Arrowhead (ARWR) Q3 2025 Earnings Call Transcript | The Motley Fool

DATE

Thursday, August 7, 2025 at 8:30 p.m. ET

CALL PARTICIPANTS

President and Chief Executive Officer — Dr. Christopher Anzalone

Chief Operating Officer — Dr. Bruce Given

Chief Commercial Officer — Andy Davis

Chief Medical Officer — Dr. James Hamilton

Chief Financial Officer — Dan Appel

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TAKEAWAYS

Revenue— $27.8 million (GAAP revenue) for Q3 FY2025, primarily from the Sarepta partnership (approximately $20 million from recognition of initial consideration and $7 million from collaboration reimbursement).

Net Loss— Net loss (GAAP) was $175.2 million, or $1.26 per share, for Q3 FY2025, compared to $170.8 million, or $1.38 per share, in Q3 FY2024, with 138.1 million shares outstanding as of Q3 FY2025.

Operating Expenses— $193.3 million in total operating expenses for Q3 FY2025, an increase of $17.2 million year over year due to higher R&D ($10 million increase from expanded phase 3 posasiran trials and preclinical activities) and elevated SG&A ($7 million increase related to commercial preparations).

Cash Position— $900.4 million in cash and investments as of Q3 FY2025.

Milestone Payments— $100 million milestone earned from Sarepta for ARO DM1 first enrollment target, to be recognized in Q4 FY2025, and an expected additional $200 million payment at second enrollment, anticipated at the end of the year; both linked to the ARO DM1 program.

Sanofi Agreement— Vicerna Therapeutics, majority-owned by Arrowhead Pharmaceuticals, signed a deal for Sanofi to acquire exclusive rights to develop and commercialize clozasiran in Greater China, providing a $130 million upfront payment (revenue recognized in Q4 FY2025), up to $265 million in potential future regulatory milestone payments, and potential royalties.

Clozasiran Development— All phase 3 studies (Shasta 3, Shasta 4, MIRROR 3) fully enrolled, involving approximately 2,200 patients across 24 countries, with full enrollment reached in June 2025, with primary triglyceride endpoints; study completion expected by mid-2026.

US Regulatory Timeline— FDA PDUFA date for clozasiran in FCS set for November 18, 2025, with commercial buildout and sales force training on schedule.

Zodasiran Progress— The Yosemite phase 3 study for HoFH was initiated with the first patient enrolled in July 2025; 60 patients will be enrolled over twelve months in the Yosemite phase 3 study of zodasiran, assessing LDL cholesterol reduction as primary endpoint.

Partnership Economics— Vazirsiran (Takeda) subject to a 50/50 US profit share and 20%-25% ex-US royalty plus up to $527.5 million in outstanding milestones; molpasiran (Amgen) eligible for up to $485 million in milestones.

Obesity Pipeline— ARO INHBE (phase 1/2 multi-dose cohorts enrolling, including tirzepatide combination) and ARO ALK7 (phase 1/2 single-dose escalation underway); initial data for both expected year-end.

Payer Access— The market access team has engaged with payers covering over 85% of US lives to date; favorable feedback on clozasiran clinical value, including triglyceride lowering and acute pancreatitis risk reduction.

Commercial Infrastructure— Sales and market access teams are fully staffed for clozasiran launch, targeting preventative cardiologists, endocrinologists, and lipidologists.

Clinical Expansion— Multiple new clinical entries planned, including a first-in-class RNAi dimer targeting PCSK9 and APOC3, and a planned CTA filing for ARO MAPT in CNS indications later this year.

SUMMARY

Arrowhead Pharmaceuticals (ARWR -1.53%) highlighted several market-moving developments including the imminent US regulatory decision for clozasiran, robust capital infusions from major partnerships, and continued advancement of both its wholly owned and partnered clinical pipeline. The full enrollment of global phase 3 trials for clozasiran and the initiation of the zodasiran Yosemite study signal a maturation of Arrowhead Pharmaceuticals’ late-stage cardiometabolic franchise. Tangible commercial readiness is evidenced by the completed US sales team buildout, widespread payer engagement, and clinical trial investments, positioning Arrowhead Pharmaceuticals to address both rare and prevalent metabolic indications. Diversification of future value was underscored by progress in central nervous system and obesity programs, as well as the continued monetization of ex-US assets through business development deals.

Dr. Christopher Anzalone stated, “Sarepta management has clearly stated that it believes this represents the future of the company.” in reference to Arrowhead Pharmaceuticals-licensed programs prioritized in Sarepta’s strategic restructuring.

Dan Appel reported the $100 million Sarepta DM1 milestone payment to be recognized in Q4 FY2025 and the $130 million Sanofi upfront payment to be recognized as revenue in Q4 FY2025.

Bruce Given referenced, “phase 2 Shasta-2 trial, where the primary endpoint of difference in triglycerides at week 24 compared to baseline for the 25-milligram dose was minus 53%, with a p-value less than 0.0001,” supporting clinical efficacy.

Andy Davis said, “To date, we’ve connected with payers representing over 85% of US covered lives,” highlighting preapproval market access penetration.

INDUSTRY GLOSSARY

FCS (Familial Chylomicronemia Syndrome): A rare genetic disorder causing extremely high triglyceride levels and risk of acute pancreatitis, targeted by clozasiran.

SHTG (Severe Hypertriglyceridemia): Medical condition with very high triglyceride levels, associated with acute pancreatitis risk, subject of key phase 3 studies.

HoFH (Homozygous Familial Hypercholesterolemia): Inherited disorder resulting in extremely elevated LDL cholesterol due to little or no LDL receptor function, targeted in the Yosemite study for zodasiran.

sNDA (Supplemental New Drug Application): Regulatory filing submitted to the FDA to seek approval for a new indication or label expansion for an already approved drug.

PDUFA (Prescription Drug User Fee Act) date: Statutory deadline by which the FDA must respond to a new drug application.

APOC3 Inhibitor: Drug class that reduces apolipoprotein C-III, leader in lowering triglyceride levels; clozasiran is described as the only APOC3 inhibitor showing positive phase 3 results in both genetic and clinical FCS.

siRNA (Small Interfering RNA): Molecule that induces targeted RNA interference, the technology platform for Arrowhead Pharmaceuticals’ therapeutic candidates.

Full Conference Call Transcript

Dr. Christopher Anzalone, President and CEO of the company. Chris?

Christopher Anzalone: Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Before discussing the progress we’ve made over the past quarter, I’d like to address questions surrounding our partnership with Sarepta Therapeutics. Sarepta has recently experienced high-profile setbacks in products and programs that are unrelated to those licensed from Arrowhead Pharmaceuticals. Nevertheless, the situation has negatively affected our stock price, so I’d like to talk about what we think is important from an Arrowhead Pharmaceuticals shareholder perspective. Sarepta recently announced a strategic restructuring plan that includes cost-cutting measures and a pipeline review that prioritizes funding, development, and commercialization of the programs the company licensed from Arrowhead Pharmaceuticals.

Sarepta management has clearly stated that it believes this represents the future of the company. This gives us confidence that Sarepta will continue to meet its financial development and commercial obligations under the agreement. The collaboration is continuing to operate as expected, which is, of course, a good thing for Arrowhead Pharmaceuticals. It represents a source of capital to fund internal programs, platforms, and commercial build-out while ensuring the assets licensed to Sarepta are developed and commercialized.

Should Sarepta fail to meet its obligations, the agreement has clear termination provisions that, in our view, would cause potentially valuable assets and associated intellectual property to be returned to Arrowhead Pharmaceuticals, without Arrowhead Pharmaceuticals having to repay any of the capital we have received from Sarepta. That would also be an acceptable outcome. Let’s now move on to our progress in the recent period. The biotech market has been challenging over the past several years, but we have no control over the broader sentiments. What we can control is our drive to serve patients and create shareholder value.

We view these broadly as three interrelated mandates: to create value, to create novel medicines capable of real impacts on human health, to generate the capital to fund development of them, and to build an engine to drive the growth of both. We made important progress in all these areas during the recent period. Let’s begin with development. This is clearly led by clozasiran. We continue to have productive interactions with regulators in the US and Europe about our market authorization applications and treatments of FCS, and we look forward to our November 18 US PDUFA date. We are also on track with commercial build-out, and our complete team is nearly assembled to support the SPS launch.

Further, we achieved full enrollment in Shasta 3, Shasta 4, and MIRROR 3, Arrowhead Pharmaceuticals’ phase 3 studies designed to support regulatory submissions for clozasiran in the treatment of severe hypertriglyceridemia or FHTG. These studies enrolled approximately 2,200 patients across 24 countries in a very short period of time. The primary endpoint is focused on triglyceride reduction at twelve months. So with full enrollment reached in June 2025, we are on track for study completion by mid-2026. Tosasiran, Arrowhead Pharmaceuticals’ candidate designed to reduce expression of ANGPTL3, 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.

We initiated the Yosemite phase 3 study and enrolled the first patients in July. Approximately 60 subjects over the age of 12 will be randomized to receive four quarterly doses of 200 milligrams of zodasiran or placebo. The primary endpoint of Yosemite is the percent change in LDL cholesterol from baseline to month 12. We think that given our phase 2 data, this feels like a relatively low-risk phase 3, potentially enabling a commercial opportunity that overlays well with the team we are building. Therefore, with a relatively small investment in a one-year 60-subject phase 3 study, we see an opportunity to extract more value from the commercial infrastructure we are already building.

Beyond clozasiran and zodasiran, there are two additional investigational RNAi-based candidates developed by Arrowhead Pharmaceuticals that are currently in late-stage pivotal studies. Vazirsiran, being developed for alpha-1 antitrypsin liver disease, is partnered with Takeda. Arrowhead Pharmaceuticals retains a fifty-fifty profit share in the US, 20 to 25% royalties outside the US, and up to $527.5 million of remaining regulatory commercial milestones. Takeda has guided that its phase 3 study could be fully enrolled this year, and the study has a primary endpoint at two years. Molpasiran, being developed for ASCVD, is licensed to Amgen, which announced that its phase 3 cardiovascular outcomes trial was fully enrolled in 2024.

We are eligible for up to $485 million of remaining related to this program. I highlight these four late-stage drug candidates because we expect them to be substantial value drivers in the near to mid-term. They also set the possibility of multiple launches between November 2025 and 2028. As we discussed in the past, clozasiran and our later-stage drug candidates together form the basis of our near-term value proposition. But these are enhanced by several programs underneath them, all of which made good progress in the recent period. Broadening out the cardiometabolic franchise are our first two obesity candidates, ARO INHBE and ARO ALK7.

ARO INHBE began a phase 1/2 study early in the year, and we recently announced that we dosed the first subject in a phase 1/2 clinical trial of ARO ALK7, which we believe is the first investigational RNAi therapeutic to enter clinical studies targeting adipose tissue. We expect to have initial early datasets for both candidates at the end of the year. Expanding the cardiometabolic franchise, we expect to reach the clinic this year with what we believe will be the first RNAi dimer in clinical studies. It is designed to reduce expression of both PCSK9 and APOC3 and could be a powerful agent in the treatment of ASCVD in patients with mixed hyperlipidemia.

There is substantial unmet medical need in this large patient population, and we should have a good idea of how well this drug candidate lowers LDL-C triglycerides in 2026. We continue to make good progress in manufacturing, toxicology studies, and clinical trial planning, and we are on track to file a DTA in the coming months. Our Virgin systemically delivered CNS franchise is also a potential near to mid-term value driver. Should this platform translate from primates to humans, we think it would represent a transformational leap forward in CNS therapies. Importantly, later this year, we expect to file a CTA for ARO MAPT, our wholly-owned candidate against Alzheimer’s disease and various tauopathies.

We are hopeful that we can achieve initial proof of concept with this platform and candidate as early as late 2026. Beyond these, we have a wealth of other clinical stage programs to drive longer-term and serve as sources of capital through business development. In fact, we are on track to meet our 2025 initiative whereby we would have 20 individual drug candidates in clinical studies or at market by 2025. Nine of these are partnered. The 11 wholly-owned clinical candidates serve as potential partnering targets and provide value redundancy to our other programs. And we expect several data readouts through the end of the year. Together, these give us tremendous amounts of ammunition to create value.

This brings us to the second important component of building durable value: adequate sources of financing, independent of the capital markets. We currently have a strong balance sheet relative to our needs over the next few years. In addition, we have made important progress sourcing new capital in the recent period. We recently announced that our Viscernet Therapeutics majority-owned subsidiary signed an asset purchase agreement whereby Sanofi will acquire rights to develop and commercialize clozasiran as a potential treatment for FCS and SHTG in Greater China. Viserum will receive an upfront payment of $130 million and be eligible to receive milestone payments of up to $265 million upon approval of clozasiran in FCS and SHTG in Mainland China.

Arrowhead Pharmaceuticals is further eligible to receive royalties on net commercial product sales in Greater China as part of the Arrowhead Pharmaceuticals Viscernal license, which was assigned in part to Sanofi. When we co-founded Vicerna in 2022, we saw Greater China as an important but undervalued potential future market for multiple programs in Arrowhead Pharmaceuticals’ pipeline. We licensed Chinese rights for posasiran, zodaciran, and ARO HST to Vyserga, which received outside funding to support developments. Sanofi has a strong presence in China and is well-positioned to assume commercialization of budesonide should it be approved by Chinese regulatory authorities.

We have not used any Arrowhead Pharmaceuticals funds to advance China-specific development or regulatory activities, and upon closing, we will own approximately 56% of ESSER. There are tax considerations and other costs, but we ultimately expect to realize a sizable amount from this deal. We hope that over time, we may monetize Chinese rights to zodasiran and ARO HSD in a similar fashion. The next key capital-building event I want to mention is reaching the first of two prespecified enrollment targets in the phase 1/2 clinical study ARO DM1 for the treatment of type 1 myotonic dystrophy, which is partnered with Sarepta.

Reaching this milestone triggered a $100 million payment, which is due from Sarepta within sixty days of when it was earned. We believe we are on track to meet the second enrollment target at the end of the year, which would trigger an additional $200 million payment. Our large pipeline and expectation that we have cash into fiscal 2028 suggest that we have the first two categories of value creation under control. This leads us to the third priority: creating an engine to drive the growth of both. I think it is rather clear that we have built this as well. We are now able to address gene targets in five different areas: hepatocytes, pulmonary, adipose, skeletal muscle, and CNS.

We also believe we are capable of silencing two genes with a single molecular entity using our dimer technology. This gives us broad reach to go where disease data is, and coupled with our expectation of introducing three to four new drug candidates into clinical studies every year, we expect to continue to grow our ability to impact human health very rapidly. This also reads on our ability to continue to access significant capital through business development before and after achieving substantial product revenue. Ultimately, we are doing all of this to bring important medicines to the patients who need them, and this does not happen without careful preparation.

We are building a right-sized commercial organization staffed with what we think are the top people in the field with extensive experience in cardiometabolic and rare disease. We’ve made strong progress in market access, analytics, operations, marketing, and building a commercial sales team. US launch preparations are now in full swing for clozasiran and SBS, and we intend to be launch-ready even before our PDUFA date on November 18. With that overview, I’d now like to turn the call over to Bruce Given. Bruce?

Bruce Given: Thanks, Chris. And good afternoon, everyone. Since we last spoke, we’ve continued the forward momentum in our development of posasiran to treat FCS and severe hypertriglyceridemia. Our US NDA to support FCS treatment was submitted last year, and our PDUFA date is November 18, 2025. Filings in Europe, Australia, and Canada are all progressing as well. We are reassured that the cadence of our interactions with US and global regulators has not changed, nor have any expectations of adhering to established timelines. Two months ago, we completed enrollment in our Shasta severe hypertriglyceridemia development program well ahead of expectations.

The Shasta program is comprised of Shasta 3 and Shasta 4, two adequate and well-controlled trials designed to meet the statutory requirement of evidence for effectiveness. Along with the supportive MIRROR 3 trial in mixed hyperlipidemia, which provides additional safety data in a relevant patient population to satisfy regulatory requirements for a complete file.

The sizing of the phase 3 Shasta 3 and 4 studies was informed by the needs of regulatory authorities to demonstrate safety while confirming the efficacy suggested by the phase 2 Shasta-2 trial, where the primary endpoint of difference in triglycerides at week 24 compared to baseline for the 25-milligram dose was minus 53%, with a p-value less than 0.0001, which was accompanied by a numerical decrease in adjudicated events of acute pancreatitis. The two Shasta phase 3 trials are similarly designed, totaling around 700 patients, and are very highly powered to demonstrate statistically significant improvement in triglycerides with 25 milligrams of posasiran compared with placebo over twelve months of treatment.

After accounting for randomization allocation in the Shasta studies, the placebo-controlled double-blind MIRROR 3 study was designed to demonstrate statistically significant improvement in triglycerides with 25 milligrams of posasiran compared with placebo over twelve months of treatment and is also expected to achieve a high level of significance while primarily serving to enhance the safety database for the SHTG filing. Assuming positive data, these three separate phase 3 studies should support our planned sNDA filing for SHTG in 2026.

Although Shasta 3 and 4 were not prospectively designed to be outcome studies, given the sizing of the combined studies and the observed event rate in the Shasta 2 study, we hope to observe at least a favorable trend in posasiran’s documented acute pancreatitis within the studies. However, the SHTG program also features a unique outcome study named Shasta 5, designed to directly assess the ability of posasiran to reduce the time to first event of positively adjudicated acute pancreatitis in high-risk SHTG patients. While it is possible that this trial will be submitted to regulatory agencies for possible inclusion in labeling, the primary audience and impetus for this study is actually national health technology assessment organizations.

On the basis of observational data demonstrating the causal link between elevated triglycerides and risk of pancreatitis, and observed effects of posasiran in SHTG patients, it is expected that less than 150 patients will be recruited to accrue sufficient events in this outcome study. We look forward to presenting more details on the design and rationale of this study at an upcoming major medical meeting. The broader cross-functional cardiometabolic clinical team has been present at key medical congresses this past quarter, including ENDO, National Lipid Association, and the American Society of Preventive Cardiology. We continue to share new data to demonstrate the value of posasiran, and the reception from the scientific and clinical communities has been engaged and enthusiastic.

Turning our attention to zodasiran, another genetically validated RNAi drug designed to reduce expression of angiopoietin protein-like 3 or ANGPTL3, is now in development for the treatment of homozygous familial hypercholesterolemia, a rare genetic disorder characterized by exceptionally high LDL levels due to very low or absent LDL receptor function. The results of Gateway, our open-label phase 2 study in this population, were presented this year at the European Atherosclerosis Society and showed robust and durable reduction in LDL-C and other atherogenic lipoproteins. The efficacy results were similar to those of evinacumab, a monoclonal antibody against ANGPTL3, that requires monthly infusions, but with posasiran, the dosing is convenient quarterly subcutaneous dosing.

We are pleased to report Yosemite, the phase 3 study of zodasiran in HoFH, began earlier this year, and the first patient was randomized last month. Assuming successful demonstration of safety and efficacy, data from Yosemite could support regulatory filings for zodasiran as early as 2028 or 2029. I will now turn the call over to Andy Davis. Andy?

Andy Davis: Thank you, Bruce. The FDA PDUFA date for clozasiran set for November 18 is now less than four months away, and I’m pleased to report that our commercialization preparations are fully on track. When I last updated you in May, we were in the midst of building out our commercial sales organization. I’m proud to share that as of this month, our national sales leader, full team of regional sales leaders, and fit-for-purpose field force of rare disease specialists are now on board and undergoing training. By the end of this month, the team will begin engaging with key healthcare professionals, advancing FCS disease education in preparation for launch.

Our market access team continues to execute exceptionally well against our preapproval information exchange strategy. To date, we’ve connected with payers representing over 85% of US covered lives, delivering compelling data on the clinical value and anticipated profile of clozasiran. We remain highly encouraged by payer interest, particularly in clozasiran’s potential to deeply lower triglycerides, support achievement of guideline-directed goals, namely less than 500 milligrams per deciliter, and significantly reduce the risk of acute pancreatitis. We’re also seeing positive developments in the FCS landscape, which reinforce our confidence heading into launch. The significant unmet need in the FCS community is clear and acknowledged by both payers and providers.

On the payer front, dynamics appear to be favorable, with access being granted to both genetically confirmed patients and those patients satisfying the diagnostic scoring tools designed to discriminate with SHTG from those whose signs, symptoms, and medical history mimic genetic FCS. This is especially motivating given that clozasiran is currently the only APOC3 inhibitor to demonstrate clinical results in both genetic and clinical FCS in a phase 3 registrational study. And from a provider perspective, the specialty mix we’re observing—preventative cardiologists, endocrinologists, and lipidologists—is exactly what we anticipated and aligns well with our launch targeting strategy. In summary, we remain on schedule and energized by the opportunity to bring investigational clozasiran to individuals living with FCS and their families.

We’re excited for what clozasiran, a potential first-in-class siRNA therapy, could mean to those suffering from this difficult disease. I’ll now turn the call over to James Hamilton. James?

James Hamilton: Thank you, Andy. I’d like to provide an overview and updates on several of our early-stage clinical and translational development programs. In obesity, our ARO INHBE and ARO ALK7 programs, targeting the activin pathway, are currently being investigated as treatments for obesity in phase 1 studies. The INHBE study is currently enrolling multi-dose cohorts using ARO INHBE in combination with tirzepatide. The ARO ALK7 study is in the single-dose escalation phase, with multi-dose and combination cohorts opening soon. We anticipate sharing data from both the ALK7 and INHBE studies at the end of the year.

Regarding our muscle clinical programs partnered with Sarepta, the ARO DM1 phase 1/2a study has completed the single-dose cohorts and is now enrolling multi-dose cohorts of patients with myotonic dystrophy. Similarly, the ARO DUX4 phase 1/2a study has nearly completed enrollment of single-dose cohorts, and the first year-long multi-dose cohort is open for enrollment. Consistent with previous guidance, we are on track for data availability by year-end. However, timing on data release is determined by Sarepta. Our wholly-owned ARO MAPT program is on track for submission of a CTA by year-end. As a reminder, ARO MAPT uses subcutaneous administration of a novel siRNA delivery platform designed to deliver an siRNA targeting CNS tau protein expression across the blood-brain barrier.

Tau aggregated into neurofibrillary tangles is believed to be one of the causative factors of Alzheimer’s disease and is also causative of various other tauopathies. Nonclinical evaluations in monkeys with subcutaneous administration of ARO MAPT using clinically translatable doses have shown better than 75% knockdown of tissue level of MAPT mRNA in the CNS. Importantly, monkey tissue level knockdown has translated into CSF tau protein reductions of better than 75% with duration of effect supportive of either monthly or potentially quarterly subcutaneous dose regimens. The monkey CSF tau protein knockdown data are an important translational step as we move this program towards the clinic. Full preclinical data will be presented at an upcoming scientific conference.

I will now turn the call over to Dan Appel.

Dan Appel: Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the quarter ended June 30, 2025, was $175.2 million or a loss of $1.26 per share, based on 139 million fully diluted weighted average shares outstanding. This compares with a net loss of $170.8 million or a loss of $1.38 per share for the prior year quarter ended June 30, 2024, based on 124.2 million fully diluted weighted average shares outstanding in that prior year quarter. Revenue for the quarter ended June 30, 2025, was $27.8 million, driven almost entirely by the recognition of revenue related to our license and collaboration agreement with Sarepta.

Of the $27.8 million, roughly $20 million related to the ongoing recognition of initial Sarepta consideration and $7 million related to reimbursement of collaboration-related costs. After the end of our third fiscal quarter, we announced two important events, each of which will have a positive impact on our financial position. First, there is the $100 million DM1 milestone payment from Sarepta, which Chris mentioned earlier on the call. As this event occurred after June 30, revenue associated with this milestone will be recognized in our fiscal fourth quarter financial results. We anticipate achieving the second DM1 development milestone valued at $200 million by the end of the calendar year.

Second, on August 1, we announced that Sanofi signed an agreement to acquire exclusive rights to develop and commercialize investigational posasiran in Greater China from Vicerna Therapeutics, Arrowhead Pharmaceuticals’ majority-owned subsidiary. Vicerna will receive $130 million upfront on closing. Additionally, Vicerna will receive up to $265 million in potential future regulatory milestone payments and potential royalties associated with the sales of posasiran in Greater China. We expect to record revenue of $130 million in the fourth quarter associated with the upfront payment only. Turning to expenses, total operating expenses for the quarter ended June 30, 2025, were $193.3 million compared to $176.1 million in the prior year quarter, or an increase of $17.2 million.

The year-over-year increase was driven by, among other things, roughly $10 million of higher R&D costs, primarily as a result of our phase 3 registrational trials for posasiran in SHTG, as well as higher costs related to active candidates in the preclinical stage. It’s worth bearing in mind that year-to-date, approximately 70% of our clinical trial spend can be attributed to the phase 3 registrational trials for posasiran in SHTG. As Bruce mentioned, these studies are now fully enrolled, and we expect data to read out next year.

Additionally, as planned, our SG&A costs have increased by $7 million year-over-year, driven primarily by our preparations for commercialization in advance of the FDA’s upcoming PDUFA action date later this year on November 18. Turning to cash, net cash used in operating activities during fiscal quarter three 2025 was $154.7 million compared with net cash used in operating activities of $115.4 million in the prior year quarter. The increase in cash used in operating activities is driven by several factors, including the aforementioned higher operating expenses and timing of clinical trial payments. Turning to the balance sheet, our cash and investments totaled $900.4 million as of June 30, 2025.

Our common shares outstanding as of the end of this quarter were 138.1 million. And with that, I will now turn the call back over to Chris.

Christopher Anzalone: Thanks, Dan. Arrowhead Pharmaceuticals continues to achieve strong execution in discovery, clinical, regulatory, and business development. Our pipeline has become increasingly insured with four area candidates currently in pivotal phase 3 studies. In addition, our commercial build-out is designed to make us launch-ready very quickly. Should clozasiran receive regulatory approval on the November 18, 2025 PDUFA date? And lastly, we have a strong balance sheet that we think gives us financial resources to continue to move multiple innovative new medicines through the clinical and regulatory process and ultimately get them to the patients. Thank you for joining us today, and I would now like to open the call to your questions.

Operator: Thank you. At this time, we’ll conduct the question and answer session. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please limit to one question. Our first question comes from Maury Raycroft of Jefferies. Your line is now open.

Maury Raycroft: Good afternoon. This is Farzin on for Maury. So thank you for taking our question. When thinking about your own SHTG with ongoing successive three and four, how are you thinking about the prospects of competitor Ionis programs reading out in September from the core studies? Especially with respect to the triglyceride reduction as well as signals in the acute pancreatitis.

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

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

You know, one is how deeply can you reduce triglycerides from baseline? And second is how many patients can get to goal, whether that goal is defined as triglycerides below 880 or below 500, I think those are the key points here, and we expect physicians to look at that. We expect patients to look at that.

Maury Raycroft: Got it. Thank you.

Christopher Anzalone: You’re welcome. Thank you.

Operator: Our next question comes from Jason Gerberry of Bank of America. Your line is now open.

Jason Gerberry: Hey, guys. Thanks for taking my questions. So another question on the SHTG program. If I heard you right, so it sounds like what you’re confirming is your baseline demographics of your two phase three studies look similar to the published baseline demographics that Ionis had published for its core studies. I guess that would be in terms of the two key subgroups, which is ultra-high triglyceride levels and past history of AP. And I’m curious, you know, your thoughts. Ionis indicated that they are seeing events on a blinded basis, at least 13. With, like, a skew of, like, 700 drug, 300 placebo, something like that.

So just kind of curious as you absorb that because, like, the event rate’s the big unknown here. I’m just kind of curious, you know, has your thoughts changed at all around the probability of showing at least a strong numerical trend by pooling the Shasta 4 and 5 studies. Thanks.

Bruce Given: You know, I think that’s a it’s difficult to answer that question, you know, Jason. And the reason is because, you know, we count true adjudicated cases of pancreatitis. The Ionis approach is not just counting pancreatitis, but also abdominal pain. And, of course, abdominal pain, you know, can be nonspecific. You know, although the effort is to determine that abdominal pain when it occurs is actually, you know, not related to other elements, you know, such as alcohol or gallstones, for instance. But it is a little bit of an apples-to-oranges comparison, you know, of actual pancreatitis to abdominal pain events.

So it’s hard to know what they’re gonna show, you know, in the end regarding pancreatitis, which I think is the most important measure. Abdominal pain matters in SHTG and high triglycerides. It can be debilitating for patients and difficult, but it’s not a fatal thing, where pancreatitis, you know, produces organ damage and can lead to fatality. So it’s a much different, it’s a much different animal for, you know, physicians to manage and, of course, for payers to deal with as well. So that part of it is harder to assess, and I’m not sure that we’ll get granularity on that, even when they announce their results in September.

So it’s a little bit difficult to say, Jason, at this time. We will track abdominal pain as well, but we’re really focused on acute pancreatitis, you know, given that’s the real disease, you know, with severity.

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

Bruce Given: Yes. I think we will. We’ll be submitting that, you know, for future medical conferences for sure.

Jason Gerberry: Okay. Thank you.

Bruce Given: You bet.

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

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

Andy Davis: Andy, you take that, and Bruce, add anything that you think should be added.

Bruce Given: Yeah. Happy to take that. So thank you for the question, Mary Kate, related to the clinical unmet need. What we know with respect to familial chylomicronemia syndrome patients is that they suffer from physical symptoms, including abdominal pain and, of course, as Bruce mentioned, acute pancreatitis, which can lead to recurrent pancreatitis, necrotizing pancreatitis, and in some instances, fatality. And so one of the big things that we believe clozasiran addresses as far as meeting the unmet need, first and foremost, is the deep reduction of triglycerides to levels that have never been seen before with existing therapies in this space. We’ve talked about an 80% reduction from baseline seen in the PALISADE study.

But moreover, the outcome of interest, of course, is the reduction in acute pancreatitis risk, and clozasiran is the only agent in a registrational phase 3 study that has demonstrated a statistically significant reduction in acute pancreatitis risk in Palisade. So those are two of the primary unmet needs that we believe clozasiran can address in FCS. I would say moreover, just from a patient convenience and tolerability perspective, clozasiran does continue to have a very desirable profile with only quarterly, so four injections a year, which is very different than the current treatment regimens that are available for these patients presently. So hopefully that addresses your question around why we believe clozasiran fills some important unmet clinical needs.

Mary Kate: Thank you.

Operator: Our next question comes from Patrick Trucchio with H. C. Wainwright and Co. Your line is now open.

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

Christopher Anzalone: So regarding pricing, you know, we are not prepared to opine too much on a potential SHTG price. We are still looking into that. We certainly would expect that to be a lower-priced drug than FCS. But beyond that, you know, we’re still working on that question.

Patrick Trucchio: Thank you.

Operator: Moment for your next question. Our next question comes from Prakhar Agarwal from Cantor. Your line is now open.

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

Christopher Anzalone: Sure. Yes, Sarepta does own some Arrowhead Pharmaceuticals shares. Their lockup period is still in effect right now. I don’t know, I can’t tell you what their plan is for those shares. I can tell you that we have had inbound interest in acquiring shares, and so I’m not so worried that if they decide to sell those, that they can find a buyer. They certainly could. But I don’t know what the longer-term plans are in terms of holding on to those shares and for how long. Andy, you want to address the education?

Andy Davis: Yeah. Thanks, Prakhar. As it relates to education, of course, we have active medical education in the form of our medical science liaisons who are conducting scientific exchange. Moreover, there is independent medical education, continued medical education that’s ongoing related to individuals with extremely high triglycerides, the unmet medical need, burden of disease, and education around clinical study results. Certainly, in the case of Palisade, I would say a lot of the education that’s happening now in the community is related to education around the disease burden, around goal attainment, namely an education around the guideline-directed risk threshold of 500 milligrams per deciliter, and then, of course, the focus on the outcome of interest, which is acute pancreatitis events.

And so that largely is the focus of our education. And as our commercial field team gets out into the field towards the end of this month, of course, they will be highly focused on similar disease education as well. I hope that answers your question.

Christopher Anzalone: And your question is in this do one. Yes. You know, triglycerides can be found on the standard lipid panel. But when people think about lipid drugs, they generally think about them in the context of ASCVD. This is not what this drug is. Clozasiran is not an ASCVD drug. Clozasiran is a pancreatitis drug, and I think should be thought of as such. And priced as such, to be honest. You know? So they so, yes, you know, it is this is a limited parameter, but it is not an ASCVD drug. This is a pancreatitis drug. And there are populations that are at substantial risk of pancreatitis, acute pancreatitis, with the high levels of triglycerides.

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

Prakhar Agarwal: Thank you.

Operator: Our next question comes from Eliana Merrill of UBS. Your line is now open.

Eliana Merrill: Hi. This is Joseph on for Eliana. Thank you for taking my question, and congrats on initiating the Yosemite trial for zodasiran. I’m wondering if you can talk about your latest on your estimations of the size of the HoFH addressable patient population. Thank you.

Andy Davis: You know, Anthony, you’re probably the expert on that. Why don’t you take that one?

Bruce Given: Yeah. So the literature would suggest the prevalence for HoFH is anywhere from roughly one in five hundred thousand to one in a million persons. And so there’s been quite a lot of evidence produced in the HoFH space over the years as new therapies have become available. So we see the accessible population for being similar to those estimates.

Joseph: Thank you.

Operator: Our next question comes from Edward Tenthoff of Piper Sandler. Your line is now open.

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

Christopher Anzalone: So the cash goes into Viscera. And a portion of that, a large portion of that, will be distributed to shareholders of Viscernet, and as I mentioned in the prepared remarks, at close, we’ll have about 56% of Viscernia. Not all will go out. You know, there will be some tax liabilities, and also, you need to leave some cash in the company because, as I mentioned, they also have ongoing studies with posasiran related to FHTG, although, again, we will take that over. They also have studies with zodasiran. They also have some ARO HSD studies ongoing. It’s not a huge cost, but there is some cost there.

Ultimately, again, as I mentioned in the prepared remarks, my goal here is to monetize the China rights for zodasiran and the China rights for ARO HSD in a similar manner that we did for posasiran. So, anyway, long story short is, you know, we will bring home, I think, a substantial amount of that capital, but not all of it.

Edward Tenthoff: Great. That’s helpful. And then when it comes to the R&D, the annual R&D from Sarepta, is that paid all at once on the annual anniversary thing?

Christopher Anzalone: Yeah. Yes. So they will pay us $50 million a year over five years. That payment is due in the first quarter of every year. So I believe it’s February. Is that right, Dan? I mean, it’s February. And so we have $100 million due now for the first DM1 milestone, $200 million that we think we’ll trigger at the end of the year, and then a further $50 million due for the annual payments in February.

Edward Tenthoff: Great. Thanks, guys.

Christopher Anzalone: You’re welcome. Thank you.

Operator: Our next question comes from Luca Issy of RBC Capital Markets. Your line is now open.

Luca Issy: Great. Thanks, guys. This is Shelby on for Luca. Can you just talk about the initial presentation for posasiran? Our understanding is that initial approval will be for prefilled syringes. So is that correct? And if so, what is the path to have it in the form of an auto-injector, and how should we think about that timeline? Thanks.

Andy Davis: Sure. Andy, you want to discuss that, and then Bruce, want to talk about more of the granularity of the auto-injector?

Bruce Given: Yeah. That’s right, Shelby. So our initial presentation for clozasiran in the FCS space will be a prefilled syringe. And there is development underway for an auto-injector in the SHTG space. Bruce, if you want to comment anymore on that.

Bruce Given: Yeah. I would just say that the auto-injector will be either available at the time of launch for the SHTG indication or soon thereafter. That’s our current expectation.

Shelby: Great. Thanks.

Operator: One moment for the next question. Our next question comes from Mani Foroohar of Leerink. Your line is now open.

Mani Foroohar: Hi, guys. Have Ryan on for Mani. Congrats on the quarter. Maybe shifting over to the INHBE readout later this year, can you just share a little detail around which cohorts we should expect to see data from, whether that’s the SAD, MAD, combo, and then internally, what are you guys really hoping to see here relative to the other data sets from muscle-sparing agents that we’ve seen so far? Thanks.

James Hamilton: Yeah, sure. I can take that. We’ll have data from all of those cohorts that you mentioned, SAD, MAD, as well as the combination cohorts, and we’ll be measuring a handful of different biomarkers, including PDE biomarkers, like measurable activity in the blood. Of course, we can look at body composition based on MRI and weight loss changes in body weight. Then, of course, we’ve got a whole host of lipid parameters and glycemic control parameters that we’ll look at.

Operator: Thank you. One moment for your next question. Next question comes from Mike Ulz of Morgan Stanley. Your line is now open.

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

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

Mike Ulz: Understood. Thank you.

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

Mike Ulz: Makes sense. Thank you.

Operator: Thank you. Our next question comes from Joseph Thome of TD Cowen. Your line is now open.

Joseph Thome: Hi, there. Good afternoon, and thank you for taking my question. Maybe on the MIRROR III study, I guess, given that these patients will likely have a lower mean fasting triglyceride level, is there an increased risk that potentially this patient subset would be more at risk to self-adherence of, or self-liberalization of diet or maybe a little bit of a less adherence to background lipid-lowering therapy than you might see in Shasta 3, 4. And, I guess, could that create some variability in the AE profile or endpoints? I guess why or why not?

And then when you think about the readouts for these three trials, would these all come at the same time and it would be one top-line release, or would these be discrete events? Thank you.

Bruce Given: So taking that first question, you know, look. In clinical trials, we do our best to try to encourage participants to follow the protocol. You know, we give them frequent dieting advice and reminders. And it’s hard to estimate whether they’re going to behave all that differently than the SHTG. I would say that, you know, we did two trials in mixed hyperlipidemia in the last few years, one with posasiran, one with zodasiran, and I wouldn’t say that the behavior in those trials was all that different than we saw at Shasta 2 or Palisade with respect to adherence to the protocol. It was pretty good for both.

Now that may be partly because, you know, we pay a lot of attention to the detail of execution of clinical trials, and, you know, we tend to have a low dropout rate and a pretty good adherence rate, probably in no small part because of that. But I’m not too concerned about that. And, of course, we have placebos in these trials, and, you know, you expect the placebo behavior to sort of mimic the behavior that you get in the active treatment arms. So, hopefully, whatever you see balances out anyway relative to placebo. But I don’t think we’re expecting anything particularly different.

Joseph Thome: Great. Thank you. And then the last part was, are these gonna read out at the same time in top line, or will these be three separate releases?

Bruce Given: I don’t think we’ve really come to a determination on that. You know, in theory, we’ll have the data from these trials fairly close together, but I don’t think they will all show up on the same day. So I’ll leave it to Chris, you know, if he wants to predict, you know, how we’ll make that decision a year from now.

Christopher Anzalone: Yeah. My thinking, you know, my first thought on that is that, you know, it’s yes. They are three separate studies, but they’re part of, you know, one grander study, and so it would seem to make sense to release them all at once. But, you know, we haven’t really discussed that.

Joseph Thome: Perfect. Thank you very much again.

Bruce Given: Thank you.

Operator: Our next question comes from William Pickering of Bernstein. Your line is now open.

William Pickering: Hey, guys. Congrats on the progress, and thank you for taking my question. It’s about your DM1 program. At your muscle R&D day last year, you indicated you were planning to dose up to twelve MPK in that initial study. My understanding is the highest dose under the current protocol is six MPK, and that’s unchanged from when Sarepta licensed the product last November. Is my understanding correct? And if so, what was the rationale for reducing that max dose versus the prior plan and for having a lower max dose than the FSHD study. Thank you.

Christopher Anzalone: Sure. So we still can go up to twelve mg per kg in the current study, the DM1 study.

William Pickering: Thank you.

Operator: One moment for your next question. Our next question comes from Madison Elsadi of B. Riley. Your line is now open.

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

James Hamilton: Sure. So this phase one study is really hypothesis-generating. There’s not that much empowering necessarily that goes into cohort size. I think the effect size that we would see from this study would be used to power a subsequent study down the road. And then in terms of frequency, you know, we’re looking at the most frequent, probably quarterly dose administration. So I’m not sure if there’s anything out there that can match that frequency to date. It’s certainly not the GLP-1s, at least not that I’ve seen. And some of the muscle molecules are probably more frequent than that. So, you know, we’re looking at quarterly every six months.

Beyond that, I don’t really see any benefit to even less frequent dosing. So I think we’re in a pretty good place in terms of frequency of dose administration at quarterly dosing.

Madison Elsadi: Got it. That’s very helpful. Thanks.

James Hamilton: Thank you.

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

Morgan Lamberty: Hi. Thank you for taking our question. This is Morgan on for Andrea Newkirk. Kind of going back to obesity and specifically Arrow ALK7, can you speak more to how you’re delivering siRNA to adipocytes? And then recognizing that it has not been explored in humans, what gives you confidence in the safety profile? What potential risks could you see in this targeting? And is there good loss of function data out there for us to see? Thank you.

James Hamilton: Sure. Yeah. See if we can hit all of those maybe in reverse order. So there are data on loss of function ALK7, in the loss of function carriers, we know there are at least a few homozygous walking around that seem to not have any issues. Then, of course, there’s a lot of heterozygous ALK7 loss of function carriers that seem otherwise phenotypically normal. They can be protected from things like type 2 diabetes and have an improved body composition, improved BMI-adjusted waist-to-hip ratio. The molecule itself does use a ligand-targeted approach that’s selected for adipose tissues, adipocytes. So there is a ligand-driven approach that’s facilitating uptake of the siRNA into the cell.

And then beyond the human genetic data, what gives us confidence from a safety standpoint to start the study is, of course, all the non-GLP and GLP tox studies that we’ve done in nonhuman primates and in rodent species, and of course, in those, we go up to doses about many multiples of the doses we plan to use in the clinical trial. And those were all completed without any dose-limiting tox. And so I think we’re in a pretty good position as far as safety goes going into this phase one study.

Morgan Lamberty: Awesome. Thank you so much.

James Hamilton: Thank you.

Operator: This concludes the question and answer session. I would now like to turn it over to Christopher Anzalone, CEO, for closing remarks.

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

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