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

All right. Good day, everyone. Welcome to Day 2 of Canada's Global Healthcare Conference. For the next session, we're very excited to host to Arrowhead Pharmaceuticals. Representing Arrowhead, we have Daniel Apel, CFO; and Andy Davis, cardiovascular metabolic franchise lead. So gentlemen, thank you so much for joining us today. .

Thank you for having us.

Maybe we could start off with some of the hot topics and -- you had a presentation at ESC for plozaseran in SHTG. What has been the physician feedback since the ESC presentation? And what attributes of the profile you feel are really aligning well with the physician community.

Yes. Thanks, Brica. Yes, we did report out our Shasta 3 and Chasta-4 clinical study results at the European Society of Cardiology. And the physician feedback has been incredibly positive. This is actually good timing. We conducted market research here in New York just last week with physicians getting their sense of the data. And similarly, this week, we're conducting market research in Los Angeles. So we have received lots of physician feedback. And I would say it circles generally around 3 key areas: efficacy, safety and dosing -- from an efficacy perspective, the attributes they tend to focus on the most was the potency around the TG reduction, so up to 81% triglyceride reduction. The reduction in acute pancreatitis 78% reduction in acute pancreatitis, which was statistically significant across the pool of analysis. And then importantly, they talk about more than 90% of subjects in the treatment arm getting below 500 milligrams per deciliter, which is a guideline directed threshold for acute pancreatitis risk. So those are kind of the data points that they tend to focus on as it relates to efficacy. And from a safety perspective, they tend to circle on a number of differentiating aspects, in particular, the fact that with plozasterin in those studies, we saw no meaningful increases in liver enzymes, no statistically significant difference in hepatic fat fraction, no thrombocytopenia, reduction in platelets and no hypersensitivity reactions, which they view as differentiating within the class. So that -- those have been some compelling messages that we've heard back from physicians through this research -- and then lastly, the every 3-month dosing does present some unique opportunities for patient benefit as far as only 4 injections a year and the potential for improved adherence over time as well.

Okay. Got it. Yes. I mean we thought some of the safety data was also differentiated. But maybe on the liver fat, I mean after they see there's still some questions whether this matters or not in terms of the real world for olezarsen, you see an increase in liver fat, but it's transient and it decreases. We've seen lower liver fat, but it could also be a differences in sample size of the patients that underwent I guess all things being considered, again, is that meaningful enough of a differentiator for you?

Yes. I mean, I think we can talk about what we saw or didn't see in Chester 3, Shast4,and it's -- we didn't see an increase in hepatic fat fraction olicarsen did. I think it still remains to be seen how that will play out over time. I mean, the open-label extension data was presented out to 24 months, and there was still elevated hepatic fat in the open-label extension. And so we'll see how that plays out from a Losartan perspective, but we can at least confidently say from a SHASTA 3 SHASTA-4. In our MRI PDFF substudy, we did not see a statistically significant difference in hepatic fat fraction -- there is some potential analog here as well around the difference between ASOs and sRNAs as it relates to hepatic fat fraction. You may recall from previous minors data related to ANGPTL3, that being an ASO, there was an increase in hepatic fat fraction that led to the discontinuation of that therapy. We similarly have an siRNA, 20-inch PTL3 Darin and to date, we haven't seen an increase in hepatic fat fraction. And so it's possible this is attributed to the mode of action between ASOs and siRNAs. I think it still remains uncertain at this point. But -- the one thing we can say confidently is coming out of SHASTA-3, SHASTA-4 in that sub study, which was powered for safety, there was no difference.

Okay. And some of the other attributes like injection site reactions, hypersensitivity, I mean you already have some of that experience in the FCS setting, right, because the drug is approved. So I guess is that again -- does that come up a lot in terms of the FCS population, which should have implications for SHTG as well as we think about the 2 drugs?

So when you say it does it come up a lot, meaning does it come up in relation to lizards resulting in switches answering because we don't have sensitivity Yes. I mean there are -- so we see about 10% of prescriptions presently are olezarsen switches. So the vast majority of our APOC3 treatment naive, and that's our focus. And there are a variety of reasons for the switches, some of which are attributed to tolerability and safety issues related to hypersensitivity or thrombocytopenia. So yes, the answer to your question is it has come up. But I would say our principal focus from a commercial strategy is on the APOC3 naive population that does make up the vast majority of prescriptions that we see.

Right. And 1 thing your competitor will flag is that the dosing flexibility for ovozarsen, 50-milligram and 80 milligrams. So the ability to down titrate to 50-milligram iter is patients have that flexibility, posasran, with just a flat dose. So I guess what are your thoughts on that?

Yes. So the reason -- the label for Trengolza is quite clear. The recommended starting dose is 50 milligrams. And only if you can tolerate 50 milligrams and you need additional TG lowering should you up-titrate to the 80-milligram dose. The reason that exists is because there was a dose-dependent increase in liver enzymes and hepatic fat fraction. That's not a flexibility argument. That's a mandate from the FDA on how you start the medicine and titrate the medicine. I would say from a pluzaserin perspective, we believe the story of simplicity. Single 25-milligram dose, no titration required, no need for liver enzyme monitoring. And so that story, that story of simplicity, we think is likely to be a more compelling message for both physicians and patients, and that's what we hear through market research as well.

Okay. Great. And maybe moving on to the launch prep and commercial aspects for -- what work are you doing right now to PREPA for the launch?

Yes. There's a lot of work happening to prep for the launch. As you know, Pekar, we purchased the priority review voucher, which sets us up for a potential launch in in the second quarter of next year. And so there's been quite a lot of work in ensuring that our infrastructure is ready to go. And the good news there is we had already begun building out our infrastructure in anticipation of SHTG because -- the launch in FCS was hitting key milestones that served as trigger points for us to increase our investment in infrastructure. And so our SHTG field force for the most part is already largely intact. There are still a few gaps to fill around the edges. But if we were to receive an SHTG approval tomorrow, we'd be prepared to go as far as targeting the nearly 20,000 health care professionals will play in roll in diagnosing and treating SHTG patients. We think we can access another up to 50,000 patients through nonpersonal promotions through the activities that we've already been implementing in FCS around digital means of communicating with our stakeholders. And then, of course, following the SHASTA-3 and SHASTA-4 data release, we're now actively engaging with payers through the preapproval information exchange opportunity. And so our teams are already out there communicating the SHASTA-3 SHASTA-4 data and in navigating the payer dynamics to set us up as best as possible to gain coverage in 27 as early as possible.

And to at the ESC presentation, you had a great slide about the different quartiles of the target that you will -- or the segments of the market that you can target. So maybe just talk about that. Which segments do you see as like initial adopters of this therapy? What's the intent of population in those segments?

Yes, great question. So recall from SHASTA-3, SHASTA-4, the population was greater than 500 milligrams per deciliter. But physicians do further segment those patients based on risk. And risk, as you know, in that 2x2 matrix I showed on the webinar is defined really by 2 attributes. TG in prior history of acute pancreatitis. And so of the roughly 3 million people in the United States, we believe have TGs above 500, the highest risk group are going to be those individuals that have elevated TGs and/or prior history of acute pancreatitis. So TG is greater than 880, which we think represents about 800,000 people in the U.S. or those who are greater than 500, but have a prior history of AP, so secondary prevention type patients. And we think they're are probably around 200,000 of those. So roughly 800,000 to 1 million patients in the United States who we would categorize as being high-risk SHTG who have the highest urgency for clinical need, likely the higher willingness to pay from a payer perspective. And that's the group that we've sized our field force to go after. Then when I talk about 20,000 health care professionals in the United States who will be going after, it's really that high-risk SHTG segment. as the beachhead for our initial promotional activities, of course, with an eye towards expanding into the 500 to 880 without a prior history of AP who are also still at risk of AP, but less so than the other cohorts in that 2x2 diagram I showed. So the beachhead will be the high-risk SHTG group.

Okay. And for patients who had a prior history of AP, I think the number you cited was close to 200,000 -- like I mean I think there's still a little bit of an uncertainty on what that number could be. So what's your number based on? Is it based on some sort of claims analysis because it seems like there's diagnosis like what's actually causing these keep pancreatatis events and the subsequent hospitalization. It's a little bit hard to track.

Yes. It is difficult to pinpoint an exact number. So our estimates are based off of secondary research understanding historical event rates within populations who have different levels of triglycerides in addition to claims analysis. So we've done kind of a breadth of analyses in order to come to those figures. But there is -- I would acknowledge there is still some uncertainty there. In some cases, it's not exactly clear whether AP events are attributed to high triglycerides, you can draw some -- you can make some decisions based on lab values as well. But there's still some uncertainty there.

I would just add, though, Prakhar, the piece that I think gets missed in all of that is we believe there are still also a fair number of patients who actually aren't presenting to the system who have acute pancreatitis events or sort of subclinical acute pancreatitis where they have the pain abdominal pain sort of unexplained origin radiating to the back. I can't tell you how many FCS patients, SHTG patients I have talked to who uniformly indicate when they feel that radiating pain, they know what the hospital will do for them, which is not feed them and give them fluids and stabilize them and move them on. In their view, they can do that at home. So there is this group of patients out there that's sort of unquantifiable at this point who are not presenting to the health care system because they're managing their acute pancreatitis or abdominal pain at home through through just water trade, water gate array bone broth or some of the solutions that I've heard patients talk about in the past. So even though the data tells us 1 thing, -- and again, it's an imperfect science trying to capture what that data tells us. There's also no doubt a group of patients who are not presenting who I think would present if they are a better solution like the APOC3 inhibitors.

Got it. And I guess for patients who are identified in the system, once they've had an agreement, how are these patients right now actively managed? And like do you have to bring back these patients into the system and the treatment care? Because like why shouldn't any patients who have had a history of prior AP beyond these drugs? What's the constraint? -- maybe apart from access, but just.

Yes apart from access, I mean, the current paradigm for these patients is stabilization in the emergency room. In some cases, triglycerides aren't even checked. Once stabilized in the emergency room discharge or follow-up with a gastroenterologist or if someone was keen enough to do a triglyceride test and suspect that TGS could be the source for acute pancreatitis referral to the endocrinology department or or lipid clinic. So I would say there's work to do around ensuring that there are diagnostic pathways for these patients. Of course, those who have had acute pancreatitis events more recently, are going to be more in the system than those that might have had acute pancreatitis events further back. And so it might require a little bit of effort from a systems perspective to identify those patients in the EHR system and call them back in. to see what their status is and whether or not they could benefit from APOC3 treatment. But physicians will acknowledge that every single 1 of these patients who they believe have TG induced acute pancreatitis should be treated.

Okay. And maybe on the priority review occur that you bought as well to speed of the launch. I feel like you're a little bit behind but not that far behind in the grand scheme of things versus olezarsen, So I guess what was the -- what were the drivers of buying a PR to speed of the launch? And I guess, maybe does it help you in terms of getting coverage for 2027 as well and maybe close the gap on the coverage, even on the government channels, maybe.

Yes. No, I'll step in on that one. So I mean, on the government channels, we're in active engagement with them before. So regardless of whether it was later in the year or earlier, we're going to get engaged, and we're not truly seen actually much of an issue there right now with FCS. So it would be a matter of just should we update the policies and gain the right coverage for the it's kind of at the end of the day, but a no-brainer. So just by shifting in, we have our product with a particular patent life, just by shifting by 4 months, it had a 3x ROI. So -- and that's even before you talk about potentially reducing their first-mover advantage potentially getting a few more basis points from being out there and competing earlier. That actually magnifies it considerably. So financially, it made all the sense in the world. It brings the medicine to the patients even earlier. And I think in a lot of pairs eyes, it just even shortening at 4 months, there's an awareness that plazas is going to be out there in a fairly short time period. So it was an important decision one, which I think was pretty straightforward as we made.

Maybe moving on to the payer side for SHTG. You had announced pricing even before the Phase III data had come out, which is 45,000 list price. -- now that you have the data in hand and maybe you have done some research with payers as well. What's the feedback now on the payers from pricing? And how would they expect to cover plus Asian.