Great. Thanks. Hello, everybody. Luca Issi Senior Biotech Analyst here at RBC Capital Markets. Today is our great privilege to have Arrowhead Pharmaceuticals as part of our 2025 Global Healthcare Conference. Representing the company, we have Chris Anzalone, who is the Chief Executive Officer, and we have a very, very long list of questions here. Thank you for joining us. Maybe before we jump into some of the individual programs, it would be very, very helpful if you can just give us an overview of Arrowhead, maybe what progress has the organization made over the last few months, and most importantly, what's ahead here.
Sure. First, thanks very much for having us. It's a great pleasure to be here, as always. Boy, that's a hard first question. We have a lot that has happened in the last several months, not the least of which is that we have really solidified our balance sheet and have weaved in clear capital into 2028, which is an important time frame for us because it gets us into several launches. We think we will launch our lead drug, Plozasiran, into FCS late this year, but into SHTG, a much larger market, in 2027. ARO-AAT, our AAT drug with Takeda, could be launched in the 2027-2028 time frame. Alpaceran with Amgen could launch around that time frame as well. While we do not quite have enough cash to get us to profitability, we can kind of smell it.
I think we are only a couple of business development deals away from that, potentially. It is really heartening to have the kind of pipeline and development ability that we have at a time when we do not need to be accessing the capital markets, which would be difficult these days.
Sure. No, that's very helpful. Maybe let's talk about Plozasiran here for a minute. Adufide, November 18th, I believe. This will be the very first drug ever approved out of Arrowhead's pipeline here, and obviously, you're planning to launch that drug solo. Anything that keeps you up at night on that application? Are you anticipating an adcom? Any thoughts there?
No, we don't expect an adcom. Our business is full of drama, and I guess anytime you cannot have drama is a good thing. I don't think there's very much drama there. I mean, the data were just clear. We lowered triglycerides in 100% of patients that we treated. We were seeing triglycerides lowering to the tune of around 80% from baseline. 75% of patients who went on drug got triglycerides below 80, and 50% got below 500, which is really saying something because the baseline starting point was about 2,500. The safe profile looked good, and we expect a smooth review, and we look forward to going forward.
That's helpful. That's helpful. How are you thinking about the label at this point? I mean, obviously, your competitors had the acute pancreatitis benefit, actually, in the clinical sections of the label, but obviously, you have hit StatSeg on your trial. Is it fair for us to assume that that benefit is going to be in the indication sections of the label, or is it going to be similar to your competitors in the clinical section, and does that matter for commercial uptake?
Yeah. So the short answer is, who knows? Let's see where the FDA puts it. I don't think it matters so much in this market. I think that it is clear in this patient population that lowering triglycerides is important, and the lower, the better. The biology here is clear. High triglycerides in this population can increase the risk of acute pancreatitis. I think it's a nice to have. I don't think it's a need to have. What I'm a bit more interested in is what the label says around genetically defined FCS versus clinically defined FCS. We study both populations. We are about, I think, 60% or so of our patients were genetically defined FCS patients, and about 40% were clinically defined, which just means that they look and smell just like the genetically defined patients but did not have the known genetic mutations associated with FCS.
Both patient populations responded similarly to the drug, and so my hope is that, as is often the case, the label follows what you studied, and so I hope that's the case. If that is, I think that makes our lives a little bit easier to bring this to patients who really need it, but we'll see where that goes.
Sure. That's helpful. Maybe big picture, I want to reflect on this target. Obviously, Novartis has decided to pass on the target with the Ionis molecule. I'm under the impression that at least maybe you and your competitors have tried to monetize at least the excess rights for these targets with pharma, but it feels to me that pharma is on the sideline here. One, is that a fair characterization? Two, if not, which I suspect you're going to say no, what do you think changes? Why is pharma not all over this?
Yeah. First, to your first question, I don't think that's fair. We have not shopped this for excess rights. We are kicking that around as we speak. How much value could we bring in by partnering excess rights? How much value could we extract by bringing this ourselves to various geographies? We don't know the answer to that yet. Who knows what goes into any of big pharma's calculus when they give back an asset? I can't really speak to the Ionis Novartis experience, but here's what I can say. I think that the biology here is clear as it relates to not just FCS, but even the broader severe hypertriglyceridemia population. These are people with triglycerides above 500. We know that there is a fairly linear relationship between triglyceride levels on one hand and increased risk of acute pancreatitis on the other.
We know that at around 500 milligrams per deciliter, that risk goes up. The slope changes a bit, and then it changes a bit again above 880. I think that much is clear, and what the market has not, or what big pharma and the capital markets have not seen, is people extracting value from this market because there has been no way, really, until now. There has never been a drug candidate to decrease triglycerides to the extent that we are doing that. We think this is a grossly underdiagnosed and certainly underserved market because there have been no treatments. We will be among the first two treatments to really move the needle on this. That is the good news and bad news. The good news is there are patients who need this, and we're coming. The bad news is this is an education play.
We have MedAfares out there helping to develop this market. Look, yes, we have a competitor here, and the easy answer to the question about whether or not that's good is it's never good to have a competitor. That's not true. This is an education play, and I think two companies will help payers and providers and patients understand the need to lower triglycerides better than one. We're happy to have two of us at this.
Sure. Maybe two quick questions. Maybe one on the safety side and the other one on the efficacy side. I mean, on the safety side, we have seen a little bit of a signal for HbA1c for this molecule, so love to pick your brain on that, again, whether that's something that keeps you up at night or not. Then second, talk to us about SHASTA 5 and why you decided to run a dedicated trial to show an acute pancreatitis benefit. Again, your competitor here is using a different strategy where essentially the benefit is going to be captured as a secondary endpoint. Again, two-part questions.
One on safety, how should we think about HbA1c signal, and then two, SHASTA- 5, tell us about why you decided to do that, and maybe if you can talk about powering assumptions and how you're planning to design that trial, that'd be much appreciated.
Sure. On the A1c question, I do not view that as a safety signal. I view that as a biology signal. These patients were not properly or not completely metabolizing triglycerides, and by knocking down ApoC3, we are enabling that. That needs to go somewhere, and that becomes substrate. That is part of gluconeogenesis. For some diabetics, for some pre-diabetics, you see a slight increase in A1c. From our perspective, that is an acceptable trade-off because there are plenty of ways that physicians can manage that. We just say, look, keep your eye on A1c and adjust meds as necessary in those diabetics or pre-diabetics. That is on the A1c. On the SHASTA- 5 side, SHASTA- 5 is our study that is focused solely on acute pancreatitis.
We have three studies right now, three phase three studies ongoing that are aimed at regulatory approval of Plozasiran for severe hypertriglyceridemia. We have a fourth study called SHASTA-5 that is not necessary for regulatory approval, but we think could be helpful from a payer standpoint. In this population, we are treating a population that is enriched for those who have a greater risk of pancreatitis. These folks will have triglycerides above 1,000. They will have had pancreatitis in the past, and we will be treating them for a year. Again, we thought that was a nice to have, not a need to have. We know it is not critical from a regulatory standpoint. We know simply lowering triglycerides in this population is sufficient, but we thought for payers, it would be helpful to show these data.
Somewhat helpful in the United States, but probably very helpful in Europe. Yes, it could be that by pooling SHASTA- 3 and 4, we can also see an improvement in pancreatitis risk. Just as belt and suspenders, we decided to do this one as well. I think it's important.
Bigger, smaller, and 200 patients, SHASTA- 5?
I don't think we've said. It's not a very large study. I'm sorry, I said it's a year-long study. It's an event-driven study. We don't think it'll be too long to count up enough events because it's enriched for those patients who are at greater risk of pancreatitis.
Sure. That's helpful. Let's maybe pivot to obesity. I guess maybe two-part question. One, if you can talk about big picture, why you decided to go for both INHBE as well as ALK7. A couple of your competitors are just doing INHBE, and I think probably most investors look at ALK7 as maybe a little bit higher risk, higher reward type of bet, given its antiphosphate issues. Walk us through why it makes sense to do both, and maybe ultimately whether you decide to go for one versus the other. Let's maybe start with that.
Yeah. Yeah. Okay. It's a good question. Just to level set, here's the pathway. INHBE encodes, or ARO-INHBE knocks down the gene encoding for INHBE. INHBE is a subunit of activin. Activin binds to ALK7. ALK7 is expressed in adipose tissue, and it helps to regulate fat storage. We know from genetic studies, we also know from now animal studies, that if you decrease either INHBE or ALK7, it induces lipolysis, and animals tend to burn fat. We decided to go after both because we feel quite confident that we're good at knocking down hepatocyte targets. The risk profile of ARO-INHBE was low. We can do it in our sleep, and we pushed that into the clinic. ALK7, as you point out, is maybe a bit higher risk and a bit higher reward.
In the animal studies, that was a bit more potent than ARO-INHBE, which makes intuitive sense, right? Because that's the receptor, and we know other ligands bind that receptor. It makes intuitive sense that that could be a more powerful drug candidate. As you say, we've never been in adipose before in humans. In animal studies, it works very well. It's very potent. We see good durability. We are quite optimistic that that will work as well, but you don't know until you know. We figured, you know what? Let's push both these into the clinic, and let's see which works better in humans, and then take that one into phase two and beyond.
Sure. Sure. So it's fair that at some point you're going to make a call on one versus the other? Would be the right way to [crosstalk] think about it?
I think that's the right way to think about it. My hope is that the difference is clear in this phase one, two study, and then we'll take just one forward.
Sure. Sure.
I tell you, I'm rooting for ALK7. I want the best drug to win, but if ALK7, if that translates, then that is a really interesting drug. It worked very well on animals. As I mentioned, for the ARO-INHBE, the hepatocyte-directed drug candidate, we would expect once a quarterly dosing. ARO-ALK7 could dose less frequently, maybe more like every six months. We look forward to seeing how that goes.
Sure. Sure. That's very helpful. You're going to obviously show us some initial data for INHBE later this year. When I look at your preclinical data, both you and Wave, it feels to me that monotherapy, so just this drug alone, maybe drives like 5-10% weight loss. Is that 5-10% the right bogey for us to think about it in monotherapy, not in combination with tirzepatide?
Yeah. I think that's the wrong way to look at it, and here's why. Look, our job is not to put the GLP, GIPs out of business. Those drugs work. Now they've got their challenges, and we think there's a lot of white space around them. Muscle sparing is an important one. Some of these GI AEs are important. Some of the central AEs are important. We think there is plenty of room in this, frankly, quite heterogeneous population of obese individuals for multiple modes of action and ultimately probably combination approaches. What we want to see early on in this phase one, two study is we want to see some weight loss. We'll see how much it is, but we want to see some weight loss. Importantly, we want that to be high-quality weight loss.
Among other things, we are doing full-body MRIs, and so we can look at how much visceral fat is lost versus muscle. What we saw in animal models was stunning. We saw weight loss in animals that was nearly exclusively visceral fat and not muscle loss. That's important. Second, these animals weren't eating less food than control animals. They were able to lose this fat while eating the same amount of food just by ramping up their fat metabolism. That's a very intriguing potential product profile. I think all we need to see in this phase one, two study is, yes, we see some weight loss, and yes, it is high-quality weight loss. Now let's take it forward and do longer-term studies to see how much weight loss we get.
Sure. Sure. Super helpful. Maybe just when I look at your MAD portion of the trial, it looks like you guys are only going to do two doses.
That's correct.
If I got that right. Is that enough to actually show a meaningful reduction in body weight? Because historically, you guys, I believe, in the MAD portion of your trial, usually have done three or four, if I recall it correctly. Why just two? Is that two too small?
Yeah. Again, look at what we're going for here. Our goal here is not to show some amount of weight loss that a patient is going to want to have after two years of therapy. Our goal here is to show the drug is doing what it's intended to do and then move as quickly as we can into a longer phase two study that would then allow us to understand how much weight a person could lose over a longer period of time. Also keep in mind that the durability of both these drugs we expect to be quite long, right? We are dosing at day one and day 30. We crimp it like that just so we can do a shorter study.
The point is we should have good knockdown in ARO-INHBE for a good four months after that second dose and for ARO-ALK7 potentially even longer than that. I think that we can learn a lot after only two doses.
Sure. Sure. The benefit of siRNA, right?
That's right.
Long-form ecology.
That's right.
It can be dosed less.
That's incredible.
are many, many other therapies out there. No, that makes a lot of sense. You maybe already alluded to it, but what are the other endpoints that are going to be focused on? Are they in body weight? You mentioned full-body MRI, but any other endpoint that will really point in the direction that this therapy is muscle sparing or anything else that we should think about?
Sure. Yeah. So there are some biomarkers that could potentially help us see that the fat is being burned, free fatty acids, glycerol, etc. But the big ones would be the full-body MRI, weight loss, of course, will the hip-to-waist ratio, that sort of thing.
Got it. Got it. Helpful. Maybe let's pivot to muscle. I mean, obviously, congratulations on your deal with Sarepta, which has obviously extended your runway quite materially, which is obviously in this environment transformative for the organization. Maybe just going into the science, walk us through, many of your competitors are going after transferrin, whether you're looking at Vidyodan versus you guys decided to go after the integrin receptors. Walk us through why you think that's the better way to go about it.
Sure. First, yes, the Sarepta deal is transformational for us because of what it did to our balance sheet. It was very important because it puts these two, among other things, it puts these two drugs that we think are really important good drugs into the hands of a company that is really good at developing them quickly and bringing them to the patients who need them very quickly. Our goal here really was multiple here. Yes, we need to bring in capital, but we also wanted to find a good home for these and other drugs, and we found that. Yeah. Look, we are agnostic as to how we get our RNAi molecules into cells. We interrogate antibodies and fabs and peptides and small molecules and what have you, and we just follow whichever works best in our hands.
We tested antibodies and fabs for our muscle program, muscle platform. The alpha beta 6 targeting peptide with a small lipid tail also just worked the best. That was great. The follow-up to that is that these are small. It is a little peptide. It is not a big antibody or a fab. Our expectation is that we will use somewhere between a tenth or maybe a fiftieth the amount of total drug compared to Dine and Invitee, in large part because we are using this very small targeting moiety, but also we expect to have a very potent RNAi molecule. What does that do? A, that could have benefits from a safety standpoint. Like anything, the smaller amount of something you can inject in somebody is potentially good because who knows what long-term safety issues can arise as you put in more drug.
Second, it could potentially allow us and Sarepta to toggle to a sub-Q administration rather than IV. That could be transformational. If we could have a once a quarter sub-Q injection with these drugs rather than once a quarter IV infusion, that is a huge benefit. I do not know that we can get there. I think we will know this year. That would just be a really important differentiator if that can work for both of those.
That's helpful. That's helpful. Can you just maybe talk about what I mean, I appreciate this is more a question for Sarepta, but what data are we going to see this year from those two programs? I think you are on the record saying that Sarepta actually did the deal after seeing some initial clinical data. Can you just tell us a little bit about what they have seen so far? What are you going to show us? Are you going to show us only PKPD, or are you going to show us also function, VHAD, and walk us through what we're going to see in the second half of the year?
Okay. Let's not overstate what they saw before a deal is done. There was precious little clinical data at the time that we did the deal. They saw everything we had, but it was not very much. People have surmised, oh, since they did the deal, does that mean that they saw clinical data that were great and the drug's going to work? The answer is no, it was too early. We did not know at that point. We still do not know. We are dosing patients. It is placebo controlled, but it is entirely in patients. We are enrolling patients at a pretty good clip. My expectation is that this year, there will be enough data generated throughout the year that could be presented, I think.
It is entirely up to Sarepta as to when and how they might present those data. I think my hope is that there is enough that can be presented at some point.
Sure. That's very helpful. Maybe going back to your cardiovascular pipeline. I mean, I think you guys have mentioned a few times the potential of running a cardiovascular outcome trial, and there's been discussions on what target and exactly how to run that. I feel like there's still a healthy debate among the investor community on whether that's a good idea or not for a smaller biotech company. Just, I guess, walk me through what's your latest thinking, especially in the context of your burn around whether you're willing to run a cardiovascular outcome trial. If so, what target and what's the strategy there?
Yep. That's a great question. The answer is we have not started a cardiovascular outcomes trial right now because I don't have clarity on the additional capital that it will take to do that. What we think is we have a protocol ready to go for Plozasiran. We call it Capitan. We've got an executive committee. We've got KOLs who are lined up, ready to go, and excited about it. There's a lot of reason to believe that lowering triglycerides in this mixed hyperlipidemia population will be a good thing in terms of ASCVD risk. We are all in on believing that. We just need better clarity on where that capital is going to come from. That's gate number one. Gate number two is it's not clear what we would take in when we have that clarity, right? Plozasiran has its benefits.
It's CVOT ready now. We've got a lot of safety data between the SHTG study and the FCS study and such, and we're ready to go. We have another candidate that will be in the clinic this year. It's our first dimer. It's actually, I think, the world's first dimer that is designed to knock down both PCSK9 and ApoC3. We love that idea to hit both the LDL pathway as well as the triglyceride pathway. The downside to that is that we're just starting that this year in the clinic later this year. It will take a little bit to get to phase three ready. We're weighing all of these right now. We are confident in the biology. We're confident in at least Plozasiran.
We'll just wait to see where the additional capital will come from and then whether or not we want to wait a bit for the dimer.
Got it. Got it. That's helpful. It sounds like the dimer could be maybe in the cards here.
Yeah. That dimer is cool. It is, from an innovation standpoint, it is breathtaking. The idea that with a single chemical entity, we can attack both those pathways. The biology risk is very low, I think, because the PCSK9 LDL pathway is clear and the ApoC3 triglyceride pathway is highly supported.
Got it. Got it. Super helpful. Maybe I know we're running out of time here, but maybe two more questions quickly. One, on alpha-1 antitrypsin, I guess two questions. One, does that placebo response still keep you up at night or not? This is biopsies. All is very noisy. Then two, and I could be wrong here, but it looks to me that maybe enrollment in that pivotal trial is going a little slower than some of us were hoping for. How engaged is Takeda? How committed are they to continue to push on that side? Also, in the broader context of we're seeing innovations for alpha-1 antitrypsin coming from a lot of other molecules that maybe can do both liver and lungs. Just walk me through what's the latest on alpha-1.
Look, we think that's a great drug. It is clear to us, at least, that that drug does what it's intended to do. We nearly completely eliminate the production of the Z protein. We know that it is the accumulation of that Z protein that causes fibrosis. We have even seen a decrease in fibrosis after a pretty short period of time in a handful of patients. To your point about the placebo effect, that's a noisy endpoint. Fibrosis is going to be a bit noisy. It's not because—and it's noisy not because there is a placebo effect. It's noisy because people will read F2 or F3 differently depending upon who's reading it. That was taken into account when we were powering the study and when we were deciding how many patients would be in it.
We feel comfortable that, yes, it's going to be—there's going to be some noise there, but the drug works so well that we think with, I think it's 120 or so patients. I can't recall exactly. The number, it is the primary endpoint, will be sufficient to see a real benefit. That's that. Second, on enrollment, look, Takeda appears to be extraordinarily committed to this. They talk about it publicly a lot. It fits squarely into their wheelhouse. They are in the enzyme replacement business as well. They are calling on these physicians. They appear to me to be committed to it, and they're spending time and money. They have guided that that phase three will be fully enrolled this year. If they stick to that guidance, then that study could read out in 2027.
That would be helpful, and it may launch in 2028. Regarding other therapies, look, we are the only game in town right now. People have come up with these really elegant ideas like a corrector that could go in there and correct the misfolded Z protein. It's a beautiful idea, but it doesn't work in practice because the stoichiometry doesn't work. People have talked about gene therapy. That feels to me still irresponsible because who knows what the long-term effects of gene therapy is. If we can address this with a reversible RNAi modality, why not do that? We feel like Takeda and we are in a good spot with this drug. We think there's a ton of patients that are waiting for this. It makes a really economic impact for us.
We have 50/50 profit share in the U.S. and 20%-25% royalties ex U.S. We are committed to this as well. We hope that we can get to market quickly.
Super helpful. Last question. Business development, how are you thinking about it? You obviously have a long track history of BD on favorable economics, including obviously Sarepta. How are you thinking about your runway at this point and ways to potentially extend it?
Yep. As I mentioned early on, we have cash into 2028 right now. I'd like to do another business development deal this year. I don't think the size of Sarepta, that was a unicorn. I would like to do a more traditionally sized BD deal this year. We will probably take a little bit of a pause to see what our bandwidth looks like because my hope is that if we can get a deal done this year, it will include a discovery component. I don't want to overtax our discovery team because we need to make sure that we are always creating our own wholly owned drugs. Again, I would expect to do a BD deal this year to extend the runway a bit more, and then we'll see about next year.
Got it. Super helpful. Have a lot more questions, but no more time. Chris, thanks so much for joining us here at RBC. Thanks, everyone, and we'll talk soon.
Thank you. Yeah, thanks so much.