Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2019 third quarter ended June 30th, 2019. With us today from management, our President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter, Dr. Bruce Given, our Chief Operating Officer and Head of R&D, who will discuss our clinical programs, and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to your questions. Before we begin, I would like to remind you that comments made during today's call contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including without limitation those with respect to Arrowhead's goals, plans, and strategies, are forward-looking statements.
These include statements regarding our expectations around the development, safety, and efficacy of our drug candidates, projected cash runway, and expected future development activities. These statements represent management's current expectations and are inherently uncertain. Thus, actual results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward-looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's annual report on Form 10-K and the company's subsequent quarterly reports on Form 10-Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call. With that said, I'd like to turn the call over to Christopher Anzalone, President and CEO of the company. Chris?
Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. We made substantial progress during the quarter toward our short-term and longer-term goals. In particular, we took some very important regulatory and clinical steps that I will discuss in a moment. We now have a good mix of early, mid, and later-stage programs, both wholly owned and partnered, and soon we will add candidates targeting cell types outside of the liver. This will be a big step for Arrowhead and more broadly for the entire RNAi field. In addition, we have multiple years of cash on our balance sheet and potentially access to more non-dilutive capital through milestone payments from our two external partnerships. Taken together, we have three critical components of success for a company like ours. One, a platform on which to build a variety of important new medicines.
Two, a pipeline of potential medicines spanning early discovery to later-stage clinical trials. Three, the capital to fund development and further innovation. The fourth critical component is effective and rapid execution. I believe we have clearly demonstrated this over the past few years and during the last quarter. Our overriding focus is on bringing important new medicines to patients who need them, and if we're able to do that, we will continue to build long-term value. Before I give a review of some of the highlights of the quarter, I want to make a couple of announcements. First, I am proud to announce a previously undisclosed program for which we expect to file a CTA at the end of this year and begin first-in-human studies shortly thereafter. We have never discussed this program publicly.
The target is HSD17B13, and potential indications we could address are alcohol-related and non-alcohol-related liver disease. The candidate is called ARO-HSD, and it is currently in IND-enabling GLP toxicology studies. HSD17B13 is a hydroxysteroid dehydrogenase involved in the metabolism of hormones, fatty acids, and bile acids. In humans, it is extensively expressed in hepatocytes. Human genetic studies indicate that loss-of-function mutations in HSD17B13 are protective against development of both alcohol-related and non-alcohol-related liver disease, with approximately 30%-50% risk reduction compared to non-carriers. Carriers of this variant show lower transaminase levels, both ALT and AST, compared to non-carriers. This protective effect has inspired therapeutic interest in the treatment of liver disease.
We are excited about the program, and I expect that not only will we have the first RNAi candidate against this target in the clinic, but I expect we'll be the first to bring any candidate using any modality into the clinic against this target. We have a large and exciting pipeline, and it is now larger and more exciting. Second, Arrowhead will hold an R&D Day in New York on October 18 to give a more in-depth review of some of our programs, including the new ARO-HSD program. We have come so far so fast, I think it will also be helpful for us to take a step back and give investors a more long-term view of where we see the company over the coming years.
We plan on having presentations from folks at Arrowhead, as well as some external experts, in addition to panel discussions and interactive question and answer sessions. The event will be open to analysts and institutional investors by invitation, and there will also be a live webcast. We're planning an engaging event with various presentation formats, so we hope many of you can join us in person or by webcast. Additional details will be available on our website as we approach the event. Let's now turn to our preclinical programs. I want to give a brief update on the timing of ARO-HIF2 and ARO-ENaC, the first two TRiM-enabled candidates targeting tissues outside the liver. As I mentioned, being able to effectively target tissues outside the liver is a big step forward for us.
Broadly, it opens up a vast set of diseases that may not be addressable with small molecule and/or antibody drugs and makes them accessible to Arrowhead. This can drive significant value for us, and more importantly, give us the opportunity to provide hope for many patients without adequate options. We have believed all along that for RNAi to reach its true potential as a paradigm-shifting new modality in medicine, it must be able to address diseases outside of hepatocytes. Because of this belief, we have spent the last several years improving our technology and finding solutions to the many technical challenges that exist beyond hepatocyte delivery. We think we are there. This gives us a distinctive strategic and technical advantage over other RNAi companies. ARO-HIF2 is being developed as a promising new drug candidate for the treatment of the clear cell form of renal cell carcinoma, or ccRCC.
ARO-HIF2 is designed to inhibit the production of HIF-2 alpha, which has been linked to tumor progression and metastasis in ccRCC. We believe it is an attractive target for intervention because the overwhelming majority of ccRCC tumors are thought to express a mutant form of the von Hippel-Lindau protein that is unable to degrade HIF-2 alpha, leading to its accumulation during tumor hypoxia and promoting tumor growth. We are still on schedule to file a CTA for ARO-HIF2 this year. Similar to ARO-HSD, we are currently conducting IND-enabling GLP toxicology studies. The anticipated completion of these studies should support a CTA filing by the end of the year. Our second extrahepatic program to leverage the TRiM platform is ARO-ENaC. ARO-ENaC is an inhaled RNAi therapeutic candidate designed to reduce production of the epithelial sodium channel alpha subunit, or alpha ENaC, in the airways of the lungs.
In cystic fibrosis patients, increased ENaC activity contributes to airway dehydration and reduced mucociliary transport. ENaC inhibitors have been tried previously in cystic fibrosis, but have not been able to get enough reduction in the lung while sparing the kidney. ENaC inhibition in the kidney can lead to high levels of potassium in the blood, called hyperkalemia, that can be dangerous and potentially life-threatening. Consistent with other targets in our pipeline, this is another case where RNAi using our TRiM platform may have a distinct mechanistic advantage over prior small molecule approaches, and thus ENaC is an attractive target for us. We have demonstrated in multiple preclinical studies that we can selectively silence pulmonary ENaC expression with no effect on renal expression or serum potassium levels. In addition, RNAi appears to have a much longer duration of effect, which has been a limiting factor for inhaled small molecule inhibitors.
Needless to say, we are very excited about the program. We previously presented data at the 2018 North American Cystic Fibrosis Conference, among others. We anticipate additional data presentations at future conferences. Because of the specialized nature of inhalation studies, there are a small number of high-quality facilities capable of doing activity and toxicology work for ARO-ENaC. This has affected our ability to get studies scheduled and has slowed the program a bit. We expect to begin IND-enabling GLP toxicology studies for ARO-ENaC next quarter, but they will not be done in time to file a CTA before the end of the year. We are adjusting guidance on our CTA filing to the first half of 2020. Keep in mind that this is our first inhaled RNAi therapeutic candidate and the first to target the lung.
While we are disappointed that the program is delayed by about a quarter, it is a small price to pay to ensure that we go into the clinic with a substantial amount of preclinical data and that the animal studies are done well. Further, with the new ARO-HSD CTA filing by the end of this year, we continue to build our clinical pipeline at a speed that meets or exceeds our own aggressive expectations. As we get clinical experience and validation with this first lung-targeted program, we anticipate that new programs will follow more quickly, and we will be able to achieve the same high level of speed that everybody has come to expect from Arrowhead. Moving on, I want to review some important progress in our clinical stage programs.
I will start with ARO-AAT, our later-stage RNAi therapeutic candidate being developed to treat a rare genetic liver disease associated with alpha-1 antitrypsin deficiency. We achieved two important regulatory milestones during the quarter. First, we announced that following the filing of an IND, we received FDA clearance to begin the SEQUOIA phase II/III trial, with the potential to serve as a pivotal registrational study. Importantly, this is the first potentially pivotal study for a compound using Arrowhead's TRiM platform. We also secured Fast Track designation for ARO-AAT from the U.S. FDA. Fast Track is designed to facilitate the development and expedite the review of drugs to treat serious conditions that fill an unmet medical need. The purpose is to get important new drugs to the patient earlier. We intend to utilize a number of the important advantages that Fast Track provides.
You may also recall that we previously announced that ARO-AAT received Orphan Designation in both the EU and the U.S. In addition to these key regulatory achievements, we have also pushed forward with the clinical studies. We have multiple sites that are operational with patients already enrolled. We expect dosing to begin this week. The 2002 open label study is also moving along well, where we continue to open sites. We expect enrollment to begin shortly. Bruce will talk about the status of these studies in a moment. I want to mention a few things about the ARO-HBV program being developed in collaboration with Janssen and now called JNJ-3989. The clinical development program has continued to advance. In April, we announced that the ARO-HBV1001 study was expanded to include a new triple combination cohort 12, in 12 patients with chronic hepatitis B infection.
All 12 patients have been enrolled and have received all planned doses of JNJ-3989. This cohort includes JNJ-3989, JNJ-6379, Janssen's investigational orally administered capsid assembly and modulator of the class that forms normal capsid structures, and a NUC. In connection with the start of dosing of cohort 12, Arrowhead earned a $25 million milestone payment. In addition to the ARO-HBV1001 study, Janssen is currently initiating a phase IIb study called REEF1 of different combination regimens, including JNJ-3989 and/or JNJ-6379 and/or a NUC for the treatment of chronic hepatitis B virus infection. The study will include up to 450 patients who will be randomized to receive up to 48 weeks of treatment. Arrowhead is eligible to receive an additional $25 million milestone payment from Janssen upon the dosing of the fifth patient in REEF1. The study is on clinicaltrials.gov if you want additional information.
Part of our October 2018 agreement with Janssen included a research collaboration and option agreement to potentially collaborate for up to three additional RNAi therapeutics against new targets to be selected by Janssen. We are actively working on the first candidate, now referred to as ARO-JNJ1, against an undisclosed liver-expressed target. These potential new candidates leverage Arrowhead's proprietary TRiM platform and do not include targets in our current pipeline. Arrowhead is responsible to perform discovery, optimization, and preclinical development entirely funded by Janssen, sufficient to allow the filing of a U.S. IND or equivalent, at which time Janssen will have the option to take an exclusive license. If the option is exercised, Janssen will be wholly responsible for clinical development and commercialization. This is an important opportunity to create novel medicines by leveraging Arrowhead's speed and expertise in RNAi drug discovery and Janssen's clinical development and commercial capabilities.
We have made rapid progress on this program, and we look forward to working with Janssen further on ARO-JNJ1 and potentially two other programs. Let's now move to our Amgen partnership. Amgen continued to make progress on AMG 890, formerly called ARO-LPA, that targets lipoprotein A, also known as Lp(a). AMG 890 is being investigated as a potential treatment for cardiovascular disease. Amgen has been enrolling patients with elevated Lp(a) in a phase I study and expects to share the initial data late this year or early next year. Amgen also anticipates launching the next phase of development of AMG 890 in the first half of 2020, which would trigger development milestone payments. We share Amgen's excitement in this program and believe that AMG 890 could one day be an important new treatment for cardiovascular disease.
Under the terms of our September 2016 agreement, Amgen also received an option to a worldwide exclusive license for an RNAi therapy against an undisclosed cardiovascular target, which we subsequently called ARO-AMG 1. In August 2018, Arrowhead delivered to Amgen a candidate that met or exceeded the activity and safety requirements stipulated in the collaboration agreement. The option period expires on August 7th, 2019. Amgen has advised us that they do not intend to exercise the option. Consequently, we'll be removing ARO-AMG 1 from our development pipeline. Let's now move to our two wholly owned cardiometabolic candidates, ARO-APOC3 and ARO-ANG3. These targets both provide some optionality with respect to which patient populations and indications we will pursue. For each target, there may be opportunities to treat well-defined orphan diseases such as familial chylomicronemia syndrome and homozygous familial hypercholesterolemia, as well as higher prevalence diseases.
In addition, the phase I study for both candidates are designed to provide a readout on safety and tolerability as well as a robust look at the pharmacologic activity and duration of effect in both healthy volunteers and various patient populations, further enhancing our optionality at quite an early stage. To that end, we secured Orphan Drug Designation from the FDA for ARO-APOC3 for the treatment of familial chylomicronemia syndrome, or FCS, and for ARO-ANG3 for the treatment of homozygous familial hypercholesterolemia, or HoFH. Our intention is to pursue these orphan indications immediately and potentially initiate pivotal studies for both ARO-APOC3 and ANG3 next year. Beyond these rare disease populations, we also plan to pursue a staged clinical development and go-to-market approach where we study larger indications in parallel involving larger studies that will take longer to mature. We like this model.
It allows for the possibility of getting to market quickly while also enabling growth into other markets. From a chemical entity standpoint, of course, ARO-APOC3 and ARO-ANG3 candidates are just one drug each. From an economic and market standpoint, however, these single drugs could behave like multiple drugs. As we do multiple studies to support treatment for and marketing two different indications, we expect to substantially increase our total addressable markets. Importantly, the addition of each new indication area benefits the others because they will all contribute to a single safety database for each candidate, there is clear leverage here. What are some of these larger market opportunities? For ARO-APOC3, it could simply be patients with elevated triglycerides with some history of pancreatitis.
For ARO-ANG3, there are many possibilities. For instance, we could look to treat heterozygous FH patients or those who are not meeting their LDL cholesterol goal while on statins. Because we expect ARO-ANG3 may decrease liver fat and help with insulin resistance, among other things, we could also look to treat patients with NASH, NAFLD, and those with metabolic syndrome. We believe we have a substantial opportunity to help a large number of diverse patients, and that ANGPTL3 is a uniquely powerful target. As a reminder, we are developing the first, and I believe only, clinical RNAi candidates against both APOC3 and ANGPTL3. These two programs are essentially on the same schedule and at the same stage currently. We completed dosing in the single ascending dose portions of both studies and are now enrolling in the multiple dose portions in various patient populations.
We are still on schedule for potential data readouts starting this year and likely continuing into next year. Specifically, Bruce will be a keynote speaker at the Global Summit on Cardiology and Heart Disease, taking place in Dubai on September 16 and 17. He will be talking about our ANG3 and APOC3 programs and will include some top-line clinical data we have generated. Later this month, we will submit a late breaker abstract for the American Heart Association Conference in November. If accepted, we expect to present a fuller data set from the ANG3 and APOC3 clinical programs. These are data-rich studies, so we believe we will have additional readouts through the November AHA conference. We would therefore expect to submit abstracts to present more data at the EASL International Liver Conference and/or the American College of Cardiology meeting in April.
At our R&D Day last year, we mentioned a breakthrough in targeting skeletal muscle cells. We have continued down this path and are getting closer to designating our first target and entering the clinic. We are not prepared to discuss data today, but we see the potential to enter the clinic with our first muscle-targeted candidate next year. With that overview, I'd now like to turn the call over to Dr. Bruce Given. Bruce?
Thank you, Chris. Good afternoon, everyone. We have made solid progress on all of our development programs during the recent period. I will begin with a status update on our two wholly owned cardiometabolic candidates, ARO-ANG3 and ARO-APOC3. ARO-ANG3 is Arrowhead's subcutaneous delivered RNAi therapeutic targeting angiopoietin-like protein 3, or ANGPTL3, being developed as a potential treatment for patients with dyslipidemias and possibly metabolic diseases. The ARO-ANG3 first-in-human study, which began dosing in quarter 1, is called AROANG1001. It is a phase I single and multiple dose study to evaluate the safety, tolerability, pharmacokinetic, and pharmacodynamic effects of ARO-ANG3 in up to 70 subjects.
The single-dose portion of the study is in adult healthy volunteers. The multiple dose portion is in patients with various types of dyslipidemia, including patients with non-alcoholic fatty liver disease, patients on a stable statin treatment regimen with persistently elevated LDL cholesterol, patients with heterozygous or homozygous familial hypercholesterolemia, and patients with hypertriglyceridemia. We have completed dosing in all of the single dose cohorts at 35, 100, 200, and 300 milligrams. We selected the 200-milligram dose to move forward with in the multiple dose patient cohorts and subsequently received Drug Safety Committee and IRB clearance to begin enrolling and dosing patients. 3 of the multiple dose cohorts are fully recruited. Dosing has begun. The recruiting process is in full swing in the other patient cohort.
As we look toward the possibility to accelerate the development program, we've decided to expand the trial, adding dose-ranging, multi-dose healthy volunteer cohorts to give us multi-dose PK and pharmacodynamic data, and also some dose-ranging multiple dose cohorts in patients with heterozygous or homozygous familial hypercholesterolemia. This amendment should be submitted shortly. As for what we have learned to date, we have seen indications of activity based on reductions in plasma ANGPTL3 concentrations and changes in lipid parameters. The safety and tolerability profile has not set up red flags and caused any protocol changes. Moving on to ARO-APOC3, which began dosing later in quarter one. ARO-APOC3 is Arrowhead's subcutaneously administered RNAi therapeutic targeting apolipoprotein C-III, better known as APOC3, being developed as a potential treatment for patients with hypertriglyceridemia. The ARO-APOC3 first-in-human study is called AROAPOC31001.
It is a phase I single and multiple dose study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamic effects of ARO-APOC3 in up to 63 subjects. The single dose portion of the study is in adult healthy volunteers, and the multiple dose portion is in patients with severe hypertriglyceridemia and familial chylomicronemia syndrome. The study was originally designed to include doses of 25, 50, 100, and 200 milligrams. We've been pleasantly surprised by the activity of the drug at lower doses than expected, so we have amended the protocol to eliminate the 200-milligram dose and have added a 10-milligram dose instead. We have now completed dosing in all of the ARO-APOC3 single dose cohorts, including the new 10-milligram cohort.
I want to be clear that this protocol amendment was based solely on positive pharmacodynamic activity and not due to any concern or finding with respect to safety or tolerability. The 10-milligram cohort potentially gives us more detail on the dose-response relationship of ARO-APOC3, which is helpful as we move forward with patient dosing in this study, and ultimately, as we design the next clinical studies. We are now in the process of screening and scheduling patients for the multiple dose portion of the study, and we anticipate dosing will begin shortly. Both first-in-human studies of ARO-ANG3 and ARO-APOC3 are designed to provide a readout on safety and tolerability, as well as a robust look at pharmacologic activity and duration of effect. Included in the readout of activity are changes in APOC3 and ANGPTL3 protein levels, triglycerides, LDL-C, VLDL-C, HDL-C, and other lesser-known lipid parameters.
At Arrowhead, we always strive to find innovative designs that get the most data as quickly as possible, and these studies are no exception. We are excited about these data and look forward to sharing them publicly in an appropriate form. The single-dose portion of both ARO-APOC3 and ARO-ANG3 studies, we hope will have mature enough data to share in the fourth quarter of the year. Our intention is to submit abstracts, and if accepted, present at the American Heart Association Scientific Sessions 2019. These take place in November. We will see how quickly the multiple dose cohorts enroll before providing guidance on when those will be available to discuss publicly. I would now like to give an update on where we are with the ARO-AAT program.
ARO-AAT is Arrowhead's second generation subcutaneously administered RNAi therapeutic being developed as a treatment for a rare genetic liver disease associated with alpha-1 antitrypsin deficiency. We are in the process of initiating two studies. The first to start is the SEQUOIA phase II/III study, and then shortly after that will be the 2002 open label study. These two studies together are designed to strike a balance between the maximum speed to a potential NDA, with the desire to see midterm confirmation that ARO-AAT is doing what it is designed to do. Let me talk about these designs for a moment. SEQUOIA is a multicenter, multi-dose, placebo-controlled, adaptive phase II/III study to evaluate the safety, efficacy, and tolerability of ARO-AAT administered subcutaneously to patients with alpha-1 antitrypsin deficiency. The multi-dose placebo-controlled Part A component of the study is designed to select a single-dose level for use in Part B.
This will feed seamlessly into a two-arm placebo-controlled Part B component. In total, SEQUOIA is designed to enroll 120 patients who will receive at least nine doses or approximately two years of treatment with ARO-AAT or a placebo. The primary objective for Part B is to evaluate efficacy as assessed by the proportion of ARO-AAT-treated patients relative to placebo, achieving a two-point improvement in the histological grading scale of alpha-1 antitrypsin deficiency associated liver disease, and no worsening of liver fibrosis on the end of study biopsy. The ARO-AAT 2002 study is a pilot open label multi-dose Phase II study to assess changes in a novel histological activity scale in response to ARO-AAT over time with alpha-1 antitrypsin deficiency associated liver disease. In total, the 2002 study is planned for up to approximately 12 participants in two sequential cohorts.
All 12 patients will also be eligible to participate in an extension cohort. Between cohort completion and then including the extension, if patients elect to participate in the extension, we plan to conduct a pre-dose liver biopsy and then repeat biopsies after six, 12, 18, and 24 months of treatment. The primary objective is to evaluate the effect of ARO-AAT on the liver scale over time. Where are we with initiating these studies? I will start with SEQUOIA because that is slightly further ahead. We have received regulatory clearance in the U.S., and one site has begun screening patients for enrollment, and we anticipate additional sites will also begin screening shortly.
It is likely that the first patient on study will be in the U.S., but we are also in the process of pursuing regulatory and IRB clearances in multiple European countries and Canada, and several of the country clearances have already been secured. We are targeting approximately 40 sites in North America and Europe. We anticipate that over the coming months, there will be progressively more site screening and enrolling patients. For the 2002 study, we have secured national regulatory clearance in the United Kingdom and are pursuing regulatory clearance in multiple other countries as well. Sites are not yet open for screening and enrollment, but we are working diligently on that. The 2002 open label study will only be in Europe. The data on ARO-AAT have been highly encouraging.
We believe the results suggest that RNAi and by extension ARO-AAT, holds great promise for the treatment of patients with AATD-associated liver disease. Notably, we presented preclinical data at EASL this year showing that we were able to prevent further liver damage and reverse existing damage in the PiZ mouse model that harbors a human Z-AAT gene and recapitulates many features of human AATD liver disease. This makes us excited about embarking on the 2002 study and on SEQUOIA, which is Arrowhead's first potentially pivotal study.
We also look forward to talking about these programs and some of our less mature development programs at our R&D Day in October. With that brief review of our clinical programs, I'd like to turn the call over to Ken Myszkowski, Arrowhead's Chief Financial Officer. Ken?
Thank you, Bruce. Good afternoon, everyone. As we reported today, our net income for the quarter ended June 30, 2019 was $20.3 million, or $0.21 per share, based on 98.9 million fully diluted weighted average shares outstanding. This compares with the net loss of $15.6 million or $0.18 per share based on 87.6 million weighted average shares outstanding for the quarter ended June 30, 2018. Revenue for the quarter ended June 30, 2019 was $42.7 million, paired with $727,000 for the quarter ended June 30, 2018. Revenue in the current period relates to the recognition of a portion of the upfront payments and milestone from our license and collaboration agreements with Janssen. While revenue in the prior period related to the recognition of a portion of the upfront payments from our license and collaboration agreements with Amgen.
Revenue from the Janssen agreement will be recognized based on our estimate of their proportion of effort expended toward fulfilling our performance obligations, primarily overseeing the completion of the current phase I/II HBV clinical trial. We expect the majority of the revenue to be recognized in this fiscal year, but we also expect revenue in fiscal 2020 as we continue to perform certain follow-up activities through 2020. Total operating expenses for the quarter ended June 30, 2019 were $24.1 million, compared to $16.6 million for the quarter ended June 30, 2018. This increase is primarily due to increased drug manufacturing, toxicology, and clinical trial costs as our pipeline and clinical candidates has increased. Net cash provided by operating activities during the quarter ended June 30, 2019 was $10.8 million, compared with net cash used in operating activities of $14.4 million during the quarter ended June 30, 2018.
The operating cash generated in the current period reflects the $25 million milestone payment we received from Janssen, offset by cash used to fund our operations. Turning to our balance sheet, our cash and investments totaled $295.5 million at June 30th, 2019, compared to $76.5 million at September 30th, 2018. The increase in our cash and investments is primarily due to the cash received from Janssen. Our common shares outstanding at June 30th, 2019 were 95.2 million. With that brief overview, I will now turn the call back to Chris.
Thanks, Ken. We continue to demonstrate Arrowhead's ability to execute with speed and precision. We gained clinical experience and validation with our TRiM platform for liver delivery and then rapidly expanded our pipeline to include five programs, which will soon be six when we file a CTA for ARO-HSD by the end of this year. We also expect to have a seventh clinical program this year when we file an IND for ARO-HIF2 and an eighth when we file a CTA for ARO-ENaC in the first half of next year. This would be a big position for a company twice our size. Two partnered and six wholly owned clinical programs spanning three cell types in the near term. We expect to be in three pivotal studies and have no less than 10 clinical programs based on the TRiM platform by the end of next year.
We think we are now on the cusp of the next stage of growth for the company, whereby we expect to rapidly build our pipeline in tumor, lung, muscle, and eventually additional tissue types. The opportunities in front of us feel limitless if we can continue to achieve our long-term strategic goals to do the following. One, file two to three new CTAs every year. Two, target a new cell type with the TRiM platform every 18 months. Three, have 10 TRiM-enabled candidates in clinical studies by the end of 2020. Four, have three active pivotal studies in 2020. With all these programs, people ask us about our development and partnering plans. Simply put, we have no appetite to partner any part of our pipeline right now. Should this change in the future, I expect it to be opportunistic rather than driven by necessity.
We have indeed come far, and there is still substantial value for us to create by developing and ultimately marketing these important medicines. Together, our strong balance sheet and access to approximately $4 billion of non-dilutive capital via potential development and commercial milestone payments enable us to pursue this strategy at this time. We are building a large but nimble long-term pharmaceutical company, and the current pipeline is the core of that transition. Thanks for joining us again today. This is a uniquely exciting time for us, our shareholders, and the patients we hope to serve. I'd now like to open the call to your questions. Operator?
Ladies and gentlemen, if you have a question at this time, please press star then number 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from the line from Ted Tenthoff from Piper Jaffray. Your line is open.
Great. Thanks. Can you guys hear me okay?
Hi, Ted. Yes, we sure can.
Fantastic update. Really excited to see all the progress. Just great job and looking forward to seeing you guys in New York on the 18th in October. Quick question, if I may. Just one on the HBV with respect to REEF-1. How quickly should we expect that to be going? And what would expectations be for additive activity of 3989 or ARO-HBV on top of the Janssen compounds? Then I have one quick follow-up for Sunday.
Chris?
Well, okay. How quickly can we expect to get going? Of course, it's not our study, so we can't really guide on that. I know that they've been working hard on it, so I don't think it'd be a surprise if they got going this quarter. I can't really guide for them.
Sure.
As for what's the likelihood of additive activity, it's really a hard call, I would say, Ted. Just because the data so far with the cams, they reduce DNA, they reduce HBV RNA, but they haven't impacted S antigen or E antigen really at all, even with six months of use. The real question here is will we get some sort of additive or even synergistic activity when combining with RNAi? That currently is unknown in the field. As Chris said, the real game here is it's a 48-week trial.
Right.
Almost a year. There's no experience with that at all. I think, it's kind of anybody's guess. My whole take on this, as you know, Ted, all along has been that there will be many different recipes tried over the coming years in HBV, and no one knows the optimal recipe yet. I don't know how to really handicap it any better than that for you, Ted, except we just have to.
Cool
wait and see. It's going to be a very exciting time.
I will say on that, it's a relatively large study. It's 450 people. We expect this to be a multinational study, we expect Janssen to have sites, across, in multiple countries and they'll have access to a lot of patients. I think, given what we know about the field, this feels to me like, I don't know, maybe if not the most interesting current study, pretty close to it, given the combination approach. Given that it's on top of our RNAi therapeutic, which looked to be quite active and quite well-tolerated last year. It feels to me like Janssen has a pretty good shot of enrolling this thing at a reasonable clip.
Yep. Makes a lot of sense. Okay, excellent. Then just quick with HSD, kind of comes out of nowhere, but we've certainly been hearing about the genetic validation around this target. Where do you think you guys are differentiated? How quickly do you think we could see phase II plans sort sort of elucidated? Thank you very much.
Yeah. Slow down on that one, yet. We're not into phase I yet. We moved very quickly on this one. I think we're excited about the target. The GWAS data are powerful, I think. As to how we differentiate ourselves with other folks, it's hard to say because I think we're going to be the first in. We'll see how those data look, and we'll see who joins us in the clinic at some point.
Thanks so much. Keep up the great work, guys.
Thank you.
Your next question comes from the line of Keay Nakae from Chardan. Your line is open.
Hi, thanks. For HSD, in terms of the patient population you might go after, how easily are these patients diagnosed, especially with the particular marker that you think you would be targeting here?
Yeah. First of all, HSD was discovered in GWAS through this variant that actually has loss of activity. It's not just loss of activity, but it's also very rapidly metabolized. Essentially, it winds up being a sort of loss-of-function variant. I guess the only patients you would say that would be inappropriate for treatment would be the people that already have that variant. We would be looking for the wild type, normal population, for treating. As for which population, or populations we will go after, I think, it's probably premature to talk about that. I think that's a good target for discussion on October 18th. This is a relatively young target. That seminal paper in the New England Journal of Medicine only came out in March of 2018. It was not previously identified as really an important target in fibrosing liver diseases.
I think this one, we're going to be learning as we go as an industry. It's going to be fun to watch develop, I would say.
I guess if I can just dig into that a little deeper. Patient is exhibiting some symptoms. How does the clinician discriminate what the exact cause is and makes them appropriate for this approach?
Well, so far it seems the non-functioning allele is associated with a substantially lower risk of developing NASH or a substantially lower risk of developing alcohol-related liver disease, including cirrhosis. Whatever the underlying causes of those are, it seems to heavily ameliorate those patients as far as we understand today. It doesn't seem, at this point, like you would go in thinking that you needed to eliminate certain etiologies. As you know, the understanding of what causes NASH is not all that great anyway. I would say that right now you wouldn't be all that selective other than determining that the patient already didn't have the variant and wasn't already essentially the equivalent to being knocked down. Okay. Well, very good. Excited to hear more about this going forward. You bet.
Your next question comes from the line of Maury Raycroft from Jefferies. Your line is open.
Hi, everyone. Congrats on the progress and thanks for taking my questions. Apologies if I missed this earlier, but I was wondering for the HBV triple data, do you think there's a pretty good chance that the data could be at AASLD this year, or is that more likely a 2020 update? I'm wondering if you can provide any perspective on what would be evidence for synergy or lack thereof with the triple combo.
There'll be zero chance that the triple combo data, I think, could be presented at AASLD. No, I don't think that's right, Chris. There'll be a late break or abstract submitted. Whether it gets accepted or not, we won't know until there. It's not zero but whether they'll accept it or not, who knows?
Okay. Any thoughts on just synergy and what we should be looking for there with the triple?
Well, it's like the answer earlier. The reason it may get accepted as a late breaker, even though it's only 12 subjects, is because it's really the first important triple therapy trial that's been done in HBV in the current era. The answer is that people will really be fascinated to see, although it's short-term therapy. It's only 12 weeks and what's going to be probably a year of therapy is what people are sort of targeting in HBV. It'll be the first inkling. The other thing is it'll be the first shot that anyone's ever seen at knowing whether there are any safety concerns to think about. At least concerns that are mechanistically based and would show up even with 12 subjects. I think it's important work. Whether or not AASLD will accept it, that's a question I can't answer.
Got it. For the 12 subjects, do you think you'll have 12 weeks of data for all 12 of those patients?
By the time we get there.
By the time of the LBA filing?
Yes. Not for the abstract itself. That's part of what always makes it a little bit uncertain. Not everybody is that far along at this point. Remember, they get dosed with the RNAi agent on day one, day 29, and day 57, and all 12 have received all three doses to date. They also get a full 12 weeks of the CAM, and not everybody has received all 12 weeks of their CAM yet.
Got it. Okay.
Let alone been having longer-term follow-up.
Makes sense. Then for ARO-AAT, just wondering if there's any update on the activity scale design and if you can provide any perspective on the conversation with regulators on that. Is it possible that we could see data from the open label study by mid 2020?
Well, let me take the second one first. Possible. EASL is in April, so I think there's just probably not enough calendar to get anything into EASL. The more likely case, I would say, would be that there'd be a shot that you would have data at AASLD or at least an abstract submitted. We can never guarantee they'll accept it, but an abstract submitted for AASLD I think would be more likely timing wise. I'm sorry, the first question was?
Just any update on the conversation with regulators on the activity scale design?
Right. First of all, the activity scale design is a protocol-driven thing where there are multiple steps that are driven by a protocol to refine this and it's actually, believe it or not, statistically driven to really find what the components are that everybody agrees would be the right sort of components and the right weighting of those components. When I say everybody, I mean all of the pathologists, experts that are involved with establishing the scale. It's very much the same way they established the NASH scale, for instance, and it's a formal process, protocol-driven. Certainly when we're done with that process, the regulators are going to be very interested to see the outcome. That's not something we're going to keep hidden from them.
Once we have a full report and they can dive into all the statistics and everything else, they're anxious to do that because this is something brand new that no one else in the world has ever done before, at least not that we know of.
Yeah. Okay. Last question is just on ARO-ANG3 and ARO-APOC3. I know you mentioned earlier that you're not going to provide any data updates on what you're seeing, but I don't know if you can provide any qualitative perspective on it. I think you guys have mentioned that you're seeing good responses to go with an even lower dose for ARO-APOC3. Maybe if you can just provide some additional perspective on that.
Bruce will have some top-line data in the Dubai conference in September, and then of course, a fuller data set, hopefully at American Heart. Just wait on that. Hopefully, you'll have that in your hands pretty soon.
Okay. Thank you very much.
Thank you.
You bet.
Again, ladies and gentlemen, if you have a question at this time, please press the star, then the number one key on your touchtone telephone. Your next question comes from the line of Mayank Mamtani from B. Riley. Your line is open.
Thanks for taking my question and congrats on the progress and looking forward to the R&D Day on October 18th as well. I have three questions, mostly follow-up. For REEF-1 for hep B, I see on clinicaltrials.gov there are 3 dose levels for 3989. Really why I ask that is there anything we could learn from the 12-week readout, the 12-patient readout that could also inform some of the doses that you're testing in the phase II 450-patient study?
I don't think so. I actually think that the dose ranging data really relates to the RNAi component. I think that they were able to make that choice based on from our 1001 study. I don't think there's really anything in those 12 patients that would inform on that. I think the most important part of the 12 patients was an opportunity to really learn about the safety of combining the three together, in preparation for what is going to have quite a few patients in the combination arm. I think it was more important there than necessarily to try to inform, and it's not dose response. The 12 patients all are getting the same dose of 3989 and whatever the number of the CAM is, 639 maybe, I can't remember. Then NUC. No, I don't think it will alter.
It only would have altered REEF- 1 if we ran into some sort of safety issue or something. Absent that, I don't think there really any chance it was going to alter REEF- 1 per se.
Gotcha. To confirm, it's also day 1, day 29, and day 57 dosing for this REEF-1?
REEF-1 doses all the way through 48 weeks. REEF-1 is the first real modern combination study in HBV curative intent, trying to create a functional cure. Remember, the 1001 study didn't have curative intent. It was just to get safety and activity and dose ranging. It was really a first-in-human study. We got a lot of information out of it, but it was never a curative intent study. REEF-1 really tried to see whether 48 weeks of combination therapy can give us functional cures. That's the purpose of it.
Gotcha.
What doses?
Great. Thanks for clarifying that. Then on the AAT, ARO-AAT, is there any difference in guidance from FDA and EMA? Just trying to understand, is there any particular reason why 2002 is focused on the EU side, or is that mostly because of the homogenous population in the Scandinavian countries?
I don't think that was the influence. I just think we thought that we had some investigators over in Europe who really wanted to do this trial and it's only 12 patients and so we thought we could do it there without really interfering at all with 2001, with SEQUOIA. It was really important to get SEQUOIA fully enrolled, obviously as quickly as we can. We just estimated that Europe was maybe a bit better place to do that trial than the U.S., and that's why we did it there.
Okay, great. Last question, have to ask on ARO-ANG3 and ARO-APOC3. Understand you wait for the data disclosure at the Dubai conference. Just as you think about the orphan and think about the higher prevalent indications? Could you pursue a different dose level for orphan, including maybe a different dose level and importantly, frequency of administration for the highly prevalent population?
Those are two different questions. I think it would be unlikely that the dose would be different just because we're acting through the RNAi mechanism. It doesn't tend to vary all that much from a disease to disease, even subgroup to subgroup basis. Now, the frequency of dosing is a little bit different question because, with treating these orphan patients who really have very high circulating levels of these sort of lipids, you probably want to maintain full activity all the time. Whereas in a, let's say, a secondary prevention setting, for instance, you might be able to have less frequent dosing, even if you had a little bit of recovery at the end of the dosing interval.
I think it'd be unlikely that the dose would necessarily be different, but I could imagine that it'd be possible that the dosing interval might be stretched a little bit in some of the other indications. That's speculation at this point. I want to be very clear, that's purely speculation at this point, and we're a ways from being able to make that call.
Great. Thanks for taking my questions.
You bet.
Your next question comes from the line of Almir Piruz from Kendra. Your line is open.
Yes. Good afternoon, gentlemen. This is a financial question. We understand that $25 million of the revenue recognized in this quarter comes from Janssen.
Yes.
How was the other half, or the amount was made up of? If you were to project out for the next year, how much of the revenue that you would receive would be recognition of previously received upfront payment, for example, and what would be the rough division between revenue from Amgen and from Janssen for R&D reimbursement?
Okay. First of all, the $25 million that we received from Janssen wasn't entirely recognized during the quarter. The way that works is we estimate what the total revenue is from the origination of the contract, and that gets put into a pool. That large amount, which is about $227 million, is the pool of revenue that's recognized over the course of delivering our work on that project, which is going to last through 2020. We take that amount, and we estimate what our progress is over each quarter. To date, we have recognized about $125 million of that.
When the second $25 million is recognized or when it's achieved, we then take that into the pool, and apply whatever percentage we are up to that. It's sort of caught up to where we are on the rest of the revenue amounts. Like I said earlier, we expect to have the majority of this recognized by the end of next quarter, but still a good portion of it.
This quarter or next year?
No, by the end of next quarter. By the end of 9/30, the majority of the total revenue will be recognized, but it still will go on for another four quarters or so to the end of fiscal 2020. Does that make sense?
Yes. Roughly how much would that be for the next fiscal year?
Well, we've recognized $125, so we've got, based upon where we are now, about $100 million to go. We will add to that $25 million when we achieve the next milestone, so about $125 million.
$125 million. Thank you very much.
Sure.
I'm showing no further questions at this time. I would now like to turn the conference back to you, Mr. Chris Anzalone.
Thanks everyone for joining us today, and we hope to see you in October.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.