attributed phase three registration of trials for Prozacirin and SHTG. As Bruce mentioned, these studies are now fully enrolled and we expect data to read out next year. Additionally, as planned, our SG&A costs have increased by $7 million year-over-year, driven primarily by our preparations for commercialization in advance of the FDA's upcoming PDUFA action date later this year, November 18. Turning to cash. Net cash used in operating activities during fiscal quarter 3, 2025 was $154.7 million, compared with net cash used in operating activities of $115.4 million in the prior year quarter. The increase in cash used in operating activities is driven by several factors, including the aforementioned higher operating expenses and timing of clinical trial payments. Turning to the balance sheet, our cash and investments totaled $900.4 million as of June 30, 2025. Our common shares outstanding as of the end of this quarter were $138.1 million. With that, I will now turn the call back over to Chris.

Thanks, Dan. Everybody continues to achieve strong execution in discovery, clinical, regulatory, and business development. Our pipeline has become increasingly mature, with four area-discovered candidates currently in pivotal Phase III studies. In addition, our commercial build-out is designed to make us launch-ready very quickly, should Los Astros receive regulatory approval on the November 18, 2025 PDUPA date. And lastly, we have a strong balance sheet that we think gives us financial resources to continue to move multiple innovative new medicines through the clinical and regulatory process, and ultimately get them to the patients who need them. Thank you for joining us today, and I would now like to open the call to your questions.

Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please limit to one question. Please stand by while we compile the Q&A roster. Our first question comes from Maury Raycroft of Jefferies. Your line is now open.

Good afternoon. This is Farzin on for Maury. So thank you for taking our question. When thinking about your own SHDD pivotals with ongoing ASASTA 3 and 4, how are you thinking about the prospects of competitor ionist programs reading out in September from the core studies, especially with respect to the triglyceride reduction as well as signals in the acute pancreatitis?

So, I'll add to that, and Bruce, you can add anything that you think is necessary. Look, you know, we can't, we have no control over other people's studies. It's difficult to compare two drugs across two different studies or more, frankly, in this respect. And so, we're just focused on our own studies here. You know, we've had very good data in our phase two studies. We have study in FCS, and we think we've got a best-in-class triglyceride reducer here. We look forward to seeing what the FHTG data look like, but that is our expectation. We'll go from there. Bruce, do you have anything to add on that?

Not really. As you said, it's hard to compare across studies. I will say that what they have relayed about their patient population looks quite similar to to our patient population at the time of enrollment. So I think it will be interesting for us to see what their data actually shows when they report it out in September and then probably in more detail at a later academic presentation. So we'll follow with interest, but how much bearing it has is always hard to tell.

And what is key here in the studies and then once we are at market are two primary things, I think. One is how deeply can you reduce triglycerides from baseline? And second is how many patients can get to goal, whether that goal is defined as triglycerides below 880 or below 500. I think those are the key points.

You're welcome. Thank you. Our next question comes from Jason Gerberry of Bank of America. Your line is now open.

Hey, guys. Thanks for taking my questions. So another question on the SHTG program. If I heard you right, so it sounds like what you're confirming is your baseline demographics of your two Phase III studies look similar to the published baseline demographics that IONIS had published for its core studies i guess that would be in terms of the two key subgroups which is ultra high triglyceride levels and past history of ap and i'm curious um you know your thoughts ionis indicated that they they are seeing events on a blinded basis at least 13 uh with like a skew of like 700 drug 300 placebo something like that so i'm just kind of curious as you as you absorb that because like the the event rates the big unknown here so i'm just kind of curious you know, has your thoughts changed at all around probability of showing at least a strong numerical trend by pooling the Shasta 4 and 5 studies? Thanks.

Bruce? You know, I think it's difficult to answer that question, you know, Jason, and the reason is because, you know, we count true adjudicated cases of pancreatitis. The IONIS approach is not just counting pancreatitis, but also abdominal pain. And, of course, abdominal pain can be nonspecific, although the effort is to determine that abdominal pain, when it occurs, is actually not related to other elements, such as alcohol or gallstones, for instance. But it is a little bit of an apples and oranges comparison. of actual pancreatitis to abdominal pain events. So it's hard to know what they're going to show in the end regarding pancreatitis, which I think is the most important measure. Abdominal pain matters in SHTG and high triglycerides. It can be debilitating for patients and difficult, but it's not a fatal thing where pancreatitis is. you know, produces organ damage and can lead to fatality. So it's a much different animal for, you know, for physicians to manage and, of course, for payers to deal with as well. So that part of it's harder to assess. And I'm not sure that we'll get granularity on that, even when they announce their results in September. So it's a little bit difficult to say, Jason, at this time. We will track abdominal pain as well, but we're really focused on you know, acute pancreatitis, you know, given that that's the real disease, you know, with severity.

And will you guys be publishing your baseline demographics, I don't know, in the next six to nine months or so?

Yes, I think we will. We'll be submitting that, you know, for a future medical conference for sure. Okay. Thank you. You bet.

Thank you. Our next question comes from David Leibowitz of Citi. Your line is now open.

Hi there. This is Mary Kate on for David today. Thanks so much for your overview of the anticipated FCS launch. I guess, how does this treatment address the clinical and med need in this space? And maybe what feedback are you receiving from physicians ahead of this potential launch? Thank you.

Andy, can you take that? And Bruce, add anything that you think should be added? Yeah, happy to take that. So thank you for the question, Mary Kate, related to clinical unmet need. Well, we know with respect to familiar kind of micro anemia syndrome patients that they suffer from physical symptoms, including abdominal pain, and of course, as Bruce mentioned, acute pancreatitis, which can lead to recurrent pancreatitis, necrotizing pancreatitis, and in some instances, fatality. And so one of the big things that we believe Plasastrin addresses as far as meeting the unmet need, first and foremost, is a a deep reduction of triglycerides to the level that have never been seen before with existing therapies in this space. We've talked about an 80% reduction from baseline seen in the Palisade study. Moreover, the outcome of interest, of course, is reduction in acute pancreatitis risk. And clavasterin is the only agent in a registrational phase 3 study that has demonstrated a statistically significant reduction in acute pancreatitis risk in Palisade. So those are two of the primary unmet needs that we believe Clizastrin can address in FCS. I would say moreover, just from a patient convenience and tolerability perspective, Clizastrin does continue to have a very desirable profile with only quarterly dosing, so four injections a year, which is very different than the current treatment regimens that are available for these patients presently. So hopefully that addresses your question around why we believe Clizastrin fills some important unmet clinical needs.

Thank you.

Our next question comes from Patrick Trucchio with HC Wainwright and Co. Your line is now open.

Thanks. Good afternoon, and congrats on all the progress. I'm just wondering, you know, as payor access appears favorable for both genetically confirmed and clinically defined FCS, is there any differentiation in the coverage path, you know, for high-risk, severe high triglyceride patients particularly those that don't have a pancreatitis history. And I guess I'm just wondering if you can speak to your expectations for pricing between FCS and severe high triglyceride indications, particularly just given the different population sizes and medical cost burden.

So, regarding pricing, you know, we're not prepared to apply too much on a potential SHTG price.

Thank you. One moment for your next question.

Our next question comes from Prakhar Agrawal from Kantor. Your line is now open.

Hi. Congrats on the quarter, and thank you for taking my questions. So maybe on the Sarepta situation, I think Sarepta also owns 10 million plus shares of Arrowhead stock. What could be a practical solution here to solve for this if Sarepta intends to sell their shares? And secondly, on SHTG, maybe a question for Andy. What sort of commercial activities you are doing to educate the community about how SHTG is different from the lipid market? It seems that the street has been anchored to lipid pricing and the update there for the drugs. Any call there would be helpful. Thank you.

Sure. Yes, Surrupted does own some airline shares. Their lockup period is still in effect right now. I can't tell you what their plan is for those shares. I can tell you that we have had hold on to those shares and for how long. Andy, you want to address the... Yeah, thanks, Prakar. As it relates to education, of course, we have active medical education in the form of our medical science liaisons who are conducting scientific exchange. Moreover, there is independent medical education, continuing medical education that's ongoing related to individuals with extremely high triglycerides, the unmet medical need, burden of disease, and education around clinical study results, certainly in the case of Palisade. I would say a lot of the education that's happening now in the community is related to education around the disease burden, around goal attainment, namely an education around the guideline-directed risk threshold of 500 milligrams per deciliter,

And then, of course, the focus on the outcome of interest, which is acute pancreatitis events.

And so that largely is the focus of our education. And as our commercial field team gets out into the field towards the end of this month, of course, they will be highly focused on a similar disease at education as well. I hope that answers your question. And your question is an astute one. Yes, triglycerides can be found on When people think about liquid drugs, they generally think about them in the context of ASCVD. This is not what this drug is. Losasterin is not an ASCVD drug. Losasterin is a pancreatitis drug and I think should be thought of as such and priced as such, to be honest.

So I think that's the way you need to look at it.

Thank you.

Thank you. Our next question comes from Eliana Merrill of UBS. Your line is now open.

Hi, this is Joseph for LE. Thanks for taking my question, and congrats on initiating the Yosemite trial for Zodacirin. I'm wondering if you can talk about your latest on your estimations of the size of the HOFH addressable patient population. Thank you.

Andy, you're probably one of the world experts on that. Why don't you take that one?

Yeah, so the literature would suggest that the prevalence for HOFH is anywhere from roughly one in 500,000 to one in a million persons.

And so there's been quite a lot of evidence produced in the HOFH space over the years as new therapies have become available. So we see the accessible population for HOH being similar to those estimates.

Thank you.

Our next question comes from Edward Tentoff of Piper Sandler. Your line is now open.

Great. Thank you very much. Actually, a little housekeeping question, if I may. Congrats on the Lyserna deal. So does that cash go to Arrowhead, and is it able for you guys to invest that?

I hate that. So the cash goes into Vicerna, and a portion of that, a large portion of that, will be distributed to shareholders of Vicerna and, as I mentioned, Bear Market. Not all of it will go out. There will be some tax liabilities. Also, we need to leave some cash into the company because, as I mentioned, they also have ongoing studies with Zodaciran related to FHCG, although we will take that over. They also have studies for Zodaciran. They also have some aero HSD studies ongoing. It's not a huge cost, but there is some cost there. And ultimately, again, as I mentioned in the remarks, our goal here is to monetize the China rights for Zodaciran and the China rights for Aero HSE in a similar manner that we did for Zodaciran. So anyway, long story short is we will bring home, I think, a substantial amount of that capital, but not all of it.

Great. That's helpful. Thank you. And then when it comes to the R&D, the annual R&D from Sarepta, is that paid all at once on the annual anniversary?

Thanks. Yeah, so they will pay us $50 million a year for five years, and that payment is due in the first quarter of every year. So I believe it's February. Is that right, Dan? So we have $100 million due now for the first PM1 milestone, $200 million that we think we'll trigger at the end of the year, and then a further $50 million due for the annual payment in February.

Great. Thanks, guys.

You're welcome. Thank you. Our next question comes from Luca Issi of RBC Capital Markets. Your line is now open.

Oh, great. Thanks, guys, for taking the question. This is Shelby on for Luca. Can you just talk about the initial presentation for Plazacaran? Our understanding is that initial approval will be for pre-filled syringes. So, is that correct? And if so, what is the path to have this in the form of an auto-injector, and how should we think about that timeline? Thanks.

Sure, Andy, we want to discuss that, and then Bruce, you can talk about more of the granularity of the auto-injector. Yeah, that's right, Shelby. So our initial presentation for plazasterin in the SCS space will be a pre-filled syringe, and there is development underway for an auto-injector in the SHTG space. Bruce, if you want to comment any more on that.

Yeah, I would just say that the auto-injector you know, will be either available at the time of launch for the SHTG indication or soon thereafter. That's our current expectation.

Great. Thanks.

One moment for your next question. Our next question comes from Mani Furuhar of LeRinc. Your line is now open.

Hey, guys. You have Ryan on for Monty. Thanks for taking our question, and congrats on the quarter. Maybe shifting over to the Inhibi readout later this year, can you just share a little detail around which cohorts we should expect to see data from, whether that's the SAD, MAD, Combo? And then internally, what are you guys really hoping to see here relative to the other data sets from muscle sparing agents that we've seen so far? Thanks.

Yeah, sure, I can take that.

We'll have data from all of those cohorts that you mentioned, SADMED as well as the combination cohorts. And we'll be measuring a handful of different biomarkers, including PD biomarkers, like measurable activity in the blood. Of course, we can look at body composition based on MRI and weight loss changes in body weight data. Then, of course, we've got a whole host of lipid parameters and glycemic control parameters that we'll look at.

Thank you.

One moment for your next question. Our next question comes from Mike Oltz of Morgan Stanley. Your line is now open.

Good afternoon, and thanks for taking the question. Maybe just to follow up on the last question related to the obesity updates later this year. Just curious if you see what you want to see there, what would be some of the scenarios around next steps for those programs? Thanks.

Yeah, so those are hard questions. I don't think we go into most studies with an idea that if we see X, we will move forward some manner, if we see Y, we will move forward. In some other manner, if we see Z, we won't move forward. You know, we're in the truth-seeking business. We will do the study and we'll see what the data look like and then move on from there. But I don't mean to evade your question. We don't go into these studies with any sort of preconceived ideas about what might come next until we see some data.

Understood.

Thank you. Yeah, I would just sort of add to that, that we need to keep in mind that these are novel mechanisms. These are not just another, you know, GLP-1, you know, agonist, you know, access sort of, you know, drug where, you know, we're looking at, you know, different behaviors and really looking for white space opportunities, you know, here. And it's very hard to predict those. It's much easier to, you know, answer a question like that if you're coming in with the you know, the 10th GLP-1 agonist. But it's quite hard to answer that question when you're dealing with a completely novel mechanism that has not been in humans before.

Makes sense. Thank you.

Thank you. Our next question comes from Joseph Tome of TD Cohen. Your line is now open.

Hi there. Good afternoon, and thank you for taking my question. Maybe on the MIR-3 study, I guess given that these patients will likely have a lower mean fasting triglyceride level, is there an increased risk that potentially this patient subset would be more at risk to self-adherence or self-levelization of diet or maybe a little bit less adherence to background lipid-lowering therapy than what you might see in SHAFTA3-4? And I guess, could that create some variability in the AE profile or endpoints? I guess, why or why not? And then when you think about the readouts for these three trials, Would these all come at the same time and it would be one top-line release or would these be discrete events? Thank you.

So, yeah, taking that first question, you know, look, in clinical trials, we do our best to try to encourage participants to follow the protocol. You know, we give them, you know, frequent dieting advice and, you know, reminders and it's hard to estimate, you know, whether, you know, they're going to behave all that differently than the SHTG population. I would say that, you know, we did two trials in mixed hyperlipidemia in the last few years, one with Plozaciran, one with Zodaciran. And I wouldn't say that the behavior in those trials was all that different than we saw at Shasta 2 or Palisade with respect to adherence to the protocol. It was pretty good for both. Now, that may be partly, you know, we pay a lot of attention, you know, to the detail of execution of clinical trials. And, you know, we tend to have a low dropout rate and a pretty good adherence rate, probably in no small part because of that. But I, you know, I'm not too concerned about that. And of course, we have placebos in these trials. And And, you know, you expect the placebo behavior to sort of mimic the behavior that you get in the active treatment arms. So hopefully whatever you see balances out, you know, anyway relative to placebo. But I don't think we're expecting anything particularly different.

Great. Thank you. And then the last part was, are these going to read out at the same time on the top line, or will these be three separate releases?

I don't think we've really come to a determination on that. In theory, we'll have the data from these three trials fairly close together, but I don't think they'll all show up on the same day. I'll leave it to Chris if he wants to predict how we'll make that decision a year from now.

My first thought on that is is that, yes, they are three separate studies, but they're part of one grander study, and so it would seem to make sense to release them all at once, but I'll be honest with you, we haven't really discussed that.

Perfect. Thank you very much again.

Thank you. Our next question comes from William Pickering of Bernstein. Your line is now open.

Hey, guys. Congrats on the progress, and thank you for taking my question. It's about your DM-1 program. At your muscle R&D day last year, you indicated you were planning to dose up to 12 MPK in that initial study. My understanding is the highest dose under the current protocol is 6 MPK, and that's unchanged from when Sarepta licensed the product last November. Is my understanding correct? And if so, what was the rationale for reducing that max dose versus the prior plan and for having a lower max dose than the FSHD study? Thank you.

Sure. So, we still can go up to 12 mg per kg in the current study, the DM1 study.

Thank you.

One moment for your next question. Our next question comes from Madison Elsati of B. Reilly. Your line is now open.

Hey, guys. Congrats on the quarter. Thanks for taking our question. I guess maybe going back to obesity, given the end size, the sample size, I guess, is it your assumption that any statistical conclusions are achievable, or is that kind of precluded here? And just assuming a competitive muscle-sparing weight loss is achieved, where do you think you need to land on frequency of dosing to be competitive, given there are other muscle-sparing candidates being developed, including other SIRNA candidates? Thanks.

Sure. So, this phase one study is really hypothesis-generating.

There's not a powering necessarily that goes into cohort size. I think the effect size that we will see from this study would be used to power a subsequent study down the road. And then in terms of frequency, we're looking at the most frequent, probably quarterly dose administration. So I'm not sure if there's anything out there that can match that frequency Certainly not the GLP-1s, at least not that I've seen. And some of the muscle-sparing molecules are probably more frequent than that. So, you know, we're looking at quarterly to every six months. Beyond that, I don't really see any benefit to even less frequent dosing. So I think we're in a pretty good place in terms of frequency of dose administration at quarterly dosing.

Got it. That's very helpful. Thanks.

Thank you. Our next question comes from Morgan Lamberty of Goldman Sachs. Your line is now open.

Hi. Thank you for taking our question. This is Morgan on for Andrea Newkirk. Kind of going back to obesity and specifically AeroAlk7, can you speak more to how you're delivering SRNA to adipocytes? And then recognizing that it has not been explored in humans, what gives you confidence in the safety profile? What potential risks could you see in this targeting? And is there good loss of function data out there for us to see? Thank you.

Sure, yeah.

See if we can get all of those maybe in reverse order. There are data on loss of function data. at ALK7 loss of functioning carriers. We know there are at least a few homozygous walking around. that seems to not have any issues, then of course there's a lot of heterozygous ALK7 loss of function carriers that seem otherwise phenotypically normal. They can be protected from things like type 2 diabetes and have an improved body composition, improved BMI adjusted waist to hip ratio. The molecule itself does use a ligand targeted approach that's selective so that there is a ligand-driven approach that's facilitating uptake of the sRNA into the cell. And then beyond the human genetic data, what gives us confidence from a safety standpoint to start the study is, of course, all the non-GLP and GLP tox studies that we've done in non-human primates and in rodent species. And of course, in those, we go up to doses many multiples of the doses we plan to use in the clinical trial. And those were all completed without any dose-limiting toxicity. So I think we're in a pretty good position as far as safety goes going into this Phase 1 study.

Awesome. Thank you so much.

Thank you. This concludes the question and answer session. I would now like to turn it to Chris Anzalone, CEO, for closing remarks.

Thank you all for joining us today, and I wish you all a good end of the summer, and we will see you next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.