All right. Good morning. Welcome to the 45th Annual TD Cowen Healthcare Conference. It's my pleasure to be joined by two people I'm sure need no introduction today, but I'm Brendan Smith, Senior Biotech and Life Science Tools Diagnostics Analyst here at TD Cowen. And to my left is the CEO of Arrowhead Pharmaceuticals. Thanks for joining, Chris Anzalone. And to his left is Bruce Given, COO of Arrowhead Pharmaceuticals, so we've got a lot of ground to cover this morning, as I'm sure many of you know. It's been a very eventful past few months at Arrowhead, so I think let's kind of just get started. Let's just really dive in, so if any questions in the audience, please feel free to email me, brendan.s mith@ tdsecurities.com. I'll be checking my phone in case anybody wants to ask anything else, but we've got a lot going on today.
Maybe just give us a quick rundown about the Sarepta deal.
Sure.
What it stands, how it came about, and really maybe how you decided on which assets to include in that deal versus keep internally?
Sure. Appreciate that. So thanks for having us. It's a great pleasure to be here. The Sarepta deal was, I don't think it's hyperbole, was really transformational for us. We needed at least two things, but certainly two things towards the end of 2024. We needed something to help focus down this large pipeline of ours from a cost standpoint, but also from a mind share standpoint. What should all of you look at? And second, of course, we needed a balance sheet that could fund these good programs. And the Sarepta deal, in one fell swoop, gave us both of those. The economics were substantial.
It was $325 million invested at a premium at, I think, $27 and change a share, $500 million of cash, another $300 million of milestone payments that we think we're going to trigger this year relating to enrollment in the DM1 study, $250 million over five years, $50 million a year, and then, of course, development milestones and commercial milestones, as well as royalties, all in, not including royalties, all in. The deal has a potential value of over $11 billion, so it gave us what we need to continue to operate and to build this large pipeline that we've got. Regarding what went into that, look, Sarepta is an arguably perfect partner for some of these assets, for DM1 and DUX4, clearly. They know this space. They have a commercial force that is prepared to commercialize these two drugs.
They've got a development team that knows how to develop these muscle targets. And so they were great. They were a no-brainer. They were a great partner for those two assets that we think are really exciting assets. We should have data this year on both of those. And so we'll see how they perform. But the animal data have been great. And we've got a very good track record of translating animal data to human data. So those were clear. Huntington's is also part of this. That's a small disease with, of course, great unmet medical need that they can address. IPF, ARO-MMP7, also goes into this. We love both of those targets, Huntington's as well as IPF. But that made sense for them. ARO-ATXN2, that was preclinical when we did the deal, but it's clinical now to treat various ataxia. Again, that's right in their wheelhouse.
Two nonclinical programs, Ataxin-1 and Ataxin-3, same thing, various ataxia. That's right in their wheelhouse. And they've got access to a handful of additional targets that they can give to us. So it made great sense for us to have the right partner in a number of areas. And it gave us the capital we needed and the pipeline focus we needed.
Great. So I think when you think about the deal, maybe moving beyond the upfront of it all, how do you kind of think about perpetual value creation from this deal? Over the next three to five years, what are the kind of key milestones among the partner programs that you kind of see paying it back into Arrowhead?
Sure. I think there's a ton of good near and certainly midterm value drivers. In no particular, well, let's see if I can make it somewhat chronological. This year, I think we'll have DM1 and DUX4 data. I think those are value drivers for us, not only because I think those are very good assets. I think that we have a chance. We'll see what the tissue concentration data look like. We'll see what the knockdown data look like. But there's a possibility that those could toggle into subQ administration rather than IV. That's disruptive. Those are value drivers not only because of those drugs, but also because it will validate that platform. There will be additional muscle targets that we can go after with Sarepta that I think create a ton of value in the near term. Same thing with MMP7.
We will have knockdown data in MMP7 patients this year. Of course, it is up to Sarepta to determine how and when they disseminate data, but should they decide to disseminate those data this year, I think they're potentially good, and I think that's a value driver not only for MMP7, because it's been an undruggable target for IPF, but also it will be further evidence, I think, that we have a real pulmonary platform that is capable of knocking down deep lung targets, so those are in the near term, and then longer term, we'll see how Ataxin-2 does. We'll see how ARO-HTT for Huntington's does. Those are more probably 2026 data readouts.
All right. Great. I know we have a lot to get through. So I do want to kind of shift through some of the programs that you have now. So we can get over to plozasiran. This is the APOC3 drug. Lots of good progress here. Maybe give us a bit of a sense. Obviously, the Ionis drug is a little bit ahead, but the data is clear on many fronts here. So how do you kind of think about competitive positioning, not just FCS, but really the bigger SHTG market? And maybe give us a sense of how you're thinking about timing between now and when that could potentially look.
Sure. Bruce.
Yeah. Well, I think whether you talk about FCS or you talk about the SHTG market, lower is going to be better. And just in general, I mean, if you want to lower triglycerides, you don't want to lower them 20%. You want to lower them 80%. You don't want to lower them 40%. You want to lower them 80%. And this is especially clear in FCS, where we treat these patients because of the risk of pancreatitis. And the risk of pancreatitis starts at about 500 milligrams per deciliter, but really accelerates when patients develop the creamy serum, which is called chylomicronemia. And that starts at about 880 or so, about 800, 900, 1,000 milligrams per deciliter of triglyceride. And those are the patients at great risk. And FCS patients are oftentimes have triglycerides of 2,000 or 3,000 or 4,000.
If you're a physician and you're treating that patient, or if you're a patient with FCS and you've got a choice between a drug that's going to lower your triglycerides maybe 30% or 40%, like olezarsen, they're in your office, they're at 3,000. If you get the standard response, you expect it to go down to maybe 2,000 or something like that. Versus when plozasiran is available to that patient, you would expect their change from baseline to be more like 80%. That actually is going to be meaningful, I think, in the marketplace. I mean, I think when you're out there and physicians are really making a decision, that's going to matter. Same thing with SHTG. Lower is always going to feel better to a physician.
So I think you'd rather be in that competitive situation, I think, always to be able to really drive those sort of results.
Yeah. Look, the data have just been very compelling for us. We are dosing quarterly, not monthly. That's helpful. We are seeing 80% reduction of triglycerides, not 30% reduction. Of course, that's helpful. We see a lot of patients in the FCS study that were reaching goal. Something like 75% of them got below 880, and something like 50% of them got below 500. That's compelling. I think that's where physicians are going to be looking towards when they are deciding whether they prescribe an olezarsen or a plozasiran.
Yeah. So I mean, some of these cardiovascular indications have historically just been difficult for different reasons over the course of years now to see some pretty meaningful penetration. So as you kind of, I mean, SHTG is a couple million patient market, right? So how do you think about who gets the drug first? What are the kind of important increments you're going to need to do in the early days of the launch to make sure that you're actually maximizing the opportunity?
So first of all, we think there are three to four million, actually, of SHTG patients. But we look at those not as one population, but as a series of subpopulations. And so the way I think about it is roughly in this order. So those patients with genetic FCS, with the known mutations associated with FCS, there's about 1,000 of those. They're well identified. They've been on very restrictive diets for years and years. And so they are motivated to find treatment. They'll be looking for treatments. And so they're sort of the easiest population to address. Second would be those phenocopies, those patients with triglycerides above 880 and a history of pancreatitis. And so they look very similar to the genetic FCS patients. In fact, on most measures, they look exactly the same as the genetic FCS patients. But they don't have the known genetic mutations.
We think that there's probably close to a million people with triglycerides above 880. Now, a smaller portion will have a history of pancreatitis. But that large group of almost a million, we think should have a drug like this, right? If they've had pancreatitis, they've seen the abyss, and they're motivated not to have pancreatitis again. For those who have not had pancreatitis but have triglycerides above 880, it's a ticking time bomb. And so we think that they should be looking for a therapy. We think there's about two million people who are on either fibrates and/or fish oils. And so for that population, they're physicians, and they have determined that triglycerides are a bad actor for them. And so we think it's a fairly straightforward value proposition of lowering their trigs by 80% versus the 20% or 30% that they're seeing right now.
Then the population that will require more education is those patients with trigs between 500 and 880. We've got MSLs in the field now. We've got our Med Affairs team that is speaking with physicians and helping the market understand the need for this kind of therapy.
Just remind us, what's the latest thinking on the cardiovascular outcomes trial for p lozasiran at this point?
Sure. So I'll let Bruce talk about that. It is ready to go. It's just a financially prudent thing to do, we think, to wait until we've got better line of sight on additional capital. I think we've got a number of areas that we can find that capital. But until that comes in, it makes sense for us to kind of keep this on pause. So Bruce, do you want to talk about what we've got there?
Yeah. I mean, we've designed the trial with a real elite group of clinical scientists being led by Steve Nissen. We have regulatory feedback from the U.S., from EMA, and from the Japanese that we're now sort of making the modifications based on all the feedback we got from the core regulatory groups. So we're on standby waiting for Chris to find the funds.
And think of these two markets as orthogonal, right? Using plozasiran for ASCVD is just quite different than using plozasiran for severe hypertriglyceridemia. We talked a little bit about SHTG. These folks have heightened risk of pancreatitis. But even upstream of that, many of them have abdominal pain and such. And so our value proposition there is, A, we think we can lower the risk of you having pancreatitis. But B, we think we can make you feel better. And so Bruce, talk a bit about the theoretical basis of plozasiran against ASCVD risk.
Yeah. ASCVD is very different because most patients, unless they have established coronary artery disease, are asymptomatic. It's like LDL risk in a lot of ways. And it's been known, I think, for quite a while that patients with SHTG especially have a higher risk of atherosclerotic cardiovascular disease. But it's never been all that well characterized. And in recent years now, with these very advanced genetic tools that people are using, Mendelian randomization, these large databases, especially out of Europe, it's now believed that the triglyceride side of the equation, the metabolites of this dietary fat, are actually as or maybe as many as four times fold more atherogenic than LDL is. But the number of patients affected by the hypertriglyceridemia has historically been smaller in LDL. We've done so much work to characterize it and understand the importance of it.
But there's always been this paradox that we can really lower LDL dramatically now, and yet we still have a large number of patients continuing to have cardiovascular events. And the thinking is part of that's Lp(a), but part of that is triglycerides. And we really have had no effective drugs. I mean, statins do a little bit, fibrates do a little bit, fish oils do a little bit. But we've never had drugs as powerful as what we have over on the LDL side until now. But when it's been studied, it's been studied with these weak drugs that actually have positive effects but also negative effects. So this is an opportunity to really prove it for the first time.
I guess then when we think about the cadence of upcoming data from plozasiran, what's the most important data? When can we possibly get it now from SHTG? And then from a commercial standpoint, are you thinking to find a commercialization partner ex-U.S.? Is that still in the works for SHTG? And just what that dynamic looks like now?
Sure. So we've said publicly that we think that the SHTG phase III studies, those that are gating not including the pancreatitis study, but those that are regulatorily required studies, if you will. We fully enrolled this year, so finished in 2026, file sNDA shortly thereafter, and we think that we will be hopefully approved in 2027. So we'll be addressing the SHTG market around that time. Yes, we are still open to ex-US, a partner for plozasiran. The disruptive deal has allowed us the luxury of time, and so we can wait to do the right deal rather than the first deal, but that still is something that could make some sense for us, at least on a geography by geography basis. Maybe not one large ex-US partner, but maybe some smaller partners. We'll see where that goes.
Okay. I know there's still a lot left to do. So I want to now switch gears a little bit to the obesity programs that you've discussed now. You have the ARO-INHBE and ARO-ALK7. I think dosing in ARO-INHBE has begun already. So maybe we'll just start with that. Give us a sense, first of all, why you structured the phase I the way you did. It's a pretty expansive phase I. And realistically, how much read-through we could get from actually just phase I data into where it could actually compete in the obesity market now.
Yeah. So for both INHBE and ALK7, the phase I are important. And I think we'll have an idea about how these are translating from animal models to humans this year. There's an awful lot to interrogate to determine how these will fit into the obesity paradigm going forward. And we will have some answers this year, but not all the answers, right? Obesity is now a space that will have a number of players in it. And so we'll see where these things are going to fit over the next several years. But here's what we expect. The animal data would suggest, for both INHBE and ALK7, that we should see weight loss as a monotherapy. We should see high-quality weight loss as a monotherapy.
What we see in both of these is a weight loss associated with the loss of visceral fat, not just fat in general, but visceral fat, and these are muscle sparing. That's extraordinarily important. As we all know, that's one of the big liabilities of the current GLP-1 agonist, so it'll be interesting to see that. Second, what we saw in both of these was that the weight loss was driven not by caloric restriction, but by just an increase in metabolism, an increase in lipolysis. That's very interesting, right, so as opposed to the GLP-1 agonists, these animals were not on essentially a starvation diet. They're eating the same amount of food as control animals, but we're losing weight because of the biology of this pathway. These animals were essentially not storing fat. They were burning fat.
That's very interesting and could be a really interesting product profile should that translate into humans. Third, I think we're on third. In animal models, we saw that we were able to see the same amount of weight loss with a full dose of tirzepatide. I'm sorry, the same amount of weight loss as a full dose of tirzepatide with a subtherapeutic dose of tirzepatide if combined with either ALK7 or INHBE. That's interesting because with a low dose tirzepatide and INHBE or ALK7, we saw muscle sparing. And so that's an interesting idea that this could be used in combination with a low dose of existing therapies to still see substantial weight loss, but without the muscle wasting issues that we've seen with those. This could also be used as a long-term therapy, right?
You can imagine somebody going on one of the traditional therapies right now to lose a fair amount of weight and then going off those drugs and then maintaining that weight loss or continuing that weight loss with INHBE or ALK7. So there's a number of ways this could fit into the overall obesity paradigm, and we're really looking forward to seeing how this translates.
Great. So, I guess, will we get INHBE and ALK7 data by the end of this year or just INHBE?
Yes.
Assuming it's like Q4 timeframe.
Yeah. So for INHBE, we feel quite good that we'll have SAD data this year. We'll have SAD and MAD monotherapy data this year. And potentially a bit of combination therapy with tirzepatide this year for INHBE. It won't be complete, but I think we'll have some data. On the ALK7 side, we're about a quarter behind. And so my expectation is that we will, I think we could have some early SAD monotherapy data by the end of the year. But we'll see how fast we can enroll these.
That initial readout of SAD, MAD, what is a win? What is great data from that initial first look at this that gives you confidence? Okay, this is actually something that really could translate.
Yeah. So these are relatively small phase I studies. And so they're not powered to show big differences in weight loss. And so my expectation is we're not going to see statistically significant changes here. But as long as we can see trends toward weight loss, that's helpful. And as long as we can see a muscle sparing approach, we'll be looking at that as well via MRI. And so as long as we can see good quality weight loss and weight loss, I think those are big wins for us.
Brendan, I think we shouldn't have people expecting that what we're trying to do here is replace the GLP-1s and the multi-agonist drugs following. That's not really the game here. There's so much white space. This is going to be a space with a lot of innovation over the next decade. Just seeing that these drugs can have effect, I think at this point, is the most important. Look at their tolerability. Phase II is going to be really interesting in trying to figure out what the best way to use these drugs is in the context of the GLP-1 and agonists already being here. We know they work. I mean, people maybe forget, but obesity has been just a terrible space for the last few decades. It's really obesity, Alzheimer's. What are our worst public health problems? It's been really unaddressable.
And all the yo-yo diets and everything else. So from my perspective, the worst thing that can happen in this space is for people to look at these new technologies and want to stack them up against the GLP-1s. It's really the wrong way to look at it. This is going to be parallel play. This would be the same as taking the PCSK9 inhibitors and saying, well, they have to be better than statins. No, they're in the context of statins. And I view our drugs here as in the context of a GLP-1 world. And where's the white space? Where can we really make a big difference, not trying to displace them?
I mean, mechanistically for both of these drugs, is there a way to kind of differentiate among, let's just say, obesity patients? Do you already know of patients that would be more prone to responding to ALK7 or INHBE who maybe wouldn't to GLP-1, for example? Are you able to segment the patient population yet?
I don't think the perfect word there was yet. No. Because I think obesity has been a wasteland for so long. We finally have a beachhead, and with the GLP-1s, it's finally given us a beachhead, so this is really what I'm trying to say, that this is going to be an area of a lot of innovation, so now, look, if we were developing an oral GLP-1 or some other modality for delivery of GLP-1, then fine, I'd say compare us to the GLP-1s that are there, but that's not the world we're in. We're in the world of trying to figure out how to address obesity for the long term. This is most likely to wind up being like other chronic diseases that have wound up requiring multi-modality treatment. Most of the big chronic diseases, patients don't take one drug.
They take two or three because you're balancing your effect to get the outcome you want. So I think that's where we're probably going to wind up playing here.
So are there any, I mean, so looking at INHBE and ALK7, obviously one is targeting liver and one is targeting fat cells. So I guess at this point, are there any plans to expand outside of obesity?
Oh, shoot. Expand within obesity outside of these targets or?
Expand beyond obesity for either target, just given the mechanism for the drugs. And the ability to kind of target different cell types is really what I'm getting at.
Sure. So adipose is important. The ALK7 data are a real value driver for us because, A, we think it's potentially a good obesity drug, but, B, it's a proof of concept that we can address adipose. I believe our first time, as you mentioned earlier. And we see a number of really good cardiometabolic targets within adipose, the largest endocrine organ in the body. And we are clearly building out our capabilities within cardiometabolic, whether it's plozasiran or zodasiran or obesity with INHBE or ALK7. And so it makes sense for us to blow that out more with adipose. And we've got a number of targets that we think we'll be bringing into the clinic in 2026.
And I would just add one thing onto that. Obesity, diabetes are in a dance with each other. I mean, they're full partners. So I'll be totally unsurprised. Even though our focus, our primary focus here is obesity, it won't surprise me at all if we wind up getting taken into type 2 diabetes at the same time. It's just they're so linked. There will be obesity drugs that don't affect diabetes really at all, other than just weight loss is just generally good for type 2 diabetes. But there'll be some of these, I think, where the mechanisms will be complementary. And we'll see both effects on type 2 diabetes at the same time as we see it in obesity, like we're seeing with the GLP-1s. I would anticipate we'll see both of those.
I know in the last couple of minutes, I did want to give a little bit of love to zodasiran. I know. Can you maybe just remind us what the kind of next steps and timing is for the next study and then what we could reasonably expect potentially for the data to come from that?
Sure. Bruce?
This was zodasiran.
Zodasiran.
Yeah. So zodasiran, we're in the final design stages for a phase III HoFH study. So homozygous familial hypercholesterolemia. And that's very much like, in some ways, analogous to the FCS study. About the same size. And we already have feedback from the FDA. And we think that we would be able to submit an NDA based on the study that we're designing right now for HoFH and the data we already have. So we don't think we'd have to do additional work beyond that for a familial hypercholesterolemia approval. And the physician population that treats those patients is basically the same physician population that treats FCS patients. So we see this as a one study, one and done, put it in the bag with the FCS SHTG sales force and just go forward. So that study should start in the second quarter. That's our plan.
At this point, I don't think we have guidance on how long we think it'll take to enroll that. It's a little too early innings for us. But stay tuned. But this will be a nice efficient way to use zodasiran, I think.
I guess, is there any at this time plans to expand? Let's say if that study works, perhaps, would you consider going into heterozygous? Or is that not in the works just yet?
Probably not heterozygous. We had a concept of potentially a very narrow slice of heterozygous that aren't fully treated with statins and PCSK9 inhibitors, but there's really no regulatory path to be so narrowly focused. I would say that if we went further at all, it would be more into the mixed hyperlipidemia world than really the heterozygous world. Because pretty much most of those patients are very well treated with statins plus a PCSK9 inhibitor at this point.
Okay. And really just in the last minute, Chris, maybe outline the next 12, 18 months' major catalysts that you're looking for Arrowhead, and even a lot across the different pipelines. So maybe just give us down the line over the next 12 months.
Sure. We've got a lot. So plozasiran, we'll start with that. We'll have our PDUFA date in November of this year. I think that's a big event for us. My expectation is, my hope is that we will be a commercial company towards the end of this year with FCS. Now, again, keep in mind that's not just genetic FCS, but also phenotypic FCS. And so I think it is a not insignificant market. In terms of data readouts, I expect to have data from INHBE. I expect to have data from ALK7. I expect to have data from DM1 and DUX4, MMP7. We will be pushing into the clinic our first CNS drugs this year. That's MAPT. The target is Tau for Alzheimer's, as well as HTT for Huntington's. I expect those to be in the clinic this year.
And that is a substantially disruptive opportunity there because our platform there is subcutaneously administered. And we think, at least in animal models, we have an expectation that we'll be getting good knockdown in deep brain regions. Should that translate into humans, that is very. I can't overestimate that. That is a substantially disruptive move for us. And then in the early part of 2026, we will have alpha-synuclein, our third CNS target in the clinic against Parkinson's.
All right. Great. I think that just about covers everything we need to. So thank you guys so much for coming. It's always a pleasure to see you. And keep going. Day one.
Thanks very much.