Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Grace, one of the biotech analysts here, and it's my pleasure to introduce Vince Anzalone, VP of Finance and Investor Relations. Just a reminder, the format for today is a fireside chat. Before we get started, I just need to read a quick disclosure. "For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative." With that, Vince, thanks for joining us today, and maybe I'll just hand it over to you to make some brief intro comments on Arrowhead.
Sure. Thanks, Mike, and thank you to all Morgan Stanley for having us today. So Arrowhead Pharmaceuticals, we're an RNAi therapeutics company. We have a proprietary technology platform called TRiM or Targeted RNAi Molecules. It allows us to get deep and durable target gene knockdown across multiple tissue types, and that's an important point we can talk about in a bit. But we are leading the field in bringing RNAi outside the liver. We have clinical programs targeting hepatocytes, lung, muscle, and now CNS as well, and so our portfolio is getting very broad. The clinical pipeline for our drugs is 14 right now. Nine of those are wholly owned, five of them are partnered. And because our platform is so broad, we can target very diverse therapeutic areas.
So we have pulmonary diseases, we have cardiometabolic diseases, we have rare liver disease, and again, CNS and then neuromuscular disease. So it allows us to create a lot of new candidates rapidly. We have an initiative we call 20 in 25, which is our goal to have 20 either clinical-stage or marketed products by the year 2025. Again, we have 14 now, and our early-stage discovery is just so productive that, you know, I feel like that's a, you know, that's a home run for us to meet that goal. We also have a very diverse pipeline with respect to stage. So we've got early-, mid-, and late-stage clinical programs. So by the end of this year, we should have 4 drugs in phase 3 studies.
And then the next step for us is to start to build out commercial. Our first phase III should be complete in Q2 of 2024, which would enable our first NDA in 2024. That's for a rare disease called familial chylomicronemia, but the same product also has potential applications in much larger populations, FHTG and then broad ASCVD as well. And so next year, we start to take that step in growing as a company into a commercial organization and then hopefully have meaningful revenue in the future. And as I mentioned, since we have this diversity of stage throughout our pipeline, our hope is that next year, that NDA is just our first in a string of multiple NDAs.
I wouldn't call it every year, certainly, but over the years following that, we should have a new launch on a somewhat regular basis.
Maybe you can just talk a little bit more about the broad potential of the platform in terms of, you know, where you started initially and how that's evolved over time and how you decided what directions you wanted to head in.
Yeah. So most RNAi companies, and, you know, when I say most, it's... There's not a lot. There's only a few pure play RNAi therapeutics companies that have been at this for a long time. We all focused initially on diseases where the gene was expressed in the liver. They weren't all liver diseases, but they were targeting genes that were expressed in the liver, specifically in hepatocytes. So our first delivery technology was called the DPCs or dynamic polyconjugates. That was an IV-administered system. In 2018, we brought our first candidate into the clinic using the new TRiM system, which is a simple conjugate, simple siRNA direct siRNA conjugates, targeting hepatocytes using GalNAc.
And one, you know, one interesting thing about our TRiM system is, regardless of the tissue or cell type that we're targeting, they are all very structurally simple molecules. They use different ways to get uptake into target cells, but from a cartoon standpoint or a structural standpoint, they all have the same, you know, basic idea, which is a cluster of targeting ligands that have preferential uptake into the target cell, proprietary linker chemistries, and then heavily stabilized and modified double-stranded siRNA. That's it. You know, we don't need to use carriers or nanoparticles or LNPs or liposomes or anything, which is good, and that's kind of the philosophy we've had for a long time.
And, you know, as I mentioned, in the early days of RNAi, we were all targeting hepatocytes, and because the receptor to get into hepatocytes, ASGPR, is very heavily expressed on the surface of hepatocytes. It's, I believe it's somewhere around 1 million copies per cell, and it's rapidly recycled as well. So when you inject something subQ, it can... It sucks up anything with this GalNAc ligand on it, and then it also puts itself back on the cell surface very rapidly. So you get multiple passes, which was very attractive. Now, when you get outside the liver, there's several challenges that we needed to overcome.
One, you're not gonna, you're not gonna find another cell that has a receptor that's heavily- that's as expressed as heavily, as the ASGPR. Second, it's not gonna recycle as fast. And, you know, third, there, you know, there's more than three, but these are the primary things, is that the other organs are not designed like the liver, which is just to kinda suck in things in circulation and pull them out. And so with extrahepatic delivery, whether it's local or systemic, you need to be able to have very potent siRNA triggers or the actual molecule that's enabling the RNAi mechanism. And so that's important, and every other part of the molecule as well needs to be optimized.
So you don't need to play perfect baseball with hepatocytes. With lung or with CNS or with muscle or with eventually adipose, which we've talked about, you need to squeeze every bit of potency out of every siRNA. And so what we've done over the years is we've empirically developed these algorithms and these rules that allow us to predict potency and stability of an siRNA sequence very well. And I think that has allowed us, I believe, to make the most potent siRNAs of any other company out there. Now, again, with liver, it's important but not critical. Anything outside the liver, it's critical.
And I think, you know, we can talk about this in a minute also, but our recent data with pulmonary, with our ARO-RAGE clinical program, shows that we hopefully are getting there or have gotten there. So the initial phase I/II clinical data in lung for ARO-RAGE shows that after a single inhaled administration, we can get a mean knockdown of the target gene of up to 90%, with a maximum of 95%. So it's essentially one dose, near full suppression of that target. And that was, you know, frankly, that was better than even our internal-
Mm-hmm
... hurdle to move forward. That was really exciting data. And with lung, you know, we are the first, and right now, still the only RNAi company who can knock down target genes in the lung. And so we've been very aggressive at pipeline expansion within the lung. We have three clinical programs targeting pulmonary diseases: ARO-RAGE, which is an anti-inflammatory; ARO-MUC5AC, which targets mucus hypersecretion; and ARO-MMP7 for idiopathic pulmonary fibrosis. We have also a couple other preclinical programs just behind that that we haven't really talked about. But you know, one big benefit of being technology-focused and expanding the reach of our technology platform is it allows us to be first in these new tissue types.
And so we can be first at the very attractive targets within those tissue types, and I think that so far we've been pretty successful at that.
Maybe just sticking with pulmonary and the RAGE data you shared earlier this year, you talked about knockdown. Maybe just talk about, you know, the other side of the coin here, which is safety and what you're seeing there.
Sure. So in the clinical program, we had an oral presentation at the European Respiratory Society meeting just last weekend. And so we did show a full safety and AE table there. These are blinded safety results, so we're assuming every AE is on drug, to be as conservative as possible, and there was really nothing there concerning at all. In addition, for every time we escalated dose, and every time we opened new dose cohorts in patients or in healthy volunteers, we have an independent DSMB that would review unblinded safety data, and there was never a concern to escalate. So far, so good.
Yep.
On the preclinical safety side, we've completed the acute toxicology studies necessary for doing two doses, and there was no concerns raised there. We've completed, for two of those candidates, the six-month rat toxicology studies, and those, the top dose was no AEL. So again, so far, so good. The final preclinical or nonclinical study that's necessary is nine-month primate, and we should have those results before the end of this year.
Yep.
So far, there's been no surprises, which is good.
Yep. Sounds like things are on track there. Remind me, I think you're supposed to have maybe an update coming up at the ERS meeting later this month? Maybe just talk about what to expect there. Is it gonna be more of what we've seen already, or will there be some additional data points we should be looking for?
Sure. So, ERS actually just happened last-
Okay
... weekend.
There we go.
Those were... I guess it's the same, you know, the same premise as safety, so no surprises, which is good. We presented some interim data at an R&D day that we had in June, and the data at ERS for ARO-RAGE were incremental. So there was a couple more patients in the analysis and a couple more time points, and it continues to look very good. So again, we were reaching up to a mean of 90% knockdown after a single dose with a long duration of effect. And this is also, you know, an important thing about the pharmacology with RNAi versus other mechanisms is that you get, you know, you get a large amount of knockdown relatively quickly.
So within a few weeks, you're down to that kinda 90%, and then the... and you have a long tail. So the duration of effect is not days, it's not even weeks, it's really months. And so the data so far with ARO-RAGE, and we'll see with our other candidates if this is similar, but with ARO-RAGE, it looks like we're getting about two months of knockdown at the relevant dose levels before the curve starts to turn up. And this is also, you know, consistent with what we saw with in the liver, is that even once it turns up, it's not like a small molecule where it's a V shape. So it's not bouncing up.
It's very gradual, which is helpful for compliance, ultimately when it's a commercial product, and we believe for real-world outcomes. So patients are, you know, we've seen it with every, you know, every medicine really. Patients are not 100% compliant with taking their dose on time. And so if you have some wiggle room with that, with the long duration, first of all, and second of all, with a more shallow return, that's helpful. And so all the data points, the early data points we're seeing with pulmonary broadly, have been really, really encouraging and very consistent with our experience with RNAi in the liver.
Yeah. Maybe talk about the next update for RAGE. I think maybe later this year, you may be planning something. Maybe tell us what to look for there.
Sure. So the data we showed at ERS was mostly for healthy volunteers. So we have, I believe it's five dose levels that we tested in healthy volunteers, and then we initiated a mild to moderate asthma patient cohorts. There's three cohorts there, a low, middle, and a high dose. We've completed enrollment for the low dose, and we are in the middle of enrollment for the middle and the high dose. And that will look at knockdown in serum. So the healthy volunteer data include BALF, the bronchoalveolar lavage fluid, so it's kind of showing local knockdown in the lung.
Mm-hmm.
The RAGE has this soluble, secreted part of the receptor that is in circulation, so you can measure that in serum. And so in healthy volunteers, we were able to draw a very tight correlation between local knockdown in lung and then that circulating biomarker, which is good. And so that allows us, in patients, to do more non-invasive assessments of knockdown. So in the asthma cohorts, we're just doing serum measurements. So the second and third cohorts, you know, we're hoping, you know, towards the end of the year or early 2024, we'll have enough time points where that will be, you know, assess where we'll be able to make that assessment of knockdown.
Yeah.
That's also, you know, an important translational measure. So we know from the healthy volunteer portion, that our preclinical work in animals translates very well into normal, healthy volunteers. The next step is to show that it translates from healthy volunteers into a target patient population. So patients with an asthmatic lung, it's inflamed, and there's a bit of mucus in there, we'd like to make sure that we can get delivery there. Now, we did show some early results with the low dose, the 44 mg dose, and that was essentially superimposed with the healthy volunteer data. So again, it's a modest level of knockdown at that dose level, but we're seeing the same band in asthma patients, so that's encouraging.
Yeah. And do you know what level of knockdown you need to have in a clinical effect, or at what point do you have more insights into that?
So yeah. So if, if we were kind of giving a moderate level of knockdown, I think that'd be an-
Yep
... an important thing for us to know. There's no... It's a, it has been an undruggable target in the lung historically because it's not accessible to small molecules or to antibodies, so we don't know from clinical experience the answer to your question. We've done work in animal models, and what we found that at the level that we're seeing in the clinical program in humans, there was a potent anti-inflammatory effect in animals. And so I feel like, you know, we have already breached that level. Now, if we were only getting 60% or 70% knockdown, I think it's something that we'd have to more closely consider. But I feel like we're pretty safe where we are.
Now, it's not a target, as I mentioned, that's ever been able to be drugged in humans, and so the biology is not completely validated clinically. I think it is theoretically, and so there's good biological rationale for this target, and then experimentally in our hands. So what we're looking to is some of the biologics, the approved biologics, so tezepelumab and dupilumab, which are kind of have that, in that same anti-inflammatory cascade area. Biologically, the RAGE target is an upstream node in that same inflammatory cascade, and so we feel like there is some clinical validation for the pathway. Now, this particular target, again, it hasn't been done in humans yet. So what we'll be looking for early is whether we have an upstream marker, of ant...
Or downstream marker of anti-inflammatory effect that is predictive of a clinical benefit. So with the biologics, what they saw is a reduction in FeNO, which is a measure of inflammation in the airway. So we're looking at that. In our early clinical program, we have initiated some high FeNO cohorts in asthma patients, so we're enrolling that now, and we should have the high FeNO cohort data in 2024. So that'll be a good reflection of two things: one, whether we're getting a good level of knockdown, and then two, if you knock down that target, is there a biomarker of, you know, some type of measure that might be clinically meaningful?
Gotcha. And maybe just talk about read-through from what you've learned in RAGE to your other targets, like, you know, MUC or MMP7. Is there read-through? Is there a reason why there shouldn't, may not be read-through for some reason?
Yeah. siRNA therapeutics and RNAi in general, it's just so consistent across gene targets and across participants in a study. That has been our experience and others' experience with liver. And so we believe, or our expectation is that, you know, that same premise holds with regardless of what target, you know, what the target cell is. That certainly has been true in non-clinical studies across different gene targets. Now, the exact dose you need is different, which is true for liver as well. And the kinetics of the PD tend to be slightly different also. The shape of the curves are not always exactly the same.
Mm-hmm.
Some will have a longer duration of effect, some will have shorter, but it tends to be consistent. Now, with MUC5AC and with MMP7, we'll have that... We'll know that, over the next 12 months. Actually, much lower than that, but I think with both of the programs in the next 12 months, we'll know. And I think that's a big event, too, 'cause what we've seen with liver is once you have clinical validation, not only that you can get high levels of target gene knockdown, but you can replicate it-
Mm-hmm
... gene to gene, then it gives you a lot more confidence to expand the pipeline. But also, it gives you a lot of insight that accelerates your ability to go from idea to a clinical candidate to proof of concept very rapidly. You know, I'll use our process with liver as an example. Now, it's a really a well-oiled discovery machine. If we have a target gene that we want to knock down, we can typically go from idea to the clinic in 12-18 months or so. It's very, very fast, and that includes doing the discovery, doing the in silico work, doing the optimization, doing the animal work, doing the tox. We just know how to do it once it's validated. So it's a very, it's a very scalable process.
Mm-hmm.
We feel like, you know, when we have that validation from MUC5AC and MMP7, that we will be able to create that same kind of, you know, plug-and-play system with the lung.
Yep, makes sense. Maybe we can just shift to cardiometabolic and starting with ARO-APOC3. Maybe just, I think you have some data coming up near term, so maybe just walk us through what to expect there.
For ARO-APOC3 and ARO-ANG3, so those are targeting two different genes, apolipoprotein C-III, and then for ANG, the angiopoietin-like protein three, ANGPTL3. So both of those will have accepted abstracts to give presentations on our phase II studies at the American Heart Association meeting, which is in the second week of November. And so we have given interim data on those studies before, but this will be essentially full final data with longer follow-up. With ARO-APOC3, that's that medicine is a little more advanced than ARO-ANG3 with respect to stage. So we fully enrolled our first phase III earlier this year against FCS, familial chylomicronemia syndrome. So that study will be complete in Q2 of 2024.
As I mentioned, we'll be working next year to prepare and file the NDA for that. That product has, you know, progressively larger and underserved populations that it might be able to address. So the first would be severe hypertriglyceridemia, or SHTG, and we will have a meeting with FDA, an end-of-phase II meeting shortly, in the next couple weeks, actually, where we'll be talking about our plans for the phase III studies. And we've already had interactions with the agency on this, and so we don't believe there'll be much surprise here or much pushback. Our current thinking is that the phase III program for SHTG will be two phase III studies. The first called SHASTA-3, second, SHASTA-4.
SHASTA-3 will be focused on just garden variety SHTG patients, so trigs above 500. The primary endpoint will be triglyceride lowering after 10 months. We'll have a year of safety there, but the primary endpoint is the 10 month. And then the second study, SHASTA-4, will be a smaller study, and it'll be enriched with patients with higher levels of TGs and also a history of pancreatitis. And so the idea there is that we would like to get approval with trig lowering and then expand the label with the SHASTA-4 study, showing that lowering trigs in the SHTG population actually reduces pancreatitis events. And we think that's important to show a value proposition-
Yep
... for patients, physicians, and for payers.
Yep. So you could potentially get approved earlier off the SHASTA-3, and then you'd follow it up with the SHASTA-4 for the pancreatitis.
That, that's right.
I guess from the physician's perspective, is TG lowering enough to drive use initially, or do you think people are going to wait and say, "Hey, I want to see the SHASTA-4?
... Yeah, so our advisors who treat patients like this have been pretty clear that the magnitude of triglyceride lowering that we're seeing is meaningful and something that they would want their patients to be on. Now, I think that this is a market, and, you know, awareness that we would have to build, which is actually, you know, a big benefit of having the FCS patients, because we'll have some experience interacting with physicians who treat these patients with severely high triglycerides. I mean, that's, you know, most of that is genetic causes. With SHTG, it's believed there's probably many polygenic causes of that. But I think that, you know, that's something that we are looking at now.
What's the best way to spread awareness around the value proposition for that product? I think that when we can add pancreatitis risk reduction to the label, that's very helpful.
Yep.
And certainly, I think it's in certain parts of the world, it will be even more helpful for access and for reimbursement. But the... You know, our CMO tends to use this figure a lot, and I think it's, you know, it's really impactful that in our clinical studies with this population, we have so far, we've gotten 100% of the patients on drug down to a triglyceride level that's predicted to be low risk of pancreatitis, 100%. And, you know, it talks to the consistency of RNAi that I was mentioning earlier.
Mm-hmm.
But beyond that, we can get many of these patients to normalized trig levels, you know, which is impactful. I think the challenge with prior triglyceride-lowering drugs in that population is that the effect was rather modest. You're looking at, you know, 15%-30% reduction in trigs with other medicines. You know, depending on the baseline characteristics of the patient, we can get between 60% and 80%-
Mm-hmm
... or even more triglyceride lowering. I mean, it's in a real different ballpark. I think that that magnitude moves the needle-
Yep
... substantially. And so I think that, you know, we're, we are enough in, we are far away from it, enough, where we still have time to kind of plan that out. But we're, we're optimistic that that market, is, is really attractive, and I think it's, it is a, it is an underappreciated opportunity, with, you know, in investors, I think, today.
Yep. Can you maybe talk about the market opportunity, maybe for FCS and then SHTG and?
Sure. So for patient numbers, FCS, genetically defined FCS is small. It's like one in a million or something like that. So, you think there's, you know, 300 or 600 of these patients, excuse me, in the U.S. with genetically defined FCS. Now, the FDA, in our discussions with them, has a broader view of what FCS is. So, for our clinical study, didn't have to enroll patients just with this narrow set of genetic mutations. They're calling FCS kind of phenotypic FCS, and so it makes the addressable market substantially larger than that 300 or 600 patients.
Mm-hmm.
It's still in the, you know, called the low thousands or so in the U.S., so it's a rare disease. But it's very severe, and there's nothing that helps these patients today. These are patients who have trigs in the thousands, that get recurrent bouts of pancreatitis that can be painful, can cause hospitalization, and in 10% of them, cause death. And so, addressing these is a critical need. With SHTG, the estimate is that there's somewhere around 4 million or so patients in the U.S. with trigs above 500. Now, they wouldn't all be eligible for treatment.
Mm-hmm.
You know, that's the difference between SHTG and FCS. FCS, everybody, you know, physicians would want to get all their patients on a drug that lowers triglycerides. With SHTG, it would be a continuum, I would say. But it's a substantial opportunity, again, that I think is underappreciated today.
Got it. Looks like we're just about out of time, so why don't we wrap it up there? Thanks so much, Vince. Appreciate your time.