Christopher Anzalone

Thanks Vince. Good afternoon, everyone, and thank you for joining us today. Over the years, we built platforms capable of addressing liver, lung, adipose, CNS, skeletal muscle, cardiomyocyte, and soon, other cell types to bring RNAi therapeutics where a multitude of diseases are. Any one of these would represent an important advance in human health, but together, we believe they have a revolutionary potential.
I don’t think it’s hyperbole to say that we’ve created a machine that spits out high-quality drug candidates if you just feed it money and gene targets. Importantly, those drug candidates can be produced quickly relative to other methodologies. And given the modality and increasingly validated nature of the platforms, we have an expectation that most will do what they are designed to do.
We’ve always had conviction that building and constantly expanding this machine is critical to our dual mandate of serving as many patients as possible and creating long-term durable value. In the early to mid-stages of building a company around such a machine, we require partnerships to develop and commercialize non-core assets and provide capital for us to develop and commercialize our wholly owned assets while also reinvesting in the machine to expand its reach and capacity. When it’s done well and in a timely fashion, it creates balance for us.
Of late, we have become out of balance. The partnership we announced today with Sarepta is transformational because it returns balance to our business model, helps to focus our investment thesis without constricting upside potential, and puts us on a fairly straight path to profitability. Let’s take a closer look at the deal.
Arrowhead and Sarepta entered into a licensing and collaboration agreement that includes select programs utilizing multiple TRiM delivery systems, targeting various tissue and cell types. Under the agreement, Arrowhead will advance each program to an agreed-upon milestone and then Sarepta will assume responsibility for further development and commercialization. These include select programs from three distinct buckets: one, certain Arrowhead clinical candidates; two, certain Arrowhead non-clinical programs; and three, discovery programs to be pursued jointly between Sarepta and Arrowhead.
In the clinical candidate bucket, Arrowhead is granting Sarepta an exclusive license to the following four programs. One, ARO-DUX4 as a potential treatment for patients with facioscapulohumeral muscular dystrophy type 1 or FSHD1. ARO-DUX4 is currently dosing patients in a Phase 1/2 clinical study. Two, ARO-DM1 as a potential treatment for patients with type 1 myotonic dystrophy or DM1. ARO-DM1 is currently dosing patients in a Phase 1/2 clinical study. Three, ARO-MMP7 as a potential treatment for idiopathic pulmonary fibrosis. ARO-MMP7 has completed dosing healthy volunteers in a Phase 1/2 clinical study and is currently dosing IPF patients to assess target engagement. And four, ARO-ATXN2 as a potential treatment for spinocerebellar ataxia 2 or SCA2.
Arrow ataxin 2 is in a Phase 1/2 study that is currently open for enrollment. In the non-clinical bucket, Arrowhead is granting Sarepta an exclusive license to three programs that utilize Arrowhead’s next generation TRiM platform for subcutaneous administration to the central nervous system. The programs are ARO-HTT for Huntington’s disease, ARO-ATXN1 and ARO-ATXN3, both for spinocerebellar ataxia.
Lastly, in the discovery programs bucket, Sarepta can propose up to six new skeletal muscle cardiomyocyte or CNS targets on which Arrowhead will perform discovery and pre-clinical development. Sarepta would then receive an exclusive license to those programs and be responsible for clinical development and commercialization.
During the five-year term of the agreement, Arrowhead will be excluded from working on a large list of skeletal muscle targets for its internal use or in partnership with other companies. Arrowhead will also be providing contract manufacturing services to Sarepta for clinical and eventually commercial drug supply for programs arising out of our collaboration.
At close of the agreement, Arrowhead would receive the following: a $500 million upfront cash payment; $325 million through the purchase by Sarepta of Arrowhead equity, priced at $27.25, representing a 35% premium to the 30-day volume weighted average price of Arrowhead stock; $250 million to be paid in annual installments of $50 million over five years; and up to $300 million in near-term payments broken up in two separate payments of $100 million and $200 million associated with the continued enrollment of certain cohorts in the Phase 1 study of ARO-DM1, which Arrowhead may achieve during the next 12 months.
Arrowhead is eligible to receive development milestone payments between $110 million and $410 million per program and sales milestone payments between $500 million and $700 million per program. Arrowhead is also eligible to receive tiered royalties on commercial sales up to the low double digits. The total potential value of this deal exceeds $11 billion plus royalties.
This is an important deal for both of our companies. In one transaction to give Sarepta multiple new promising pipeline opportunities all with the potential to be best in class in areas where Sarepta has extensive development, regulatory and commercial expertise, and where clear synergies exist with their existing organization.
The folks at Sarepta are specialists in these areas, and we see them as having a high potential to maximize the value of the programs and be a dominant competitor. They are an ideal partner for us.
For Arrowhead, the deal answers two primary questions the market had about us. First, we’ve seen general acceptance that our technology works and that current and future drug candidates have a good chance of becoming important medicines, but there’s a lack of clarity about how we would pay for them. This deal provides us with substantial capital immediately and potential access to very large amounts of additional funding throughout the life of the collaboration and beyond. This cannot be overstated. According to our long-term plan and budget, we are now funded toward the end of 2028, potentially through multiple commercial launches by Arrowhead and our partners.
Second, we built a massive clinical and pre-clinical pipeline across different therapeutic areas that has the potential to create substantial value, but A, it is difficult for the market to properly value everything there, particularly when it has been unclear what would remain wholly owned versus partnered and B, it is difficult for us to build out clinical and regulatory expertise as well as commercial infrastructure across diverse therapeutic areas. This deal goes a long way to providing a more manageable, wholly owned pipeline focused on the areas we intend to commercialize ourselves, namely in the cardiometabolic space. This more focused pipeline allows us to take advantage of the expertise we have built in clinical development and regulatory in the cardiometabolic area and our growing medical affairs and commercial presence in the space as well.
Now, in the cardiometabolic area, we’re focusing resources on the following: plozasiran, which is rapidly progressing toward commercial stage; zodasiran, which is Phase 3 ready; the APOC3-PCSK9 dimer program that we expect to file a CTA on in 2025; ARO-INHBE, which should begin enrolling a Phase 1/2 study in the next couple of months; ARO-ALK7, for which we expect to file a CTA shortly and begin enrollment by mid-2025; additional undisclosed adipose-targeted programs, undisclosed CNS programs that leverage our systemic subcutaneous delivery, and possible cardiomyocyte targeted programs. These provide us with near-, mid-, and long-term value growth and leverage common resources and expertise making us progressively more efficient for each subsequent program. This is a solid and scalable model.
A focused pipeline also allows us to manage the growth of our R&D expenses. Four clinical candidates and three pre-clinical programs come off our books immediately while still moving rapidly to patients who need them. On the discovery side, we believe we have an engine that is second to none and has the potential to create substantial value. So we will not slow that down.
We now have a partner that will take advantage of our significant discovery capacity and take as many as six new candidates that we are not yet working on into clinical studies. This is a great use of our discovery engine, represents scalable value creation, and leaves us with plenty of capacity for our own future wholly owned programs and additional partnerships.
Another important piece of the Sarepta partnership that may be overlooked is the manufacturing component. Providing clinical and commercial material to Sarepta for programs included in this deal soaks up current excess manufacturing capacity in our new Verona manufacturing plant and defrays our operating costs. It also provides Sarepta with a high-quality, cost-effective partner for important R&I medicines that will develop and ultimately commercialize.
Our cardiometabolic focus and the Sarepta license agreement together do not capture all of our promising programs. Rather, we believe there are additional programs we have that could be partnered at some point to capture additional value and ensure that they reach the patients who need them. The programs that sit in this category are the following: ARO-RAGE for asthma and COPD, which is Phase 2 ready, and we are assessing various options and designs for moving forward; ARO-PNPLA3 for MASH, which is also Phase 2 ready and for which we are also considering options; ARO-C3 and ARO-CFB in the complement space, which should both have clinical readouts by mid-2025; ARO-MAPT for Alzheimer’s and other tauopathies as well as ARO-SCNA for Parkinson’s which both use what we believe is our very promising subcutaneous TRiM system for CNS delivery and are on schedule for CTAs in 2025.
We’re excited about each of these programs, and while we do not require partners immediately, our current strategy is to eventually find the right companies to develop and commercialize each one. In the meantime, we are assessing timing and possible additional development that could maximize risk-adjusted value to us.
As part of this pipeline focus, we have decided not to pursue further development of ARO-MUC5AC. To be clear, this decision was not due to any emerging safety issue but rather the inability to reliably assess target engagement with the availability of biomarkers. While we still believe that ARO-MUC5AC is an intriguing target for muco-obstructive diseases, we believe that we have programs without this biomarker limitation where we can better allocate capital.
We have also made great progress with our lead program and potential first commercial product, plozasiran, from a clinical, regulatory, and commercial perspective, which Bruce and Andy will discuss in a moment. We now feel like all the pieces are in place to accelerate growth.
Let’s review what we see as the key steps that enable that growth. We have generated important Phase 3 data in the PALISADE study of plozasiran in patients with genetically defined and clinically diagnosed FCS, forming the basis of submission of our first NDA. This is a big step for any biotech company, and we were excited to make that submission earlier this month. We now have field and home office, medical affairs organizations in place within clinical development.
We have also built out the key headquarters, commercial infrastructure and are in the process of building out a commercial field team, right-sized for this rare disease. We are confident that we will be ready for our potential first commercial launch in 2025, provided we receive positive FDA review and approval. We have also begun leveraging outsourced resources for a European commercial launch provided we receive positive positive EMA review and approval which we intend to seek in 2025.
We also have comprehensive plozasiran Phase 3 program for the large patient population with severe hypertriglyceridemia or SHTG. We believe there are 3 million to 4 million people in the US making up this population, and there are very limited options — treatment options at present. We expect the studies needed for regulatory approval to be fully enrolled by mid-year 2025, leading to final patient visits in the middle of 2026 and potential sNDA fine at the end of 2026 or early 2027.
We see this as a large patient population with inadequate treatment options that alone could make plozasiran a $2 billion to $3 billion per year drug. Further, we continue to see a big opportunity in a larger mixed hyperlipidemia markets. Plozasiran has always looked like potentially powerful medicine for secondary prevention of ASCVD as well as primary prevention for high-risk patients by the KOL community we’ve been working with. Addressing this patient population approximately doubles our revenue forecast for plozasiran but would require a cardiovascular outcomes trial or CVOT for approval. As such, we are waiting until we have better visibility on additional capital before launching this trial.
Arrowhead now has a combination of traits that puts it in the strongest position ever in the history of the company. These include substantial immediate capital, the expectation of large amounts of additional non-dilutive capital in coming years via existing partnerships, a lead program that is gearing up for commercial launch, a lead program that could see substantial label expansion in coming years, a focused cardiometabolic pipeline that spans early discovery to Phase 3 ready, a discovery engine capable of creating new candidates rapidly, strong partners in place for non-core assets, several non-core programs that could be partnered in the future for additional non-dilutive, near- and long-term capital and a state-of-the-art, high-capacity manufacturing facility that is qualified for clinical material now and could be qualified for commercial material soon.
With that overview, I would now like to turn the call over to Dr. Bruce Given, who will discuss what we’ve accomplished with plozasiran and the status of the Phase 3 program. Bruce?

Bruce Given

Thank you, Chris, and good afternoon, everyone. It has been a remarkable year for plozasiran. We’ve had a series of high-impact presentations at major international academic meetings accompanied by four simultaneous publications and highly selective, high-impact medical journals. We also initiated our Phase [2] program in severe hypertriglyceridemia, or SHTG, this summer and culminating with our New Drug Application or NDA submission to the US FDA earlier this month. I’ll review some of those highlights over the next few minutes.
First, it was a great pleasure to submit our NDA for plozasiran and in the orphan condition of familial chylomicronemia syndrome or FCS to the FDA. That started the clock for their validation process, which is expected to take up to 60 days. If the FDA determines that the filing is complete and accepted for review, they will inform us at that time of the PDUFA date by which a decision on approval may be made. Because the FDA has granted plozasiran breakthrough therapy designation, we are hopeful for a priority review, but that determination will be made solely at the discretion of the FDA.
Our database for the pivotal PALISADE study in subjects with genetically confirmed or clinically diagnosed FCS was only locked on May 16 of this year. So this was an excellent performance by the Arrowhead team, especially given that this was the organization’s first NDA. We look forward to hearing the FDA’s filing decision.
If we take a step back to assess the results that have been generated with plozasiran over the last year at medical meetings and in publications, a clear picture emerges. As data from the Phase 2 trials were presented and published in JAMA Cardiology and the New England Journal of Medicine in the first half of the year. We saw in the MUIR study of patients with mild to moderate hypertriglyceridemia in the context of mixed hyperlipidemia and in patients with severe hypertriglyceridemia in SHASTA-2 that plozasiran produced deep and durable reductions in apolipoprotein C-III or APOC3 with quarterly subcutaneous dosing, and that these reductions led to deep and durable reductions in triglycerides, remnant cholesterol, apolipoprotein B or ApoB, and non-HDL cholesterol, while substantially increasing HDL cholesterol as we had anticipated based on human genetic data and our Phase I study results.
While Phase 2 data require replication and expansion in Phase 3 studies, which I’ll describe in a moment, we learned a number of important things from these results. First, we evaluated doses from 10 to 50 milligrams and determined in both of these studies that we could confidently select 25 milligrams as being at the top of the dose response curve for efficacy while also having safety and tolerability that appeared favorable. On this basis, we chose the 25-milligram dose, administered every three months to (technical difficulty) Phase 3 development in both mixed hyperlipidemia and severe hypertriglyceridemia.
Second, the reductions in our lipid targets were substantial and consistent with the human genetic data from individuals who had inherited genetic variants with low or no activity for APOC3 who displayed favorable lipid profiles and appear to have reduced risk for cardiovascular disease. Finally, these individuals inheriting loss of function APOC3 genes have been thought to have no negative safety or tolerability issues, and our Phase 2 data suggests that this therapy may well be well tolerated in Phase 3 studies.
In fact, subjects from the Phase 2 MUIR and SHASTA-2 studies were offered the opportunity to enter a long-term extension study called ARO-APOC3 2003, which was reported out at the American Heart Association Scientific Sessions on November 18. Those data in 418 patients suggested that lipid changes remained essentially unchanged, out 15 to 18 months while receiving plozasiran 25 milligrams quarterly with no new safety signals detected. Hemoglobin A1c was essentially unchanged over that period.
Most of you will be familiar with our Phase 3 PALISADE study that reported at the European Society of Cardiology with another simultaneous publication in the New England Journal Medicine. We observed an 80% reduction from baseline in median triglycerides at month 10 with the 25-milligram dose, while placebo subjects showed a reduction of 17%. The reduction in triglycerides in month 10 was highly statistically significant with a p-value less than 0.0001.
This study also included a 50-milligram quarterly dose group with plozasiran with similar significant results, which together with the results from MUIR and SHASTA-2 have convinced us that we have achieved the maximum efficacy possible for the APOC3 mechanism with the 25-milligram dose, regardless of indication. Because both 25 and 50 milligrams achieved significant reductions on the primary triglyceride endpoint, we were allowed to assess the significance of our alpha-controlled secondary endpoints. In this regard, APOC3 reductions at 10 and 12 months and average triglyceride reductions at 10 and 12 months combined were also highly significant.
Our final alpha-controlled secondary was a comparison of incidents of expert-adjudicated cases of acute pancreatitis for the placebo group compared to a combined group of the 25 and 50 milligrams plozasiran dose cohorts. This important endpoint showed a statistically significant 83% reduction in incidence of acute pancreatitis with plozasiran with a p-value of 0.029.
Not surprisingly, given the reduction in pancreatitis, high percentages of patients reached recognized risk reduction thresholds for triglycerides with a clinical dose of 25 milligrams quarterly. In fact, 75% of patients reached levels below 880 milligrams per deciliter, and 50% were able to reach triglyceride levels less than 500 milligrams per deciliter.
There were a number of exploratory endpoints in the study, which we reported at AHA and simultaneously published in the high-impact AHA Journal, Circulation. Meaningful reductions in remnant cholesterol and non-HDL cholesterol were shown as well as increases in HDL cholesterol. The expected increases in mean LDL cholesterol were seen but remained below guideline levels for cardiovascular risk reduction. Finally, longitudinal data was shown from month 1 through 12 for the clinical 25-milligram dose indicating that the reductions in triglycerides from baseline of approximately 80% were similar whether patients had genetically confirmed or clinically diagnosed FCS, a finding that we believe is important.
Tolerability has been good across all three study populations. The most common treatment-emergent adverse events for the PALISADE FCS study were abdominal pain, COVID-19, nasopharyngitis, and nausea. For the Phase 2 MUIR and SHASTA-II studies, the most frequent adverse events were COVID-19, upper respiratory tract infection, headache, type 2 diabetes mellitus, and abdominal pain.
While all of this was going on, we were also busy obtaining regulatory input and initiating our Phase 3 program for plozasiran in SHTG. Our twin pivotal Phase 3 studies in patients with SHTG called SHASTA-3 and SHASTA-4 were initiated in the middle of the year. We now have centers open in the US, Europe, and China with new centers opening weekly, and we have patient screening and enrollment ongoing in all three territories.
We are also conducting a Phase 3 study in patients with mixed hyperlipidemia named MUIR-3, which is there to provide safety numbers needed for the expected SHTG supplement to our plozasiran NDA. All three of these studies are largely patterned after their Phase 2 counterparts, except that patients will receive four quarterly doses of 25 milligrams or placebo for a full year of treatment and follow-up before entering into an extension if they so choose.
We are also getting ready to start SHASTA-5, a first-of-its-kind study, where the primary outcome will be reduction in acute pancreatitis in patients with SHTG and a history of pancreatitis. This study has not been requested by regulatory authorities and is not considered to be on the critical path for the SHTG submissions. Rather, this is a study that we are conducting for payers and to support the market.
Finally, regarding CAPITAN, our planned outcome study with plozasiran for prevention of cardiovascular events in patients with elevated triglycerides and a history of atherosclerotic cardiovascular disease, or ASCVD, or at high risk for ASCVD. We continue to receive feedback from global regulatory authorities in our Executive Committee and expect to have our final dose — I’m sorry — our final protocol design in the first half of 2025. So in summary, an amazing 2024 for plozasiran is setting up a busy and exciting 2025.
I will now turn the call over to Andy Davis. Andy?

Andy Davis

Thank you, Bruce. Just over one week ago, our team was at the American Heart Association Scientific Sessions 2024, or AHA, where we announced new results from the Phase 3 PALISADE study and the open-label extension from the Phase 2 MUIR and SHASTA-2 studies of investigational plozasiran. And the feedback we collected on site from both physicians and patient societies continues to be very encouraging. We hear lots of enthusiasm about the differentiating attributes of plozasiran, which generally fall into five value pillars that you’ve heard me speak about before.
First, the reduction in triglycerides has been both deep and durable. In PALISADE, as Bruce mentioned, plozasiran reduced triglycerides by around 80% from baseline as early as month one and maintain this reduction with limited variation throughout the full 12-month treatment period.
Second, and for really the first time, patients and their doctors see real hope of achieving triglyceride levels below guideline-directed risk thresholds associated with acute pancreatitis, such as 880 and even 500 milligrams per deciliter. Around half of the patients at the 25-milligram dose in PALISADE maintain TGs below 500 milligrams per deciliter, with approximately 75% achieving levels below 880 milligrams per deciliter.
To support physician education on guideline-directed risk thresholds, we announced on FCS Awareness Day earlier this month, the launch of a new disease awareness campaign called We’ll Get There Soon. A key focus of our messaging is to educate the physician community about expert guidelines from several professional medical societies, which recommend maintaining triglyceride levels below 500 milligrams per deciliter to reduce the risk of acute pancreatitis.
Third, the triglyceride reductions in PALISADE were generally consistent in patients with genetically confirmed and clinically diagnosed FCS. As I mentioned at the outset, new results from PALISADE were presented in an oral presentation at AHA and simultaneously published in the journal, Circulation. Plozasiran at the 25-milligram dose induced rapid, deep, and sustained reductions in APOC3 of greater than minus 90% and in triglycerides of approximately minus 80%, independent of gene variants causing FCS. As Bruce mentioned, we believe this supports the potential value of plozasiran in patients with clinically diagnosed disease regardless of genetic status.
Fourth, plozasiran is the first and only investigational medicine to report a statistically significant reduction in the risk of developing acute pancreatitis in patients with genetically confirmed and clinically diagnosed FCS. This important endpoint showed a statistically significant 83% reduction in the incidence of acute pancreatitis with plozasiran. This is the outcome of most importance for physicians, patients, and payers.
And lastly, number five, plozasiran demonstrated favorable safety and tolerability, largely similar to placebo and is conveniently dosed every three months, reducing the treatment burden on both physicians and patients with only four injections per year. To support this value proposition, we’ve built best-in-class medical market access and marketing organizations, and our teams are solidly in place.
As Chris mentioned, the medical affairs group is fielding medical science liaisons to conduct scientific exchange. And on the sales and marketing side, we’ve recently hired our National Sales Director, who will be executing our field force hiring plans over the next several months. We are on track, and we’re incredibly excited about 2025 and the possibility of bringing investigational plozasiran to those FCS patients and their families who are burdened by this condition.
I’ll now turn the call over to Dr. James Hamilton.

James Hamilton

Thank you, Andy. With our sharpened focus on the cardiometabolic therapeutic area, I’d like to discuss our two new programs for our obesity and metabolic disease. Clearly, there have been advancements in the obesity space of late. This has created excitement in the field, and we believe our programs, ARO-INHBE and ARO-ALK7 have attractive profiles and may fill gaps in the current standard of care.
We held a webinar in August on the obesity and metabolic space as part of our summer series of R&D webinars. We covered the biology of these targets, our pre-clinical data and our clinical plans. That presentation is still available as an archive on the website.
As a high-level refresher activation of the INHBE/ALK7 pathway instructs adipocytes to store fat. In an environment of nutrient excess, this pathway can become dysfunctional and overactive. Both targets are supported by human genetics, where loss of function carriers have favorable body composition and metabolic characteristics compared to non-carriers. ARO-INHBE is a GalNAc-siRNA conjugate intended to silence hepatic INHBE expression. INHBE’s mRNA codes for active protein, which is one of the ligands binding to ALK7 on the adipocyte surface.
It’s the expression of ALK7 mRNA that is targeted with ARO-ALK7, which uses Arrowhead’s novel adipocyte siRNA delivery platform. ARO INHBE and ARO-ALK7 achieved 22% and 50% reduction in fat mass, respectively, versus saline controls in a mouse diet-induced obesity model. Importantly, this is achieved with the preservation of lean mass. In the same mouse model, when studied in combination with incretin therapy, inhibition of the INHBE/ALK7 pathway can potentiate weight loss with lower doses of incretin therapy while simultaneously preserving lean mass.
Again, for those interested, I refer you to our August obesity and metabolic R&D webinar for more pre-clinical data details. Turning to the clinical studies planned for these molecules, both Phase I studies will evaluate single and multiple ascending doses as a monotherapy in obese patients as well as multiple doses in obese patients with or without type 2 diabetes in combination with incretin therapy. ARO-INHBE dosing should initiate very soon and dosing with ARO-ALK7 should initiate in 2025. We look forward to providing updates on these studies throughout 2025.
I will now turn the call over to Ken Myszkowski.

Kenneth Myszkowski

Thank you, James, and good afternoon, everyone. As we reported today, our net loss for fiscal 2024 was $599.5 million or $5 per share based on $119.8 million fully diluted weighted average shares outstanding. This compares with a net loss of $205.3 million or $1.92 per share based on $106.8 million fully diluted weighted average shares outstanding for 2023.
Revenue in 2024 was $3.6 million as there were no new partnership or license agreements executed during the year and no major milestones from previous license agreements were triggered during 2024. Revenue in 2023 was $240.7 million, Revenue in 2023 primarily relates to our collaboration agreements with Takeda, GSK, and Amgen.
Total operating expenses for fiscal 2024 were $604.6 million compared to $445.7 million for 2023, an increase of $158.9 million. In 2024, operating expenses, excluding non-cash stock compensation charges and depreciation and amortization, a better indicator of cash spend were $512.1 million compared to $355.1 million in 2023, an increase of $157 million. The key drivers of this change were increased research and development costs, primarily candidate costs, which is driven by clinical costs, manufacturing costs, and toxicology costs. In particular, during the third fiscal quarter, we kicked off certain large Phase 3 clinical trials for our drug candidate plozasiran to address further indications beyond FCS, namely severe hypertriglyceriyceridemia or SHTG.
Net cash used in operating activities during fiscal 2024 was $462.9 million compared with net cash used in operating activities of $153.9 million in 2023. The increase in cash used in operating activities is driven primarily by higher research and development expenses as well as lower revenue versus the prior year.
Our footprint expansion is complete with only minor final payments to be made over the next few months totaling $8 million. We expect very little capital expenditures in fiscal 2025.
Turning to our balance sheet. Our cash and investments totaled $681 million at September 30, 2024, compared to $403.6 million at September 30, 2023. The increase in our cash and investments was primarily related to the $450 million equity issuance as well as the $400 million debt facility, partially offset by ongoing cash burn.
We expect our largest cash expenditure in 2025 to be related to the Phase 3 studies for plozasiran. We expect that costs for the ongoing studies will start to decrease in ’26 and ’27. Thus, a large portion of those study costs were incurred in 2024 as start-up costs, in 2025 as ramp-up costs, which then start to decrease in 2026. Our other clinical studies are earlier phase studies, which require much less capital.
The collaboration agreement with Sarepta brings in $500 million in upfront cash, $325 million as an equity investment priced at $27.25 per share representing a 35% premium to the 30-day volume weighted average price and additional near-term cash of $350 million. Pro forma cash resources at September 30, 2024, including just the upfront cash and equity investment would be $1.5 billion.
We estimate that this partnership agreement extends our cash runway into 2028, during which time we expect plozasiran may be approved for the additional indication of SHTG. This capital significantly enhances our balance sheet and puts us on very solid financial footing for several years.
Turning to financial guidance. We expect total cash burn in fiscal 2025 to be $500 million to $550 million, of which about $62 million to $65 million is related to G&A costs. We expect a similar cash burn in 2026, with G&A comprising about $65 million of spend.
Incorporating debt repayments and cash inflows, we expect our cash balance at the end of 2025 to be about $1 billion, and we expect our cash balance at the end of 2026 to be between $600 million and $650 million.
We believe our cash runway extends into 2028. These estimates include modest revenue for FCS but do not include potential revenue from future business development deals. So if these assumptions prove overly conservative, our cash balances may be higher. Our common shares outstanding at September 30, 2024, were $124.4 million.
With that brief overview, I will now turn the call back to Chris.

Christopher Anzalone

Thanks, Ken. As I mentioned, Arrowhead is now extraordinarily well positioned to build value in the short, medium and long term. We think all the necessary pieces are in place to execute effectively and efficiently. We are funded into 2028 with additional non-dilutive funding expected with existing and potentially new partnerships advance through clinical studies and generate commercial products.
We are building out commercial to be ready on day one for our first commercial launch of plozasiran in patients with genetically confirmed or clinically diagnosed FCS. We are eager to receive our PDUFA date from FDA, but our expectation for commercial planning purposes is to be ready to launch in the middle of 2025.
Plozasiran, our lead program is also in Phase 3 studies to potentially expand into the large and significantly underserved SHTG population a couple of years after we launch in FCS. If successful, that would provide a potentially large revenue stream. Aside of plozasiran, we have focused our pipeline around a cluster of cardiometabolic programs, providing some mid-term opportunities for commercial launches and multiple long-term opportunities. We also retain select key early-stage programs, providing opportunities to build pipeline value while still managing to limit growth in R&D expense.
Lastly, we have a new collaboration partner with extensive clinical, regulatory, and commercial expertise to advance and commercialize multiple promising candidates outside of our cardiometabolic commercial focus. So we end fiscal 2024 in a strong position across the board and are now well positioned to execute on our long-term strategy and bring several important new medicines to patients over the coming years.
Thank you for joining us today, and I would now like to open the call to your questions. Operator?

Operator

Thank you. (Operator Instructions)
Ellie Merle, UBS.

Jasmine Fels

Hi, this is Jasmine on for Ellie. Thanks so much for taking our question and congratulations on all the progress. So first, just with the deal with Sarepta, including a few FC programs in Huntington’s with the subcu delivery, how are you thinking about the future of Arrowhead’s CNS franchise from here and particularly where else you’d like to go with the subcu delivery? And then second, just curious on anything you can say about future plans for zodasiran. Thanks.

Christopher Anzalone

Sure. So thanks very much for the question. So the subcu CNS platform is one that we’re really excited about. As you mentioned, HTT will go to Sarepta. We also have MAPT and alpha-synuclein that we are developing that remain wholly owned, as I mentioned in the prepared remarks.
Those are not really core to our business, and so those are potentially partnerable at some point. We are trying to determine the optimal time to partner those.
We see a number of good potential CNS targets in the cardiometabolic basin. So I do expect that we will develop and retain some wholly owned CNS assets that will be, again, core to our cardiometabolic business. So stay tuned on that. I expect that we’ll have some updates on that in 2025.
Regarding zodasiran, we are trying to figure out our strategy there. At the very least, we see a big opportunity or at least an interesting opportunity in HoFH. And so we have a protocol waiting to go — waiting to start for a Phase 3 study to support HoFH. And we are also exploring how else we may be able to exploit that asset.

Operator

Luca Issi, RBC Capital.

Luca Issi

Great. Thanks so much for taking my question. Congrats on the progress and obviously on the deal with Sarepta. Maybe two quick ones. Bruce, if I may, we’ve seen Eli Lilly discontinuing their siRNA for APOC3. So wondering what was your reaction to that.
And then maybe on the deal, Chris, can you just maybe provide any color on whether that deal with Sarepta was competitive? And then maybe related, lots of moving parts, obviously, with the FTC, but any potential risk here in the context of what we saw a year ago between Sanofi and Maze? Any color there? Much appreciated. Thanks so much, guys.

Christopher Anzalone

Sure, Bruce. Why don’t you take yours first, and then I’ll go after that.

Bruce Given

Sure. I, of course, don’t know why Lilly made that decision. It’s hard to assess from a distance — plozasiran is an awfully good drug. And it may have set the bar too high; that’s a possibility. But I really can’t determine why Lilly would have made that decision one way or the other. Not very fulfilling for you, I know but that’s about the best I could do.

Christopher Anzalone

All right. And thanks for the questions, Luca. So regarding my question. So was the Sarepta deal competitive? Sure. We were talking to other companies about large strategic deals. This one made sense to us. There’s, of course, never 100% overlap with respect to what’s included in these various strategic deals, but at least philosophically, we were talking to other companies about that.
And look, the potential good news here is that we also have additional assets I mentioned in the prepared remarks that remain unpartnered that are not core to our business. And so I think we have room to do additional partnerships.
Nothing — I don’t think quite as large as what we’re talking about here with Sarepta with an overall deal value greater than $11 billion plus royalties, but I think there are still good deals we can do with other companies or on other assets, potentially with discovery components. As I mentioned, we’ve got an extraordinarily productive discovery team that has capacity to serve us and Sarepta as well as other partners.
Regarding the HSR risk, look, who knows? I can’t give you much guidance on that other than from our perspective, there does not seem to be overlap there that make us concerned. But of course, that’s not our call to make. We’ll just have to see when that comes down. We expect to have a ruling 30 days after we file. And so sometime in, I believe, early January is when we would expect to clear HSR.

Operator

Andrea Newkirk, Goldman Sachs.

Andrea Newkirk

Hi, everyone. Thanks for taking my question and congratulations on the deal. Maybe on the back of that, and in the context of the debt financing that you announced on the last earnings call, how are you thinking about paying that down? And is there a particular amount that’s maybe earmarked in the Sarepta deal that’s obligated towards paying off the principal for that facility?
And then Ken maybe a question for you here. If you could quantify the R&D savings that you expect to realize and over what time period we could think about that. Thanks so much.

Christopher Anzalone

Sure. So we will be paying down the debt you know through Sarepta as well as through other deals as cash comes in. There are formulas for that. And so we do expect that to contribute to paying down the debt over time.

Kenneth Myszkowski

So we’ve taken certain costs out of the budget, but the main components or the biggest part of our R&D spend relates to those three Phase 3 trials that I mentioned earlier, and we expect those costs to continue over the next two years and then decrease by 2027. So it would depend on if there’s any new large trials by that time. But over the next two years, we’d expect it to remain constant with the guidance and then decrease.

Operator

(Operator Instructions)
Maury Raycroft, Jeffreries.

Maury Raycroft

Hi, thanks for taking my questions and congrats on the deal update today. Wanted to ask about the obesity programs. So for INHBE and ALK7, how important are the strategically to the company at this point? And with obesity studies, you can get insight into efficacy relatively quickly. Wondering if you’ll run a placebo-controlled Phase 1? And can you commit to getting to data from either of these programs sometime next year?

Christopher Anzalone

I’ll take the strategic question. These are important to us strategically. Look, these are really interesting targets, genetically validated. We will be, I believe, the first ones in the clinic with INHBE, and I think we will be the first one in the clinic by a long shot with ALK7. I don’t know anybody else will be in the clinic in the near term with siRNA against adipose.
So we like our positioning here. We like the genetic data. We love our animal data. And so these are important for us.
To be honest, if we wanted to partner these, we could have. But these are important for us strategically. And so we look forward to run these studies and see what we see.
James, do you want to address the Phase 1.

James Hamilton

Sure. Yeah. On the Phase 1 designs, both programs are placebo-controlled in patients with obesity. The main purpose of the study are, of course, to generate an understanding around safety and PK and some early target engagement biomarker data. I mean we have some exploratory end points in there, but these are primarily focused on safety, PK, and biomarkers.

Operator

Jason Gerberry, Bank of America.

Dina Ramadane

Hi, good afternoon. This is Dina on for Jason. Thanks for taking our question. Congrats on the deal announcement and the progress this quarter. The first one we had is more of a broad strokes question, how does the Sarepta agreement than your TRiM discovery engine prioritization by tissue type and targeted number of lead pre-clinical candidates that you plan to kind of accelerate into the IND stage over the near term? Like do you plan to kind of separately advance pre-clinical assets for your own internal verticals or for additional partnerships?
And then I just had a follow-up on your zodasiran strategy. Is it maybe safe to say that we could see an execution of a COVT (sic – CVOT) when the company is in a better capital position with costs from the plozasiran studies winding down in 2026 or so? Thank you.

Christopher Anzalone

So with respect to the CVOT question, look, we have always been interested in asking the triglyceride question in outcomes, and our KOLs feel strongly that plozasiran could be a very powerful ASCVD drug. And so we just need to wait to see better visibility on capital in order to start that CVOT. Those can be expensive and time-consuming. And so we just want to make sure that we’ve got the capital in front of us before we start that.
With respect to the first question, sorry, what was that again?

James Hamilton

Our bandwidth for — target (multiple speakers)

Christopher Anzalone

Yeah, right. So look, on discovery, we really can be an and company, not an or company. We’ve got plenty of bandwidth to serve Sarepta and to serve ourselves and frankly, to serve other partners. James, approximately how many nominations can we do over the last couple of years?

James Hamilton

I mean we’ve done close to double-digit nominations per year. So 5 to 10 per year is certainly doable, and all of the targets will probably not come in all at once from a partner.

Christopher Anzalone

Right. So if we are in the 5 to 10 nomination range per year, this is a five-year collaboration. And so over those five years, we could — goodness, we’ll have dozens and dozens of nominations over the time. We’ve got plenty of room to have a vigorous discovery campaign for ourselves as well as Sarepta as well as for other partners.

Operator

Patrick Trucchio, H.C. Wainwright

Patrick Trucchio

Thanks and good afternoon. And congrats on the collaboration. I just have a couple of follow-ups on it. Can you tell us how the clinical or pre-clinical programs are expected to be prioritized within the collaboration with Sarepta and how much input Arrowhead would expect to have in that process? And separately, can you tell us how the collaboration contributes to or accelerates achieving the 2025 strategy?

Christopher Anzalone

Sure. So I’ll take that one first. I don’t know that it affects our 2025 strategy so much, because we have one more year for 2025. I don’t know if Sarepta can move fast enough to get us to target and for us to get them something that will enter the clinic during that time. So I don’t think it’s relevant to 2025 necessarily.
Regarding prioritization or regarding how we run those, well, so let’s see — so the clinical assets will go to them. We are happy to help them with the transition, but those will ostensively move to them, and they will continue those clinical programs essentially on day one, again. We’re happy to help them, but that will be their purview.
The non-clinical assets, we will get those two CTA-ready and then they will take those over and assume all the cost and, of course, all the burden of running clinical studies with them. Same thing with the discovery bucket. Our job is to get them a CTA-ready package, and then they would take those for you in the clinic.

Operator

Edward Tenthoff, Piper Sandler.

Edward Tenthoff

Great. Thank you. My congrats to you on the financing. You guys have been wheeling and dealing, and I love to see it. When it comes to the $250 million over the five-year period, firstly, is that considered like an R&D funding? Or what is sort of the classification of that? And how will that be — is that just straight line amortized? Or how would you be recognizing that?

Kenneth Myszkowski

So the $250 million payment was just a timing of the payment. The accounting recognition — the revenue recognition for that, we need to assess that with the rest of the deal, including the upfront payment and what our performance obligations are. So we’ll get more information to you on how we will recognize that revenue.

Christopher Anzalone

And that’s simply $50 million a year over five years of starting on the one-year anniversary of the closing of the deal.

Operator

Mayank Mamtani, B. Riley Securities.

Mayank Mamtani

Yes. Good afternoon. Thanks for taking our question and congrats on a productive quarter and the deal. Just quickly following up on the plozasiran NDA filing strategy, could you confirm that the focus there is on the 25 mg dose level? And how do you think of the total patient exposure there to be able to have that broader label that you did evaluate the study for with and without FCS you get from patients? And I do have a follow-up.

Christopher Anzalone

Bruce?

Bruce Given

Well, so the filing is only for the 25-milligram dose, because it performed really at least equally to the 50-milligram dose. So as I said, all the data for the drug and all the indications said 25 milligrams was the right dose. So I think we’re very — we feel very solid there.
The question — if I understood the second question right; I didn’t really hear it very well. But if I understood it correctly, we, of course, don’t know at this point the agency, how the FDA will feel about the question of genetic versus clinical FCS. We did expand to include the clinically diagnosed FCS patients at the suggestion of the agency. So that’s something.
But ultimately, we would assume that, assuming the agency is happy with the NDA in the end, we won’t be discussing indication until the very end. I hope I answered your question there, but I’m not 100% sure I did.

Operator

Prakhar Agarwal, Cantor.

Prakhar Agrawal

Thank you for taking my questions and congrats on the Sarepta deal. Maybe firstly, on the deal, how much of the data did Sarepta see on both DM1 and FSHD programs? Was it mostly limited to the SAT programs — SAT cohorts? Or were you able to see some of the multiple those data as well?
And second question is on INHBE. It’s an interesting target — pre-clinical data, very interesting and the genetic evidence is out there. So maybe just broadly, how are you thinking about where this drug fits a new [BT] landscape relative to incretins out there commercially and that are coming out soon? And how does the RNAi therapy differentiate in obesity? Thank you.

Christopher Anzalone

Sure. So Sarepta side we have not moved into MAD cohorts yet. So all we have is very limited, in fact, SAD data, but that’s what they saw.
Regarding INHBE and ALK-7, look, our job here is not necessarily to put GLP-1s out of business. I think that we have an opportunity to work with GLP-1s as we talked about in the prepared remarks and also in the webinar several months ago. At least in animal studies, we were able to use a sub-therapeutic dose of tirzepatide in combination with either ALK7 or INHBE and show good weight loss, in fact, better quality weight loss than tirzepatide alone.
That could be a possible use, and also maintenance could be a possible use in order to be on a GLP-1 and then lose a substantial amount of weight and then keep it off with INHBE or ALK7. They can also be used as monotherapy; who knows? And we’ll see what the tolerability looks like.
From our perspective, as you say, the non-clinical data were compelling. The genetic data are compelling. And so we really look forward to seeing how this translates into humans.

Operator

David Lebowitz, Citi.

David Lebowitz

Thank you very much for taking my question. Given the large partnership with Sarepta, what are your thoughts on additional partnerships going forward? Are you intending to take a pause from that? Or are you still on the lookout?

Christopher Anzalone

I would say somewhere in between those. We are still on the lookout. As I mentioned, we were — before we did the Sarepta deal, we were in discussions with other companies about large strategic collaborations. Those we are no longer really considering, but there are smaller bite-sized collaborations and license agreements that certainly could take place.
Look, our hair is not on fire. This is an important deal for us. This gives us a lot of breathing room and gives us, frankly, what we needed in a number of areas. And so I think we can get the right deal or deals done over time. We don’t have to have that tomorrow. But I do expect more deals over some period of time.
Certainly, we’ve got the capacity on the discovery side. And we’ve got the assets, both non-clinical and clinical that are not core to our metabolic — to our cardiometabolic focus. And so I think there’s ample ammunition there for additional deals.

Operator

Keay Nakae, Chardan.

Keay Nakae

Congrats on the deal. Just looking for some further clarification about the plans for lung. I think you said you’re still taking ARO-RAGE into a Phase 2, maybe first half of next year. But will you look to partner that? And then beyond that, will you look to pursue any other long targets?

Christopher Anzalone

Sure. Look, yes, I think that ultimately, RAGE should be partnered. That’s going to require large and relatively complicated asthma studies, maybe COPD. With our renewed focus on cardiometabolic, it would make sense for us to find the right partner for that. We don’t have to do it tomorrow. But at some point, it would make some sense to partner that.
It could be that it makes sense for us to do a bit more work, some kind of Phase 2 study — we’ll see — in order to increase the value of a partnership. We haven’t made those decisions yet. I’m just telling you what’s on the table, I guess.
Look, we like the pulmonary platform. I think there’s an awful lot we can do there, particularly in deep lung targets. And so my hope is that we continue to develop that. Again, less for ourselves — longer term, at least, less for ourselves and more for partners. It doesn’t mean that we wouldn’t initiate some programs, but it would mean that we’ll be doing those largely on spec. My hope is that we can find partners, who are interested in helping us develop the right medicines against the right targets in pulmonary.

Operator

Brendan Smith, TD Cowen.

Brendan Smith

Hi guys. Thanks for taking the questions. Another big congrats from me on the deal. I guess backing really on that last question, just on the pulmonary vertical, have you filled the inbound at this point, or are you in any active discussions about potentially partnering that platform more broadly?
I guess, obviously, you already kind of lead there, but to your point, there seems to be a lot of optionality for that across the board. So just wondering where you guys are — where your head is at on that a little bit more broadly.
And then can you just maybe confirm for plozasiran if now this renewed focus on cardiometabolic — does this mean that a commercialization partner is just kind of off the table altogether now and you think you should be able to fully commercialize it across the different segments on your own? Or is that still maybe something you consider like post-SHTG data before the CVOT read out? Thanks.

Christopher Anzalone

Yes. So we would certainly consider ex-US partners, partner or partners. Within the US, we really see ourselves building out our commercial infrastructure largely around plozasiran and then using that infrastructure to commercialize other cardiometabolic assets as well. But sure, we would certainly consider some ex-US partnership if the right one came around.
Again, back to lung, we have spoken with folks about lung, as you can imagine. I don’t have any guidance on when we may get a pulmonary deal done. As I mentioned, the Sarepta deal is important for us, and it allows us to have some breathing room here. And so I don’t expect a pulmonary partnership in the very, very near term, but it’s certainly something that we have spoken with other companies about, and we will continue to do that.

Operator

Mani Foroohar, Leerink.

Ryan McElroy

Thank you, guys. You have Ryan on for Mani. I’ll add my congrats on the deal, and thanks for taking our questions. So maybe first, just a follow-up on a prior question around paying down debt through the BD cash flow from Sarepta and other agreements. Does that mean you plan to utilize this new cash to cover the interest expense on the debt, or are you planning to actively pay down the principal? And if the latter, to what degree and on what time horizon should we expect that?
And then real quick, maybe just circling back to the $300 million near-term milestone for DM1 enrollment, any specifics you guys can provide on the $100 million and $200 million milestones and how those are achieved?

Christopher Anzalone

Yeah. And so I can’t get too granular on that, but I can tell you that it has to do, as you mentioned, with the DM1 program. And it just has to do with when a certain number of patients have been dosed within some of the early cohorts.
We are on track, I believe, to reach that over the first three or so quarters of 2025. Look, that can change as those studies go on, but at least right now, that is our hope. That’s our expectation. Regarding the debt, we’ll be paying down both interest and principal over time as cash comes in through Sarepta as well as through other partnerships.

Operator

William Pickering, Bernstein.

William Pickering

Hi. Thank you for taking my question and congrats on the deal. You made some reference to cardiomyocyte targets during the prepared remarks, and I was wondering if you could expand on what sorts of indications you’re interested in here, whether it’s rare or higher prevalence? Is there a clear demarcation between the cardio targets that you want to pursue independently versus what Sarepta has dibs on? Thank you.

Christopher Anzalone

Yeah. So I can’t give you too much guidance; I can’t give you any guidance, frankly, on what targets we are considering within cardiomyocytes. That’s still pretty early. Our non-clinical data have been compelling. And so we view that as a platform that we can start to really consider bringing into the clinic. I can tell you, Sarepta has not given us any targets yet within cardiomyocytes.
I don’t know if they have any, in particular, that they’re thinking about right now. They just have the ability to designate some targets within cardiomyocytes as well as skeletal muscle and CNS. So I don’t know where they’re going to go or when they’re going to do that.
We have some ideas on targets. And so my expectation will be that probably sometime in 2025, you might hear a bit more about that.

Operator

Maya Mamtani, B. Riley.

Mayank Mamtani

Thanks for taking my follow-up. Could you also touch on how your TfR ligand-based targeted approach is different than maybe the other main shuttle approach is being looked at? And what are the attributes you feel allow you to optimally target MAPT? There’s a couple of approaches being looked at there. And thanks for taking our follow-up question.

James Hamilton

Yeah, sure. So we haven’t disclosed a lot of details on that. I would refer you to the webinar that we gave a few months ago in October where we covered the CNS platforms and talked a little bit more about that specific platform and how it differentiates itself.

Christopher Anzalone

And I think structurally, we said it was TfR targeted, but we didn’t describe the structure any more specifically than that.

Operator

Thank you. And as there are no further questions at this time, i would now like to turn it back over to Chris Anzalone for closing remarks.

Christopher Anzalone

Thanks very much, everyone, for joining us today. This has been an important day for us with this Sarepta deal. We’re excited about what that’s done for us as a company. We’re excited about working with Sarepta. So thanks for joining on the call today, and I wish you all a happy Thanksgiving.

Operator

Thank you for your participation in today’s conference. This does include the program. You may now disconnect everyone. Have a great day.