Arrowhead Pharmaceuticals, Inc. (ARWR) Earnings Call Transcript

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 Vince Anzalone, Senior Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Good afternoon. Thank you for joining us today to discuss Arrowhead's results for its 2026 fiscal year ended September 30, 2026. With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview, Andy Davis, Senior Vice President and Head of the Global Cardio-Metabolic Treatment who will provide an update on commercialization activities, Dr. James Hamilton, Chief Medical Officer and Head of R&D, who will discuss our development programs, and Dan Appel, Chief Financial Officer, who will give a review of the financials. Following management's prepared remarks, we will open the call to questions. Before we begin, I would like to remind you the 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 are forward-looking statements and are subject to numerous risks and uncertainties. that could cause actual results to differ materially from those expressed in any forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. I'd now like to turn the call over to Chris. Thanks, Vince. Good afternoon, everyone. Thank you for joining us today. Arrowhead has fundamentally changed over the past 12 months. Where there was once a company that relied solely on great scientific promise, there is now a company that is beginning to translate promise into real patient outcomes and the potential for durable shareholder value growth. We are building a commercial business around Redemplo. We have delivered the pivotal data we believe is needed to pursue a much larger market in severe hyperglyceridemia, or SHTG. And we have demonstrated new capabilities that substantially expand what our R&AI platform can do. I believe we approach 2027 with the strongest combination of near-term commercial opportunity and scientific capability in our history. For the long term, we intend AeroEdge to become a substantial pharmaceutical company that introduces important new medicines into the market virtually every year. We believe we've demonstrated that we have the platforms and development capabilities to do this. And the result could be an engine that improves innumerable patient lives and creates substantial value. But first things first, we need to build a commercial presence that matches the excellence we've built in discovery and development, and we need to demonstrate that we are capable of building out a new market, finding patients who could benefit from our medicines and growing a profitable business. Simply put, commercial progress with their DEMPLO is critical. We are focused on continued success serving the FCS market, planning a rapid launch into SHTG, and positioning Arrowhead to maximize the SHTG market opportunity. Of course, revenue levels, growth, and profitability will ultimately be the only metrics that matter when assessing how we are doing with your demplo. However, that will not tell the full story until after the first several quarters of our planned SHCG launch as payer policies are being worked out, coverage is being secured, and provider outreach is initiated. So during this period, we will regularly refer to three metrics that we believe capture the breadth and depth of early market penetration. They are one, total number of new-to-brand patient prescriptions, two, number of distinct prescribers writing prescriptions, and three, number of lives covered on payer formularies. there are large pools of patients who can benefit from Mugemplo, and these three metrics are intended to reflect how well we are building pipes to reach them. We launched into the narrow FCS market about 11 months ago and are still in the pipe building phase. This work has progressed well. As of September 30, we had 950 new-to-brand patient prescriptions representing a 63% increase over the prior quarter end. This growth rate continues to increase rapidly as we have added another 300 since then. At September 30th, over 640 distinct individual prescribers wrote first-time prescriptions, and that number has grown to over 860 since then. There are now over 160 million lives covered in payer formularies in the U.S. We are seeing strong demand for Regempla and continue to work with payers to increase the rate at which prescriptions are converted to paid shipments. This is still a choke point, and there is substantial work to do, but we are off to a good start. The pipes we are laying are also the pipes we are laying are critical for the FCS market and, importantly, directly applicable to the next stage of our business in SHCG. We intend to enter SHCG with an organization that already understands the medicine, its prescribers, and the practical work needed to get patients on treatment. Let's now look forward. We are preparing aggressively for a potential U.S. launch in SHCG in the second quarter of 2027, subject to successful FDA review and approval. The FDA granted Blazacerin entry into the split real-time application review or STAR pilot program for for our planned SHCG supplement. STAR provides a six month priority review framework and the possibility of action earlier than the formal goal date. We submitted our SND on November 2nd, so we expect to receive our PDUFA date over the next 50 days or so. We are very optimistic about the potential for this launch. We believe the clinical profile, the unmet need, and the capabilities we are building position Redemptilo to become the leading treatment in this market. That conviction begins with data. In July, we announced that Shasta 3 and Shasta 4 met their primary endpoint and every pre-specified secondary endpoint. The detailed results presented at the European Society of Cardiology Congress in August and at the American Heart Association just last weekend reinforced the consistency of the Plesacerans activity. Median triglyceride reductions from baseline were 79% and 81% at month 12. In the pooled analysis, cumulative acute pancreatitis events were reduced by 78% versus placebo across the broad SHCG population study with an impressive 100% reduction in patients at the highest risk of acute pancreatitis. These are results that we believe can change treatment expectations. Physicians see patients whose triglycerides remain dangerously elevated despite existing approaches. Our goal is to deliver those physicians a medicine that can produce deep, sustained reductions with a simple quarterly injection, supported by evidence of fewer acute pancreatitis events in the SHAFSA 3 and 4 studies. We believe that is a powerful proposition for patients. patients and payers alike. We continue to describe the profile we are pursuing as safe, simple, and strong. It reflects the favorable tolerability observed in all our studies, no increase in liver fat, no hypersensitivity, and no notable changes in liver values. Simple, reflects a fixed 25 milligram dose administered once every three months. We don't expect to need to monitor liver enzymes, and there will be no need to titrate the dose up. Strong reflects the depth of triglyceride lowering and the pancreatitis results. The FDA will determine the final FHDG label, but we have a high degree of competency in this medicine. We continue to see the potential for Redemplo to generate $3 billion to $4 billion in annual U.S. sales over time in SHTG. These are large numbers, but we see many ways to get there. While there are thought to be 3 to 3.5 million people in the U.S. with TGs greater than 5 milligrams per deciliter, we believe the early adopters will be the population at highest risk within this group. This is comprised of those patients with TGs greater than 880 without a history of pancreatitis, and those with TGs greater than 500 that have a history of acute pancreatitis. Together, we believe this population tolls almost 1 million people in the U.S., and their enhanced risk of acute pancreatitis would suggest that they are in real need of treatment. In SHASTA 3 and 4, the number of patients needed to treat in order to prevent a single acute pancreatitis event was 9 in patients with TGs greater than 880 without a history of pancreatitis and those with TGs greater than 500 and a history of pancreatitis. Within that latter group alone, the NNT was only 3. numbers and keep in mind that this is just after one year. We would expect those NNTs to decrease further over longer treatment periods. Our data suggests that this patient population could benefit from Redemplo, but a valid question is how long it will take to educate patients and providers about the need to treat their there's clearly already some appreciation for this. For instance, we believe that around 1 million people with TGs greater than 500 are on prescription fish oils. This suggests to us that providers already have an urgency to treat TG levels for at least these patients. Remember that these fish oils only reduce TGs by 20 to 30% while reducing template reduced TGs by around 80% from baseline in Shasta 3 and 4. Outside the U.S., our business is advancing as well. Redempla became available for prescription, dispensing, and reimbursement in Germany in August following the European Commission's June authorization. In addition, in October, the UK Medicines and Healthcare Products Regulatory Agency, or MHRA, authorized Redemptilo in the United Kingdom for adults with FCS, and the UK National Institute for Health and Care Excellence, or NICE, issued guidance recommending funding in England and Wales. These milestones expand the foundation of our global cardiometabolic business. Besides our commercial build-outs, our discovery engine has delivered two important clinical advances. In September, AeroDimer PA demonstrated that one RNAi molecule can silence both PCSK9 and ApoC3 in people with mixed hyperlipidemia. That opens an important new approach to ASCVD due to mixed hyperlipidemia and gives us a basis for developing additional medicines that address more than one disease driver at a time. Then in October, Aromat-T produced substantial and sustained reductions in tau measured in the cerebrospinal fluid after subcutaneous administration, We view this as early clinical validation of our ability to deliver RNAi across the blood-brain barrier. The opportunity to address CNS targets with an injection under the skin could dramatically expand the diseases we can pursue. I do not think this breakthrough can be overstated. We intend to move decisively to build on these results. This is the model we've been building for years. Establish delivery to a cell site, learn how to do it reliably, and then apply that capability to additional targets Our clinical work now spans the liver, lung, muscle, adipose tissue, and CNS, with additional tissue types being studied pre-clinically. Every successful expansion gives us the potential to create multiple new medicines and additional opportunities for partnerships. Our cardiometabolic franchise illustrates how that can translate into an efficient commercial business. Regemplo, Sodaciran, AeroDimer PA, and our obesity and NASH programs could serve related physician audiences. We intend to build an organization that can support several products through much of the same infrastructure. That is an important part of how we think about growth and long-term returns on the capital we invest. We have also announced an agreement with Sixth Street to retire our existing debt at a discount to the minimum multiple on invested capital provided for in the existing agreement and to establish a new facility at a lower cost of capital. The refinancing is designed to extend our debt maturity and provide financing terms more consistent with Arrowhead's current stage. We have a great deal to execute and we are approaching it with urgency. The potential FHCG launch is our most important near-term commercial priority. We believe it can change the scale of Arrowhead's business while the rest of our pipeline creates opportunities well beyond our dev flow. more optimistic than ever about the patients we can help and the value we can build. With that overview, I'd now like to turn the call over to Andy Davis. Andy, Thank you, Chris, and good afternoon, everyone. We are approaching one year since Redemplo's initial FDA approval, and the FCS launch continues to progress. I'll cover three measures of this progress. Number one, growth in prescriptions. Number two, expansion of the prescriber base. And number three, advancements in market access. then I'll connect them to our planned SHTG launch anticipated in the second calendar quarter of 2027. First, growth in prescriptions. Total new to brand prescriptions grew 63% in the fiscal fourth quarter, and that momentum has carried into this quarter, taking us well past 1,250 cumulative new to brand prescriptions. On prior calls, I cited a run rate of 20 to 30 new prescriptions per week. Recent trends support approximately 50 to 60 per week. We are encouraged by the sustained increase in demand. Since expanding our field team this summer, we are reaching substantially more healthcare professionals, and we are seeing strong interest in Redemptilo from prescribers across specialties. It's important to note, however, that these are written prescriptions, not paid claims. Moving from prescription to treatment requires patient engagement, benefit verification, physician office support, and prior authorization, submission, and approval. dedicated Redemblo reimbursement navigator team is heavily focused on educating offices on the reimbursement process to convert this demand into treatment starts and durable access. Second, expansion of the prescriber base. Unique prescribers grew over 50% in the fiscal fourth quarter. Since then, in the last five weeks alone, we added as many prescribers as in the entire fourth quarter, bringing the total as of the first week of November to over 860. We view this as an important indicator of future growth and of productive field engagement with the right providers. The specialty mix is led by cardiology and endocrinology with internal medicine of grow and share. These are the same specialties we expect to engage for SHTG should Redemptible be approved for that use next year. Repeat prescribing is also building, with approximately 27% of prescribers having written for more than one patient. In recent market tracking research, prescribing physicians report strong satisfaction and high and increasing likelihood to recommend Redemplos since launch. Third, advancements in market access. Payers representing the vast majority of U.S. covered lives have published utilization management policies for Redemplo and SCS. These policies describe the criteria by which a payer will evaluate the reimbursement request. Additionally, more than 160 million US lives now have coverage for Redemblo, with coverage defined as those eligible patients with a reimbursement pathway under the applicable policy criteria. Both of these metrics have grown steadily since launch. Our objective is to expand access for appropriate patients with genetically confirmed or clinically diagnosed FCS and to help practices navigate requirements efficiently. We are working with payers, specialty pharmacies, and physician offices to move prescriptions through the process and resolve points of and resolve points of friction. Broadening access and improving the patient journey are central priorities as we prepare for a much larger opportunity. Turning to SHTG, our enthusiasm is high. We are preparing for a potential launch in the second calendar quarter of 2027, subject to FDA approval. Our initial focus is on patients at high risk of acute pancreatitis, including those with triglycerides at or above 880 milligrams per deciliter or above 500 milligrams per deciliter with a prior history of pancreatitis. this as approximately 1 million people in the US within the broader SHTG market. We have identified more than 20,000 healthcare professionals across relevant specialties as likely SHTG treaters, and we are well advanced in building our HCP engagement, patient services, distribution, and market access capabilities. Our expanded sales team is now largely in place building relationships and mapping priority accounts in preparation for a potential SHTG launch. What we are learning now will help us execute as the addressable population expands. Our one redemptible pricing approach supports this transition. The current U.S. wholesale acquisition cost is 45,000 per patient per year, and we intend to hold a consistent U.S. price across FCS and SHTG if the broader indication is approved. We believe that simplicity supports productive payer discussions and a clear value proposition. Outside the US, Germany and the UK are now active commercial markets. In the UK, the Reimbursement Authority recently issued final guidance recommending Redemplo for genetically confirmed FCS. porting reimbursement in England and Wales, and we are working to serve eligible patients there now. To recap, the FCS launch is showing increased prescription demand, a broadening prescriber base, and important advancements in access. This is the progress we intend to carry into SHTG. believe the opportunity ahead is significant and our team is preparing accordingly. With that, I'll turn the call over to James. Thank you, Andy. The fourth quarter and subsequent period included important progress in our late-stage cardiometabolic programs and clinical validation of two new applications of Arrowhead's TRMM platform. I'll begin with plazaciran and then discuss zodaciran, aerodimer, PA, our CNS efforts, as well as obesity and MASH. For plasacerein, the SHASTA-3 and SHASTA-4 results give us a strong basis for the SHTG-SMDA, which, as Chris mentioned, has been submitted. Both trials evaluated 25 milligrams every three months, and both met their primary and all pre-specified secondary endpoints. In addition to the triglyceride reductions Chris described, more than 90% of treated patients achieved triglycerides below 500 milligrams per deciliter at month 12, and more than half achieved triglycerides below 150 milligrams per deciliter. In the pooled acute pancreatitis analysis, the overall reduction in cumulative events was 78% versus placebo. Among patients with a prior history of acute pancreatitis, the event rate reduction was 91%, with an estimated number needed to treat of three over one year to prevent one event. In the highest risk group with triglycerides above 880 and a prior history of pancreatitis, there were no events observed in the plozasiran group. These subgroup findings support our focus on patients with substantial ongoing risk. Safety remained favorable overall and consistent with our previous experience. Treatment emergent adverse event rates were similar in the pooled placebo and pooled active groups. There were no cases of anaphylaxis or systemic hypersensitivity, no clinically meaningful platelet changes, and no mean no meaningful liver enzyme elevations relative to placebo. The MRI sub-study showed no statistically significant change in hepatic fat fraction. Worsening glycemic control was reported more frequently with plazaciran at 14.3% versus 8.7% in placebo, with mean changes in hemoglobin A1C consistent with previous experience, and importantly, no progressive worsening of A1C over time. A regulatory package draws on Shasta 3, Shasta 4, and the MIR-3 safety database, Working within STAR, which includes Priority Review, we continue to anticipate an efficient review process. Entry in the STAR reflects the FDA's assessment that the application meets the program's criteria for potentially meaningful improvement over available therapy on clinically relevant endpoints, approval and the ultimate label remains subject to regulatory review. Now, turning to Zodaciran, in July, we completed enrollment in the global phase three Yosemite study in homozygous familial hypercholesterolemia, We enrolled 70 patients above the original target of 60, reflecting strong interest in this population. The trial evaluates quarterly dosing and the change in LDL cholesterol at month 12 as the primary endpoint. We anticipate study completion in mid-2027 and data in the second half of next year with potential regulatory filing thereafter if the results are supportive. Our previously stated goal has been an NDA filing by year end 2027. Next, Aero-Dimer PA. The interim single dose results announced in September showed mean maximal reductions of 89% in PCSK9 and 95% in APOC3. The corresponding mean maximal lipid reductions were 65% for LDL cholesterol, 78% for triglycerides, 73% for remnant cholesterol, and 66% for ApoB. These are early dose escalation results, but the ability to affect both pathways with one molecule, leading to large reductions in atherogenic lipoproteins, is highly encouraging. No drug-related serious adverse events were reported in that interim analysis. Injection site events and headache were the most commonly reported treatment-emergent events, and multiple-dose assessment continues, and we expect additional clinical data around mid-2027. We are evaluating a development strategy that could first seek approval based on LDL cholesterol lowering subject to regulatory agreement. Turning to the CNS, our October 14 presentation included the first interim healthy volunteer results for subcutaneous Aromat-T. At the 12.8 milligram per kilogram regimen administered on day one and 15, mean CSF total Tau fell 73% by day 105 with a maximum individual reduction of 85%. Day 105 was 90 days after the last dose, and these findings support the potential for maintenance dosing every three months or less frequently. Aromantia was generally well tolerated in the interim analysis, and there were no serious treatment emergent adverse events or adverse events leading to discontinuation. No persistent anemia or neurobehavioral adverse events were reported. These results provide evidence of target engagement in healthy volunteers. Multi-dose healthy volunteer cohorts are fully enrolled, and enrollment in early Alzheimer's patient cohorts is ongoing. We expect additional healthy volunteer data and Alzheimer's patient data in 2027. We've also begun regulatory discussions around clinical studies in MAT-T-associated frontotemporal dementia and progressive supernuclear palsy. We have multiple additional CNS programs in development. As discussed at our October webinar, we are targeting CTAs for two wholly owned candidates around end of 2026 or early 2027, and additional CNS clinical entries by the end of 2027. The objective is to apply the CNS delivery capability across a broad set of diseases. Lastly, we remain on track to share updates from our obesity programs, specifically focused on ALK7 non-diabetic monotherapy cohorts, as well as the type 2 diabetic-truzepatide combo cohorts before the end of the year. now turn the call over to Dan Apel. Thank you, James. Good afternoon, everyone. I'll provide a.

brief outline of our financial results for the full fiscal year ended September 30, 2026, and then discuss our financial position following several recent developments.

As we reported today, net loss attributed to Arrowhead for fiscal year 2026 was $724.2 million, or a loss of $5.11 per share, based on 141.6 million fully valued and weighted average shares outstanding in the year. This compares to a net loss of $1.69 or loss of 1 cent per share based on 133.8 million fully diluted weighted average shares in fiscal year 2025. Three factors drove much of the year-over-year change. First, fiscal year 2025 benefited from 829 million in collaboration revenue, largely from the initial recognition of the Sarepta and Sanofi arrangement. fiscal year 2026 included a one-time $215 million expense with a priority review voucher we acquired in September. Excluding that expense, net loss would have been approximately $509 million. TURNING TO REVENUE. REVENUE FOR FISCAL YEAR 2026 TOTALED 450.8 MILLION COMPARED TO 829.4 MILLION IN FISCAL 2025. Revenue in fiscal 2026 was driven by our license and collaboration agreements with Sarepta, Novartis, Madrigal, and Sanofi, together with our first year of commercial sales of Redempto. Of that total, 317 million related to our Sarepta collaboration. This includes the 181 million recognized for the second DM-1 milestone, ongoing recognition of initial disruptive consideration, reimbursement of incurred collaboration program costs, and revenue under the clinical supply agreement. The 317 million compares to 697 million from the prior year with the year over year decrease related to the one-time recognition in 2025 of the transfer of the initial should have to license this. For our Novartis collaboration, we recognized 89 million during the year, nearly all of which relates to the 200 million upfront payment we received in October. As of September 30, 2026, we still carried approximately 113 million of deferred revenue, which will be recognized over time as we fulfill our research and development obligations. During the year, we also recognize the 25 million upfront payment from Madrigal for Arrow PMPLA-3 following completion of that license and technology transfer. And we recognize 13.3 million related to Sanofi in Greater China, compared to 130 million in the prior year, which related to the upfront consideration received when that agreement closed. Finally, fiscal year 2026 also marked our first year of commercial sales of Redemplo with net product revenue of approximately 6.6 million as As both Chris and Andy have mentioned, we are very pleased by the reception from patients, physicians, and payers, and how the underlying prescription volume and net sales are developing. While we have consistently stated that FCS revenue will have an immaterial impact to our 2026 financial statements, continue to invest in supporting this FCS launch and preparing for the potential blockbuster opportunity in SHTG. Turning to expenses, total operating expenses for fiscal 2026 were approximately 1.16 billion compared to 731 million in fiscal 2025, The 427 million increase includes the 215 million priority review voucher expense. Excluding the voucher, operating expenses were approximately 943 million, an increase of 212 million year-over-year, driven by 132 million of higher R&D and 78 million of higher SG&A expense. R&D for the year was 739 million, compared to 607 million in the prior year. Candidate costs accounted for 96 million, or the majority of that increase. it as a whole these r&d investments supported the positive pivotal shtg results reported this summer the advancement of our broader pipeline, and our efforts toward commercial manufacturing readiness in Verona. As a reminder, the Verona plant provides us accelerated and enhanced ability to prioritize and make new clinical GMP oligonucleotide drug substance and will be used to support future commercial products, the first one planned being Sedacilin. SG&A expense for the year was 202 million, compared to 124 million in the prior year. The increase was driven primarily by our investment in the commercialization of Redemplo. As we have discussed, these capabilities more than support the current SCS launch and were built with the intention of being fully leverageable for the potential SHTG launch and ultimately for Sudacerin and HOFH. As of today, our commercial organization is largely in place, and we expect only incremental addition as we approach a potential U.S. SHTG launch. Turning now to the balance sheet, cash and investments total nearly 1.2 billion as of September 30th, 2026, compared to 0.9 billion a year earlier. used in operating activities was approximately 272 million for the fiscal year. Importantly, that year end balance is after funding both our operating activities and the 215 million purchase of the priority review valuation. Common shares outstanding at year end were approximately 141.3 million. As to the voucher, following the FDA's acceptance of Plasacin into the Star-Potter program in October, it is no longer needed for our planned SHCG supplemental application, and is eligible to be sold to a third party Publicly announced PRV transactions over the last 12 months have ranged from approximately 180 million to 220 million. Merely illustratively, if we were to sell our PRV at prevailing market rates, our cash and investments would be approximately 1.4 billion on a rounded pro forma basis. To be clear, though, we have not entered into a sale agreement and no PRV sale proceeds are included in our reported statements. FOLLOWING THE RECREATION. FINALLY, I'D LIKE TO HIGHLIGHT FINALLY, I'D LIKE TO HIGHLIGHT FINALLY, I'D LIKE TO HIGHLIGHT THE REFINANCING. THE REFINANCING. THE REFINANCING. WE RECENTLY COMPLETED WE RECENTLY COMPLETED WE RECENTLY COMPLETED THE SIXTH READ ON NOVEMBER 2. We replaced the prior facility with a new $400 million senior secured term loan and 3 months SOFR plus 5.5%. compared to the prior facility's 15% annual rate. We also negotiated significantly a 68 million discount to the minimum amount required to retire the old facility in 2028. The new loan matures on November 2nd, 2031, has no scheduled principal amortization before maturity, and importantly, eliminates any and all required cash sweeps to 6 feet tied to product sales, royalty, milestones, or any existing or new licensing and partnership proceeds. IN A DAB AND NECESSARILY STOCK EVENTS? EVENTS? EVENTS? PERWARD PHOTOGRAPHY? PERWARD PHOTOGRAPHY? PERWARD PHOTOGRAPHY? TO PUT OUR DEBT POSITION TO PUT OUR DEBT POSITION TO PUT OUR DEBT POSITION IN CONTEXT, OUR FUNDED debt IN CONTEXT, OUR FUNDED DEBT IN CONTEXT, OUR FUNDED DEBT NOW CONSISTS PRINCIPALLY NOW CONSISTS PRINCIPALLY NOW CONSISTS PRINCIPALLY OF THE 400,000 DUE OF THE 400,000 DUE and $700 million of 0% convertible notes due in January 2032. In other words, no principal payments are required before late 2031. Compared with the retired structure, this materially lowers our borrowing costs, extends maturity, and improves our near-term liquidity and flexibility. Taken together, we believe our strong balance sheet with approximately 1.2 billion of reported cash and investments, a transferable PRV with demonstrated market value, and a meaningfully lower cost, longer-dated debt structure provides a substantial financial flexibility to support our current and pre-commercial current clinical and preclinical priorities, current and future commercialization activities, and our long-term strategic priorities. Lastly, and unrelated to our financial position, we announced today our decision to change our fiscal year end to December to align with the calendar year. The calendar quarter ranging from October to December 2026 will be what is called a transitional quarter period with fiscal quarter one 2027 now referring to January through March 2027. We believe this change will ease a number of administrative burdens associated with a September year end and ahead of a potential SHTG launch, will improve company and investor communication. With that brief overview, I will now turn the call back to Chris. Thanks, Dan. I want to close with what we believe the next year can mean for Arrowhead. Redemplo has given us our first commercial foundation. We view that as a launching pad that is intended to enable us to address the SHCG opportunity rapidly. We are targeting the second quarter of 2027 for potential US SHCG launch subject to FDA approval. We believe we have the data to support a highly differentiated medicine, a large population with substantial unmet need, and a growing commercial organization that understands how to serve physicians and patients and how to navigate the payer landscape. We intend to build the leading franchise around that combination. The coming period should also bring important opportunities beyond our down-flow, including additional obesity data by the end of 2026, additional aerodimer PA data in the first half of 2027. The 70 phase 3 readout in HOFH in the second half of 2027. So the S or N NDA piling by the end of 2027. Initial patient data from AeroMapT in the second half of 2027. new candidates emerging from our dimer and CNS platforms throughout 2027, and the opportunity to receive milestone payments from existing partnerships and the possibility of new deals throughout 2027. We have worked for years to build a company that can repeatedly create important medicines and participate meaningfully in the value they generate. We now have much more evidence that this model can work. We are commercial. Our mid- and late-stage pipeline is advancing, and our ability to reach new tissues and targets continues to expand. That is why we are so optimistic. We believe that the next stage of Erivid's growth can be substantially larger than the last, and we are working to make that happen. Thank you for joining us today, and I would now like to open the call to your questions. All ready?

TO ask a question, you will need to press star 1-1 on your telephone. To withdraw your question, press star 1-1 again. Due to time restraints, we ask that you please limit yourself to one question. You may then return to the queue. Please stand by while we compile the Q&A roster. And our first question will come from the line of Maureen Raycroft with Jefferies. Your line is open.

I, thanks for taking my questions. Given that IONIS has set expectations for their early SHTG launch to be softer than expected, do you view that as a company-specific execution issue or evidence that the SHTG market may take longer to develop than anticipated? And how do you reconcile the IONIS comments on broad access and the one million people on prescription fish oils with the perception that there may be headwinds to the launch. And I guess, can you help us identify what those headwinds could be?.

Boy, you jammed several questions into one question. So, broadly, look. What we learned from IONIS doesn't affect our expectations in SHCG at all. I think what we've seen from them are some missteps in communications, some missteps in commercial execution, and we're and we we don't expect to have those missteps. And so we are full steam ahead towards a rapid launch in SHCG. That's a large market. We have a good differentiated medicine that can address that market. And we are we are we are building towards that as we speak. So we are as bullish as ever on our ability to help those patients. You've seen the increase in demand as reflected by prescriptions. We saw a good, what, 63 or so percent increase from quarter to quarter in number of prescriptions, but then an additional 30% increase just over the last four to five weeks. Same thing with an increase in, prescribers, another 30 or so percent increase just over the last 45 weeks. And so we see a lot of demand out there waiting for a demo to be available for SHTG individuals. And also, look, we've got some structural advantages as it relates to an SHTG launch. Just because we are second, we are able to see what has been done in the market and I think adjust accordingly. We are also having early discussions with payers to hopefully allow us to hit the ground running with respective payers once we are approved in SHTG. I think we're doing a good job in preparation to that. As we talked about, the slow piece of this has been what we call the middle of the funnel. So once prescriptions are written, we have to go through a number of machinations with payers in order to get paid shipments. We're working through that. And I think that... All right. expectation is that we should be able to work through that even quicker in FHTG because we're talking about it right now. and that is all helpful perspective. Thank you. One moment for our next question.

And that will come from the line of Jason Gerberry with Bank of America. Your line is open. Hey, guys. Thanks for taking my question. A follow-up just kind of on the... the competitor launch. You guys have said twice, I think, on this call, rapid launch, but then also said it'll take several quarters. I wasn't sure if the several quarters was – into the Tringolda launch or several quarters into the Redemptlo launch? And maybe because you guys highlighted communication and kind of expectation setting, is your definition of a rapid launch on sort of the metrics that you guys outlined like NBRX as opposed to revenues? So just wanted to perhaps clarify that so everybody's level set.

Sure, and you want to start with that? Yeah, thanks for the call, Jason. I'm happy to comment. As we had mentioned at the outset of this call, the three leading indicators that we will be tracking and looking to consistently report to you and others are the three mention metrics you mentioned at the outset of the call that's new to brand prescriptions, which is largely anonymous with new patients, breadth of prescribers, so are we able to communicate to the prescribers who were interested in educating, and number three, how are we navigating the payer space that is through the metric of coverage. And we had mentioned that in FCS alone, we currently have 160 million lives covered for Redemplo and FCS. We think that is a very very good number at this place in the launch. And so these are the three leading indicators that we'll continue to report on as we define what would be a rapid launch forward into SHTG as well. Yeah, and look, we're not walking away from revenue. Obviously revenue is important. Our point here is that in the early stages of the launch, that may not tell the entire story. we'll be talking about revenue and how we increase that. I think it's also important to look at these other three metrics to see how growth is going, to see how market penetration is going as we work with payers. As you know, it just takes a little bit of time to get these policies in place and have coverage in place. Got it. Thank you, guys. You're welcome. One moment for our next question.

that will come from the line of Mike Olves with Morgan Stanley. Your line is open.

Good afternoon. Thanks for taking the question. Maybe just another follow-up on the REDEMPLO and the pending launch here. Just wanted to get your thoughts on potentially providing guidance, what's the current thinking there? Is that something you might share next year at some point or any thoughts there would be helpful. Thanks.

Yes, thanks. Unfortunately, it's just too early to provide guidance. We will be happy to do that when we can. We have just filed our SNDA. We don't have a PDUFA date yet, much less a label. And so we need to see what that label looks like. We need to have some experience working with payers. As I mentioned, we are starting to do that right now, even even prior to an SHTG label. So I think that that can move relatively rapidly. But until we have better visibility on those key features, it's just too early to provide.

guys. Great. Thank you. You're welcome. Thank you. And our next question, that will come from the line of Brian Chang with J.P. Morgan. Your line is open.

Hey guys, sorry. Thanks for taking our questions today. Just shifting away from SXGG here, the obesity update in the coming weeks, what do you need to see to define success for the OX-7 monotherapy and the terceptide combo? And when you talk about new deals, is this an area where you think that the new deal should happen? Thank you.

Do you want to go first? Yes, sure. I can talk a little bit about, I can't set sort of the hurdles that we plan to get over, but in terms of data that we'll be sharing by the end of the year, expect to see the changes in body composition based on MRI. Of course, we'll share safety and knockdown and then probably some changes in body weight as well. yep and and relating to to deals um uh let's see I can't give you too much guidance on this. And they maybe it's easier to tell you, what what I can't give you too much guidance. that's off the table. We running towards an FHCG launch with Pladastra and with Redemplo. We see that as a cornerstone of our burgeoning commercial infrastructure in Cardio Metabolic and beyond. And so given that, at least in the United States, we have no appetite in partnering there. within CNS, Aromap-T is really, really interesting. We have something, of a of real scarcity. We have the ability to deliver all nucleotides to the brain that is, at least initially, clinically validated. We're very excited about that, and and we are interrogating a drug that is targeting a gene target that is well validated, somewhat validated in Alzheimer's, but very well validated in primary tauopathy. And so it's hard for us to imagine doing a partnership around ARM-FT at this point. Beyond that there could be areas within obesity. There could be areas within NASH that makes sense to us. Certainly on the complement side, there could be something that makes sense to us. And then just on the discovery side, we have a number of things that that are characterized by great scarcity. Again, our ability to deliver oligonucleotides to the brain via simple subcutaneous injection. We have we have a really interesting clinical proof of concept there. There's a lot of good CNS targets that that we will go after. ourselves as wholly owned drug candidates, but there's room there to do partnerships with other folks, as we have with Novartis so far. Same thing with other deliveries, say into the adipose, into the lung, those are also scarce. So there's a number of ways we can go. We'll just have to look at opportunities and decide how those opportunities could fit in with our strategy going forward with the cardio-metabolic franchises that we're building and with the CNS franchises that we're building.

Thank you. One moment for our next question. And that will come from the line of June Lee with UBS. Your line is open.

Hi, congrats on the progress and thanks for taking our questions. Going back to what's below, what's the depth of conversations with payers you can have prior to the FDA approval without a label? How are you taking advantage of this time between now and approval to ensure maximal access and conversion of scripts? to reimbursement upon approval. Thank you.

Thanks, June. This is Andy. Good question. We are able to interact with payers using a pre-approval information exchange deck, which essentially articulates the value proposition of Redemplo both clinically and economically. And so we are able to engage with both the clinical and negotiating teams of the large payers in a pre-approval context, presently doing that now and will continue to do that up until the approval of Redemplo expected in the second quarter of next year. Yes, look, that was, we were confident that we could do that, which is why we bought the priority voucher. We're happy to report, that we don't need that any longer and we can sell it. But we saw, we saw a big opportunity to have those discussions early, particularly if we could have accelerated approval or the possibility for accelerated approval. But also, let's look at what this said about our data. if our data were ambiguous, if they were if there were clear warts, on this on Redemplo, it would be much more difficult to have these early conversations with payers. We don't see that as the case. And so the fact that that there are payers talking to us right now before we have a label, I think is an indicative of the power of this medicine and the unambiguous value proposition that we've got. Thank you.

Thank you. One moment for our next question. And that will come from the line of Edward Tentoff with Piper Sandler. Your line is open.

Thank you very much and I apologize if I ask this. I don't think anyone has, but Tell Carson this and the data at AHA, any read through or do you guys have any thoughts Amgen partnered, I'll pass on with the Ocean trial, I think maybe next year. And again, I apologize if someone asks this, I'm trying to listen to everything you guys are saying.

I hate that it's great to hear you. So as you know, we are largely out of old PASTRAN. We monetized those royalties. We still have milestone payments, of course, but we monetized those royalties. And and and and we don't have good visibility on on when Amgen may finish this or have data We have no more visibility than anybody else on the planet. But from just my perspective, I don't know that the book is closed on LP little a. My recollection is that Novartis showed something like 77% reduction in LP little a Opasser N is much better than that. I think that Amgen was seen better than 90, 95% reduction in Lp. That could make a difference. Of course, the baseline characteristics also could make a difference. I believe that the Amgen studies have a bit of a higher baseline Lp numbers than Novartis. So that can make a difference as well. So we'll see where that goes. The data were unfortunate with Pella Carson, but I don't think the book is close.

I appreciate that perspective.

Thank you. One moment for our next question. And that will come from the line of Eric Joseph with Citi. Your line is open. Hey, this is Charles on for.

Eric, congrats on the quarter and the year. Maybe one from us on AeroDimer PA sort of registration strategy. Do you mind expanding on why you're seeking approval first on the LDLC lowering versus perhaps a composite-based endpoint? More clarity would be great. Thanks.

Yes, sure, Charles. I can take that. Of course, this is all subject to agreement with regulators, but the LDL cholesterol is probably one of the most validated surrogate endpoints out there. And that's our thought is that if we could get, we get approval and get it on the market with an LDL endpoint in the mixed hyperlipidemia population that would be great. The triglyceride component of mixed hyperlipidemia, that is more of a surrogate for the SHTG population, less so and less widely accepted for the less severe mixed hyperlipidemia population. So that's why we're focusing on LDL at least for now. And if we're able to do that, that's a relatively quick time to approval to a fairly large market. We look forward to continuing to see data with Airdyne or PA and to start to have discussions with regulators.