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

Sure. So we had -- as you know, there is a time when we were thinking about plozasiran for that market as well. Right now, it's a 2-step drug for us. Step 1 is FCS, step 2 is SHTG. There was a time when we were thinking about a third step and then stepping into this mixed hyperlipidemia market. That does not make too much sense to us at this point. I think we keep plozasiran as a pure-play pancreatitis drug full stop. We are developing the dimer for addressing the mixed hyperlipidemia market. We're really excited about that. We think there could be 20 million or so people in the United States that would fall into that category who have never been prospectively studied. And the concept is stunning, right, that if we can knock down both PCSK9 and APOC3, as we've shown in NHP studies, we'll see if it translates into humans. We've had good luck with translation in the past, but let's see how that goes. But if we can reduce LDL-C and triglycerides in these same patients who have elevated triglycerides and elevated LDL, we think it's a very powerful tool for these patients.

And does anyone else have a dimer? I mean it seems a very interesting concept.

It's an interesting concept. We -- I believe that we will be the first ones with a dimer in the clinic, and I expect that to be this year. It's not -- this has taken us some innovation, right? It's not as simple as clipping 2 RNAi molecules together. There is different chemistry. There's a lot that has gone into this. So we're really looking forward to seeing how this looks. As I mentioned, we will have LDL and triglyceride data in 2026. And I think that's going to tell us, is the stoichiometry working for us? Are we getting enough knockdown of both PCSK9 and APOC3 to have something. But I think we'll know that next year. And then I think we can move relatively quickly into a cardiovascular outcomes trial.

Right. But I mean, your translation from NHP to humans has historically been very good.

It's been very good, yes.

So you saw the same signal for the dimer as well?

We did, yes. Yes.

Okay. Got it. Maybe moving on to the obesity portfolio. You have 2 assets in the clinic. So maybe just walk us through why 2 targets, the rationale there?

Sure. So these 2 targets, INHBE and ALK7 are opposite ends of the same pathway, right? This Activin pathway. ALK7 targets adipose tissue. This is our first time in the clinic. I think the first time anybody in the clinic, frankly, to bring RNAi drug directed at adipose. And we've seen good data in animal studies with ALK7. In fact, we've seen good weight loss. We've seen good high-quality weight loss. And so we're excited about that. And it's a very durable drug. That could be dosed potentially once every 6 months or less frequently. So we're excited about that. INHBE is, again, the proximal side of that pathway. And we are interested in that, and the data also -- the animal data were quite good there as well. And that's the hepatocyte-directed construct. We know we're good at knocking down hepatocyte gene targets. So for us, it was belt and suspenders. ALK7 in animals was more potent. I don't know if that's going to translate to humans, but in animals, it was. And so it made sense to bring both into Phase I. And let's do a bake-off. Presumably, one will come out, one will look better, and we will take one of those into Phase II and beyond. But I suppose it's possible that they both look good for different reasons, and we may develop both. My expectation is that we will collect these data this year. And then in '26, we'll be doing Phase II studies in just one of those.

Okay. Got it. And so maybe like where will these targets fit in relative to the semaglutide, tirzepatide and could be a monotherapy option as well? Or do you see it as more like a combination play?

Yes. It's -- look, there's a lot of white space in this field. Obesity is obviously a very large market, and it's a bit diverse. And so let's see what these data look like. In the animal studies, what we saw was good weight loss as a monotherapy, but more importantly, high-quality weight loss. We saw a sparing of muscle. We saw a loss of visceral fat, and this wasn't due to chloric restriction. These animals were eating the same amount of food as control animals, but were still losing weight. They're metabolizing fat. That's a very attractive profile. So it is possible this could be used as a monotherapy. But I'm frankly a bit more excited about potentially using it in combination with one of the GLP-1s either, for instance, using it in combination with the subtherapeutic dose of tirzepatide to maybe lower the -- or eliminate the sarcopenia issues and the GI issues, but still see good weight loss. And also, I like the idea of using this for maintenance therapy. We know that, that's a real opportunity. And so it could be that the patients lose a lot of weight with existing therapies, go off those and then go on either INHBE or ALK7 as a maintenance therapy. So we'll see where that goes. Our Phase I studies will tell us a lot. And I think we'll -- this time next year, we'll know a lot better about how these could fit in.

Right. And so the update that you'll have on the clinical trial, INHBE will come later this year?

Yes. Yes. We'll have an incomplete data set for INHBE by the end of this year. We will have an even more incomplete data set with ALK7 by the end of the year. But my hope is that we have data that is interpretable and so we can have some idea how these are working and if they're working. And then probably in the first half of '26, we'll have a bit more ALK7 data because, as I said, that's about 6 months behind INHBE.

Okay. And so one of your competitors, WAVE also has an readout, INHBE readout. Anything that you would hope to see there as it relates to your approach?

No. We're really focused on how our data look. We'll pay attention to other modalities and drugs as well. But we're -- it's hard for me to imagine being overly influenced by whatever data they have.

Okay. And longer-term for these obesity assets because these are like large markets, more big pharma play. So -- and you've done -- historically done partnerships across multiple assets for your pipeline as well. So what's the longer-term strategy here in obesity? Is partnership something that you could explore early on? Or you want to explore this in like a Phase II trial and maybe take it a little bit further along?

Yes. So let's be clear. Our model has always been a combination of partnering and wholly owned assets. In order to create real value, long-term value, we need to have wholly owned assets that we are commercializing ourselves, plozasiran will be the first one. And that will continue to be the case. But we also have this extraordinarily productive discovery engine that is capable of spinning out more drugs than we could ever commercialize. I continue to be confident that going forward, we will bring 3 to 4 new drug candidates in the clinic every single year. And so they're always be partnering here. Now with obesity, let's just see how that plays out. It's easy to say that a company our size is not really able to do these large and expensive obesity studies. But right now, these are fairly cheap studies. And so let's see what kind of company we look like 2 years from now when those studies could be expensive and broad. We could be a different looking company with different access to capital and plozasiran will be launched by then with different revenue than we have now. And so let's see what that looks like. We are in no hurry to partner these. In fact, they have been -- to date, at least, these have been off limits for partnering just because we think there's too much near to midterm value to part with them at this point. Let's see what the data look like and then we can make decisions going forward.

Right. And on BD, you announced a pretty good deal with Novartis on SNCA, $200 million upfront for a preclinical asset. Strong -- really strong upfront. So like what was attractive about that asset specifically?

Yes. It was a great deal. We look forward to working with Novartis. They are the right company to partner alpha-synuclein. We are convinced of that. They're excited about it, and we are excited to work with them. Look, we may have something that is breathtaking in CNS. We have this platform that enables us to administer via subcu injection that gets into the brain and importantly, to deep brain regions. Let's see if that translates from animals to humans. Should it do that, then this is a disruptive technology, absolutely. And so I don't want to speak for Novartis, but I think what they saw was that potential. There's an awful lot -- as they say in Billiards, there's an awful lot of green between the ball and the pocket here. And so let's see if this translates. We haven't been in humans with this platform at all yet. But should it translate, it's potentially very powerful tool, I think.

And so maybe just talk about your broader CNS portfolio as well. MAPT is moving into the clinic. Where will that be tested? And is it like something similar in terms of the technology that you have at SNCA?

Yes, I appreciate that. Yes, it's the same delivery technology. It's the same delivery platform we call the BBB platform, the blood-brain barrier platform. So MAPT will be the first against the targeted tau for Alzheimer's as well as other tauopathies. I would expect that -- I would expect us to file CTA for that over the next month or so. And so that will be the first one in the clinic, and that will be the first one where we will have some knockdown data, I think, in 2026. The next one will be ARO-HTT, that's against Huntington's. That will be by the end of this year, we'll file a CTA. That's partnered with Sarepta. And then the alpha-synuclein drug candidate should be -- we should be filing a CTA in the first quarter of 2026 for -- with Novartis. And then we have a whole host of potential drug candidates underneath that. And so I would stay tuned. I would expect additional neuro assets in the clinic in 2026.

Okay. And on the cadence of partnership, obviously, we saw this deal this week. But going forward, what could be the trend there?

Yes. Look, this is a big part of our model, as I mentioned. And so we will continue to partner. Should you expect to see any new partnerships in the very near term, probably not, particularly discovery-based partnerships. We need to make sure we probably want to take a bit of a breath on discovery partnerships just to make sure that we can serve Novartis, we can serve Sarepta and we can serve ourselves. But maybe in 2026, we could think about additional discovery partnerships. Now there's other deals we can do in the meantime, just not discovery. We -- as I mentioned, we could consider some type of ex U.S. partnership for plozasiran. We could consider some type of ex U.S. partnership with other assets. And so that's certainly on the table.

Right. And I mean you have a lot of clinical stage assets that we haven't talked about. Obviously, pulmonary used to be very important as well. I think you're looking for a partnership there as well, PNPLA3 in NASH and some other host of other assets. So like any specific categories where you feel that there is more opportunity to partner out?

So I would view it the other way. So we are -- we like the idea of building out our development infrastructure and commercial infrastructure in the cardiometabolic space broadly. And so that would include obesity, that would include cardiovascular, that would include plozasiran, zodasiran, the dimer, et cetera. I like the idea of continuing to hold on to assets in that area. And then there will be these noncore assets. We'll see where pulmonary goes. I still like the idea of building out pulmonary expertise at some point. And so we'll see where that goes with the current assets and the additional ones.

Right. And maybe anything else on the early-stage pipeline that we haven't talked about that you guys are super excited internally?

I think we did it. We're really excited to see what MAPT looks like. That, like obesity has been off limits from partnering. We just want to see how that -- we want to turn that card over. We want to see how that -- how the platform works. We want to see how that asset works. It's a well-validated target. There should be some data from competitors out next year on that target that's administered via an intrathecal injection. What's important about this, the BBB platform is certainly helpful from a convenience standpoint rather than having a lumbar puncture that could be a subcu injection. But more importantly, what we have seen is that we can get into deep brain regions and things like alpha-synuclein and Huntington's and MAPT for Alzheimer's, it really requires that deep brain region access. And so we'll see what some of these data look like later in 2026 with respect to the intrathecal injection for MAPT. But I think that could be a good harbinger for that asset class.

And lastly, with the cash in hand, where does it take you in terms of the runway?

Sure. So we said publicly that we've got -- before the Novartis deal that we've got enough cash to get us into 2028. And that's assuming current cash as well as expected inflows from existing deals, existing milestone payments. So we feel good about where we are there. My expectation is that -- my strong expectation is that there will be more business development between now and 2028 to continue to move this forward.

Okay. Great. That's all the time we have today. Thank you, Chris, for joining us, and thank you to the audience for listening in.

It's a pleasure. Thank you.