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

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. [Operator Instructions] I will now hand the conference call over to Vince Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, Andrew. Good afternoon, and thank you for joining us today to discuss Arrowhead's results for its 2025 fiscal year ended September 30, 2025. With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview; Bruce Given, Outgoing Chief Medical Scientist, who will provide an overview of the REDEMPLO FDA approval; Andy Davis, Senior Vice President and Head of the Global Cardiometabolic Franchise, 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 Apel, Chief Financial Officer, who will review the financials. Following management's prepared remarks, we will open up the call to questions. Before we begin, I would like to remind you that comments made during today's call contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact 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 Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Before we begin, I'd like to announce that this will be Bruce Given's final earnings call. He's been a valuable member of the Arrowhead team for almost 15 years. He will continue to help Arrowhead as a trusted adviser, but now that REDEMPLO has received its first FDA approval, he will be stepping back from day-to-day operational responsibilities. And hopefully, he can finally enjoy his time and retirement or in his re-retirement, which is probably more accurate. His contribution to Arrowhead's success both current and future have been critical, and we owe him a heartfelt thank you. Later in the call, you will hear from Bruce who will discuss the REDEMPLO FDA approval, which he came back to Arrowhead and out of retirement to help us get across the finish line. Bruce leaves us in a strong position with a very strong group of leaders across the organization. As you all know, James Hamilton has already assumed much of Bruce's prior responsibilities as Chief Medical Officer and Head of R&D. So thank you again, Bruce, for getting us to today. And thank you, James, for taking us into the next chapter for Arrowhead. Let's now turn to our business and what progress we've made during the recent period. This has been a very busy and enormously productive last few months. The most impactful change is the FDA approval of REDEMPLO. On November 18, we announced that the FDA approved REDEMPLO, indicated as an adjunct to diet to reduce triglycerides in adults with familial chylomicronemia syndrome or FCS. FCS is a severe, rare disease, with an estimated 6,500 people in the United States living with genetic or clinical FCS, characterized by triglyceride levels that can be 10x to 100x higher than normal, leading to a substantially higher risk of developing acute, recurrent, and potentially fatal pancreatitis. This is Arrowhead's first FDA-approved medicine, marking a major milestone for the company as it transitions into commercial-stage. REDEMPLO is the first and only FDA-approved siRNA medicine for people living with FCS and can be self-administered at home with a simple subcutaneous injection once every 3 months. REDEMPLO is the first and only FDA-approved medicine to be backed by adequate and well-controlled studies that include patients with genetically diagnosed and clinically diagnosed FCS. After many months of preparation, our commercial team was able to hit the ground running, and I'm happy to report that we have drug in channel a mere week after approval. We also launched Rely On REDEMPLO, a patient support program, providing support services and resources for patients at each stage of the treatment journey with REDEMPLO, including financial assistance options for eligible patients. In addition, we also announced the One-REDEMPLO pricing model that creates one consistent price across current and potential future indications. This is important. We are committed to sustainable innovation, and this requires a rational drug pricing according to the value of a medicine -- according to the value -- excuse me, according to the value a medicine offers to patients and health care systems. It also means that we will not ask different patients to pay different amounts for the same drug based solely on what disease they've been diagnosed with. REDEMPLO is a pancreatitis drug. And when we think about pricing, we look to those patient populations who are at greatest risk of acute TG-related pancreatitis. The patients we are serving now are also those at greatest risk of pancreatitis, people with FCS. This includes those with a defined set of mutations as well as those who share the same level of chylomicronemias and symptoms but with more heterogeneous and often less well-characterized genetic backgrounds, who we refer to as clinically defined or phenotypic FCS. The broader patient population with substantially increased risk of acute pancreatitis are those with persistent chylomicronemia, meaning fasting triglycerides greater than 880 milligrams per deciliter. We believe there are approximately 750,000 of these patients in the U.S. And while they often have less day-to-day symptoms than FCS patients, they are clearly at high risk for acute pancreatitis. The One-REDEMPLO pricing model has these patients in mind. And the $60,000 annual WACC price is designed to provide real value to patients and health care systems in this population. Our SHASTA-3 and SHASTA-4 Phase III studies are designed to support an sNDA in this population. And while those studies are ongoing and we are actively serving the FCS population, we will have time to help payers properly appreciate REDEMPLO's value and payers will have time to plan and budget for its possible eventual adoption, pending regulatory review and approval. Outside of REDEMPLO, we have also made good progress with 2 other pipeline programs in the cardiometabolic space, zodasiran and ARO-DIMER-PA. We'll start with zodasiran. During the recent period, we dosed the first subject in the YOSEMITE Phase III clinical trial of zodasiran, our clinical candidate being developed as a potential treatment for homozygous familial hypercholesterolemia or HoFH. HoFH is a rare, genetic condition that leads to severely elevated LDL-cholesterol and early onset cardiovascular disease. In YOSEMITE, approximately 60 subjects over the age of 12 will be randomized to receive 4 doses once every 3 months of 200 milligrams zodasiran or placebo. The primary endpoint is the percent change from baseline to month 12 in fasting LDL-C. The Phase II data in this patient population were encouraging, and we hope to have this study fully enrolled in 2026, complete the study in 2027 and if successful, enable an NDA filing by the end of 2027 and launch in 2028. The next new pipeline program is in cardiometabolic is ARO-DIMER-PA. During the last quarter, we filed a request for regulatory clearance to initiate a Phase I/II clinical trial of ARO-DIMER-PA being developed as potential treatment for atherosclerotic cardiovascular disease, or ASCVD, due to mixed hyperlipidemia in which both LDL-cholesterol and triglycerides are elevated. This is a very large population without proper treatment options. We believe there are approximately 20 million people in the U.S. with mixed hyperlipidemia. ARO-DIMER-PA is a dual-function RNAi therapeutic designed to silence expression of the PCSK9 and APOC3 genes in the liver that's designed to reduce both LDL, serum and TGs. This represents an important step forward for the RNA field as we believe it is the first clinical candidate to target 2 genes simultaneously in 1 molecule, and an important step forward for preventative cardiology, as both LDL and TGs have epidemiologic support as being important drivers of ASCVD risk. Both these programs fit well strategically with our growing commercial focus on the cardiometabolic space and on physicians to treat these patients. Also during the quarter, we expanded our clinical pipeline in CNS. We filed a CTA to initiate a Phase I/II clinical trial of ARO-MAPT as potential treatment for tauopathies, including Alzheimer's disease. ARO-MAPT is Arrowhead's first therapy to utilize a new proprietary delivery system which in preclinical studies has achieved blood-brain barrier penetration and deep knockdown of target genes across the CNS, including deep brain regions after subcutaneous injections. Nonclinical evaluations in monkeys with subcutaneous administration of ARO-MAPT, using clinically translatable doses, have shown better than 75% knockdown of tissue level MAPT mRNA in CNS. Importantly, monkey tissue level knockdown has translated into CSF tau protein reductions with duration of effect supportive of either monthly or quarterly subcutaneous dose readiness. This is an exciting program, and we look forward to initiating the study shortly. We also continue to make good progress on our first 2 obesity programs, ARO-INHBE and ARO-ALK7. Together, we have randomized 192 patients, all with a BMI greater than 30. Because we started ARO-INHBE earlier, it is about 2 quarters further into the Phase I study than ARO-ALK7. Our plan has been to share early data at the end of the year, but due to travel schedules and the holidays, this will push a couple of weeks later into the early part of January. We also expect to have more fulsome data toward the end of the first half of 2026. We also made important progress in business development. First, as we announced yesterday, we earned a $200 million milestone payment from Sarepta following drug safety committee review and subsequent authorization to dose escalate, and achievement of the second pre-specified patient enrollment target for ARO-DM1. This follows a $100 million milestone earned previously when Arrowhead reached the first of 2 pre-specified enrollment targets and subsequent authorization to dose escalate in a Phase I/II clinical study of ARO-DM1. This partnership continues to be productive, and we look forward to continued progress. In addition to progress on the Sarepta partnership, we announced a new global licensing collaboration agreement with Novartis for ARO-SNCA, Arrowhead's preclinical stage siRNA therapy against alpha-synuclein for the treatment of Parkinson's disease. The collaboration includes a limited number of additional targets outside our pipeline that will utilize Arrowhead's proprietary TRiM platform. Arrowhead received a $200 million upfront payment from Novartis and is also eligible to receive development, regulatory and sales milestone payments of up to $2 billion. Arrowhead is further eligible to receive tiered royalties on commercial sales up to low double digits. As I mentioned before, the recent approval of REDEMPLO is clearly the most important recent development that Arrowhead has been busy across the pipeline and in business development during the recent period. Business development and licensing is critical to our business model. So we are pleased to have these 2 significant deals closed this year. With that overview, I'd now like to turn the call over to Bruce Given. Bruce?

Thanks, Chris. Good afternoon, everyone. I'm happy to give my final update to Arrowhead shareholders at such an important time and with Arrowhead in such a position of strength. We have built something truly unique and powerful at Arrowhead. And with the first FDA approval behind us, it feels like the right time for me to step back and retire. So let's review some of the key parts of the recent FDA approval that we announced last week. Mostly, I'll discuss the label and information contained in the package insert. REDEMPLO is approved as an adjunct to diet to reduce triglycerides in adults with FCS. The recommended dose of REDEMPLO is 25 milligrams, and it could be self-administered at home by subcutaneous injection once every 3 months. REDEMPLO has no contraindications, warnings or precautions. The most common adverse reactions include hyperglycemia, headache, nausea and injection site reactions. The FDA submission was supported by clinical data from the Phase III PALISADE study in patients with both genetic FCS and those with the same clinical manifestations of disease but without solely a genetic cause, referred to as clinically diagnosed FCS. The blinded portion of the trial compared a year of therapy with plozasiran or placebo dosed every 3 months and tested 2 doses of plozasiran versus placebo. The primary endpoint was change in median triglycerides at month 10. There were also multiplicity-controlled secondary end points, all of which were statistically significant, including notably the occurrence of acute pancreatitis for which the 25- and 50-milligram doses were combined for comparison to placebo as called for in the analysis plan. Plozasiran achieved deep and durable reductions in median triglycerides as early as 1 month when the first measurement was taken. Overall, these reductions were around 80% from baseline and reductions largely maintain medium triglyceride levels below the usual guideline-directed threshold of 500 milligrams per deciliter throughout the year of treatment. 500 milligrams per deciliter is the recognized threshold where the risk of pancreatitis increases relative to a normal population. Importantly, patients with genetic FCS versus clinical FCS showed similar reductions from baseline. We see the clinical FCS population as having the same high unmet need as the genetic FCS group. And as such, we think it is crucial to have shown that both patient populations showed similar large reductions from baseline in triglycerides with REDEMPLO therapy. Plozasiran is also labeled as having reduced the rate of adjudicated pancreatitis events versus placebo, a very welcome finding for FCS patients and their caregivers and an important validation that reductions in triglycerides can, in fact, lead to reductions in pancreatitis. Let me close by saying that it's gratifying to have been a part of Arrowhead from the early days of our siRNA developments and part of the plozasiran program and its inception and again, over the last several years. And more importantly, it's exciting to hear the enthusiasm about this new medicine from patients, caregivers and physicians. I'd also like to wish all of you an enjoyable Thanksgiving holiday. I'll now turn the call over to Andy Davis. Andy?

Thank you, Bruce. It's been exactly 1 week since the commercial launch of REDEMPLO and the early feedback we've received from health care professionals, patient societies and payers has been very encouraging. We hear lots of enthusiasm about the differentiating attributes of REDEMPLO, which generally fall in 5 value pillars, some of which the team has touched on briefly already. First, the reduction in triglycerides is both significant and sustained. In PALISADE, REDEMPLO reduced triglycerides by an unprecedented minus 80% from baseline as early as month 1 and maintained this marked production with minimal variation throughout the full 12-month treatment period. This compared to a minus 17% reduction in the pooled placebo group. With REDEMPLO, patients now have real hope, many for the first time, of achieving triglyceride levels below guideline-directed risk thresholds associated with acute pancreatitis, such as 500 milligrams per deciliter. In PALISADE, 50% of patients at the 25-milligram dose achieved TG levels below 500 milligrams per deciliter, with approximately 75% achieving levels below 880 milligrams per deciliter at month 10. Second, the numerical incidence of acute pancreatitis in patients treated with REDEMPLO was lower compared with placebo. As we all know, this is the outcome of most importance for health care professionals, patients and payers. Third, REDEMPLO demonstrated favorable safety and tolerability. Importantly, the U.S. approved package insert contains no contraindications, no warnings and no precautions associated with the use of REDEMPLO. Fourth, REDEMPLO can be self-administered at home with a simple subcutaneous injection once every 3 months, just 4 injections per year. Physicians tell us this infrequent dosing schedule is likely to reduce the treatment burden on physicians, patients and caregivers. And fifth, early feedback on the One-REDEMPLO pricing model has been positive. As Chris highlighted, this model creates one consistent price $60,000 per patient per year across current and potential future indications such as severe hypertriglyceridemia. Again, this means that we will not ask different patients to pay different amounts for the same drug based solely on what disease they have. We have been in important discussions with payers and early signs for market access are encouraging. As a reminder, we believe there are an estimated 6,500 people in the U.S. living with genetic or clinical FCS and the prescriber base comprises specialist physicians such as lipidologists, endocrinologists, preventive cardiologists and internal medicine physicians with a focus on lipid disorders. These specialists often operate within multidisciplinary teams that may include gastroenterologists, advanced practice providers and specialized dietitians. At launch, we are targeting approximately 5,000 health care professionals through personal engagement. And finally, our Rely On REDEMPLO patient support program is operational and designed to make every step of the journey easier. This program is designed to assist patients and physicians with insurance verification, financial assistance options, a first dose starter kit and supplemental injection training. We launched just 1 week ago, but our care coordinators are already actively processing REDEMPLO start forms, conducting patient welcome calls and engaging payers to obtain approvals. And as Chris stated, we're happy to announce that we already have drug available in channel ahead of schedule. I will now turn the call over to James Hamilton to discuss the broader R&D portfolio. James?

Thank you, Andy. I'd like to give a quick review of the status of our late-stage Phase III studies and also describe the design of a couple of our early-stage programs. Let's start with the suite of Phase III studies of plozasiran designed to potentially support supplemental NDA filing to expand the label beyond genetic and clinical FCS. SHASTA-3 and SHASTA-4 are Phase III studies designed to compare reductions in triglycerides with 25 milligrams plozasiran compared with placebo over 12 months of treatment. Between the 2 studies, we enrolled approximately 750 patients. In addition, the MUIR-3 study enrolled approximately 1,400 patients. This study in patients with mixed hyperlipidemia is designed to supplement the safety database when we filed an sNDA for plozasiran in severe hypertriglyceridemia. We are not planning to seek approval in the mixed hyperlipidemia patient population. We completed enrollment in the global SHASTA-3 and SHASTA-4 as well as MUIR-3 Phase III clinical studies in June of 2025. We anticipate completing the primary portions of these studies in mid-2026, with top line data expected in the third quarter of '26. If successful, we plan to make submissions before the end of 2026 for regulatory review and potential approval. The SHTG program also features a study named SHASTA-5 to directly assess the ability of plozasiran to reduce the risk of acute pancreatitis as the primary endpoint in SHTG patients at high risk of acute pancreatitis. We are currently enrolling patients in that study. Of note, we will also be assessing pancreatitis risk reductions in SHASTA-3 and SHASTA-4 as a key secondary endpoint, but SHASTA-5 is the first event-driven study to assess acute pancreatitis as the primary endpoint. I'd also like to provide an update on our obesity programs, ARO-inhibin E and ARO-ALK7. Both of these programs target the known activin pathway that is involved in signaling to adipocytes to store fat. ARO-inhibin E inhibits one of the ligands in the pathway and ARO-ALK7 inhibits the receptor on the adipocyte that these ligands bind. So essentially, we are trying to reduce the message sent to store fat and the way the message is received at the adipocyte. ARO-inhibin E started enrolling patients in December 2024 and ARO-ALK7 initiated in May of 2025. Both programs are currently in Phase I/IIa first-in-human dose escalating studies to evaluate safety, tolerability, pharmacokinetics and pharmacodynamics. Both programs include Part 1 designed to assess single and multiple doses as monotherapy and Part 2 designed to assess multiple doses in combination with tirzepatide. As ARO-inhibin E started about 2 quarters earlier, we have more mature data in that study. The study is nearly fully enrolled, and we are on schedule and currently planning to share initial data from this program around the first week of 2026. This is a rather robust first-in-man study that's collecting multiple measures of drug activity and pathway activity, and we are eager to share initial findings. We were originally planning on sharing the first data around the end of the year, but due to the holidays and travel, the first week of January worked the best for all schedules. For ARO-ALK7, we intend to provide a brief snapshot of early safety and target engagement results from that study. Both targets have strong genetic validation and both programs have yielded promising results in preclinical studies. So it will be interesting to see similarities and differences in patient response in clinical trials. I will now turn the call over to Dan Apel.

Thank you, James, and good afternoon, everyone. I'll provide a brief outline of our financial results. As we reported today, our net loss for fiscal year 2025 was $2 million or loss of $0.01 per share, based on 133.8 million fully diluted weighted average shares outstanding. This near breakeven result compares with a net loss of approximately $599 million or loss of $5 per share, based on 119.8 million fully diluted weighted average shares outstanding in fiscal year 2024. Revenue for fiscal year 2025 totaled $829 million and was driven entirely by our license and collaboration agreements with Sarepta, Sanofi and GSK. Of the $829 million, roughly $697 million pertain to the Sarepta arrangement. Of that $697 million, $587 million relates to the ongoing recognition of initial Sarepta consideration, $94 million relates to the achievement of the first DM1 milestone and $16 million related to the reimbursement of your current collaboration program costs. Additionally, the license to Sanofi for Greater China rights to plozasiran contributed $130 million to our fiscal 2025 revenue. And lastly, to round things out, we recorded $2.6 million earlier in the year related to a milestone payment under the GSK-HBV agreement. Turning to expenses. Total operating expenses for fiscal year 2025 were approximately $731 million compared to $605 million for fiscal 2024, an increase of $126 million. The year-over-year increase was driven by $101 million of higher R&D expenses and $25 million of higher SG&A costs, both of which I will explain in brief. The key drivers of research and development spend included costs to run our clinical trials, our clinical manufacturing costs as well as expense expenses related to active programs in the preclinical stage. 2025 R&D costs were heavily impacted by Phase III clinical trials for plozasiran and SHTG. It's worth noting that in fiscal year 2025, nearly 2/3 of our clinical trial spend can be attributed to the late-stage development of plozasiran and SHTG. As we have mentioned, the SHTG registrational studies are now fully enrolled, and we expect data to read out next year. Accordingly, the majority of remaining Phase III registration of clinical trial costs are expected to occur over the next 12 months. Our SG&A costs increased by $25 million year-over-year, driven primarily by our preparations for the commercialization of REDEMPLO. All of us here at Arrowhead are enormously proud of the capabilities we have built to commercialize REDEMPLO, not only in our commercial function, but also across regulatory, supply chain, order to cash and indeed, across all of our enabling support functions. Turning now to cash flow. Net cash provided by operating activities during fiscal year 2025 was $180 million, compared with net cash used in operating activities of $463 million in the prior year for a net positive change year-over-year of $643 million. This increase in cash from operating activities was driven by cash received from licensing and collaboration agreements, partially offset by the aforementioned increase in R&D and SG&A costs. Turning to the balance sheet. Our cash and investments including the available-for-sale securities totaled $919 million as of September 30, 2025, compared to $681 million as of September 30, 2024. The increase in our cash and investments was primarily related to our licensing and collaboration agreement with Sarepta, Sanofi and GSK, partly offset by our ongoing cash burn. Our common shares outstanding as of the end of the quarter were 135.7 million, down 2.4 million from the prior quarter due mainly to the repurchase of shares from Sarepta. I use this opportunity to reiterate 2 developments that are subsequent to the fiscal year and meeting up to today, which were financially meaningful for Arrowhead and our balance sheet. Firstly, as Chris mentioned earlier on the call, we announced a licensing and collaboration agreement with Novartis for ARO-SNCA. Arrowhead's precritical stage siRNA program targeting alpha-synuclein for the treatment of synucleinopathies such as Parkinson's disease. Novartis will also be able to select a limited number of additional collaboration targets outside of Arrowhead's current pipeline to be developed using our proprietary TRiM platform. The closing occurred last month, and we have already received $200 million in the bank as an upfront payment. As a reminder, we also are going to receive up to $2 billion in future milestone payments from Novartis as well as royalties on commercial sales. Secondly, just yesterday, we announced, we earned our second development milestone under the Sarepta collaboration agreement ARO-DM1. As Chris mentioned, this triggered a $200 million obligation from Sarepta that will be recorded in the first quarter of fiscal 2026, and we expect to receive the cash in January of 2026. This is, of course, additional to the $100 million earned for the first DM1 milestone in fiscal quarter 4, 2025. Finally, we are not providing detailed financial guidance at this time for the coming fiscal year. Beyond reiterating that, while we view the launch of REDEMPLO as a truly transformational event for the company, we do not anticipate that the commercial sales of REDEMPLO will have a substantial impact on our financial statements in fiscal year 2026. We also believe our cash runway even in the absence of any further capital from new deals or other sources and all the while funding a broad ambitious set of commercial clinical programs to be sufficient to extend into fiscal year 2028. With that, I will now turn the call back to Chris.

Thanks, Dan. Arrowhead has been working to bring important medicines to patients in need for over 15 years. As Bruce mentioned, it's very gratifying to see REDEMPLO approved by the FDA and the overwhelmingly encouraging feedback we received from the FCS community. While REDEMPLO is just one part of a large pipeline that we've created to help potentially millions of patients in a diverse set of disease areas. We spent years building the TRiM platform to enable us to bring RNAi where it is needed. We are now able to address 7 different cell types and have current clinical programs in 5 of these. Further, we will meet our 2025 goal, whereby we will have 20 individual drugs candidates in clinical trials by the end of this year. Our partner has been helpful but judicious with approximately half of our clinical pipeline wholly owned and half partnered. We have late-stage studies ongoing, again, both independently and with partners that may potentially lead to multiple new commercial loans just over the next few years. In addition, we have a strong financial position that enables us to properly invest in our growth today and in the future. We believe we now have everything we need to be in the next class of large and ultimately profitable biotech companies. Thanks for joining us today, and I would now like to open the call to your questions. Operator?

[Operator Instructions] Our first question comes from the line of Luca Issi with RBC Capital Markets.

Bruce, congrats on your re-retirement, I should say. So all the best for the next chapter. And then maybe if I can stick with you. Can you just maybe talk about what's the plan to show a benefit in terms of acute pancreatitis for plozasiran? Are you confident in SHASTA-3 and 4 in Q3 2026 can actually hit acute pancreatitis? Or is the base case scenario, those 2 trials are maybe underpowered to show a benefit and you actually need SHASTA-5 to actually hit on acute pancreatitis, given obviously that population is enriched for history of acute pancreatitis. The only reason why I'm asking is it looks like you doubled the size of the end, I should say, in the SHASTA-5 trial according to ClinicalTrials.gov as of Monday last week. So again, any color there, much appreciated.

Sure, Luca. And thank you for your kind regards. SHASTA-3 and 4 were powered on the basis of triglyceride reduction, which is the primary endpoint. So we did not specifically power SHASTA-3 and 4 for pancreatitis. However, it was on our mind and as was also done in the core studies, there is the intent and by design, the capability, to pool both SHASTA-3 and 4 for evaluating versus placebo on reduction of pancreatitis. And of course, we only have 1 dose of plozasiran instead of 2 doses -- 2 different doses like we had, for instance, in the Phase II program. So there's, I would say, reasonably good power for seeing a difference in acute pancreatitis, but we're not dependent on it because we've designed SHASTA-5 specifically to obviously be able to have a primary endpoint of acute pancreatitis. We did change the design in SHASTA-5 recently to making a more generalizable population in patients with persistent chylomicronemia and a history of pancreatitis. The original design was a much more enriched population, but it would have actually been less representative than the newly designed trial. So it's not so much a matter that we've increased power so much as we broadened the power to the patient population to be more inclusive of the high-risk population in SHTG. So we certainly -- we oftentimes refer to it as belts-and-suspenders approach. There's obviously a decent chance that we will show statistical significance in the SHASTA-3 and 4 programs, but we're not entirely dependent on that because of SHASTA-5, which is a study, the first of its kind, specifically designed to demonstrate a benefit versus placebo in acute pancreatitis.

[Operator Instructions] Our next question comes from the line of Prakhar Agrawal with Cantor Fitzgerald.

Congrats on the quarter as well as the updates throughout the quarter. Maybe on the obesity side, I had a couple of questions. So on inhibin E for the update early next year, if you can just provide more details on how much data will be disclosed, especially on the MAD side. And how much follow-up will you have on inhibin E for both monotherapy and combo cohorts? And also the same question on ALK7, what cohorts will be disclosed and will there be any weight loss data at all from ALK7 early in the year?

Yes, sure. Prakhar, this is James. I can cover that. For inhibin E, it is a little bit ahead, as Chris mentioned, probably by a couple of quarters. So the study is nearly fully enrolled. We have a good amount of data in both the SAD and MAD healthy volunteer or obese healthy volunteer cohorts. So we'll have biomarker data, MRI data as well as safety in those cohorts. And then the combo cohorts are almost fully enrolled. I think we're waiting on a few more diabetic patients to enroll the highest dose combo cohorts, and that should have probably not through end of study but ample post-dose follow-up and both the diabetic and the nondiabetic cohorts from inhibin E. And then ALK7 will be a little bit more limited, focused mostly on monotherapy, safety and knockdown data -- knockdown of target for that study. And keep in mind here that we want to present data that are interpretable, and we're not going to have all cohorts -- we're not going to have all patients -- all patient data in all cohorts even if they're fully enrolled, we don't get data in real time necessarily. And so you'll have probably 2 bites of the apple, maybe 3 bites, but certainly 2 bites of the apple. Our goal here in this first log of data is to give you an idea about how these are going and then the fuller store should come out once we have the more fulsome data set later in '26.

Our next question comes from the line of Maury Raycroft with Jefferies.

Congrats on the progress and best wishes, Bruce in retirement. I was going to ask a follow-up to Luca's question earlier. We're expecting to see the patient baseline profile for your SHTG pivotals next week. What are your estimates on AP events accrual based on your patient's baseline characteristics? And also your change in plans to broaden AP adjudication criteria.

Maury, I think it's a little bit hard to answer the question just because we have adapted our protocols now to go ahead and adopt the modified Atlanta criteria since those have been accepted by both FDA and EMA and here in the U.S. at least payers, and this is really going to be our first experience with using that particular scale, which makes it a little hard to estimate exactly how many events we will have. So it's hard to say. What you will see next week is you will see the percentage of patients that had a history of pancreatitis that were enrolled in the study. And based on that, that, I think you'll see that there's a good chance that we'll have the necessary number of events. But I'm a little bit uncomfortable trying to give any real predictions when we're using a scale that we haven't used before.

Our next question comes from the line of Jason Gerberry with Bank of America.

This is Dina on for Jason. Congrats on all the progress this quarter. Just a couple from us. I guess first on your ARO-MAPT program. Can you maybe just discuss which aspects of the drug differentiates from J&J's recently failed anti-tau antibody and what kind of still gives you the confidence in the target after the failure? And then just kind of based on your current cash position and the progress that you've made on these partners -- partnership milestone triggers, do you have any maybe updates on your visibility on launching a CVOT study? Is that more tied to kind of seeing how the FCS and potential SHTG launches are progressing? And then can you just remind us like any potential milestone triggers from the Sarepta programs that you're expecting in 2026?

All right. I count 3 questions. James, do want to take the first one?

Sure. Yes, I'll take the first one on the MAPT program. So the J&J antibody, the monoclonal as well as other monoclonal are IV-administrated monoclonal antibodies, probably a small fraction of those molecules across the blood-brain barrier and then are primarily focused on binding to extracellular tau, so Tau been released for damaged cells or has been secreted and that can propagate and find it to tau outside of the cell. Our approach is very different. We use a targeting ligand to facilitate delivery of the siRNA across the blood-brain barrier into the neuron and silence the expression of tau. So we're sort of turning off the faucet for all of the expression and preventing the neurofibrillary tangles to form in the first place. So we should get that, over time, be able to reduce the level of intracellular tau and extracellular tau where the monoclonal antibodies are really just able to get the extracellular panel. So that's the key differentiator.

And on the other 2 questions, I'll answer the last one first, the Sarepta milestone. So we are eligible to receive the first of five $50 million annuities in February. So we expect that over the next several months. That's correct, February, right, Dan?

Yes.

On the visibility on the CVOT. So that CVOT, you know, is for the dimer. That's a big opportunity for us. And so we are moving as quickly as we can to that CVOT. We'll have a good idea, I think the summer if we have a drug. We'll know PCSK9 knockdown. We'll know APOC3 knockdown, we'll know LDL decreases, we'll know triglycerides. So given what those data look like, I think, again, as early as this summer, I think we'll know if we have something that really could be. An important treatment is mixed hyperlipidemia patients. Should that be successful, should that look good, we are not waiting on anything to start those studies other than finishing this Phase I/II. Our plan is to be able to roll directly into pivotal studies after the Phase I/II studies. Again, should they all go well and there's nothing gating there other than the data looking good. We also are hoping to have parallel pivotal studies, one that will be a CVOT and one that we'll be looking at simply lowering LDL over the course of the year. As you know, that has been an approval endpoint in the past for PCSK9 inhibitors and we think that could be a good way to get to market very quickly and frankly, help us to pay for the CVOT. So that's our plan now. We'll have a much better idea about how quickly we can move in the summertime once we start to see those data. We're really looking forward to seeing those data.

Your next question comes from the line of Edward Tenthoff with Piper Sandler.

Bruce, wishing you all the best. And James, wishing you all the best of luck. Really is a super exciting time for the company. I wanted to get a sense just with respect to upcoming data readouts next year. Specifically asking, do you think you'll have your first look from the ARO-DIMER-PA next year? And what other data sets beyond the obesity data in the first half, should we be thinking about?

Thanks, Edward. We have a bunch of, I think, potentially very interesting data readouts throughout 2026. As you mentioned, obesity will be the first. As I mentioned, we should have 2 bites on an apple or thereabouts. We'll have our first early data set in the very first part of January. And then as the data mature in both those programs, stay towards the end of the second quarter, something around then, we'll have a much larger data set. We think those are important. In the summertime, we expect to have dimer data. We think those are extraordinarily important. The idea that we might have a drug candidate that can simultaneously lower LDL and triglycerides to treat the 20 million or so people in the United States with mixed hyperlipidemia is a very exciting opportunity. And again, I think we'll know if we have something that could really fit there in a summertime. Also in the summertime, I think we'll have our first bit of ARO-MAPT data. We'll be looking for tau levels in the CSF that also would be extraordinarily exciting. We can be at once sitting on one of the most exciting potential Alzheimer's drugs in the clinic. And hopefully, we'll be derisking the entire blood barrier platform that can enable us to treat a variety of CNS diseases. And so that's an important readout. Of course, also in the third quarter or so, we expect to have the readout for SHASTA-3 and 4 that are designed to enable our sNDA by the end of the year. And then, of course, at the end of the year, we expect to have -- expect to file our sNDA. So look, there will be other things happening during the year, but those to me, are like the primary ones and of course will be in the market. You can be in the market and we will be really looking forward to seeing how the adoption curve that REDEMPLO is going to have.

Any update on ARO-RAGE, just to be comprehensive?

Yes. Thank you. Yes. So as you noted, the data so far for ARO-RAGE have been enticing. We've seen that we can knockdown RAGE deeply, both looking at circulating biomarkers as well as tau. That's super interesting. Where we've struggled is looking for biomarkers to show potential clinical benefit. And so rather than running directly into a large asthma or COPD Phase II, we were hoping to have a baby step to see some evidence of that. And so we have started a challenge study I don't expect to have data in '26, maybe at the very end of '26, but we've just started that. And so my hope is that, that will show us that knocking down RAGE is an important thing. Look, it's been an untroubled target for some time and now we can drug it. So now let's see what that does for us. I think at the end of that, we can then ask ourselves, do we want to build out a pulmonary franchise or do we want to partner that? And I think a positive challenge study readout would allow us to partner that in attractive -- under attractive terms.

And our next question comes from the line of Mani Foroohar with Leerink Partners.

Congrats on the progress on the first product launch and best wishes also to Bruce on his re-retirement. Though something tells me you're going to pop up again soon. I don't think you're done with us. I propose the question, can I -- I want to follow up on sort of broader pipeline. I know Tent touched on new Arrowhead study, et cetera. How do we think about ARO-DIMER application in terms of pursuing CVOT and the right target for that technology? And where are the right places for you to put that to work now that you've got sort of a very different place in terms of your balance sheet?

Actually, Bruce, do you want to take where that can fit?

Yes, I'm happy to take that. Obviously, we're excited about plozasiran and APOC3 inhibition generally for patients with severe hypertriglyceridemia, that's been essentially very, very poorly treated population for a long time. LDL, the LDL side of the equation, on the other hand, has been really a different story. And other than HoFH, there is a pretty good number of tools in the tool chest for dealing with LDL, the patients on that LDL side of the equation, especially patients with heterozygous familial hypercholesterolemia, which is a pretty good size population for instance. But the 20-some million patients in the U.S. alone that have mixed hyperlipidemia has been an interesting population. We could address the LDL part. We've done really a terrible job historically of being able to address the triglyceride piece of that and the post-hoc analysis that have been done of CVOT has shown that for the same LDL reduction, you can really rank order the risk that patients have by how high their triglycerides are? And of course, the Mendelian randomization data has also said that triglycerides are independent predictor of events and mortality in that mixed hyperlipidemia population, it is huge. It's a very good population. So there's never really been a very good way of addressing both sides of the problem in mixed hyperlipidemia, both the LDL and the triglycerides. And here, we're talking about a drug that could potentially do it with a single, say, quarterly injection, get both their LDL and their triglycerides probably on top of the statin. I think you're going to always have a statin there at the patients can tolerated. But you could have a daily staff at a quarterly dimer injection and potentially treat that 20 million patients to low risk levels of LDL and triglycerides that would be quite an amazing opportunity, I think, from a marketing perspective compared to what you can do today, which is you can probably get the LDL taken care of today, but you probably can't do much at all worthwhile in the triglycerides. So this is what makes this to us such an interesting proposition.

Yes. As you know, Mani, what we used to -- our former strategy was to make plozasiran and REDEMPLO drug a 3-step drug. Step 1 is FCS, step 2 is SHTG, step 3 after CVOT would be this -- would be part of a treatment in mixed hyperlipidemia. Once we were able to perfect at least in animals, the dimer platform, it didn't make sense any longer. We like the idea of keeping REDEMPLO as a pure-play pancreatitis drug. And now I think we'll have a tool to more completely treat that mixed hyperlipidemia population should this dimer translate well from animals to humans.

That's helpful. And as a follow-up, when you think about potential dimer applications, et cetera, how are you thinking about the data next year from Horizon and potentially applications of combining what hopefully will be a validated Lp(a) target with other approaches to risk elevating elements of a lipid profile.

Yes, sure. So of course, our siRNA targeting Lp(a) is partnering with Amgen. So we would have to work with them on any kind of dimer applications. But there are other applications beyond, of course, the PCSK9, APOC3. I mean we're looking at other dimers in the CV space, both targeting hepatocytes and extrahepatic cell types. So this is probably not the only dimer that you'll see out of Arrowhead.

And our next question comes from the line of Patrick Trucchio with H.C. Wainwright.

Congrats on the progress. I have a few follow-up questions. Just the first is just regarding REDEMPLO. I'm wondering if the FDA has provided clarity on what level of pancreatitis evidence will be required for a future pancreatitis risk reduction claim in the -- particularly in the high-risk SHTG patient population? And separately, I'm wondering if there's been discussions around potential pediatric pathway just given FCS presents in childhood. And then just a follow-up on the MAPT program. I'm wondering what level of CSF tau knockdown or biomarker response would you consider clear clinical proof of concept in humans, just given I think you have greater than 75% knockdown in the NHP data?

Bruce, why don't you take the first and then let me take that two.

So the first was...

What level of AP that we think the FDA is required to have it on the label?

Yes. We had that discussion with the FDA specifically what it would take to get a claim per se. I'm not sure we really felt that was necessary. I mean I think physicians have no real question about the relationship of triglycerides to pancreatitis risk, especially now that it's been proven. And payers haven't seemed to be concerned about that either at least in the U.S. So I'm not sure what the value of a claim would be. It's -- and of course, at this point, it's untested whether the agency would consider providing that claim. I don't know that we've really thought of it as being necessary, Patrick, to be clear.

In FCS. Patrick, is your question on SHTG or FCS?

It was around actually the high-risk SHTG patient population.

Yes. But the answer is the same, I think. We at least have not approached asking them when they give a claim, what it would take to get that claim. It's very possible that what they would require is something like SHASTA-5. But the SHASTA-5 was really designed primarily on the possibility that the payers in countries outside the U.S. might require an actual dedicated outcome study. So it was more payer focused than it was regulatory focused. And we really were not committed one way or the other about whether it be submitted to regulators asking for a label change. We were more interested really in protecting the possibility that there would be payers outside of the U.S. that would require a specific proof of concept in a dedicated study. So we really haven't raised this with regulators anywhere on a global basis at this point.

Do you want to address ped's question?

The ped's question, we absolutely plan to do pediatric work in FCS. We have those plans in place. We have a pediatric plan in Europe and in U.S. The only thing pulling us back right now is just that we have to have a formulation so that we can use for weight-based dosing. And that's just -- we're in the process of getting that formulation put together, so that we can go ahead and do those studies. But we're absolutely planning on doing that.

James, do you want to talk about MAPT knockdown?

Yes, sure. In terms of what we're looking for -- I mean based on the cynos data, as you mentioned, at the tissue level, we were seeing 75% plus reductions and similar reductions in the CSF in monkeys. I mean we typically translate well from cynos into the clinic, into the humans. And I think based on some of the other data out there with the intrathecally administered ASO and they were able to achieve CSF reductions of about 50% to 60%, and those CSF reductions corresponded to improvements in tauopathy signals. So I think that's probably where we're aiming for in our clinical study is at least 50% to 60% reduction in the CSF. That's what others have shown, and that seems to have translated into a meaningful tauopath signal.

Your next question comes from the line of Andrea Newkirk with Goldman Sachs.

Maybe one more on the REDEMPLO launch, recognize it's only been about a week since the approval, but now that you have launched, just curious if you'd be willing to comment on your expectations for the cadence of the initial launch here in FCS. And how you think it may be similar or different from that of the TRYNGOLZA launch particularly in the context of the significant pricing differential that you have.

Yes, happy to take that, Andrea. This is Andy. So we do have very high ambitions for the REDEMPLO launch expected to be best in class. And as you know, there are a number of reasons why we believe that to be the case, largely around the attributes of REDEMPLO that we do believe make it a special molecule in this category. We talked about obviously the significant and sustained TG reduction. We've talked about the reduced incidence of acute pancreatitis. But even more importantly, we hear a lot of positive feedback around the safety and tolerability profile, so no contraindications, no warnings and no precautions. And we do have a lot of physicians and patients who are enthusiastic about the once every 3-month dosing regimen. So with those product attributes, we have very high ambitions for the launch of REDEMPLO in FCS specifically.

And our next question comes from the line of Mike Ulz with Morgan Stanley.

Congratulations on all the progress as well. Maybe just a follow-up on the SHASTA-3 and 4 studies. You mentioned adopting the modified Atlanta criteria. Just curious now that you've seen some more detail around the core studies, are you considering any sort of adjustments or fine-tuning to your studies going forward?

Other than adapting the Atlantic criteria, I think we're feeling pretty good about the design and it was negotiated with the FDA. I don't think we saw anything in core that would cause us to see to change anything else, nothing that comes to mind. James, would you see it any differently? Look closely at this too?

Yes, I agree. It didn't inspire any changes in the protocol. So...

And our next question comes from the line of Madison El-Saadi with B. Riley.

I wanted to ask about your neuromuscular franchise. Just given your integrin targeted delivery mechanism, which one could assume maybe safer and perhaps more targeted on TfR -mediated approach. Should we expect DMPK knockdown and splice correction data comparable to kind of the peer benchmark levels? And relatedly, wondering which dose do you anticipate observing really optimal biomarker activity. I believe previously, you said that even a low dose may be active.

Sure. I think most of that will defer to Sarepta. I probably can't comment on the dose where we'd expect to see maximum knockdown. We don't know that yet. So I wouldn't want to venture a guess there yet. In terms of the knockdown, I mean I think that is probably a goal is to have something that looks -- be similar to or equivalent to what others have shown for DMPK knockdown and splice correction with this platform.

Got it. And then if I may, are there any milestones associated with hitting a certain threshold? Or are there milestones largely related to the regulatory progression?

Yes. Based on regulatory and commercial, there are no sort of activity-based or PD-based milestones.

And our last question comes from the line of Joseph Thome with TD Cowen.

Just another quick one on the dimer. Just curious, based on your work in SHTG, what proportion of patients are already on an anti-PCSK9 treatment? Is this an undertreated population on both sides? And then can you give us an indication in terms of the triglyceride and LDL cutoffs that you're looking at in patients enrolled into the early dimer study?

Sure. Yes. I think based on the work that we've done, I mean a lot of those patients may be on a statin, probably less so on fibrates and a very few of them on PCSK9 inhibitors is actually not that commonly used in that population. In terms of the cutoffs in the inclusion criteria. So we allow patients in that study with mixed hyperlipidemia with triglycerides up to 880. So there's a pretty high threshold and they have to have either a non-HDL of 100 or an LDL greater than 70 to get into the study. So they have to have through mixed hyperlipidemia, both high triglycerides and high -- non-HDL or LDL cholesterol.

Thank you. I'll now hand the call back over to President and CEO, Chris Anzalone, for any closing remarks.

Thanks very much for joining us today. Again, thank you to Bruce for all he has brought to the company. He is re-retiring. He is not going to be gone, however, and I do trust that he will still be around and helping us out going forward. So again, thanks to Bruce, and thanks to James for continued and ongoing leadership. Again, thank you all for joining us today, and I hope you have a pleasant Thanksgiving holiday.

Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.