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

Got it. But do you think it's unreasonable to expect that there will be some sort of threshold put in place by the payers?

Well, so the population that we're studying in severe hypertriglyceridemia is above 500. And so I would view that as a threshold. Now would payers say that it depends -- of course, depends on price, but would payers say that it makes most sense treating patients above 800. It's possible. But the label -- my anticipation is that our label will stay above 500 because that's the population that we're studying.

Got it. I guess, as you approach commercialization, how are you thinking about your launch, how you're preparing to enter the fray?

Yes. So we are -- we are now essentially fully staffed in advance of our November 18, PDUFA date. And so if we were approved 2 days from now, we have the staff to follow that. Now some of these folks have just recently come in and so they're still training, but we have achieved the critical mass that we believe we need to address the FCS market. I'll tell you, so plozasiran is a very helpful first product for us -- first commercial product for us. And here's what I mean by that. Like any company that makes the transition from an R&D organization to a commercial organization, is going to have some growing pains. And even though all the folks who are in our commercial team have been doing this for quite some time, as an institution, as an organization, we have not commercialized a drug before. And so there will be some growing pains and some mistakes here and there. We like this following plozasiran because it is a stepwise commercialization process. We will start with FCS. It's a very small population requiring a relatively small team. It's relatively easy to find patients, at least genetic FCS patients. So it allows us to kind of get our commercial feet under us with this more narrow market. But as I mentioned, we've got 2 Phase III studies to support a label expansion into severe hypertriglyceridemia that's fully enrolled. And so my expectation is that, that study will be complete in the middle of next year. And then we'll file an SNDA towards the end of next year, that would be a step up. That's a much larger population should we look out and the data be good and regulators approve that drug in that broader population. We'll then ramp up our commercial footprint and address larger populations. So this allows us to become commercial in a more systematic stepwise process.

So in the last couple of days, it's been kind of an evolution in what the Street is estimating is the market size for this. What do you view as the market size? And there's the cardio versus the pancreatitis outcomes aspect you mentioned with pricing. How does it change with -- if the ultimate goal if people end up targeting the cardio population, larger but with a lower price rate range versus targeting pancreatitis, smaller group but larger price.

Sure. So here's the way we're approaching this. We view plozasiran as our pure-play triglyceride-related pancreatitis drug. That's what it does. We are bringing it to FCS patients shortly, I think, and then longer term, bring it to broader severe hypertriglyceridemia patients in order to decrease the risk of pancreatitis full stop. Now there's an awful lot of interesting data to suggest that the high triglycerides are related to increased risk of major cardiovascular events. And there was a long period of time when we expected there to be a third step in the commercialization process of plozasiran, where we would do a cardiovascular outcomes trial and then ultimately lower the price and address that ASCVD market. That doesn't make sense to us right now. We like plozasiran as a pure-play pancreatitis drug. The broadest market that appears to be at this point is the 3 million to 4 million people in the United States that have triglycerides above 500. Then the question is, are you addressing all of those? Or are you focusing primarily on those with very high triglycerides that have an increased risk, and even enhanced risk of pancreatitis. And we don't know the answer to that yet. We're still trying to figure out what the price -- what the right pricing is going to be and that may narrow that market a bit as well. But at its broadest, it's the 3 million to 4 million, but it could be as narrow as the 1 million or so with triglycerides above 880, we'll see on that. Now as I mentioned, there is a ton of relatively new data over the last couple of years, 3 years, maybe, that suggests that high triglycerides are at least as atherogenic as LDL-cholesterol. In fact, many of our KOLs think that it is more atherogenic and that there is a big opportunity to help with ASCVD by lowering triglycerides. We will be addressing that market, but not with plozasiran. We have a dimer approach that will be in the clinic this year that is designed to reduce expression of PCSK9 as well as APOC3. And so in one fell swoop with this one drug, and it's not a combination approach. It is a single chemical entity. We expect that we can knock down both PCSK9 and APOC3. And therefore, knockdown both LDL and triglycerides. I think that we will have those early data in the Phase I sometime next year. And I think that we will know if we have a drug pretty soon during that time frame because we have -- the field has a very good understanding about how much you lower LDL and how much of effect that could have on these major cardiovascular events. And we -- there's at least a theoretical approach to associate high triglycerides with major cardiovascular events. So we are positioning that as our broader ASCVD drug. We'll know better again next year how well it's working in both those targets. But my expectation is that it will reduce both of those substantially and could be really, really powerful heart disease medicine at some point.

So Let's jump over to zodasiran here, another drug in the lipid area. Can you tell us about it? We haven't heard quite as much about it recently because obviously, APOC3 has become much more dominant. What's going on with zodasiran?

Yes. So zodasiran is designed to reduce expression of ANGPTL3, and it does that. We've now been in a ton of patients and healthy volunteers showing that it lowers expression of ANGPTL3 and therefore, lowers triglycerides as well as LDL. And so almost think of this as a baby dimer, right? The PCSK9 and APOC3-dimer should lower LDL and triglycerides a lot. zodasiran lowers both, but not quite to the extent that we are expecting the dimer to do. And so when we first were developing that, we viewed that as a pretty interesting ASCVD drug. We have changed our strategy there a bit with the new dimer that's coming on board. And so -- and so then the question is, okay, well, where do you take zodasiran? And you could take it in severe hypertriglyceridemia certainly. But with plozasiran, we don't really need that. And so therefore, you could take it to high LDL populations. And within that, we are focused on HoFH as opposed to HeFH. It's a very small population, of course, but we are in a Phase III study now. It's a very small study. I think that should read out sometime say in '27. And we view that as a nice addition to the bag of our commercial team that is commercializing plozasiran. It's going to be the same physicians essentially that they would they'll be talking to for zodasiran. And so the incremental commercial costs are quite small and sure, HoFH is a small population, but there could be a couple of hundred million dollars of possible revenue that could come of that for relatively small incremental investments.

Now yesterday, you announced that you had entered into a partnership with Novartis. Could you tell us about that? And Novartis also seemingly diving a little bit more deeply into this space with zodasiran as well by -- with a deal Argo. Could you tell us about how that's evolving?

Sure. Yes, it's a great deal. It's in the CNS space. One of the places we can go with TRiM is in the CNS, while we do have one drug candidate in the clinic right now that is via intrathecal injection, everything going forward will be on our BBB platform that enables systemic delivery to get into the brain. The first drug candidate to get in the clinic will be MAPT against tau for Alzheimer's, I expect that. We expect us to file a CTA for that in the next month or so. After that, we expect to have a target against Huntington's HTT that has been licensed to Sarepta. I would expect that to be also at the CTA point by the end of this year. And then early next year, say, the first quarter of next year, I expect our third candidate to be in the clinic, and that's against alpha-synuclein. That was the basis. So that was the real root of the Novartis deal. And so we have licensed to them alpha-synuclein or ARO alpha-synuclein as well as 3 additional targets. And those targets, they will determine and send to us. But importantly, they can't come from our pipeline. And so we view that as found value. Those will be brand new targets that we're not going after. And so we look forward to working with them on all 4 of those areas. I think alpha-synuclein is a great target. And I think it's in great hands with Novartis. We are holding on to MAPT. We see that as a potential -- a real potential value driver for us. It's a well-validated target against Alzheimer's as well as other tauopathies. And I think we'll have target engagement data from that study sometime maybe in the middle of next year. And that could be an important value driver, not only in so far as ARO-MAPT could be a valuable drug but also to unlock value in the entire CNS platform. There are a lot of great CNS targets that we can go after. And once we derisk that platform, I think that we can create a ton of value.

Could you walk us through the terms? I mean, we know about the upfront what do the terms look like for the milestones downstream and potential royalties?

Sure. Yes. Again, it's given the state of this -- of the technology, we think it's a great deal. It's preclinical, of course, but also it's based on a platform that has not yet been in humans, our CNS blood-brain barrier platform. So it was $200 million upfront. It's milestone payments up to over $2 billion, and those are commercial as well as development or regulatory-based milestones and then royalties to low double digits.

Now of course, a lot in the news lately has been what's going on Sarepta to the $200 million was well timed with that. Could you kind of bring us up to speed? I know there's been a lot of moving parts about where things stand right there?

Sure. Look, my expectation is that they will continue to perform and they have so far in the partnership. They have given us no reason to believe that they will not. The most -- the basis of that partnership or the most advanced part of that partnership is our 2 skeletal muscle drugs, ARO-DM1 and ARO-DUX4. My expectation is that we'll have some data that jointly we can release at some point this year. It won't be a full data set from the Phase I, but hopefully, we'll have some data that is interpretable that we can talk about. I think we're on track with that. They continue to push forward in the other areas of the partnership. And from what they've said publicly, it does sound like they are viewing the products of this partnership as a real basis of that company going forward. And so I think they will make sure that they can continue this. One component of the deal was that they bought 12 million shares of ours at a premium, I guess, back in February. And that was locked up until the end of -- or towards the end of August. It made -- it sounds like it makes sense to them to get liquid on that in order to make sure that they could operate their business and also make sure they could continue to perform in this partnership. And we really didn't like the idea of that being an overhang on our stock. And so they, along with the bank and us placed all those shares. So those are all gone. They got liquid. And presumably, that enables the stock to behave more normally.

So we have 4 minutes left here on the clock. What would you like to talk about that we have not talked about?

Well, boy, we -- it's hard for us to talk about this company in 40 minutes because we have so many things going as I mentioned, we're going to hit our 20 in '25 goal of having 20 individual drug candidates at market or in clinical trials by the end of '25. So there's a lot there. Now our model is based on a combination of partnering and wholly-owned assets. And so of course, a huge, huge chunk of those 20, we will not commercialize ourselves, but we'll commercialize in collaboration with partners. I think hitting that 20 in '25 milestone is an important thing from a value standpoint for us. But we have a ton of things going on between now and say, 6 or 9 months from now. And basically chronological order, unless I forget something, I think it's as follows. We will have -- we will file the CTA for MAPT, our Alzheimer's CNS drug. I think that's important. We will file the CTA for our dimer, the PCSK9, APOC3 dimer soon thereafter, I think that's important. We'll have our PDUFA date in November, which, of course, is critically important to change the tenor of this company and make us a commercial company. We will have some obesity data by the end of the year. We didn't talk about Inhibin E or ALK 7. These are our first 2 obesity candidates and Inhibin E is hepatocyte-directed construct and ALK 7 is our first adipose-directed RNAi molecule. We will have not complete data set by any stretch, but we will have I think some interpretable data set from both of those assets by the end of this year. I think that's important. We'll probably have a bit more ALK 7 data come out in the first half of next year just because that's about 6 months behind Inhibin E, I think that's important. I think we'll start to have initial MAPT data sometime maybe in the middle of next year, so we can see how well that's performing. And as I mentioned, that I think reads on the whole CNS platform. I think that can create value if we do see good translation from animals to humans. And then the same thing with the dimer. I think we'll have LDL and triglyceride data sometime in the middle of next year, and I think that will tell us if we have something that really could go the distance. So just over the next 6 or 9 months, I think we have an awful lot of things that will monitor our growth.

Looks like things are going to be very busy for you. Thank you so much for coming in to our conference. And of course, look forward to chatting again.

You're welcome. Thanks very much.