Arrowhead Pharmaceuticals, Inc.

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's presentation, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. Instruction will follow at that time. I will now hand the conference call over to Vince Anzalone, Senior Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Good afternoon, and thank you for joining us today to discuss Arrowhead's results for its fiscal 2026 second quarter, ended March 31st, 2026. With us today from management, our president and CEO, Dr. Chris Anzalone, who will provide an overview. 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 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 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 1936. 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. Thanks, Mitch. Good afternoon, everyone, and thank you for joining us today. During the fiscal second quarter, in the period since our last ordinance call, we have continued to execute well against our commercial, R&D, and corporate goals. Arrowhead is now on the strongest footing of our history. We are commercial. We have a clear line of sight to expand our commercial opportunities and footprints. Our pipeline is larger than ever. Our discovery capabilities are broader than ever. Our balance sheet is stronger than ever. This is an historic time for our company. We are uniquely positioned to deliver important medicines to patients who need them and to create substantial value for our shareholders. Let's talk about some of our recent progress and begin with commercial. As you recall, the FDA approved Redemplo in November 2025 as an adjunct to diet to reduce triglycerides in adults with FCS. FCS is a severe, rare disease with an estimated 6,500 people in the U.S. living with genetic or clinical FCS. characterized by TG levels that can be 10 to 100 times higher than normal. This leads to a substantially increased risk of developing acute or current, and potentially fatal, pancreatitis. As we reported last quarter, the U.S. Regenblut launch was off to a strong start. That momentum has continued into the current quarter, and we are now seeing around 30 new prescriptions written each week. More than 400 prescriptions have been written since launch, becoming paid claims, but we offer a robust quick start program to support these MCS patients in the interim. The volume of physicians writing prescriptions and the number of patients receiving Redemptilo continues to exceed our initial expectations. With respect to pricing, we updated Redemptilo's U.S. wholesale acquisition cost, or WAC, to $45,000 per patient per year. This represents a premium to our competitors' WAC pricing. We believe this is appropriate given that clinical data suggests we have a clearly and demonstrably superior product in terms of TG reduction, safety profile, and convenience. As part of the one or down below unified pricing model, this price is intended to remain consistent across FCS and SHCG if that indication is approved. We continue to see this strategy as potentially simplifying payer contracting and eliminating pricing complexity, Response from payers to the strategy has been positive, and our interactions to date have been productive. Beyond the U.S., we secure positive regulatory action in four additional geographies for Redemplo in patients with genetically confirmed and clinically defined FCS. We received approvals from the Australian Therapeutic Goods Administration, the Chinese National Medical Products Administration, and Health Canada. In addition, the European Medicines Agency's Committee for Medicinal Products for Human Use adopted a positive opinion recommending the approval of Redempla. This is an impressive result achieved by our global regulatory team in a very short period and further reflects the strength of our clinical data in FCS and the value that Redempla offers to patients. Redempla will be available later this year in Canada and we anticipate it will be marketed independently by Arrowhead. Pending a marketing authorization to AND LIKELY IN THE U.K. AS WELL. IN GREATER CHINA, REDUNBLO WILL BE MARKETED BY CENOPI. IN ADDITION TO OUR REGULATORY TEAM, THE REST OF THE R&D ORGANIZATION HAS PERFORMED EXTREMELY WELL AND HAS MADE PROGRESS IN THE BROADER PORTFOLIO. OUR DRIVE TO EXPAND OUR PLATFORMS IN ORDER TO INCREASE THE NUMBER AND TYPES OF DISEASES WE CAN ADDRESS CONTINUES EVEN AS WE GROW AS A COMMERCIAL INDIVIDUAL. DURING THE RECENT PERIOD, WE HAVE MADE RAPID PROGRESS ACROSS THE LIFE LINE including programs targeting genes expressed in liver, fellow muscle, adipose, CNS, and the lung, as well as the first dual-functional siRNA designed to silence the expression of two genes with a single molecule. We believe the depth and breadth of our clinical pipeline is unmatched, and we expect to continue to lead the field in innovation. Importantly, many of these programs will have clinical readouts this year, so investors and others may start to properly value the broader pipeline. As we look to near-term clinical data releases, we anticipate four important events. First, the Phase III, Shasta III, and IV studies of plazasterine in SHTG patients should be ready for top-line data release in Q3. This is an important readout that will drive our anticipated supplemental NDA or SNDA as we seek to expand the population of patients we can treat with plazasterine. We expect to continue to see a favorable safety Second, we expect to have early data from the ongoing Phase I-II study of aerodimer PA in patients with mixed hyperlipidemia in Q3. We believe this will be the world's first clinical data of a single RNAi molecule designed to simultaneously silence expression of two proteins. If we see good reduction of PCSK9 and APOC3 and therefore reductions in LDL cholesterol NTGs, we could have a very powerful and unique therapy for the roughly 20 million people in the U.S. living with mixed hyperlipidemia. More broadly, the data could provide initial clinical approval concept for our growing dimer platform and pipeline. Expect to see additional dual functional dimers in the clinic in 2027. Third, we expect to have early data from the ongoing Phase I-II study of Aeromap around the end of Q3 or early Q4. As you recall, this is our first candidate using our CNS platform designed to deliver RNAi molecules to the brain via simple subcutaneous administration. Our map T targets, sorry, arrow map T targets the tau protein, which is increasingly validated for the potential treatments of Alzheimer's and other tauopathies. We believe that positive early data could be substantially disruptive. It could represent a great leap forward in treating teleopathy and, more broadly, open the door to using RNAi to treat a broad range of conditions from neurodegenerative disorders to obesity. If early arrow MAP-T data are encouraging, expect a substantial expansion of our CNS pipeline beginning at the end of 2026. Fourth, we expect to provide clinical updates on arrow INHBE and arrow LX7 throughout the second half of the year. Regarding AERO-I and HBE, we plan to present additional data at various conferences and launch a Phase II study. For AERO-L7, we expect to provide additional data from the ongoing Phase I-II study. We see these as potentially important therapies for metabolic disorders and represent our first steps into obesity and MASH. We expect to have additional candidates in this space by the end of the year and into 2027. Moving on to financial and portfolio myths. Arrowhead took important steps to ensure that we are properly funded to advance our commercial and development portfolio. We also entered into a license agreement for a program that achieved clinical approval concepts, but is not one that we wish to take forward. This is key to Arrowhead's strategy since we are extraordinarily productive in discovery and early development, but cannot commercialize everything independently. Let's talk about the steps we took. First, we dramatically strengthened our balance sheets, allowing us to push multiple programs toward commercialization and potentially through multiple independent and partner launches. During the quarter, we completed the largest fundraising Arrowhead has ever conducted. We closed concurrent public offerings of $700 million of 0% coupon convertible senior notes and $230 million of common stock. Both offerings were several times oversubscribed, reflecting investor confidence in our portfolio and our ability to continue to build value. Second, in just this week, He announced the exclusive worldwide license agreement with Madrigal Pharmaceuticals for Arrow PMPLA-3, Arrowhead's clinical stage program designed to treat a genetically defined population of MASH patients. Under the terms of the agreement, Madrigal will pay a $25 million upfront payment to Arrowhead. Arrowhead is also eligible to receive development, regulatory, and sales milestone payments of up to $975 million. Arrowhead is further eligible to receive tiered royalties up to mid-teens. Madrigal's leadership in the NASH space makes it a natural and attractive partner to advance AERO-B and PLA-3 into Phase II studies and toward potential commercialization. This transaction with Madrigal underscores AERO-Ed's disciplined business development strategy, demonstrating our ability to partner high potential, clinically validated programs with leading organizations. With that overview, I'd now like to turn the call over to Andy Davis. Andy? Thank you, Chris, and good afternoon, everyone. It has now been approximately five and a half months since the FDA approval of Redemplo on November 18, 2025, and we continue to be very pleased with the trajectory of the launch. Today, I would like to cover five areas, prescription and patient dynamics, payer coverage developments, pricing strategy, commercial infrastructure expansion, and our international and SHTG outlook. Let's start with prescription and patient dynamics. Redemplo's launch continues to build strong and consistent momentum. In the fiscal second quarter in the March 31st, 2026, we have seen prescriptions accelerating week over week, growing nearly threefold from the start to the end of the quarter. That momentum has continued into the current quarter with total prescriptions written exceeding 400, representing over 40% growth over just the last four weeks alone. The awareness and conviction driving this prescription growth are encouraging. Redemptive awareness among the prescribers who matter most has increased meaningfully. Critically, this awareness is translated into conviction. Nearly all Redemplo prescribers surveyed report being satisfied or highly satisfied with the product, and Redemplo is perceived strongest on the efficacy outcomes FCS patients care about most, triglyceride reduction and acute pancreatitis risk reduction. The patient mix continues to reflect what we expected. Approximately 85% of prescriptions are from patients naive to the ApoC3 class, a strong signal that physicians are identifying and treating SDS patients who have never had access to an effective therapy, to which patients largely account for the remainder. Patient persistence data is equally encouraging. Refill activity is accelerating meaningfully, an important early validation of both clinical effectiveness and patient satisfaction, for example, as one's quarterly dosing profile. Geographic distribution of prescribing is balanced across the country, This breadth of prescriber activation across all territories signals that patient identification capability is building at scale across the organization, not just concentrated in a handful of high-volume centers. And this gives us confidence in the durability of the prescription growth trajectory. Turning to payer access. We are making meaningful and consistent progress. Our market access team has been actively engaged with the largest payers in the country, covering the vast majority of U.S. lines. to support continued patient access. These discussions are proceeding as expected and, in some cases, have already led to Redempto's improved coverage. Additional formulary coverage decisions are expected in the coming months across both commercial and government segments. A particularly important development in the payer landscape is the diagnostic pathway flexibility that major payers are recognizing. The coverage policies taking shape across major payers reflect both genetic testing and clinical criteria as valid routes to diagnosis. This is critical for ensuring that all appropriate redentlo patients can access treatment because a meaningful proportion of real-world SDS patients are clinically diagnosed rather than genetically confirmed. And policies that require genetic confirmation as a prerequisite would create an unnecessary and inappropriate barrier. As Chris mentioned, we have made a proactive decision to reduce the list price of redentlo to $45,000 per patient per year. This decision reflects our commitment to optimizing market access for FCS patients and is consistent with our belief that a competitive and rational price point accelerates formulary decisions and reduces friction in the prior authorization process. We have always believed that Redemplo's clinical profile is best in class, and the $45,000 per year price point reflects a premium value supported by the clinical evidence. With the SDS launch performing ahead of our expectations and with potential expansion into SHCG on the horizon, we are making deliberate and sequenced investments to scale our commercial infrastructure. I will speak more on this in the future, but the field infrastructure we are building will be sized and structured for both the current expanded SDS accessible population and also the future SHCG opportunity as it unfolds in the future. On international expansion, Redempla received regulatory approval in both Canada and China in January. and most recently in Australia last month. All three markets are currently in pre-launch phase as we work through the pricing and reimbursement frameworks in each country. We look forward to providing updates on those timelines as they develop. Also last month, CHMP, the Committee for Medicinal Products for Human Use, recommended EU marketing authorization for edemplu in Europe for SDS without requiring genetic confirmation. Consequently, we anticipate an EMA approval decision in the June to July timeframe We intend to commercialize Redemplo directly in Europe, supported by contracted infrastructure, which encompasses market access strategy, account management deployment, medical science liaison support, and broader stakeholder engagements, including medical congresses and patient advocacy group engagement. We believe this model is the right approach for Arrowhead and are pleased with the readiness of that team as we approach the anticipated EMA decision. Finally, I want to comment on the SHTG program, which represents the most significant near-term value catalyst for the cardiometabolic franchise. We are approaching what we expect to be a highly meaningful series of milestones. Hotline results from Shasta 3 and Shasta 4, or two registrational phase 3 studies in severe hypertriglyceridemia, are expected in Q3. We head into the data readout with confidence grounded in the strength of Redempto's established mechanism of action and the consistency of the ApoC3 biology we have observed. across our full clinical program to date. We also intend to present the data at a major medical congress, which we hope will be with a simultaneous publication in a top-tier medical journal. We then expect to file an SNDA with the FDA before the end of 2026 with an anticipated regulatory approval based on an expected standard review timeline targeted in second half of 2027. Additional regulatory filings in other jurisdictions are planned to follow thereafter. The SHCG opportunity represents a patient population that is substantially larger than SCS, with over 1 million high-risk patients in the United States alone. The commercial infrastructure investments we are making for SCS today are also designed with that launch in mind. In summary, the Redemptible Launch is progressing well and continues to exceed our expectations across prescription volume, patient dynamics, and payer access. Physician satisfaction and forward prescribing intent are both extremely strong, Retail activity is accelerating, and we have a series of highly anticipated milestones in the second half of 2026 that we believe will be transformative for the cardiometabolic franchise and for Arrowhead. With that, I'll turn the call over to James Hamilton to discuss the broader R&D portfolio. Thank you, Andy. As Chris mentioned, we have a very broad pipeline with over 20 clinical programs, so I will focus on areas with upcoming readouts. First, I'd like to announce that we are planning to host three webcasts over the coming months as part of our R&D webinar summer series. Each webcast will cover a specific aspect of our pipeline where we expect to have upcoming data readouts this year. These include cardiometabolic, including plazaciran, zodaciran, and aerodimer PA. Obesity, including aero-inhibinene and aero-ALK7. And AeroMAP-T, including the blood-brain barrier or BBB platform. I'll now give status updates from the quarter on these specific areas. First, let's review the suite of Clozaciran Phase III studies, SHA-SA3, SHA-SA4, SHA-SA5, and MIIR-3, designed to support supplemental NDA filings to expand the Redemplo label beyond genetic and clinical SCS into patients with SHTG. Shasta 3 and Shasta 4 together enrolled over 750 patients and have a primary endpoint of change in triglycerides from baseline with key secondary endpoints of acute pancreatitis rates. MIRA 3, which enrolled over 1400 patients, is designed to supplement the Shasta studies with additional patient safety data. We are also enrolling patients at high risk of acute pancreatitis in the Shasta 5, to directly assess the ability of plazaciran to reduce the risk of acute pancreatitis as the primary endpoint. Should SHASTA 3 and SHASTA 4 show a statistically significant improvement in acute pancreatitis risk, we will reassess whether there is added value in continuing SHASTA 5. We remain on schedule to complete the blinded portion of the SHASTA 3, SHASTA 4, and MIIR 3 in mid-2026 to support a planned top-line data readout in the third quarter. This would further support our plans for an SNDA submission or SHTG before the end of this year. Before moving on to zovastiran, I'd like to highlight a presentation we made with new long-term efficacy and safety data for plazastiran across a spectrum of patients with hypertriglyceridemia at the American College Cardiology Conference in March. The data were from a two-year open-label extension of the two Phase IIb double-blind placebo-controlled studies of plazaciran. SHASTA-2 conducted in adults with severe hypertriglyceridemia and NIR, which enrolled patients with hypertriglyceridemia. During the two-year open-label extension, patients saw median reductions in their triglycerides of 83% in SHTG patients from SHASTA-2. with additional reductions in remnant and non-HDL cholesterol. 96% of SHTG patients achieved TGs below 500 milligrams per deciliter, and 63% achieved TGs below 150 milligrams per deciliter, with 93% of HTG patients achieving TGs below 150 milligrams per deciliter. Importantly, no adjudicated acute pancreatitis events Phase IIb open-label extension study. These findings support the potential of plazaciran as a promising new approach in managing patients with moderate to severe HTG phenotypes who are at risk of AP and potentially other cardiometabolic comorbidities. I'd now like to give a quick update on the Yosemite Phase III study of zadaciran, which is being developed as a potential treatment for homozygous familial hypercholesterolemia, or HOFH, a rare genetic condition that leads to severely elevated LDL cholesterol and early onset cardiovascular disease. Sodaciran is the fourth investigational RNAi-based candidate developed by Arrowhead to reach late stage clinical studies. Yosemite is designed to enroll approximately 60 individuals with HOFH over the age of 12 who will be randomized two to one to receive five doses of 200 milligrams of Daciran or placebo. The primary endpoint is the percent change from baseline to month 12 in fasting LDL cholesterol. Enrollment has been on track, and we are confident that the study can be fully enrolled this year to enable study completion and potential NDA filings before the end of 2027. The last program within cardiometabolic is aerodimer PA. The first dual-functional siRNA designed to silence the expression of two genes with a single RNAi molecule. Aeroenzymer PA is being developed as a potential treatment for ASCVD due to mixed hyperlipidemia by silencing expression of both PCSK9 and ApoC3. In January, we initiated a Phase I-IIa placebo-controlled dose escalating study to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and effects on LDL cholesterol and triglycerides using single-dose aerodimer PA in part one and multiple doses in part two in up to 78 adults with mixed hyperlipidemia. Enrollment in the study has been rapid, and we are on schedule to have sufficient data to provide diverse clinical readouts in Q3 of this year. This is a very interesting program, and we think the preclinical data has been highly compelling. We have some innovative ideas on late stage trial designs and potentially, that potentially accelerate the path to regulatory approval. So, we're eager to have a first clinical readout to start moving ahead with later studies if supported by initial data. Lastly, I'd like to give an update on the status of the Aromap-T first in human study. Aromap-T is being developed as a potential treatment for chiopathies, including Alzheimer's disease, neurodegenerative disease characterized by cognitive and functional decline. Alzheimer's disease is the most common cause of dementia affecting an estimated 32 million people worldwide and is part of a group of neurodegenerative diseases called tautopies that are marked by abnormal tau accumulation and formation of tau tangles in neurons. Tau-related pathology may be a critical driver of neurodegeneration and targeting tau is a promising strategy that potentially slows and functional decline. AROMAT-T is Arrowhead's first investigational RNAi-based therapy to achieve a new proprietary delivery system, which in preclinical studies has achieved blood-brain barrier penetration and deep knockout of target genes across the central nervous system, including deep brain regions after subcutaneous injection. This underscores Arrowhead's leadership in the delivery of siRNA to multiple tissues and cell types throughout the body, utilizing our proprietary and differentiated targeted RNAi molecule, or TRIM, platform. In December 2025, we dosed the first subjects in a Phase I-II clinical trial of Aromanti. This study is a placebo-controlled, dose-escalating study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of Aromat-T in up to 64 healthy subjects and up to 48 patients with mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease dementia. In part 1a of the study, healthy subjects will receive one or three weekly doses of Aromat-T or placebo by subcutaneous injection. In parts 1B and part 2, healthy volunteers and Alzheimer's disease patients, respectively, will receive multiple escalating doses of Aromat-T or placebo. We are nearing completion of enrollment of the single-dose portion of the study in healthy volunteers and have begun enrollment in the multi-dose cohorts in both healthy volunteers and patients with Alzheimer's disease. This keeps us on pace for an initial data readout at the end of Q3 or early Q4. I will now turn the call over to Dan Appel.

Thank you, James, and good afternoon, everyone. As we reported today, net loss for the quarter ended March 31, 2026. It was $132.7 million for a loss of 93 cents per share. Based on 142.4 million fully diluted weighted average shares outstanding. This compares the net income of $370.4 million, or $2.75 per share, for the quarter ended March 31st, 2025. It's done $134.5 million, fully diluted weighted average shares outstanding in that quarter. Recall that in the prior year quarter, we recorded over $540 million in revenue solely related to the disruptive transaction that was executed at that time. Revenue for this quarter totaled $74 million, driven primarily by our license and collaboration agreements with Sarepta and with Novartis. On this amount, approximately $42 million related to the Sarepta collaboration. This includes $28 million from ongoing recognition of the initial Sarepta consideration, $10 million related to reimbursement of incurred preclinical collaboration program costs, and $4 million for clinical supply provided to them under a clinical supply agreement. In addition, we recognize $20 million of the $200 million upfront payment received from Novartis in October, bringing year-to-date recognition of Novartis upfront to $54 million, with the remaining $146 million to be deferred over time as we fulfill our preclinical obligations. We also recorded 11 million related to the asset purchase agreements between Sanofi and Vicerna, developed and commercialized investigational investment in Greater China. Vicerna, as you know, is our majority-owned subsidiary with operations in China, and the amount recognized is almost entirely due to the January approval of FCS in that region by the Chinese National Medical Products Administration. As mentioned previously, we are not intending to headline specific Redemplo product sales numbers until such time as they become a meaningful driver to our financials. That said, net sales can be derived from our disclosures, with the difference between total net revenue and collaboration revenue, and represents approximately $1 million for the quarter. This is our first full quarter of Redemplo sales, and on a unit basis, that figure compares favorably to the first full commercial quarter of the other approved APOC3 inhibitor. Turning now to expenses, total operating expenses for the quarter were approximately 215 million, roughly flat with operating expenses in the first fiscal quarter. This compares to 162 million in the prior year quarter representing an increase of 53 million year over year. This increase is driven by $40 million of higher R&D expenses and $13 million of higher SG&A expenses, fully in line with our expectations. The increase in R&D expense was primarily attributable to ongoing progression of our Phase III registration studies for prozacrin and SHTG, as well as our early-stage pipeline programs, including the DIMER and MAP-T. Fiscal year to date, Almost two-thirds of the clinical trial spend can be attributed to our plasastrum phase three studies. As James already mentioned, the registration of SHTG studies for plasastrum should read out in December, and clinical trial spend for these programs should thereafter moderate accordingly. SG&A expenses increase year-over-year compared to the prior year's second fiscal quarter, driven primarily by ongoing investments to support the commercialization As previously discussed, we are continuing to build our commercial capabilities to fully support the FCS launch. We continue to leverage and invest in these capabilities to support Redempto and FCS, while also positioning the organization to support a potential future launch in . And we ultimately expect to leverage these same capabilities for the advancement of for the treatment of HOFH. Turning to the balance sheet, cash and investments on hand totaled nearly $1.8 billion as of March 31, 2026. Common shares outstanding at quarter end were $140.69. To provide a little color, in this quarter alone, we brought in over $1 billion, including approximately $850 million net from our January financing transactions, INCLUSIVE OF A CONCURRENT ALTERNATIVE ZERO PERCENT CONVERTIBLE SENIOR NOTES IN COMMON STOCK ALONG WITH THE ASSOCIATED CAPITAL CONSACTION. OTHER NOTABLE INFLOWS IN THE QUARTER INCLUDE THE $200 MILLION RECEIVED FROM SEREPTA UPON ACHIEVING THE SECOND PM1 PROGRAM MILESTONE AS WELL AS THE $50 MILLION ANNIVERSARY PAYMENT UNDER THE SEREPTA LONG-TERM COLLABORATION AGREEMENT. ALL OF THIS IS VERY MUCH IN LINE WITH THE INFORMATION PROVIDED PREVIOUSLY DURING OUR FEBRUARY EARNINGS We believe our strong balance sheet provides us with significant financial flexibility to support ongoing clinical development, to advance current and future commercialization activities, and to execute against our long-term strategic priorities.