Takeda Pharmaceutical Company Limited

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. And good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2025 second quarter, ended March 31st, 2025. With us today from management, our president and CEO, Dr. Chris Anzalone, who will provide an overview. Dr. Bruce Given, interim chief medical scientist, who will provide an update on our cardiometabolic pipeline. Andy Davis, senior vice president and head of global cardiometabolic franchise, who will provide an update on commercialization activities. Dr. James Hamilton, Chief Medical Officer and Head of R&D, who will discuss our earlier stage development programs, and Ken Muskowski, our outgoing Chief Financial Officer who is retiring this week, who will give a review of the financials. We also welcome Dan Appel, our incoming CFO, who is also with us on the call today. 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, 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 I start, I want to say thank you to Ken and wish him the best in his retirement. Ken has been a valuable member of the Arrowhead team, and he retires at a time of great financial strength at the company. The financial organization that Ken built over the years is very capable and provides strong support to our ambitious Thank you for all the important contributions over the last 16 years. I'm also excited that Dan Appel will join us as our new CFO at a critical time for Arrowhead. We expect to make the transition from development stage to commercial stage with the planned launch of Pladaciran this year, pending regulatory review and approval. Dan is an accomplished pharmaceutical executive who can make immediate and important impact on our business. Let's now talk about our business and the progress we've made toward our short, mid, and long-term goals. Arrowhead is at an important point both in terms of capabilities and potential value as we drive our organization toward our first commercial launch, which we anticipate this year. Following this, we expect multiple additional independent and partner launches over the next few years. The culmination of commercial expansion the increasingly validated nature of our platforms and RDI modality, our large pipeline of clinical stage assets, our strong balance sheet, and clear access to additional non-diluted capital together provide us with a level of upside potential and stability that I believe is a priority in our industry. This is always attractive, but it's even more valuable at a time when biotech markets have been depressed for the past several years, and the near-term capital markets are uncertain at best. As the current biotech market weakness causes people to weigh the tradeoff of stability versus the potential for explosive value growth, I think we have the tools for both. I view our value proposition in layers. Layer one is Fladaciran. It constitutes our primary near and midterm value driver and provides a strong base for us. Fladaciran has shown to be a potent triglyceride lowering agent across multiple clinical studies in hundreds of patients. We believe there are 3 to 4 million people in the U.S. alone who suffer from severe hypertriglyceridemia, or SHTG, as defined by fasting triglyceride levels above 500 milligrams per deciliter. We are preparing to launch into a small subgroup of this population, patients with familial chylomicronemia syndrome, or SDS, and have a PDUFA date of November 18, 2025. We also completed the submission of a marketing authorization application, or MAA, with the ENA, and are working through additional plan submissions in other select geographies. The Phase III data supporting our regulatory submissions were consistent and encouraging. Genetically defined and clinically defined FCS patients responded similarly, with reductions in triglycerides of about 80% from baseline. Approximately 75 and 50% of patients who had triglycerides go below 880 and 500 milligrams per deciliter, respectively. which are discussing guidelines in the academic literature as important goals for minimizing pancreatitis risk. These are truly impressive levels to achieve in FCS patients, as the mean baseline triglyceride level in the study was approximately 2,500 milligrams per deciliter. Cladaciran was generally well-tolerated and showed triglyceride reductions in 100% of patients treated at the primary endpoint of 10 months. Our hope of treating FCS patients is important. an historically underserved population, and we believe flibasterin could be an important medicine for them. However, we view this as just the beginning. Shasta 3, Shasta 4, and Muir 3 are Phase 3 studies designed to support a supplemental NDA and other applications on a global basis to enable us to treat a broader SHCG population. These studies are moving rapidly, and we believe they could be fully enrolled this summer. We are also in the process of initiating Shasta 5, and payers. Our second layer of value may be our initial obesity candidates and initial CNS candidates. Regarding the former, Arrow INHBE is currently dosing in obese patients, and we expect Arrow ALK7 to begin dosing in obese patients shortly. Both are designed to intervene in a biological pathway regulating fat storage. Arrow INHBE targets parasites with the same trim platform using several ongoing clinical studies and has been in thousands of patients. It is designed to reduce hepatocyte expression of active in E, which is a ligand for adipose ALK7. ALK7 is the first adipocyte-targeted siRNA with a new trim platform that, in animal models, has shown good uptake in adipose tissue and high levels of targeting knockdown with a long duration of that may enable Q4 month, Q6 month, or less frequent administration. ALK7 is designed to reduce Both programs demonstrate substantial reductions in visceral fat versus control while simultaneously preserving lean mass in animal models. Both targets are also supported by hemogenetics where loss of function carriers have favorable body composition and metabolic characteristics compared to non-carriers without any apparent safety costs. It's a very intriguing pathway that we believe may fill some important gaps left by standard of care obesity treatments addressing some of the shortcomings of the GLP-1 GIP class. The possibility of long-acting agents that are well-tolerated, spare muscle mass, and enable visceral fat loss without dependence on caloric restriction is exciting. AeroINHPE began dosing a Phase 1-2 study in December 2024, and we anticipate having some initial data by the end of 2025. As I mentioned, we expect AeroAlt7 to begin dosing shortly, and we should have some initial data soon after AeroINHPE results become available. Studies in both candidates include single-dose and multiple-dose monotherapy arms in OB subjects, as well as multiple-dose arms that include combinations with triseptide. Our CNS BDD platform has made great strides in recent years. We have a substantial amount of preclinical data across multiple animal models that make us optimistic that we can deliver potent RNAi drugs to the brain via simple subcutaneous injection. Delivering large-molecule drugs systemically and getting past the broad blood-brain barrier has been a holy grail virtually as long as complex biological drugs have been developed, and we expect to be in the clinic late this year. Our first candidate, AeroMapT, targets the tau protein for potential treatment of Alzheimer's. We expect to follow that with AeroHTT, licensed to Sarepta against Huntington's disease by the end of the year. In the first half of 2026, we expect to bring AeroSNCA to the clinic, which targets alpha-synuclein for potential treatment of Parkinson's. These are all well-validated targets against very important diseases for which effective agents have long been sought, and we look forward to seeing how they translate from animals to humans. A third layer of value could come from our other Phase III drugs. We expect to begin enrolling in year-long Phase III studies of Dasaran for homozygous familial hypercholesterolemia, or HOFH, shortly. The HOFH patients the HOFH patients treated with sodasturant in Phase I and Phase II studies give us confidence that they may have a potent LDL, I'm sorry, that it may have a potent LDL C-lowering agent that only requires quarterly dosing in this important at-risk patient population. The sales infrastructure we are building for sodasturant could easily be leveraged to those populations, so this feels like a straightforward, relatively rapid, low-risk, and low-cost expansion of our commercial press. Zazisaran is our drug candidate against AAT liver disease. Our prior studies give us confidence that it could be an effective agent to reverse fibrosis in this largely unserved patient population. Zazisaran is partnered with Takeda, and they have publicly guided that Phase III studies could complete enrollment this year. They are two-year studies to prior endpoint. While this is partnered, our economics are substantial. We're a 50-50 profit share in the U.S., 20-25% royalties ex-U.S., and up to $527 million of remaining milestones. While we view these as our primary, near, and midterm value drivers, there are substantial pieces of our business underneath them, providing redundancy and additional upside potential. They include four fully-owned additional Phase II-ready clinical programs in Aero C3, Aero CFB, Aero RAGE, and Aero PMPLA-3. Two Phase II programs partner with GSK against chronic hepatitis B infection and MASH, another Phase III program partnered with Amgen in El Paso, and four Phase I-II clinical programs partnered with Sarepta, three designated preclinical programs partnered with Sarepta, one of which I already mentioned in HTT, and six additional preclinical programs to be named by Sarepta. And, of course, underlying all of this is a discovery engine that we believe is second to none in the SIRNA field. We expect it to continue to drive value as a basis for many additional O1 drugs, and through future partnerships. With all these layers, one can reasonably ask how many of these would be required to create a large, productive, sustainable pharmaceutical company. We indeed have many opportunities to create durable value. Importantly, we believe we have the capital and access to substantial additional capital to support our work. The Sarepta deal was a critical component of this. During the last quarter, we closed the Global License and Collaboration Agreement with Sarepta materially strengthening our balance sheet. This transaction brought in $500 million as an upfront payment and $325 million through the purchase by Sarepta of Arrowhead Common Stock at $27.25 per share. Arrowhead will also receive $250 million to be paid in annual installments of $50 million over five years. In the short term, we have potential to receive an additional $300 million in milestone payments associated with the continued enrollment of the Phase 1-2 study of Arrow D1, which we are on track to achieve during the next few quarters. Taken together, this adds up to $1.375 billion in cash payments. The total potential value of this deal, including upfront payments, equity investments, and potential milestones, exceeds $11 billion. We are also eligible to receive tiered royalties on commercial sales. This will be a transformational deal in any environment, as I mentioned with state of biotech equity markets today, we feel very good about not having to raise equity capital at this time to fund our growth as we become a commercial company. We are now funded into 2028 and through multiple important milestones that we think can drive substantial value for our shareholders. With that overview, I'd now like to turn the call over to Bruce Geddes. Bruce?

Thanks, Chris, and good afternoon, everyone. Arrowhead has been working in RNAi interference for nearly 20 years. During that time, we've made great strides creating a modality that is increasingly scalable, reliable, potent, and generally well-tolerated. We've also made great strides bringing RNAi to where it is needed. In addition to delivering to hepatocytes, we are now able to address lung, CNS, muscle, adipose, and cardiomyocytes. We have always been a great R&D platform company, and we are now taking the next step forward as we seek our first marketing approval or clozacirin, and familial chondromyconemia syndrome, or SDS. Most of you will be aware of the results of our Phase III Palisades study, which was published in the New England Journal of Medicine last year. It showed statistically significant responses on all primary and alpha-controlled secondary endpoints, including a large reduction in the primary endpoint of triglyceride reduction of 10 months, as well as reduction in incidence of confirmed pancreatitis in the protocol-defined comparison of placebo and the combined 25- and 50-mg dose groups. Following pre-NDA discussions with the FDA, a marketing application for approval for use in SDS was submitted on November 16, 2024, and accepted for review by FDA with BDUCA date of November 18, 2025. At this time, we do not anticipate being asked to participate in advisory committee meetings We've been frequently asked whether the changes in Washington have impacted the review. While we have no special insights into the inner workings of the agency, our impression has been that the review is progressing as we would have anticipated, and we know of no FDA personnel or timing changes affecting our program at this time. We have also had routine pre-filing meetings with EMA and appointed CHMP rapporteurs that culminated in the submission of a marketing authorization application, or MAA, on February 28, 2025, which was confirmed to be valid for review on March 20, 2025. Our plan is to seek approval in the UK following approval in either the US or Europe by leveraging the international recognition procedure. We've also had pre-filing meetings with the Canadian and Japanese regulatory authorities and have plans for filing marketing applications in those and other jurisdictions as well. We are hopeful that these filings will lead to Arrowhead's first commercial launch, possibly beginning as early as late this year. As welcome as we believe that Clozastran will be for FCS patients, this is just the beginning of the story for this important drug. While we were studying Clozastran and FCS, we were also evaluating the drug in much larger patient populations, including severe hypertriglycerideemia, or SHTG, defined as patients with fasting triglycerides above 500 milligrams per deciliter, but without genetic SNS, as well as in patients with mixed hyperlipidemia. These important studies led to publications last year in the New England Journal of Medicine, General Cardiology, and Circulation Journals. After receiving end-of-phase II feedback from FDA and EMA, We have initiated a phase three program in severe hypertriglyceridemia. This program is designed to meet key standards based on guidance documents from the International Council of Harmonization. Key requirements and drove design considerations include two pivotal placebo-controlled trials in SHTG patients and a safety database of at least 1,500 patients treated with Clusastran compared with placebo for 12 months. Shasta 3 and 4 are very similar studies designed to demonstrate significant improvement in triglycerides with 25 milligrams per vaseline compared to placebo over 12 months of treatment. The two trials told around 700 patients that they were highly tired. Given the results here in stage 2 Shasta 2 trial, where the primary endpoint difference in triglycerides at week 24 compared to baseline at the 25 milligrams dose was minus 53%, with a p-value of less than 0.001. To reach the necessary 15,000 patients in the safety group, SHASIS-3 and 4 are supplemented by a supportive year three trial with mixed epidemiology. Also blinded, it took care of 25 milligrams per quarter of the disaster versus placebo for one year, with a planned enrollment of about 1,400 patients. We have previously guided that we expect the last patients to be randomized in the SHTG program this year. Based on enrollment today, we now anticipate the last patient to enroll sometime this summer. We've been encouraged by the enthusiasm of our investigators and indicated by the rapid enrollment and also by a very low premature discontinuation rate for adverse events and other reasons. The last patients entered will be treated for one year before the database can be locked, the data analyzed, and hopefully submissions made to regulatory authorities seeking approval for use in SHGG patients. Thus, before the end of the summer, it should be possible to narrow the potential timing for SHTG supplemental NDA submission. The SHTG program also features a first-of-its-kind study named SHASTA-5 to directly assess the ability of lisacrin to reduce the risk of acute pancreatitis in SHTG patients with a purpose-designed outcome study. We are conducting this study expressly to meet the needs of sophisticated payers, especially outside of the U.S. It is not gaining through the SHTG filing. It is unlikely to be complete prior to those submissions. We do hope that it will be completed during the review process in Europe and elsewhere to be available for pricing discussions with the national affairs post-approval. We cannot provide precise timing of submissions, not only because of uncertain timing in enrollment, but also because, as an outcome study, treatable continuance of the required number of events have been collected rather than for a fixed duration. The screening is underway at centers currently open for a range of trials, so the trial is underway. More information on design will be presented following presentation at major medical meetings. The R&D group is also playing its role in growing the awareness that new treatments are reaching the market for treating FCS. Our medical affairs team reporting into R&D continues to play a vital role in educating the medical community. Our medical science liaisons are actively engaging healthcare professionals in scientific exchange, helping them better understand and raising awareness of familial catalyzerine syndrome, the significant unmet medical needs, and the growing body of clinical data now available. The team has been present at key medical conferences during this last quarter, including the American College of Cardiology meeting the European Episclerosis Society and British Episclerosis Society joint meeting, and the European Society of Endocrinology meeting taking place presently. In parallel, our public patients team continues to generate and disseminate important data to support these scientific efforts and expand awareness within the clinical community. Most recently at EAS, an abstract authored by experts in the field titled Palisade, Closasterin decreases risk of acute pancreatitis and improves indices of quality of life in FCS was featured. The authors concluded in the abstract that in patients with FCS, Closasterin markedly reduced triglycerides and risk of pancreatitis with promising changes in indices of quality of life. Those of you who have watched this for a while know that we have another agent in our cardiomyopatetic pipeline that, like Closasterin, has very strong support for human genetics. I'm describing Zidaciran, an RNAi drug designed to reduce expression of angiopoietin protein-like 3, or HPT-L3. This drug also produced strong results in two phase IIs, including ARTIS-II in mixed hyperlipidemia, also published in the Room of General Medicine, as well as the GATEWAY study in HOFH patients, with data presented last week at the European Atherosclerosis Society Conference. However, as we've discussed previously, we saw Zodastrin as positioned in the crowded LDL space where the unmet medical need has largely been addressed by statins and PCSK9 inhibitors. But there is an important population where we think Zodastrin would make an important contribution without requiring an outsized commitment of resources by Arrowhead, this being for patients with homozygous familial hypercholesterolemia. These patients have exceptionally high LDL cholesterol levels, and because their genetic abnormalities usually result in very low or absent LDL receptor function, are usually not able to get to goal LDL levels, even with maximal statin and PCSK net therapies. This leaves them with very high risk of suffering cardiovascular events and early mortality. Monoclonal antibody against SPTR3 has already been proven effective in these patients. It requires monthly intravenous infusions and can lead to immunologic reactions. We conducted an exploratory phase two study in this population and saw similar benefit, but with convenient quarterly subcutaneous dosing. Moreover, these patients are usually cared for by physicians which largely overlap the physicians who treat STS and SHTG, making the potential marketing of Zidasteride in these patients efficient for us, or to be improved. We have designed a phase-free study of similar size to our phase-free palisade study comparing Zidasteride 200 milligrams quarterly to placebo, and expect to be enrolled in patients this year. Assuming successful demonstration of safety and efficacy and successful regulatory submissions so that Asteran could join Clus Asteran in the market as early as 2028 or 2029. As I said at the beginning of my remarks, we hope to see Clus Asteran emerge as our first commercially available drug to treat STS patients as early as this year. Based on our expected completion enrollment in the SHTG Phase III study this summer, We could see SHCG phase 3 completion in the summer of 2026 and an end in the 78 filing shortly thereafter. Interestingly, also before completion of the decade, based on public guidance, progress with phase 3 partner programs for alpaceran and opioid and fisiceran in liver disease associated with alpha-1 antitrypsin disease could result in approvals for these programs in a similar type. as well as with the possibility that some of our less mature department programs for important organ diseases might also find approval in that sector. It takes patience in this business to see an important new platform rise to prominence. We feel there is some good reason to have confidence in RNA interference with joyous homology of drugs and monoclonal antibodies as a foundational technology in drug development, especially as the field, which we see Arrowhead still leading, continues to push into new cell types, opening up additional important diseases to be addressed. I'll now turn the call over to Andy Davis.

Thank you, Bruce. With the PDUFA date for disaster in September-November 18, just six months away, I'm pleased to share that our commercialization efforts are advancing rapidly and with strong momentum. As discussed by Bruce, the medical affairs team is in facilitating publication of the results of Arrowhead's clinical trial. We're also making strong progress in building our commercial sales team. A national sales leader and a full complement of regional sales leaders are now on board and focused on hiring and onboarding top tier talent with deep rare disease and therapeutic area expertise. Interest has been very encouraging with thousands of resumes in the queue. And we're on track to fully hire and train our sales force by late summer. ensuring ample time for target validation and disease state education in advance of launch. A market access team is executed effectively on our pre-approval information exchange, or PIE, strategy, directed toward healthcare decision makers to help them plan for our potential approval. We've now engaged with payers representing a significant number of U.S.-covered lives, delivering compelling content on the clinical value and anticipated profile of disasters. and acute pancreatitis risk. Additionally, our analytics team is deploying innovative technologies to identify individuals potentially living with FCS. We're connecting with these potential patients through disease state education efforts, including opportunities for them to opt in for continued communication and support. Across our research and stakeholder engagement, the clinical attributes of Plasastrin continue to resonate strongly. and durable triglyceride reduction is compelling to numerous stakeholders. The Palisades study showed that plazasterin reduced triglycerides by approximately 80% from baseline as early as month one. But this effect sustained over 12 months and with limited variability, while placebo subjects showed variable changes ranging from plus 10 to minus 18%. As a reminder, the primary endpoint in Palisade was the median percent change from baseline in fasting triglyceride levels at month 10. plazasterine demonstrated a placebo-adjusted change of minus 59% with the planned commercial 25 milligram dose. Our market research also suggests that healthcare providers, caregivers, and patients have a strong desire to see triglyceride levels fall below expert guideline thresholds, such as 880 milligrams per deciliter and even 500 milligrams per deciliter. In Palisade, approximately 75% of patients at the 25 milligram dose achieved levels below 880, and approximately 50% achieve levels below 500. Numerous expert guidelines emphasize the importance of maintaining triglyceride levels below 500 milligrams per deciliter as the aspirational goal to reduce acute pancreatitis risk. Finally, we received feedback that patients are looking for a treatment option that minimizes disruption to their lives. Plazastrin shows a favorable dosing and safety profile. And as a reminder, Plazastrin is conveniently administered once every three months. potentially minimizing treatment burden and improving adherence. As our U.S. launch preparations continue at full speed, we're equally pleased to report steady progress on our European commercial efforts as well. We've already established a field medical presence and are actively engaging in scientific exchange at key European scientific meetings, laying a strong foundation for a successful rollout. We remain on track and deeply motivated by the opportunity to bring investigational disaster and individuals living with FCS and their families in both the United States and priority countries outside the United States. We believe this potential first-in-class SIRNA therapy will mark a major advancement, and we're fully committed to unlocking its patient impact. I'll now turn the call over to James Hamilton. Thank you, Andy. First, I'd like to provide a status update on our two early-stage obesity programs, Arrow Inhibit E and Arrow Out 7. Aeroinhibin E is designed to reduce expression of activin E, which is a ligand for adipose ALK7, while aero ALK7 is designed to reduce expression of the ALK7 receptor itself, both of which are involved in regulating adipose storage of fats. These programs have the potential to reduce visceral fat mass while simultaneously preserving lean mass, which we demonstrated in preclinical models and are now evaluating in clinical studies. AeroInhibine began dosing in December of 2024 and is progressing on our planned timeline. As a reminder, the Phase 1-2 study will evaluate AeroInhibine monotherapy administered to obese, otherwise healthy volunteers in both single and multiple dose escalation cohorts. The SAG cohort dosing is now complete, and the multi-dose monotherapy cohorts are actively enrolling. The study is also evaluating multiple doses of aro-inhibit E in combination with terzapatide, and these combination cohorts are actively enrolling now on our planned timeline. We anticipate the aro-ALK7 clinical program will be up and running shortly. The design of this study is very similar to the aro-inhibit E study with SAD and MAD monotherapy cohorts and MAD cohorts in combination with terzapatide. This study will also enroll obese otherwise healthy volunteers. Both studies are designed to assess safety, tolerability, pharmacokinetics, pharmacodynamics, and multiple exploratory obesity efficacy endpoints. We anticipate that some initial data may be available for arrow and hibinid around the end of 2025 and potentially for arrow ALK7 shortly thereafter. Our muscle-targeted programs partnered with Sarepta, arrow Dux4 for FSHD, and arrow DM1 for myotonic dystrophy type 1, While the decision to release data will be made jointly with Sarepta, it is our expectation that initial data release is possible in 2025. Lastly, I want to highlight some top line results from Part 2 of the Phase 1-2 clinical study of AeroC3, designed to reduce liver production of complement component 3 as a potential therapy for various complement-mediated diseases. In patients with IgA nephropathy, or IGAN, AeroC3 achieved deep and sustained reductions in alternative pathway complement activity and prognuria. The max mean reductions in C3 was 89% for serum age 50, which is an alternative pathway hemolytic assay reduced by 85%. AeroC3 also led to an important improvement in prognuria with a mean reduction in spot maximum individual reduction of 89% from baseline up through week 24. AROC3 was generally well tolerated, and the observed duration of effect is supportive of once every three months or less frequent subcutaneous dosing. We are very pleased with these results and are planning to present a fuller data set at the upcoming European Renal Association, or ERA, Congress in June. I will now turn the call over to Ken Miszkowski.

Thank you, James, and good afternoon, everyone. As we reported today, our net income for the quarter ended March 31st, 2025 was $370.4 million, or $2.75 per share, based on the $134.5 million fully diluted weighted average shares outstanding. This compares to the net loss of $125.3 million, or $1.02 per share based on $123.3 million, fully diluted weighted average shares outstanding for the quarter ended March 31st, 2024. Revenue for the quarter ended March 31st, 2025 was $542.7 million. No revenue was recorded in the quarter ended March 31st, 2024. Revenue in the current period relates to our license and collaboration agreement with Sarepta. As you know, the agreement with Sarepta was significant. It included many assets, including clinical assets, preclinical assets, and other assets to be developed. Common guidance requires that we allocate consideration to several items, including the value of the licenses we transferred, the ongoing work of certain clinical trials that we will oversee, as well as expected obligations regarding future assets to be developed. Initial fixed contracts REVENUE TO BE ALLOCATED INCLUDED THE UPFRONT PAYMENT OF $500 MILLION, THE PREMIUM PAID ON THE STOCK PURCHASE OF $84 MILLION, AND $250 MILLION RELATED TO THE FIVE-YEAR ANNUAL MILESTONE PAYMENTS. THIS TOTALS TO ABOUT $834 MILLION MAJORITY OF WHICH WAS ALLOCATED TO THE LICENSE AGREEMENTS AND RECOGNIZED IMMEDIATELY AND THE BALANCE WILL BE RECORDED AS WE FULFILL OUR PERFORMANCE We recognize revenue of $542.7 million during the quarter ended March 31st, 2025, and we expect the balance to be recognized over the period that we satisfy these performance obligations. These obligations include overseeing certain clinical trials as well as performing R&D work related to future clinical candidates. We expect $90 to $125 million in revenue to be recognized over the next 12 months, solely related to the revenue recognition of the initial fixed contract revenue. The balance will be recognized over the next five or so years, most of which will be recognized in the first half of that time period. We also expect future revenue related to cost reimbursement for certain discovery and manufacturing activities. Future near-term milestones of $300 million related to the DM1 program are expected to be earned in the next few quarters, and will be recorded in their entirety as revenue at that point, as would any other future milestone payments and royalties. Total operating expenses for the quarter ended March 31st, 2025, were $161.5 million, compared to $126.2 million for the quarter ended March 31st, 2024. Key drivers of this change were increased candidate costs, as the company's pipeline of clinical candidates both increased in advance into later stages of development. Net cash provided by operating activities during the quarter ended March 31st, 2025 was $460.1 million, compared with net cash used in operating activities of $92.4 million for the quarter ended March 31st, 2024. Increase in cash provided by operating activities is driven by the cash received for the Sarepta Agreement. Turning to our balance sheet, our cash and investments totaled $1.1 billion at March 31st, 2025. Our common shares outstanding at March 31st, 2025 were $138.1 million. With that brief overview, I will now turn the call back to Chris.

Thank you, Ken. Arrowhead has been a strong and stable position as a business, and we have made meaningful progress toward our long-term goal of developing and ultimately commercializing new innovative medicines for millions of patients. We are on schedule to launch Cladasterine this year, pending regulatory approval, with what we think is a best-in-class profile with useful differentiation from currently available therapies in FCS. We are also well on our way to fully enrolling this summer our suite of Phase III studies designed to support regulatory submissions for the large SHTG patient population. We are funded into 2028 and potentially through multiple launches of wholly-owned and partnered programs in late-stage developments. In addition, we believe our technology platform is the broadest and best in the field, giving us many opportunities to receive additional capital inflows from business development in areas that are outside of our core commercial focus. Thank you for joining us today, and I would now like to open the call to your questions. Go ahead.

Thank you. To ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. And our first question comes from Maury Raycroft of Jefferies. Your line is open.

Hi. Congrats on the progress, and thanks for taking my question. And best wishes to Ken, and welcome, Dan. Let's see. For Inhibini and ELK7, You've noted that the goal there is not to compete with GLP-1s, but to be used in combination. What's the latest you're saying on how you're setting expectations for initial monotherapy and potential combo data? I guess what you want to see in the initial update, including changes on weight loss, body composition, and relevant biomarkers.

Yeah, thanks, Maury. So, look, we're not giving any guidance on what The AMLO data were compelling. We saw good weight loss. As a monotherapy, we saw good weight loss in combination with tricep appetite. As you know, this is a new pathway that we think could fill some of the massive amounts of white spaces in the GLP-1 GIP current standards. So we're looking forward to seeing what we see. The real benefits here, we think, are potentially not just weight loss, but quality weight loss. So, look, let's just do what we see. I think we'll have our first flood of data towards the end of this year, and then it should be data rich, you know, gosh, virtually every quarter to the next year or so after that.

Got it. That's helpful. Okay. Thanks for taking my question.

You're welcome.

Thank you.

And our next question comes from Jason Gerberry of Bank of America. Your line is open.

Hey, guys. Thanks for taking my question. Just ahead of the positive serum FDA review decision, I'm wondering how you think about the robustness of your pancreatitis data and how that might look or feel a little bit differently in the package insert. I noticed, Tringol, that just as a mention of the numerical incidence reduction in the clinical section, and I'm wondering if you guys feel like based on Palisade that you might get, you know, maybe a more robust front page reference to the pancreatitis benefit. Anything you can just offer on the potential aspects of label differentiation would be much appreciated. Thanks.

Yeah. Hi. This is Bruce. You know, we haven't had any labeling negotiations with the FDA at this point, which, as you would expect, I mean, we're still in the midst of the review process, and labeling negotiations come later. So, possible for me to estimate how they may view things. We obviously like our data quite a bit. We did our study differently in that we looked at patients that had confirmed pancreatitis using the Atlanta criteria while they developed a scale that also included possible and probable, you know, quote unquote pancreatitis, which actually don't meet the Atlanta criteria as definite pancreatitis. So frankly, it's a little bit of an apples to oranges comparison, and I really don't know how that, you know, how that might play out during lately discussions or even in the market. But, you know, it is a little bit apples to oranges. We went, I guess what you might say, the more conservative route that we think especially, for instance, with payers in Europe especially, that might turn out to be important. But, you know, it's, you know, clearly these drugs are extremely helpful, not just in reducing triglycerides, but also in turning that reduction in triglycerides into reduced abdominal pain and pancreatitis. So, We'll see. I really can't give you any guidance for what labeling is going to look like. In our business, we do the studies, we submit, the FDA reviews and the FDA decides. So ultimately, it's going to be up to them.

We'll obviously discuss it with them, but I can't speak for them at all. And let me just add here more broadly. The biology here is clear. In these patients, the higher the triglycerides, So the goal here is to get triglycerides as low as you can. So while we are monitoring for pancreatitis, of course, in the Shasta 3 and Shasta 4 studies, we are looking at an abdominal pain. The real thing to focus here on is how low can we get triglycerides. And as I mentioned in the prepared response, prepared remarks, as well as we presented in the past, in that Phase III study below 880 and something like 50% below 500, and that's a real feat for these FCS patients who, as we mentioned, came into a study with a mean triglyceride level of 2,500. I think that's what we need to focus on here.

Got it. Thanks, guys. Welcome.

Thank you.

And our next question comes from Ellie Merle of UBS. Your line is open.

Hey, this is Jasmine on for Ellie. Thanks so much for taking our question. So, first, for plesioscleran and SATG, just on acute pancreatitis, can you talk about what the latest is that you're expecting for your baseline rate of AP in your population for SHASTA 3 and 4? And what do you think the magnitude of effect that you think that you can show here? And then just quickly, second, on Zodasteran, can you clarify your current expectations in terms of potentially expanding beyond HOFH here? Thanks.

Let me take the second one first with Zodasteran. You know, the expansion beyond HOFH, you know, would be in, you know, potentially some sort of high-risk you know, HEFH population. And that's actually something we discussed with, you know, with the agency and proposed, you know, a narrow, you know, a narrow approach of looking only at those patients that, you know, despite maximal therapy were not able to get to the goal of, you know, LDL reduction, you know, that would be associated with the greatest reduction of risk. They just weren't comfortable with that because they thought, well, I can't speak for why, but they, you know, maybe because they thought it was going to set a precedent. But, you know, they, you know, to get into HEFH, they wanted a full, you know, a full program, you know, multiple adequate, well-controlled trials, you know, 1,000, you know, 1,500 patients or more safety, et cetera. And it didn't make sense to us, you know, to go after such a, sliver of high risk patients with a very expensive, very long program. So we're going to stay focused on HOFH. And we do not anticipate at this time that we would expand Zadastrian, but beyond HOFH. It's just not feasible and it's not a good use of our resources. Going back to Zadastrian, if I understood your question of what we think the mean entry response we might see. You know, we would expect the tests are pretty good and we'll, you know, we'll pretty much replicate what we saw at phase two. And in phase two, you know, the mean triglycerides in the SHTG population in that study were around 900, I think, maybe 850 to 900. And as I said, you know, our placebo-adjusted change was you know, large reductions in triglycerides, which is why we said, you know, this trial is really, you know, these trials are really overpowered because even with, you know, a smaller trial, these two, we have P-value of less than 2.001. So, you know, it will, it should be an impressive, you can't say it will, but it should be an impressive, we expect it to be an impressive adjustment.

but the mean enrollment triglycerides probably would be . Did I get your question right, Ellie? Did I understand your question?

Yeah. We also were just interested in the mean of what you expect for acute pancreatitis, kind of a baseline.

Oh, in the pancreatitis study. Okay. Well, I would expect that's going to be closer to the to the FCS, to the Palisade baseline. So I would expect that the pancreatitis study baseline, it won't surprise me if it's around 2000. It could be a little bit lower because patients, especially when they've had a history of pancreatitis, they're more susceptible to repeat pancreatitis even at lower values. But it won't shock me if it turns out to be somewhere around 2000.

Okay, thanks so much. Very helpful.

You're welcome.

Thank you.

And our next question comes from Patrick Tucciot of H.C. Wainwright and Company. Your line is open.

Thanks. Good afternoon, and congrats on all the progress. I was actually curious about your Arrow C3 and Arrow CFB programs and your latest thinking regarding the potential positioning of these compounds in complement-mediated diseases. how you're viewing these compounds. Are they core to your portfolio or there's potential here for partnering? Thanks.

Sure. I'll take the second part of that and I'll leave the first part more for James. You know, look, we are open, you know, to discussing partnerships for C3 and Factor B. Those drugs, at least in my mind, those drugs work. You know, they do what they're designed to do. They lower C3 and they lower Factor B. and we think there's a number of places they can go. If push came to shove, we could certainly build out a commercial presence within a fairly narrow set of opportunities. But if we can find the right partnerships, I think that would be more beneficial to us. We'll just see if we can find the right partnerships with the right economics. And right now, it's too early to tell. James, do you want to talk about some of the opportunities? Yeah, sure. So the data that we talked about earlier today with AeroC3, of course, that's the IGAN data. We're still pending some data in the C3G population with that molecule. And of course, AeroCFB is also applicable and could be used in those renal disease populations, potentially in some of the hematologic pretty well against the other complement-mediated drugs approved or being studied in the renal indications. In terms of proteinuria reduction, you know, we talked about the 41% reduction in proteinuria with ROC3. I think that, relative to what else is out there, is pretty competitive, particularly when you look at the infrequent dose administration that you know, dosing every three or every four months, that could have some advantages.

Thank you.

And our next question comes from Andrea Newkirk of Goldman Sachs. Your line is open. Good afternoon.

Thanks for taking our question. James, maybe one for you as you think about entering the obesity space. How are you thinking about advancing both arrow ELK7 as well as arrow inhibi through clinical development? And do you have interest or capacity to advance both, or would you look to make a decision of one versus the other following the initial data sets?

Sure. Yeah, so our thoughts with those that development.

And we have aero-inhibit E, which targets the hepatocyte expression, uses the so-called GALNAC technology for delivery. That technology is pretty well-fetted. We know what the safety profile, at least of the platform is, and we know that we should be able to knock down the gene target in the hepatocyte. In contrast, aero-ALK7 uses a completely different platform The animal data looked really compelling with that molecule, but the platform has never been in humans before. So presumably there's a little bit more risk there just because the platform hasn't been de-risked. Our thought was to take both of those through phase one and then get a look at the data at both the safety and the PD and efficacy data and then choose one to move forward. And there may be opportunity for partnership either with one or both of those. But that was the thought of why we brought both of them into the clinic. And let's also be clear, I do not expect these to be our last two obesity assets. You know, with our ability to address hepatitis and our ability to address potentially CNS via this blood-brain barrier platform,

Okay, thank you so much. Thank you.

And our next question comes from Luca Izzi of RBC. Your line is open.

Oh, great. Thanks so much for taking my question. Congrats on the progress. Maybe, Bruce, circling back to the prior question, can you just maybe remind us how you're thinking about SHA-STAT-5 study design, what patients will you enroll, and maybe most importantly, how many patients do you need to actually hit the stats? So if you can talk about powering assumptions, that would be much appreciated. And then maybe a bigger picture on plasasterone, Chris, how are you thinking about commercialization of the molecule XUS. Are you planning to do that by yourself, or you're still looking for a partner? Any thoughts there? Much appreciated. Thanks so much.

Yeah, so again, this trial will be, we believe, the first ever trial where demonstrating a benefit in scampiotitis is the primary endpoint. So it's similar to a MACE trial. from the standpoint of we're going to count events and when we hit a certain number of events, we'll analyze. We haven't yet divulged what that number of events is. I think we probably will in the future, but so far we haven't. But we have a pretty good idea of obviously what that is. We also haven't said how many patients we're targeting. But again, my guess is that we may continue to you know, enroll, you know, depending on sort of what the rate of pancreatitis is that we're seeing in the early days. But the trial itself is a trial enriched from the perspective that it requires, you know, that, you know, patients have had a history of pancreatitis, including a history of pancreatitis in the recent past. which those patients are at higher risk of pancreatitis than hypertriglyceride patients that have never had a pancreatitis event. But again, no one's ever done a trial like this before. So understanding exactly what the observed risk will be is something that we'll get some understanding. Of course, I'll be blinded, but we'll get some understanding as the trial gets underway and it gets moving And that will sort of determine, but it's certainly not the size of a CVOT or anything like that. It's much smaller, you know, given the reduction of pancreatitis we saw in Palestine, for instance. But, you know, we haven't, you know, I think we'll give more detail in the future, but we're not ready to give all the deep detail at this point.

Hey, Luca. So regarding your question on pedestrian, so as you know, we're full speed ahead in the U.S. for FCS and eventually FACG opening. The rest of the world, we are open to finding partners. We are preparing right now in Europe. Andy, do you want to discuss how we're approaching that right now? Yeah, Luca. So we think the European markets in particular, the large four European markets in the U.K. lend themselves extremely well to commercialization for a rare disease like STS. Many of these patients on their patient journey are triaged through a small number of centers of excellence. And so with limited infrastructure and resources, we believe we're able to help these potential STS patients through those centers of excellence. And so as far as priority markets outside the U.S., those large markets in Europe and the U.K. and also Canada are a priority for us.

Got it. Thanks so much, guys.

Thank you.

And our next question comes from Edward Tentoff of Piper Sandler. Your line is open.

Great. Thank you very much. Appreciate you taking the question. So, you know, important to note that you guys are CEDAR-reviewed, not CBER-reviewed. Do you anticipate an adcom or anything like that? And what other steps are you taking in preparation for hopeful approval and likely launch? Thanks.

Well, as far as the adcom goes, we've not been advised that there's an expectation for an adcom. So at this time, we don't think that an adcom's in our future. As you probably know, the agency can change their opinion on that at any time if data develops in their analysis that makes them want to have an adcom for some reason. But at this point, There's no anticipation of a headcount. So the likelihood, I suppose, is lower every day we get closer to potential approval. We can't say we won't have one because they can decide any time that they need one. We don't see it though.

And then the second part, I guess, is... The second part was what actions are we taking to be ready for one?

So I guess we talked a bit about that. From the R&D perspective, we have an educational mission under our medical affairs function and MSLs. So that's very much just a matter of helping physicians be ready for a new drug coming into the FCS space. We're really

the ionis launch ever really first you know so there's a big challenge in this and bruce do you think the launch of ionis is helpful in terms of sort of priming the pump a little bit there and then hopefully you guys coming in with a uh better therapy afterwards thank you well look i think any

Any organ disease that has had essentially no approved therapies has always benefited from as much educational effort as you can get. History tells us, and I could quote many examples, where the first approved drug really did not fully reopen that market. It often takes two or more companies to be promoting into a space, even an organ space, to really get those markets to open up and grow. So it's paradoxical because people might think you're better off being alone. In many ways, you're actually better off when there are multiple competitors. Now, yes, they fight it out who gets the most share in the end. But actually, the more educational noise, the better when you're trying to open up a market like SCS. And the exact same will be true for SHGG as well. More noise is better than less. And, yes, the best drug usually wins the share battle, but the pie gets much bigger with more education coming on.

That's really helpful. Thanks.

Thank you. And our next question comes from Mike Als of Morgan Stanley. Your line is open.

Good afternoon. Thanks for taking the question. Maybe just another one on plazaciran and the upcoming FCS launch. It sounds like you guys are making good progress in launch prep, but maybe you could just talk about or remind us the U.S. patient population and then some of the progress you're making identifying patients and if there's any way to try and accelerate that trend. Thanks.

Yeah, thanks for the call, Mike. You'd be familiar with the epidemiological data suggesting that the prevalence of SDS in the United States would be 1 to 13 per million. And so that spans anywhere from the hundreds of patients in the U.S. to mid-single-digit thousands. And we think the variability around the single-digit thousands is really around whether you think about genetic FCS or even clinically diagnosed FCS. That's why there's some variability there. As a reminder, of course, in Palisade, we studied plasacrin in both the genetically confirmed and clinically diagnosed patients and showed similar results. And so that's how we think about the broader market for FCS. As far as patient identification, I would say that our internal team here, our analytics team, and our marketing team is comprised of seasoned professionals who have cut their teeth in cardiometabolic and lipids specifically and are really using the latest technologies to patient find. and ultimately to support those individuals who may have SDS and don't know that they have SDS. So patient finding will be absolutely critical as we move into this space, as it is with any ultra-rare condition. We feel like we have the people and the capabilities to excel there.

Got it. Thank you.

Thank you. Thank you.

And our next question comes from Mayank Mantani of B Reilly Securities. Your line is open.

Yes, good afternoon, Dean. Thanks for taking our questions, and congrats to Ken for 16 years of service. Just maybe on the InnoVin E, a quick follow-up on the SAD data. Is there anything that you are... you can or willing to share what maybe the learnings there were. And on the MAD Part 1B and Part 2, which is the combination, are those sequential or are they happening in parallel? And I have just one follow-up for Ken, if I may.

Yes, sure. On the second part of the question, those, the combo studies and the MAD non-combination those are in parallel, so those are enrolling at the same time.

And then I think in terms of what we can share, as Chris said earlier, we'll have to wait and see later this year what kind of data that we have available.

Okay. Understood. And Ken, what partnership-related milestones are factored in your, this 2028 runway guidance, if you could maybe just clarify that? Thanks for taking our question, and congrats, Ken.

So, we've included the near-term milestones that we expect to get from Sarepta. And beyond that, there are other milestones. If we think they are probable of happening, then we've included those as well.

But we're not providing specifics on that. Understood. Thank you.

Thank you.

And our next question comes from Manny Faruhar of Lyric. Your line is open.

You have Ryan on for Manny. Thanks for taking our question. Maybe just a quick financial one. I noticed you guys started to pay down that credit facility. I'm just wondering, should we expect that to continue over the course of the year, or was this more of just a one-time pay down to kind of bring that total down? Thanks.

So the one-time pay down was because of the SREP agreement. There will be future payments on that, but it's only related to times when we have cash flow coming in from milestones and such.

So it's only attributable to when we have some cash that's coming in. Got it.

Thanks. Thank you.

And our next question comes from Brendan Smith of TD Cal, and your line is open.

Maybe just similar to a couple earlier questions, I wanted to ask a little bit more on your latest thinking for the CNS assets. So is the plan as of today to carry those forward internally, or are you already kind of thinking that these could potentially be partnered or licensed? And then maybe more specifically for MAP-T, are there any subsets of the AD population you'll look to target first? Just kind of wondering how we should think about the potential design there and segmentation of that market. Thanks, guys.

Sure. James, why don't you take the MAP-T, and then I'll take the both questions. Sure. So the second question on MAP-T, not at this point for the Phase I design. It's not entirely finalized yet, but suffice it to say that the the main goal of the study will be to evaluate safety and measure PD markers of knockdown of tau, various subtypes of tau in different populations. So we've not specifically pinned down subtypes of AD that we plan on studying. And regarding your first question, so as we talked about, our first three candidates in the clinic are expected to be MAP-T towards the end of this year for Alzheimer's. HCT, for Huntington, that's already likely to Sarepta. We expect that to be this year, too, by the end of the year. And then first part of next year, alpha-synuclein for Parkinson's. So HCT is already off the docket for right now. We may have alpha-synuclein and MAP-T. We've always been clear to potential partners that MAP-T is off limits right now. We view that as a potentially very high-value target. Look, we don't know yet, you know, if this CNS platform is going to translate from animals to humans. We will see, and so this is a bet that we're making. But we think it's a good one, given the data we've seen in the preclinical models and given the, you know, the validated nature of MAP-T as a target. So we're holding on to that, at least for right now. You know, we'll see where that goes in the future. Alpha-synuclein, look, you know, we like that target a lot. Um, and, and, you know, if we, if a partner comes in with the, with the right partner comes in with the right kind of deal, we would certainly consider a partner in that. Um, um, uh, so that, so that we don't feel quite as strongly, at least in the near term, um, as we do on map T and then, and then look, those are the first three of, we think, we think many, you know, once we have this, this platform, uh, validated in humans, we're going to run. There's a number of additional good targets that we are developing internally. And my expectation is, you know, if we see that this translates as we hope it does, you're going to see a large number of additional CMS targets, some of which we'll hold on to, some of which we'll partner.

Got it. Sounds good. Thanks, guys.

You're welcome.

Thank you.

And our next question comes from Prakhar Agrawal of Cantor Fitzgerald. Your line is open.

Hi, thank you for taking my questions and congratulations on the quarter. So Ionis has the Phase 3 SHTG readouts coming soon. If Olizarson achieves statistical significance on pancreatitis events in Phase 3, how does that impact your development strategy to have the pancreatitis reduction data in the label around the time of launch versus waiting for Shasta 5 to read out? And anything else you will be focusing on when Olizarson's SHTG trial reads out? Thank you.

Well, it'll be interesting to see whether they can accrue enough events to actually achieve anything there. We'll see. From our perspective, that was not a good enough bet for us to rely on that, especially in Europe, to do that. Our program is also designed you know, to look at pancreatitis events, albeit we look at definite pancreatitis. We don't look at possible, you know, cases. We just don't think that, you know, we think there's a high chance that that's going to worry the, you know, the health technology authorities in Europe. So we really felt that it had to be definite pancreatitis from our perspective. But we are adjudicating any pancreatitis that occurs in Shasta 3 and Shasta 4, and we are, you know, we have written those studies so that we can merge those two trials for the purpose specifically of motility pancreatitis, and we intend to do that. But ultimately, you know, that for us feels like a high-risk strategy in all comers SHTG. And again, I think that a purpose-built study, rather than a secondary endpoint, will be much more agreeable to the payers, the most sophisticated, difficult payers in the world, which are mostly the European payers and some other places as well.

Thank you.

And our next question comes from David Leibowitz of Citi. Your line is open.

Hi, everyone. This is Ike Lee on for David Leibowitz. Thank you for taking our question. We have one on pricing for post-serum. How do you think about launching this in FCS and then waiting for the SHTG data in the interim We expect something like Tringoza also getting a label expansion in SHTG and therefore having to move from an ultra-rare pricing scheme into something that is a little bit cheaper. Is that something on your mind yet as you look towards commercialization? What are your thoughts on potentially having to navigate the ultra-rare versus much more prevalent disease pricing schemes? Thanks.

Sure, look, I think we can have and we are having transparent and open conversations with payers. You know, should we be lucky enough to have a disaster end approved in FCS? It's a relatively narrow population, and so we would need to get reimbursed at a high level that is commensurate with ultimate and ultra-horror. Should we be lucky enough to have, you know, shafts of three and four read out well and Conceptually, so that we know on a more granular level about what those two prices are. We just don't know at this point. It's going to depend upon a lot. Conceptually, that is our strategy, but I can't get more granular than that at this point.

Thank you.

I'm showing no further questions at this time. I'd like to turn it back to Chris Anzalone for closing remarks.

I will thank everyone for joining us today. It is bittersweet to end this call. This is the last time I'm going to have Ken on my left during these calls. And as we mentioned in the prepared remarks, I really appreciate his great work for the last 16 years. And I'm going to miss having him here. Having said that, I'm, of course, excited to have Dan on board today to my right, maybe to my left, you know, once Ken's gone. But thank you all for joining us today.

This concludes today's conference call. Thank you for participating and you may now disconnect.