Arrowhead Pharmaceuticals, Inc. (ARWR) Earnings Call Transcript & Summary

Hi, everybody. Thanks for joining us today. We are here to talk about the Fazirsiran SEQUOIA top line results and give an outline for what the Phase III looks like. So thanks all for joining us this early in the morning. Next slide, please. Just before we start, I want to make sure everybody knows that we will be making forward-looking statements, so please refer to our SEC filings for the risk factors. Next slide. Today on the panel, we have Dr. Virginia Clark from the University of Florida, who's going to talk about AAT and natural history of the disease as well as some of the significance of the findings from the SEQUOIA study. Myself, I'm Vince Anzalone, the Vice President of Investor Relations; and Javier San Martin, our Chief Medical Officer. Next slide. So today, we -- as I mentioned, Javier is going to speak about the Fazirsiran SEQUOIA top line results. Dr. Clark will then provide some context about why this is important. Javier will go back into the Phase III design, and then we'll give some concluding remarks. We know it's a busy day and a busy week. So we'll try to get through this as quickly as possible. Next slide. And I will turn it over to Javier.

Thank you, Vince. Slide. In alpha-1 antitrypsin deficiency, homozygous PiZZ gene mutations in the SERPINA1 gene produces mutant protein that aggregate in hepatocytes as global leading to progressive liver disease and fibrosis. Fazirsiran, an investigational RNAi therapeutic was designed to specifically [indiscernible] liver Z-AAT [indiscernible] siRNA and reduced synthesis of the mutant protein. This mechanism allows the cellular machinery to clear existent [ Z protein ] reduced global burden, help liver disease and reverse fibrosis. This next slide, I'll show you the SEQUOIA, the SEQUOIA study design. Here is the study, thanks for SEQUOIA, also known as the 2001 study. Patients with homozygous PiZZ mutations were enrolled in a 2:1 ratio to receive fazirsiran at either 25 milligram, 100 or 200 milligrams or placebo. At screening, 15 patients were assessed as having no liver fibrosis and 25 were assessed as having fibrosis based on local liver evaluation. Patients without fibrosis received 2 doses of fazirsiran at baseline and at week 4 and will follow for up to week 64. Patients with fibrosis, we give fazirsiran at baseline week 4 and every 12 weeks thereafter. Among the 25 patients with fibrosis, a second liver biopsy was collected at week 48, 72 or 96. Most patients have a second biopsy at week 48. Their liver biopsies, [ 425 ] patients were centrally read and analyzed. Patients with fibrosis could be up to continue open-label fazirsiran treatment for up to week [ 16 ]. The primary impact was change in serum Z protein at week 16. In order to select the dose, we selected the 200-milligram dose for the open-label period and subsequent Phase III study. Here, we report the results for a study week 48. Baseline characteristics show patients in their 50s and 60s with approximately half of them men. [ With the inclusion ] criteria, all patients were homozygous for the [ PiZZ mutation ]. Patients with fibrosis have paired biopsies that were frequently reviewed and actually [indiscernible] blinded to treatment such as ID and time point of the biopsy. Patients with fibrosis -- 3 patients initially deemed to have fibrosis, 1 each in the placebo, 25 milligrams and 200 milligrams treatment groups were related assessed of having no fibrosis basement [ central grade ]. This shows how valuable assessment of fibrosis can be. Fazirsiran treatment significantly reduced Z-protein concentration in the dose-dependent manner with robust reduction after the first dose ranging 62% to 92% that was sustained over a year. At week 48, fazirsiran reduced [ serum ] Z-protein concentration by up to 94% compared with essentially no changes in the placebo group. Now I will present the effect of fazirsiran versus placebo on key histological features of [indiscernible] global burden, inflammation and fibrosis. Liver's Z-AAT was reduced in the fazirsiran group by a median reduction of 94% at week 48. In contrast, the Placebo group had a median increase of 26%. The [indiscernible] Global, a hallmark feature of [indiscernible] reduced by 58% in the fazirsiran group versus initially no changes in the placebo group. Histological assessment of portal inflammation and fibrosis were characterized into 1 of 3 categories, at least 1 point improvement on baseline, no change from baseline or at least 1 point worsening from baseline. The denominator for each category will vary based on each patient's baseline value. For example, patients with baseline [indiscernible] 0 will be ineligible for assessment for improvement. In the combined fazirsiran treatment group, 5 of 12 or 42% of patients achieved an improvement of 1 or more point in portal inflammation versus 0% in patients on placebo group. One of 15 or 7% of fazirsiran treated patients experienced worsening portal inflammation versus 5 of 9 or 56% in the placebo group that show worsening in portal inflammation. Finally, 7 of 14 or 50% of patients in a fazirsiran group experienced an improvement in METAVIR fibrosis score in the placebo group, 3 of 8 patients or 38% at 1 point or greater improvement in METAVIR fibrosis. Improvement in fibrosis in the placebo group was higher than expected based on natural history data at approximately [ 15% ] of patients improved over a 3-year period. Worsening fibrosis was similar between groups 25% and 22% in the fazirsiran and placebo group, respectively. In this next slide, I wanted to show you side by side, the active treatment group of the SEQUOIA study next to the 2002 study results that was published last year in New England Journal. SEQUOIA and the 2002 study delivered consistently efficacy across all histological parameters. Liver Z-AAT was similarly reduced by 94% and 83% at week 48 in the SEQUOIA and 2002 study, respectively. At week 48, total global burden decreased similarly in both study [ active ] groups, 68% and 71%, respectively. Portal inflammation also improved similarly in both studies, 42% in SEQUOIA and 69% in [ fazirsiran II ]. Importantly, the improvement in at least 1 point in METAVIR fibrosis was observing 7 out of 14 or 50% of patients in both studies, confirming a substantial fibrosis regression into these studies. Now let me summarize the safety finding, safety of [indiscernible] not show any new safety signals from the previous study with COVID-19 being the most frequent reported [ Z-AAT ]. There were no PIA-related studies of discontinuation, [indiscernible] interruption of premature study withdrawals. [ Two serious AE ] were reported both in 200-milligram cohort compared with 3 serious [ AE ] in the placebo group. The 2 series in reporting 200 group were exacerbation of bronchitis [indiscernible]. So in summary, fazirsiran reduced [ serum ] liver [ CAC ] and histological global burden in all treated subjects consistent with previous studies. This was in contrast to placebo, which show no change or a slight increase in all 3 measures of [ CAC ] burden. At week 48, this results in too many portal inflammation and 42% of the active versus 30% of the placebo; improvement in liver fibrosis in 50% of the active grew versus [ 38% ] placebo. Placebo rate for improvement in fibrosis was higher than expected from natural history study data, approximately [ 15% ] over the 3-year period. And fazirsiran was well tolerated, pulmonary function test was stable and similar to [ placebo ] throughout the study. With that, I'd like to pass the call over to Dr. Virginia Clark, who will talk to us about the natural history data and the significance of these results for patients with alpha-1 antitrypsin liver disease. Dr. Clark.

Thank you very much, Javier. It's my pleasure to talk to you guys today. Next slide. First, I'd like to start by setting the stage for the natural history -- studying natural history in alpha-1 antitrypsin deficiency. alpha-1 antitrypsin deficiency is considered a rare disorder. This means that less than 200,000 individuals in the U.S. are actually diagnosed with alpha-1 antitrypsin disease. And that makes it a challenge to study when we're looking for -- to explain the natural history. It's a clear population with an unmet need for liver disease treatment. I'll show you a picture of the liver biopsy with the globules with the accumulation of the toxic protein here. There are many undiagnosed but individuals who are affected and out in the -- excuse me, in the -- there are many individuals who are undiagnosed. And the reasons for this are varied, likely because there is no treatment at therapy for individuals with alpha-1 antitrypsin deficiency liver disease. The other challenge in studying natural history in alpha-1 antitrypsin deficiencies is that many studies -- the data that we have comes from studies with small sample sizes or a selected patient population or from registry data without liver biopsies or complete data to use. Next slide. What do we know about liver disease and the individuals who are -- who have alpha-1. It's prevalent, but the presentation is quite heterogeneous. Individuals who are affected with alpha-1 antitrypsin can be completely asymptomatic or can present with liver cirrhosis. We sometimes will see an elevation in liver enzymes in this patient population, but our work and others have shown that this may or may not correlate with the severity of liver disease that is present. The best way to really define and determine what is -- if liver disease is present is with the use of a liver biopsy. There are 3 things that we've looked for on the liver biopsy to help us determine the severity of liver disease in alpha-1. The degree of portal inflammation, the accumulation of the toxic protein in the polymer form, which can be measured directly or visually characterized by the globule -- percent globules and then the spectrum and the severity of liver fibrosis, as you've heard -- described previously. So using a liver biopsy, obviously, is an invasive procedure. It puts a patient through a procedure that has some risk of complications, but it gives us the most data and the most relevance to understanding completely what is happening in the liver and then the response to therapy. The challenge that we have in -- with liver biopsies is interpretation -- largely is interpretation of the liver fibrosis. There can be some variability in the reads between pathologists. And inherently, the way I think of it is that individuals you're taking a -- you're trying to categorize something into a single category that's likely on a continuous spectrum. And so even within a single stage of F2, there may be someone who has an early F2 versus someone who is still on F2, but has more -- a little bit more advanced fibrosis. So I think that can help explain a little bit of the variability in the fibrosis in the individual reads. And that also can be overcome by having techniques in trials where you have pathologists read or adjudicate the presence of the fibrosis stage. Next slide. So what do we know? Have there been -- there have been several liver biopsy studies to look and to define what the prevalence of liver disease is in alpha-1 antitrypsin deficiency, ZZ adults. We published a study in 2008, the biopsy of 94 individuals on ZZ alpha 1 and found that the prevalence of fibrosis was around 2 or greater and 35% of these individuals across multiple other studies, smaller or larger -- you can see there's some variability in the prevalence, which is -- likely reflects the underlying patient population. But I think when I look at these numbers, I see consistently a prevalence in between 20% and 30% and what we would expect if we biopsied individuals, suggesting that these individuals are -- with fibrosis are the patients who may progress to cirrhosis and are the appropriate patient population for therapeutic intervention. Fortunately, more advanced fibrosis was even -- was a lower prevalence, but it was even up to Stage 3. And these were individuals that were completely asymptomatic and not known to have liver disease. So that is the concern in individuals with ZZ alpha-1 antitrypsin is that fibrosis will just silently progress and then ultimately present with cirrhosis. Next slide. So what do we know about fibrosis progression. In our study, where we biopsy to cross section of 94 patients, we ended up [ rebiopsying ] patients who already had paired biopsies. And that let us give a clear understanding of what are progression rates. And what we found is, over a period of 3 years, about 38% progressed by 1 stage or more. 46% had no change in fibrosis at 3 years and at -- and we described about 15% that improved by 1 fibrosis stage. Now this is the number we -- you heard Javier mention about changes for improvement in fibrosis and in fazirsiran study use 38% had improvement. Now I can explain this. I think if you think about essentially what this data is showing you is that this is what a placebo arm would look like. This is a large number of patients. It's the best described kind of natural history data that is out there. When you compare this large group of patients with a much smaller group, only 8 patients, I think that variability in the small number explains the difference in what was observed and what was expected in the study. Next slide. So why do we -- are we concerned about the natural history? Well, we understand that the natural progression in alpha-1, it's a bimodal distribution. The disease presents in childhood and then represents -- if it's not -- if you're not affected then, then will present in adults. And liver-related mortality is only second to pulmonary disease in terms of causes of death from alpha-1 antitrypsin deficiency affected individuals. So what we know is that progression -- there's very limited data looking at progression from fibrosis to cirrhosis. The most -- the often quoted natural history study is a birth cohort in Sweden that was identified over 40 years ago that have been followed annually. And in this cohort, no patient after childhood has been identified with clinical cirrhosis to date, and they've reported that out to age 40. However, it's limited by no biopsies and not -- and cirrhosis can often be asymptomatic. So we still don't -- there's to be determined on that data. From our own data and repeat biopsy, we saw about 7% over a period of 3 years progressed from biopsy that were not cirrhotic on their initial biopsy that progressed. So that's a fairly rapid rate of progression at least in our cohort. And what we -- what our therapeutic needs to do a therapeutic intervention for alpha-1 is we want to interrupt this natural progression to prevent the complications related to liver disease. Next slide. So what would be -- what are the overall significance of the fazirsiran results, I think highlight -- to me highlight 3 things. The first is the consistency between the 2 studies of the overall reduction of that toxic accumulation of the Z protein in the liver. The reason this is so important is because multiple lines of data have shown that the accumulation of that toxic protein is the key to liver injury in the pathogenesis. It sets off a series of events that caused progression of liver disease. So if this type -- if this drug can reduce the alpha 1 in the liver and reduce accumulation, then we can see what will happen. The second thing I'd like to highlight is that -- that Javier presented, is that there was a significant improvement in portal inflammation. The reason I think this is important is in our own natural history study, we showed that if portal inflammation -- those who had worsening portal inflammation, their risk of fibrosis progression was much, much higher than those who did not. So the fact that the reduction of the accumulation in the Z protein translates into reduction of portal inflammation, you can anticipate that we're going to see improvement in liver histology overall. And then the final thing is that -- although these studies were small and not really powered to look for improvements in liver histology, it was there. We saw that there was 50% in each study showed improvements in fibrosis stage. Now -- the limitations we know that we have to have larger numbers of patients to really clarify this. And we're going to be stuck. We're going to have to have a liver biopsy to look at the right outcome. But I think ideally, what you see is that we're going to -- it needs to be targeted towards the individuals who have fibrosis so that we can identify improvement. Thank you very much.

Thank you, Dr. Clark. And I like now to see the presentation presenting high level the Takeda Fazirsiran [ registration ] of Phase III study design. This is going to be a randomized, double-blind, placebo-controlled parallel arm multi-center study, the indication with the patient with PiZZ alpha-1 antitrypsin deficiency associated liver disease. They aim to enroll about 160 subset with F2, F3 and F4 METAVIR fibrosis baseline. The primary endpoint will be the decrease from baseline of at least 1 stage in histological fibrosis METAVIR stages in the centrally liver biopsy F2 and F3 [ done at ] week [ 106 ]. The dosing regimen will be a baseline of day 1, week 4, week 16 and then every 12 weeks thereafter, after week 196 or 4 years we delivered biopsies at week 106 and [indiscernible]. The interim analysis, the first one, the first interim analysis is safety assessment [indiscernible] for safety to allow possible pulmonary inclusion and safety monitoring adjustment. And second, the interim analysis is the primary analysis after all F2 and F3 reach week 106 for safety and [indiscernible]. With that, we'll conclude this part of the presentation. I will turn the call over back to Vincent Anzalone.

Thank you, Javier, and thank you, Dr. Clark, for joining us today and everybody at home. We are really excited about these results, and so are our partners at Takeda what we really [ hardening ] here is that all of these results are consistent with what we saw in the open label study, which was really exciting for us. So thanks to the patients and the investigators that participated. And also, I wanted to just flag that our CEO, Chris Anzalone, will be speaking later this morning at JPMorgan Healthcare Conference. So I hope you all can take a look at that on our website. And thanks very much, and we'll talk to you soon. Have a great week, everybody.