Arrowhead Pharmaceuticals, Inc.

Welcome to the Arrowhead Pharmaceutical Conference call. Throughout today's recorded presentation, all participants will be in a listen mode only. After the presentation, there will be an opportunity to ask questions. I will now hand the conference over to Vincent Anzalone, Senior Vice President of Investor Relations for Arrowhead. Please go ahead, Vincent.

Thank you. And good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2026 third quarter, ended June 30, 2026. With us today for management are President and CEO, Dr. Chris Anzalone, who will provide an overview, Andy Davis, Senior Vice President and Head of the Global Cardio-Vetabolic 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 Apel, 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 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. Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Arrowhead is now on the strongest footing in its history. Two weeks ago, we reported positive top-line Phase III results from the global Shasta III and Shasta IV studies in patients with severe hyperglyceridemia, or SHTG, and we expect additional results to be presented later this month at the European Society of Cardiology Conference. These data made clear to us that Redempla was needed therapy for SHTG patients. To that end, we announced today that we have acquired a priority review voucher which can accelerate the regulatory review process in the United States from 10 months to 6 months, potentially bringing this important medicine to patients as quickly as possible. To me, this is an expression of Arrowhead values. Push to create the best medicines and be creative and aggressive to rapidly get them to patients who need them. Let's talk about the ChASSA III and IV top-line results. Both studies met their primary endpoint and every pre-specified secondary endpoint. . . . . . . and others. The acute pancreatitis findings are, in our view, the standout results. Across the broad SHTG population, patients with triglycerides above 500 milligrams per deciliter with or without history of pancreatitis. cumulative acute pancreatitis events were reduced by 78% versus placebo. And in the highest risk subgroup, patients with triglycerides above 880 milligrams per deciliter and a history of acute pancreatitis, we saw a 100% reduction in events versus placebo. Detailed results are expected to be presented at a hotline late breaker at the European Society of Cardiology Congress on August 30th, followed by an Arrowhead webcast on August 31st. We intend to submit an FNDA to the FDA before the end of 2026, followed by additional global filings. If approved, SHCG would represent a substantially larger commercial opportunity than FCS, and it would let us utilize the infrastructure we're building today for a much broader patient population. We believe the Shasta results materially de-risk our most important year-term label expansion opportunity and further strengthen the foundation of our cardiovascular franchise. As we consider how we could fit into SHTG therapeutic paradigms, we think of Redemplo in three ways. Safe, simple, and strong. Safe because of the impressive tolerability we saw in the Palisade Phase III and resulting clean legal NFCS, combined with what we saw in Shasta III and IV across multiple measures, including quiet liver enzymes, no hypersensitivity, and no increase in liver fat. Simple because of quarterly dosing, No Anticipated Need for Liver Enzyme Monitoring, and a 25 mg dose for all patients rather than having to titrate up, and strong because of unprecedented reductions in triglyceride levels from baseline across multiple studies. We see this as a clearly compelling value proposition for patients, healthcare providers, and payers. Therefore, the speed at which we can bring Prozacerin to the broader SHCG population is critical. The possibility of shaving four months off the approval process through the primary review voucher we acquired is important. We have a saying at Arrowhead that is even etched in the floor of one of our facilities. It is that every day matters. This is a driving principle for us from discovery to early development to late stage clinical to regulatory interactions and ultimately to the last mile, getting important medicines to the patients who need them. Turning to execution of this last mile, Our U.S. or dead below launch for FCS continue to build real momentum during the quarter. We've seen greater than doubling of prescriptions quarter on quarter. Andy will talk through our progress in a moment, including prescription and market access progress, and I think you'll come away as encouraged as we are. This launch in FCS has given us valuable experience and a scalable foundation to build on. Physicians are identifying previously untreated FCS patients, prescribing activities broad, and our team is building the capabilities we'll need for a much larger potential SHTG launch. We also continue to expand Redemplo's reach outside the United States. In May, Australia's Therapeutic Goods Administration approved Redemplo as the first and only medicine approved for FCS in Australia, including genetically confirmed and clinically diagnosed adults. In June, the European Commission formally granted marketing authorization, making Redemplo the first and only oligo-based medicine authorized by the EC for adults with FCS diagnosed through either clinical criteria or genetic testing. Together with our approvals in the United States, Canada, China, and Australia, the EU authorization gives Revenlo an approved footprint across five geographies, an important achievement we are very proud of. We're now working through country-specific reimbursement and launch processes while Sanofi leads commercialization in Greater China. All of the commercial infrastructure we are building is intended not only to hopefully bring Prozaciran to SHTG patients, but also to serve as the basis for our broader cardiometabolic franchise, which we expect to include Zodaciran, Aerodimer PA, obesity treatments, and other candidates you will hear more about in coming quarters. We're building a large number of potential medicines that could use the same commercial channels, hopefully providing us with substantial scalability and cost-effective growth. We view Prozaciran as providing us with a strong value foundation. Our intention is to build on that aggressively, and we have made good progress recently toward that end. At Eazl, we presented interim Phase 1-2a data for arrow I and HBE in obesity and MASH, and the results were compelling. Arrow I and HBE achieved dose-dependent active and E reductions with a mean maximum reduction over 85% after a single 400 mg dose, with effects persisting beyond three months. and a small subgroup of obesity and elevated baseline liver fat receiving at least 200 milligrams as monotherapy. The placebo-adjusted post-dose reduction in liver fat was 44%. The program has been generally well-tolerated and we're now engaging regulators on potential Phase II designs and endpoints. We continue to make progress in the Arrow-ALK7 Phase I-II program and expect to release more data from that study in the fourth quarter. Further, we expect to file a CTA for a new obesity candidate against an undisclosed target by the end of this year. Our June Cardiometabolic R&D webinar highlighted Zodaciran and Aerodimer PA. The Zodaciran Yosemite Phase III study in HOF patients is fully enrolled and we expect to have data in Q3 2027 and hopefully file an NDA by the end of 2027. Aerodimer PA is designed to silence both Apocene-3 and PCSK9, and therefore reduce both LDL cholesterol and triglycerides. We believe this could be a uniquely powerful therapy for roughly 20 million people in the United States with both elevated LDL and triglycerides. We expect to release early data from our Phase I study in September. During the quarter, we also presented our subcutaneous CNS delivery work around Aromap-T at TIDES. This is an important piece of our pipeline and we expect to release early data from our phase one study in September. This is a potentially exciting data set, not only because of the potential of Aromap-T against Alzheimer's disease and other challenges, but also because we think it could provide the first clinical proof of concept that we are able to address brain targets with RNAi using a simple subcutaneously administered conjugate. Our partnership strategy remains a key part of our model of value proposition. In May, we announced an exclusive worldwide license agreement with Madrigal for Aero PNPLA-3, a program for a genetically defined MASH population. Phase 1 data showed liver fat reductions of up to 46% after a single dose in homozygous carriers of the PNPLA-3 I-148M variant with rapid onset durability through at least 24 weeks and no clinically meaningful adverse events observed. Under the agreement, Aero had received a $25 million upfront payment and is eligible for up to $975 million in development, regulatory and sales milestones and tiered royalties to mid-teens. We believe that Arrowhead is something truly unique in biotech today. We have an approved product and positive pivotal data that we believe supports a potentially much larger indication that we think could drive peak sales in the $3 to $4 billion per year range. We have commercial infrastructure that is effective, Growing and capable of being the basis for multiple additional products. We have a set of platforms that enable us to address liver, adipose, muscle, lung, and CNS targets, and we believe virtually everything we have introduced to the clinic has translated from animal models to humans. By the end of this year, we expect to have 23 individual drug candidates in clinical trials, 11 wholly owned, 12 partnered, and we have a high degree of confidence that the overwhelming majority of these could eventually be approved products. We have the potential for a substantial future partner income from milestones and royalties, and we have the financial resources to keep this engine running and growing. So as you look to the patients we can help and the value we can create, of course look to Possessory, but also look to the engine we have built and the dozens of new medicines we can bring to patients. With that overview, I now like to turn the call over to Andy Davis. Andy? Thank you, Chris, and good afternoon, everyone. It has now been approximately eight and a half months since the FDA approval of Redemptlo last November, and we continue to be very pleased with the progress of the launch. Today, I'd like to first walk through where we stand with our FCS launch. First, prescription and patient dynamics. Second, payer coverage. Third, pricing and competitive positioning. Fourth, commercial infrastructure. And fifth, international expansion. And then finally, turn to some reflections on our recent SHTG clinical trial results. Let's start with prescription and patient dynamics. Redemplo prescription volume has more than doubled over the course of the fiscal third quarter, and that momentum has continued into the current quarter. We have supported more than 400 unique prescribers of Redemplo, with the specialty mix continuing to be led by preventive cardiology and endocrinology, consistent with prior quarters and our expectations at lunch. Patient origination remains steady from prior communications across new to therapy versus switch patients and the volume of physicians writing prescriptions and patients receiving Redemplo for FCS continues to exceed our internal targets. In recent market tracking studies, healthcare professional respondents indicate steadily increasing awareness and depth of product knowledge with consistently high marks for Redemplo both in absolute terms and relative to competition. Turning now to payer coverage developments, We continue to see strong momentum in the publication of payer policies and overall coverage across payer segments. Redemplo now has favorable policies in place for the most significant payers and overall coverage is progressing at a fast trajectory for the brand. We expect the remaining coverage gap to continue closing over the coming months. Our market access team remains focused on ensuring both genetically confirmed and clinically diagnosed FCS patients have access to Redemplo and nearly all published payer policies reflect the ability for physicians to diagnose FCS patients using clinical criteria alone. Next, pricing and competitive positioning. As a reminder, Redemplo's U.S. WAC is 45,000 U.S. dollars per patient per year under our one Redemplo unified pricing model, and we believe the value of Redemplo is supported by its highly differentiated efficacy, safety profile and dosing convenience. We've said consistently that we believe Redemplo offers physicians and patients a best-in-class option, and we remain confident that both the clinical data and the commercial model we've built position us well in FCS as we head towards the potential launch in SHTG. Ultimately, we believe physicians and patients should have the freedom to choose the therapy that best fits a given patient's clinical profile, and we'll continue to let the product profile of Redemplo and FCS make our case. Our field organization continues to scale in a deliberate, sequenced way, sized for both the current FCS opportunity and the future SHTG opportunity as it unfolds. Our commercial team's tenure and productivity continue to build, and we're seeing that reflected in the prescription and payer metrics I just walked through. Importantly, if the launch timing for SHTG is accelerated, as we expect, we will be ready. Just this past week, in fact, we onboarded the next wave of field personnel. This team will be in the field this month, educating stakeholders on FCS and Redemplo. Lastly, a word about international expansion. Redemplo is now approved for FCS in the United States, Canada, China, Australia, and the European Union. On the EU approval specifically, Redemplo's label uniquely covers both genetically confirmed and clinically diagnosed FCS patients. That is to say, it's the only therapy in Europe with clinical FCS on label. We view this as a meaningful differentiator given that a substantial share of real-world FCS patients are diagnosed clinically rather than genetically. We expect reimbursement will proceed on a country-by-country basis over approximately the next 12 months, beginning with Germany in the coming weeks. I'll wrap up my remarks with some reflections on what's ahead for plizasterine and SHTG. As Chris highlighted, we recently announced top-line results from the Phase III, Shasta III, and Shasta IV studies of plizasterin and severe hypertriglyceridemia, and we believe these are best-in-class results. Both studies met their primary endpoint with median triglyceride reductions of 79% and 81% for baseline at month 12 in Shasta 3 and Shasta 4, respectively, compared to approximately 27% for placebo. Just as importantly, in a pre-planned pooled analysis, plizasterin achieved a statistically significant reduction in acute pancreatitis events versus placebo across the broad SHTG population study, a 78% reduction in cumulative AP events. And in the subset of patients at the very highest risk, those with triglycerides above 880 milligrams per deciliter and a prior history of pancreatitis, we saw a 100% reduction in AP events versus placebo. The safety and tolerability profile remained consistent with what we've seen across the plazasterine program to date with no new safety signals, No Clinically Meaningful Liver Findings, and No Hypersensitivity or Thrombocytopenia Signal. We see this dataset as a powerful validation of plasasterin's profile across the full spectrum of SHTG, and it gives us continued confidence in our planned supplemental NDA submission, which remains on track for before the end of this year. With that, I'll turn the call over to Tim. Thank you, Andy. I'd like to share our plans for R&D milestones and data readouts throughout the rest of the year. But first, let's review the R&D team's accomplishments over the last quarter and beyond. We made large strides in advancing our cardiometabolic programs, specifically the Arrowhead team locked databases and analyzed data for MIR-3, Shasta-3, and Shasta-4 ahead of schedule, culminating in the release of top-line Shasta-3 and Shasta-4 data at the end of last month. As already mentioned, plus Asteran achieved deep and durable reductions in triglycerides, We remain excited about sharing detailed results which are planned for presentation at the upcoming European Society of Cardiology meeting later this month. The MIR-3 trial achieved its intended purpose as a study designed to build the plazaciran safety database. We plan on presenting data from this study at a future medical conference. Additionally, during the quarter, plazaciran received Australian and European Commission approval as an adjunct diet in FCS patients. Switching gears to zodaciran in the development for the treatment of homozygous familial hypercholesterolemia, or HOFH, We completed enrollment of the Phase 3 Yosemite study in mid-July. Importantly, the study was designed to enroll 60 HOFH patients. However, due to strong demand, we ended up enrolling 70 patients, all with genetically confirmed or clinically defined HOFH. This is a one-year study, so we expect study completion mid-2027, with data in the second half of 27. Also in cardiometabolic, the AeroDimer PA Phase 1 2A study in patients with mixed hyperlipidemia is nearing full enrollment, and we plan to share top-line data in September. Elsewhere in our pipeline, we continue to make progress with both the AeroInhibine and the AeroAlk7 programs. As Chris already highlighted, we presented data from the AeroInhibine Phase 1 study demonstrating a 44% reduction in liver fat and patients with hepatic steatosis baseline. As a reminder, liver fat reductions of better than 30% are generally thought to translate into histologic and potentially clinical benefit. An arrow-inhibit phase IIB clinical trial protocol has been submitted to regulators. The trial is designed to evaluate the effects of various doses of arrow-inhibit E on liver fat, liver histology, body weight, The study is intended to evaluate diabetic and non-diabetic patients as well as those on and not on stable incretin therapy. As the study is under regulatory review, we plan on sharing trial details once agreed upon with regulators. We intend to provide an obesity data update primarily focused on L7 towards the end of this year. Moving on to CNS, we've long held the belief that the CNS represents the next frontier for sRNA therapeutics with a large number of gene targets amenable to a gene silencing approach. Historically, the field has been severely limited by the requirement of intrathecal administration. This is a limitation Arrowhead hopes to remove with pioneering technology designed to deliver sRNA therapeutics across the blood-brain barrier. AeroMapT is Arrowhead's first molecule based on this delivery platform. MAPT gene encodes for the tau protein. Abnormal tau accumulation is widely believed to be a critical component of the pathologic cascade leading to Alzheimer's disease. Additionally, other forms of abnormal tau accumulation are known to directly cause MAPT variant frontotemporal dementia as well as progressive supernuclear palsy. A phase one clinical trial of AeroMapT and Healthy Volunteers is reaching full enrollment and the second phase of this study in Alzheimer's patients is actively enrolling. As Chris mentioned, we are targeting this September for top line data release from the Healthy Volunteers. This will be a very important data readout as it could pave the way for later stage telepathy clinical trials. Additionally, achieving successful MAPT gene and our pre-clinical pipeline, which includes our partner programs. I will now turn the call over to Daniel Apel.

Thank you, James, and good afternoon, everyone. As we reported today, net loss for the quarter into June 30, 2026 was $194.3 million, or a loss of $1.36 per share, based on 143.4 million fully diluted weighted average shares outstanding. This compares to a net loss of $175.2 million, or loss of $1.26 per share, for the prior year quarter and to June 30, 2025, based on 139 million fully diluted weighted average shares outstanding in that quarter. Revenue for the quarter totaled approximately $75 million compared to $28 million in the prior year quarter. Revenue was driven by our license and collaboration agreements with Sarepta, Madrigal, Novartis, and Sanofi, together with commercial sales of Redempo. Of the total, approximately $26 million related to the Sarepta collaboration, mainly from ongoing recognition of initial consideration under that agreement, as well as reimbursement of certain clinical and manufacturing expenses. With the Novartis collaboration, we recognize approximately $20 million in the quarter, bringing fiscal year-to-date revenue recognition to approximately $75 million. As of June 30th, of the initial $200 million of cash received upfront, approximately $125 million of consideration remains in deferred revenue and will be recognized over time as we fulfill our preclinical research and development obligations. We also recognize the full $25 million upfront payment from Madrigal following completion of a license and technology transfer for Arrow PMPLA3. As previously announced, Arrowhead remains eligible to receive up to $975 million in development, regulatory, and sales milestones, as well as tiered royalties on future commercial sales ranging from the high single digits to the mid-teens. Finally, we recognize approximately $1.2 million for transitional services and commercial FCS supply to Sanofi, under our License Agreement for Greater China. As previously mentioned, we are not intending to headline specific redemptive product sale numbers until they become a meaningful driver to our financials. That said, commercial revenue can be derived from our disclosures as a difference between total revenue and collaboration revenue and represented approximately $2.4 million for the court. This is more than double the approximately $1 million recorded in fiscal quarter two, and we have been very encouraged by the continued progress we are seeing in lunch. Turning now to expenses, total operating expenses for the quarter were approximately $245 million compared to $193 million in the prior year quarter. The $52 million year-over-year increase was driven by approximately $36 million of higher R&D expense and $16 million of higher SG&A expense. R&D expense was approximately $198 million. The increase year-over-year was primarily attributed to a $32 million increase in candidate costs, reflecting continued progression of our pipeline through clinical development, including the Phase III registration of program for plesiosterine in SHCG, as well as increased manufacturing and clinical supply activity. In line with our forecast, this also contributed to the pickup in expenses when compared to fiscal quarter two. Salaries are also higher driven by increased headcount to support manufacturing operations and a broader clinical pipeline. As James discussed, Shasta 3 and Shasta 4 have now read out with positive top line results. Accordingly, we expect costs associated with active execution of those studies to begin to moderate down over time beginning in fiscal 2027. At the same time, we will continue to invest in regulatory activities, commercial supply readiness, or potential SHCG launch, and advancement of our broader pipeline. The quarterly R&D expense will continue to be highly influenced by program timing and clinical activity. SG&A expense was approximately $47 million a quarter compared to $31 million in the prior year quarter. The increase is primarily driven by ongoing investment and supporting the commercialization of Redempto, including commercial headcount, marketing and launch support, and other outside services. Given the opportunities we are seeing in FCS, we have expanded and are continuing to expand our commercial footprint and our capabilities where appropriate. We're building these capabilities to support the current FCS launch, but we've designed them to scale, supporting potential future indications for plesiosterine, and ultimately Sudha Asaran and HOFH. Turning to the balance sheet, cash and investments on hand totaled approximately $1.6 billion as of June 30, 2026. Common shares outstanding at quarter end were $141.1 million. As we have disclosed, we have entered into an asset purchase agreement for an issued FDA priority review voucher, which we plan to use with our upcoming SNDA submission for Plozasarin in SHCG. Under the terms of the APA, we will pay the current holder $215 million in closing, which we expect to occur in our fiscal fourth quarter following HSR clearance. According to our projections, should we gain approval in SHCG, the increase in present value of Redemplum, simply as a result of shifting our launch aspirations and uptake curve forward by four months, provides a greater than 3x return on the PR and PRB Investment. Further, it is easy to layer, on top of that, incremental value that we might expect to achieve commercially should we be able to shorten our competitors' first mover advantage. As a concluding remark, we believe that our strong balance sheet provides significant financial flexibility to support ongoing clinical development, current and future commercialization activities, and our long-term strategic priorities. With that brief overview, I will now turn the call back to Chris.