Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, Chris. Good afternoon, everyone and thank you for joining us today to discuss Arrowhead's results for its Fiscal year ended September 30, 2020. With us today from management are President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter; Dr. Javier San Martin, Chief Medical Officer, who will discuss our clinical programs; and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. In addition, James Hassard, our Chief Commercial Officer, and Dr. James Hamilton, who is recently promoted to Senior Vice President and Head of Discovery and Translational Medicine will both be available during the Q&A session of today’s call. 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 facts, including, without limitation those with respect to Arrowhead's goals, plans, and strategies are forward-looking statements. These include statements regarding our expectations around the development, safety and efficacy of our drug candidates, projected cash runway, and expected future development and commercialization activities. These statements represent management's current expectations and are inherently uncertain; thus, actual results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward-looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's annual report on Form 10-K and the company’s subsequent quarterly reports on Form 10-Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today’s call. With that said, I'd 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. This is our final earnings call in 2020, so in addition to discussing our progress for the quarter and plans for 2021, I would also like to speak a bit more broadly about our philosophy and model. We are building a different kind of biotech company. We are not focused on a single therapeutic area or rather on any disease with unmet medical need that is addressable with our technology. We are not focused solely on rare diseases or rather address large and small populations.

Thank you, Chris, and good afternoon to everybody on the call. I want to highlight data from the ARO-AAT, ARO-APOC3 and ARO-ANG3 programs since which are important readouts for each during the last quarter. Before I do that, I will give a very quick review of the earlier stage clinical program. ARO-HSD is our investigational candidate for the potential treatment of alcohol and non-alcohol related liver disease. The genetic validation is strong for inhibiting the target HSD17B13 in NASH cirrhosis, alcoholic hepatitis and cirrhosis patients. While conducting a Phase 1/2 single and multiple dose-escalating study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamic effects of ARO-HSD in normal healthy volunteers, as well as in patients with NASH or suspected NASH, we have complete single dose escalation in healthy volunteers and are currently enrolling the multiple dose patient portion of this study in NASH or suspected NASH patients. This study includes liver biopsy plus physical activity. ARO-HIF2 is designed to clear cell, renal cell carcinoma, and we are currently dosing patients in the Phase 1b dose-finding clinical study in up to 18 patients with advanced renal cell carcinoma. This study is designed to evaluate the safety of ARO-HIF2 and to determine the recommended Phase 2 dose by also assessing pharmacokinetics and preliminary efficacy based on RECIST and post-dose tumoral expression of HIF2 alpha and HIF associated genes. Our last early-stage clinical program is ARO-ENaC designed to treat cystic fibrosis. ARO-ENaC is in a Phase 1/2 dose escalated study to evaluate the safety, tolerability and pharmacokinetic effect of ARO-ENaC in up to 224 normal healthy volunteers and to evaluate safety, tolerability and efficacy in up to 30 patients with cystic fibrosis. We have dose escalated multiple times as planned in healthy volunteers and so far we are pleased with the safety and tolerability of this study. This is always an important finding for a new investigational drug and even more so for a new platform. We are now enrolling cystic fibrosis patients in the multiple dose portion of the study. Now I will move on to the recent data readouts. For ARO-AAT, our investigational RNAi therapeutic being developed as a treatment for the rare genetic liver disease associated with alpha-1 antitrypsin deficiency, we presented data at AASLD on 2002 open-label study. To review this study is fully enrolled with 15 participants in three cohorts. Four patients in cohort one received 200 mg of ARO-AAT and will have a repeat biopsy after six and 18 months of treatment. Cohort 1b is the same but patients received a 100 mg dose and eight patients in cohort 2 received 200 mg of ARO-AAT and will have repeat biopsy after 12 and 24 months of treatment. At AASLD, we reported on six months results from cohort 1. We think that data strongly suggests that ARO-AAT is doing what is designed to do, which is reduce the production of the misfolded mutant Z-AAT protein. The result also indicates that the liver may have the ability to clear out accumulated Z-AAT and begin to heal itself faster than anticipated. Importantly, we saw the following: 86% to 93% of reduction in terms of AAT protein, all patients demonstrated greater than 80% reduction in liver Z-AAT monomers, three of four patients had decrease in liver globule involvement and three of four patients demonstrated reduction in Z-AAT polymers with a range of 68% to 97%. All patients showed AAT reduction ranging from 36% to 66%. So we think that these are all positive indications of a strong pharmacodynamic response and improvement in liver health following just three doses of ARO-AAT. As Chris mentioned, we are currently preparing to engage with the FDA and other regulatory agencies in the first half of 2021 to discuss areas where the ARO-AAT program may potentially be streamlined and accelerated.

Thank you, Javier, and good afternoon, everyone. As we reported today, our net loss for fiscal 2020 was $84.6 million or $0.84 per share based on 100.7 million weighted average diluted shares outstanding. This compares with net income of $68 million or $0.69 per share based on $98.6 million weighted average diluted shares outstanding for fiscal 2019. Revenue for fiscal 2020 was $88 million, compared to $168.8 million for fiscal 2019. Revenue in both periods primarily relates to the recognition of a portion of the upfront payments and milestones from our license and collaboration agreements with Janssen. Revenue from the Janssen agreement is being recognized based on our estimate of the proportion of effort expended toward fulfilling our performance obligations, primarily overseeing the completion of the Phase 1/2 HBV clinical trial. We expect the remaining $19 million of deferred revenue to be recognized in the first half of fiscal 2021. Any additional milestones achieved with Janssen or Amgen will be additive to this projection. In addition, current period revenue also included the $20 million milestone payment we received from Amgen on the initiation of their Phase 2 clinical trial for AMG 890, which is now referred to as Olpasiran. Total operating expenses for the year ended September 30, 2020 were $181.1 million, compared to $107.6 million for the year ended September 30, 2019. This increase is primarily due to increased non-cash stock compensation expense. Stock compensation expense has increased because the valuation of new stock option and restricted stock award grants has increased with the growth of our stock price. Additionally, stock compensation expense increased due to the timing of achievement of certain performance-based awards in each period. The increase in total operating expenses was also driven by increased clinical trial costs as our pipeline of clinical candidates has increased and increased personnel costs in both R&D and G&A as our headcount continues to grow. Net cash used by operating activities during fiscal 2020 was $95.4 million, compared with net cash provided by operating activities of $173 million in fiscal 2019. The operating cash generated in fiscal 2019 reflects the $175 million upfront payments and two $25 million milestone payments received from Janssen offset by cash used for operations. Turning to our balance sheet, our cash and investments balances totaled $453 million at September 30, 2020, compared to $302.9 million at September 30, 2019. The increase in our cash and investments was primarily due to the December 2019 equity financing we completed, which generated $250.5 million in net cash proceeds to the company. In addition to the cash and investments assets discussed, as of September 30, 2020, we also anticipate receiving $300 million from the upfront payment from Takeda by the end of this calendar year or shortly thereafter. Similar to our agreement with Janssen, we anticipate recognizing this upfront payment as revenue over the course of completing our performance obligations within the deal, which primarily consists of managing the ongoing ARO-AAT clinical studies and providing certain manufacturing services. Looking ahead to 2021, we expect our full year cash burn to be in the range of $200 million to $250 million. This increase is due to growth throughout the company. Our program costs are expected to increase as ARO-ANG3 and ARO-APOC3 begin larger Phase 2 clinical trials and our newer programs continue to advance; our headcount increased in 2020 and we expect continued increases in 2021, which drives increases in payroll, related facility costs, discovery R&D and G&A expenses. Our common shares outstanding at September 30, 2020 were $102.4 million. With that brief overview, I will now turn the call back to Chris.

Thanks, Ken. There is no question we’ve had a productive recent period. The more clinical experience we gain with the TRiM system, the more confident we become that we are on the path to providing physicians with potentially transformational therapies that may make a big difference in the lives of millions of patients. That’s important and gratifying. We also feel confident that we have the right strategy. We believe the combination of focusing on well validated targets, our speed from idea to the clinic, our ability to address a new cell type every 18 to 24 months, the rapid nature of our pipeline expansion, and our selective partnering model together provide our shareholders with the potential for rapid value creation. So, what’s next for us? We think our initial commercial focus on cardio metabolic and pulmonary will allow us to build out the necessary infrastructure over the coming years in a focused and effective manner, but also in a way that is ever conscious of capital efficiency. That has been an area of hallmark and we intend for that to continue. And lastly, we are eager to gain clinical validation for our TRiM platform stability to target tissues outside the liver. This includes lung, tumor, muscle and other tissue types that we have not yet disclosed. RNAi works well in the podocytes we know that but our goal has never been simply to address liver-based disease; rather we have always worked to bring RNAi wherever it is needed and we are on the brink of demonstrating that right now. We are indeed building a different kind of biotech company and we look forward to continuing to share our progress. Thanks again for joining us today. I would now like to open the call to your questions.

And our first question comes from the line of Shawn Egan with Citi. Your line is now open.

Hi guys. Thank you for the updates today and for taking my questions. As investors start to do work for 2021, can you maybe set expectations for the ENaC program in regards to what data endpoints there will be? I know FEV1 has come up a few times, and I guess what level of benefit there would give you confidence? And you guys also plan to test for ENaC knockdown or are there any other approaches you can use to validate proof-of-concept?

Sure. Javier, would you like to address that?

Yes. So, let me start with the comment about by when we are going to have data next year, 2021, and it’s likely to be either at the end of the first half or maybe early Q3 of 2021. With regard to what we think will be success, as you know, one of the key efficacy endpoints is FEV1, and we have a study that is hopefully we’ll be able to see a change from baseline in the range of anywhere between, I would say, 5% and 15%. The first drug that was approved in this disease was with an increase in FEV1 of approximately 5%; the more current dose approved as you know is more in the range of 10% or 13%. So, we are looking for that proof-of-concept. Seeing a movement in FEV1 in a Phase 1 study I think will be considered success in our mind.

And let me also expand upon that. So, when we look at our FEV1 results, we are not comparing those to TRIKAFTA. At least, our initial patient populations we are going after will be those patients who are not eligible for TRIKAFTA, either they are no null patients so they have no CFTR to correct or they are refractory to TRIKAFTA or the like. So, the bar here is really nothing, right. These patients have very limited therapeutic options. And so, I think that if we can show a 5% improvement in FEV1, that’s a big thing for those patients, and I think that suggests we’ve got a drug.

Great. And then, maybe one follow-up question on the ARO-ENaC program. Like when you consider the physical barriers present in CF patients, I guess what gives you confidence that the drug will get to the target epithelial cells?

Well. So, of course, we don't have preclinical data in this model. So, we cannot answer the question definitively. One of the things that we're doing to prevent that to happen is the approach to dosing that we will dose – we are dosing patients with three consecutive days every three weeks, so that allows us to hopefully see that the drug reaches out to the anatomical areas in the lung where it’s necessary. So, I think that is one of the things that we are doing to really try to maximize that doses will reach the target tissue.

And when we first got into pulmonary, our first question or among our first questions was whether or not we are able to get through the mucus, and our KOLs were nonplussed by that. They said, you know what, given the size and charge of the molecule, we don't expect any problem to get through the mucus, and sure enough in animal models, whether it be rodents or NHPs or sheep, we've done that to be the case and so that was heartening. We then asked what about CF mucus? We know that's dehydrated. We know that that's a bit different. Unfortunately, as Javier said, there is not a good animal model for that. However, we have done in vitro analysis using actual CF mucus, and it does appear we are able to get to that. So we are optimistic. You never know until you know, and so look these – this first study will tell us an awful lot about the translatability of this platform, but we go into this reasonably confident given our good pre-clinical data.

Great. Thank you so much.

You're welcome.

Thank you. And our next question comes from the line of Maury Raycroft with Jefferies. Your line is now open.

Hi, everyone. Congrats on the progress and thanks for taking my questions. First one is also on ENaC and HIF2alpha also, so for both programs can you provide more specifics on where you are outlook dosing, are you at a therapeutically relevant dose, and is there anything else you can say on safety at this point?

Yes. So there is not so much we can say on that. It's been our policy, as you know Maury, not to give blow by blow. We have given some interim data before but in a more – in a different sort of environment. So, we can tell you that we are dosing patients in the early next study. We are at that portion of the study. So, that is encouraging. HIF2alpha of course, we are dosing patients. Examples, I can tell you at this point, I don't think with ARO-HIF2, we have not seen any data yet, those data are batch. And so at some point, I hope in the near future, we will see some early data that will indicate whether or not we are seeing knockdown at these first doses. But at this point, we just don't even know internally. With ARO-ENaC, we have just begun the patient portion, and so we don't have data there yet to know if we are in a therapeutic range. That's the big unknown for both of these. We have a good idea about what the therapeutic range would be in animal models, but we'll just see how this translates, and this really is uncharted territory for us. We have a good idea about how things translate from rodents to NHP to humans in hepatocytes. This of course is our first foray into solid tumors and pulmonary epithelial cells. And so, we'll learn a heck of a lot over the next few months.

Got it. That's helpful perspective. And then, for the initial data updates mid-year 2021, have you decided if you are going to report at a conference or in a press release, and then any thoughts on the amount of patients you are going to include in those initial data updates?

Yes. It's really too early to tell there unfortunately. When we look at the calendar, it appears that we will have some at least preliminary data by the middle of the year. But how much we are going to have is not clear and therefore what sort of venue we can share these data are not clear. And so, unfortunately, I can't give you a good answer for that at this point.

Okay. Understood. Thanks for that.

Yes. You're welcome.

We appear to be having some technical difficulties and the question queue has disappeared. So, we'll give everyone a few minutes to get back into that queue, because right now it seems to be gone. Okay, now we can’t do it now. Go ahead operator. You can move on to the next question. The next question comes from the line of Alethia Young with Cantor. Your line is now open.

Hey guys. Thanks for taking my question. I got the whole thing went dead for a second. But I am glad to see that we are all back up and running. I just want to talk a little bit about and it's a little bit big picture, just, how you are kind of outside the extra-hepatic liver approach differs from some of your competitors? I know you don't want to give away the whole secret sauce, but I guess, we are like some inherent like big picture differences and things that you think about, I mean, many companies say this is something they are pursuing, you guys are pursuing it in a very robust way. So, just wanted to – I've gotten this question before. So, I just wanted to pose it to you guys. And then, also, can you talk a little bit about your confidence on going after HIF, I mean, as those studies get going, I know it's sometimes been a little tricky in RNA and kind of in that world of HEM, but just wanted to get kind of your perspective with your technology.

Sure. So, the first question, let's see, we have been thinking about, as you know Alethia, you have followed us for a bit, we've been thinking about and working on bringing RNAi outside the liver for probably a decade now. This spans our – even our prior platform that we are developing. We always knew this was going to be an important value inflection point. So we wanted to be there. So, a lot of this is just brute force. We've been working on this for a decade now and so, we looked like an overnight success, except for it's a bit of ten year overnight. So that's more broadly. More specifically, of course, part of that is building a library of linker chemistry that we can use to optimize delivery. It involves establishing a library of targeting MOIDs that we can use and maybe most importantly, it involves our ability to design these very potent RNAi triggers. Again, as you've heard us talk about in the past, Alethia, we have a set of algorithms and rules that are proprietary that enable us to design triggers that may not be potent in vitro, but will be potent in vivo. And look, that's important as it relates to getting to podocytes because it does allow us to make more potent podocyte-directed constructs. Look at the LP(a) data that Amgen showed. That was a very potent – appeared to be a very potent sequence. But it's absolutely critical when you're looking at going outside the liver, because we know that there is no GalNAc analog, if you will, in other cell types. There is nothing – there is no front door like that in other cells that we've ever found. And so, we need to squeeze all the potency we can out of these constructs. So that ability has been just critical in our ability to rapidly expand into lung and solid tumors and next year at muscle cells. We hope to continue that as we talked about. This is a big part of our value proposition. This is a big part of our model. Now, the next question was around HIF2-alpha. So, are you asking about what we need to show vis-a-vis the Peloton Merck drug? Is that what you are curious as about?

Well, a little bit, yes, kind of just to get a flavor and context of that. Yes.

Sure. So look, so that – that's been a great program. The data have looked pretty good and that has helped to further validate a target that we've been excited about also for, gosh, almost a decade. There is an opening, however. They have seen some anemia that we may see less of - it's too early to tell, but we may see less of, because we are targeted. But at the end of the day, I think we just need to show a well-tolerated and active drug. That's a big enough market that there is plenty of room for a couple of us. I don't – I am not absolutely focused on showing X percentage better responsiveness than the competitor drug. I think we just need to be on the board. And we are hopeful we can be there, because as again, we've – as we talked about the past, that program has value for us in two ways. One, we think it's a good drug, and we think it could be a helpful drug in renal cell carcinoma, we think it could play well with others because we don't expect a lot of overlapping AEs, so that is exciting to us. But second, it's a good proof-of-concept. If we can show that we can knock out HIF2-alpha in these metastases, it will suggest to us that we have a platform, that we have a franchise and then we can go after other gene targets and potentially other solid tumor types. As we said in the past, our targeting strategy here is not specific to RCC metastases, but rather we believe it could allow us to get into solid tumors more broadly.

Great. Thanks.

Sure. Thank you.

Thank you. And our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Thank you. Just another question here on extra-hepatic tissues you plan on targeting. Could you just walk us through your thoughts beyond the lung and muscle with your strategy? And on the skeletal muscle targeted asset, which is entering the clinic in mid-2021, when we might get to see pre-clinical data here? And any thoughts you could provide us on the initial indications that you may be targeting?

Boy! I apologize. You asked a lot of questions there and I really can't answer any of those. Again, we’ve talked about solid tumors of course, and skeletal muscle and lung. We are working on other cell types. We've not disclosed any of those yet. And so, we're not prepared to disclose any of those at this point. But we clearly have others that we're working on. As we talked about, this is a big part of our growth strategy. What we have done for the podocytes, we want to do for lung and solid tumor and muscle and for fill in the blank number of additional cell types. With respect to – gosh, I am sorry. What was the other question?

Targeted for muscle.

Sorry. Right. Again, we haven't talked about that yet. We gave some – we have mentioned some early data - I think, at our R&D Day last year. We haven't really shared any non-clinical data since then. I do expect that we will do it. But we're just not prepared to do it quite yet. And I am not being coy. I don't know when we are going to do it. We feel confident that sometime in the summer, I believe we will be filing at CTA for that asset. And so some more upstream of that we will talk about in more depth. But at this point, we are just not quite prepared to do that yet.

Thank you.

Sure.

Thank you. And our next question comes from the line of Ted Tenthoff with Piper Sandler. Your line is now open.

Great. Thanks guys, and congrats on the progress. Really exciting just to see how far the platform has come along and then to see the recognition. My questions really had to do with the cardiovascular programs. While it's interesting to see Amgen mentioned LP(a) on a – in the press release this morning. I am trying to get a sense for what the costs of these Phase 3 and Phase 2bs could be appreciating that you gave the guidance of $200 million to $250 million next year. When it comes to an outcome study, what kind of cost should we be thinking? Thanks very much.

Yes. I guess, I apologize, Ted. These are important questions. But I can't answer them. We've not given guidance on what we think those costs are going to be. At this point, we've talked about how large we think those phase could be. The Phase 2b studies for the large outcome study for ARO-ANG3 it's not even clear what the number of those patients are going to be yet. They probably range anywhere from 8,000, if you look at Ameren studies or Medicines Company studies, all the way up to may have 15,000. And so, we need to see what our Phase 2b data look like before we determine how large that phase is going to have to be and then, at that point, we might be able to give you a bit of guidance on what we think that's going to cost. For your model right now, I think you could plug in what those costs generally are for a company like us for the Ameren type study or The Medicines Company type study, but I can't give you better guidance than that unfortunately, I apologize.

No. That's okay. I think that makes sense with the potency of the molecule. Great. Thank you very much. Looking forward to an exciting 2021.

You're welcome. Thanks, Ted.

Thank you. And our next question comes from the line of Mani Foroohar with SVB Leerink. Your line is now open.

Hey guys. Thanks for taking the question. I guess, building off of what Ted asked earlier, so, I know you can't give specific guidance around the cost of some of these trials, some of which were a few years away, so of course, pretty tough to -big estimate that far out. But you got a lot of trials going through early, mid, late stages and as you think about some of these assets moving forward, give us what your metrics are in terms of gating to move assets forward as opposed to deprioritizing or shutting down programs? And how do you think about that at each stage of development?

Sure. So, I think the real question there is strategic, right? I don't think we – that we have – I don't think that we are considering shutting down in the programs right now. I think the question is do we partner these programs or do we hold on to them internally. Right now, it feels like we can build out our commercial infrastructure for pulmonary and cardio metabolic. We have a good line of sight, I think, on half a dozen potential pulmonary drugs that we can develop. There are 16,000 pulmonologists in the U.S., and so we like that leverage of addressing a fairly larger market with only about 16,000 touch points where we can sell any number of drugs into it. That makes sense to us. Cardio metabolic as well, look, we think ARO-ANG3 and ARO-APOC3 are potentially big drugs and we could see ourselves building a sales force addressing cardiologists and lipid clinics to sell those two drugs that makes sense to us. As we go forward, those will not be the last two areas that we are going to build commercial infrastructure around, I think that's for sure. But right now, given our current clinical pipeline, we can make that forecast. As we bring in additional candidates into the clinic and as we address new cell types, we can expand that going forward. But right now, that makes sense to us. So, then, when you look at our assets outside of that, it doesn't mean that we are going to partner all those. It just means that that we've got a little bit of a higher bar I suppose when we think about building another sales force there. So, say take for instance HIF2-alpha, if that's our only oncology drug, it makes no sense for us to build a lot of sales force to just sell one drug. If that becomes a franchise, like we think it could, that could make sense for us to add on a commercial franchise there. It could also make sense to do a hybrid approach of finding the right oncology partner to help us build that out and also establish commercial jobs. It's a bit too early to tell at this point.

Thanks guys.

You're welcome.

Thank you. And our next question comes from the line of Luca Issi with RBC Capital. Your line is now open.

Terrific. Thanks for taking my question. Just two quick ones. The first one, I think I saw on clinicaltrials.gov that the size of the HIF2-alpha trial has been recently reduced from 40 patients to 80 patients. So, wondering if you have any color there? And maybe more broadly, saw some partnering I think you just articulated, but any thoughts there? Big picture thoughts would be helpful. And then the second is, I think it would seem some data for Ionis on the ENaC antisense oligonucleotide. Again, wondering if you have any thoughts on that data set. Thank you.

Sure. Javier, do you want to take the clin trials, as well as the ENaC? And then I'll circle back.

Sure. So, the HIF2 study, correct, we changed an amended the protocol early this year, I think was March or April and the reason was to reassess really what we wanted to learn from that study. And there are two really things that we care about. Number one, safety and number two, if we are able to get into the cells and knock down HIF2. In order to do that, we didn't need really 40 patients. Initially it was – I guess, very ambitious program to really evaluate different doses or sequences and then we made the decision to set it to the first thing first, which is proof-of-concept that we get to the tumor and we knock down the gene as we've done with all of the liver targets. So that's the reason to do that, get the proof-of-concept and safety reg as early as possible.

Okay. And so, I'll piggyback on that for the HIF2 partnering. So look, we are excited about that franchise and about that platform. Having said that, oncology is hard. And so, in a perfect world, we can achieve proof-of-concept for HIF2-alpha to show that we can do this and then bring in the right oncology partner to help us prioritize our next set of targets and then do some with our partner and then maybe some by ourselves. That's where we are right now. Do we have to partner HIF2 the candidate itself, not necessarily, but I do hope that the data will be compelling enough to enable us to blow out that platform, if you will, and the best way to do that would be, at least, in part with a partner. And so, Javier, do you want to talk about ENaC with Ionis?

Yes. So we look at that data carefully when we disclosed that a month or so ago. My opinion on the data is that it's not as consistent as initially, I think we thought, because it is four of those groups and only one shows a movement within about 50% knock down and that was in the highest dose – was the second highest dose. So I think first glance, it's interesting. It got our attention and we are working on it. So we decided to really work and see if we can replicate that and show our data. So we're in that process to think about or work on the development of the proper assay and we're thinking about how to do this in the clinical trial, whether it's going in normal healthy volunteers and/or patients. So, we're working on it. It was interesting. But again, as I said, I have my question mark about that data at this point.

Terrific. Thank you.

You're welcome.

Thank you. And our next question comes from the line of Madhu Kumar with Baird. Your line is now open.

Hey, everyone. Thanks for taking our questions. I guess my first one is kind of the elephant in the room, which is the REEF-1 trial with JNJ in hepatitis B. So, kind of by our back to the envelope calculations near the end of last year is what we might expect, kind of the 48 weeks of treatment from that trial to kind of conclude, plus some degree of number crunching. Do we expect to get visibility from JNJ about the kind of timing for the release of at least the 48-week treatment data from REEF-1? Like, how do you think about any kind of data cadence from that hepatitis B trial?

Thanks, Madhu. So that was funny. So you asked about – you mentioned the elephant in the room and I was thinking, which elephant is that and REEF-1 was not – didn't even come to my mind. Okay. So, I can't give you any guidance on that. You'll have to look at JNJ for that. As I recall, it was 48 weeks of treatment and then six months of follow-up. And so, that's the best I can give you at this point. I can tell you, and we've talked about it in the past, we are really excited about that drug candidate. We're really excited about JNJ. We think that they have been extraordinarily fast and thoughtful about all these trials and that they are starting its multinational. And so, all of that makes us really excited to be their partner, but I can't give you any guidance on when those data might come out.

Okay. And then, moving onto AAT. So you mentioned - here you mentioned before this idea of streamlining kind of clinical development of AAT based on the effects you've seen in the open-label extension. So, I mean, how are you thinking about that? Are those some kind of like nominal precedence we should be looking at for kind of endpoint comparisons or kind of composite endpoints that might come to play in the trial in Alpha antitrypsin liver disease?

So, Javier is probably dying to answer that question, but I can't let him answer at this point. Here is the deal. We were so excited about those data for a lot of reasons. I believe that – which is that, is that, it suggests this drug is doing what we wanted it to do, in fact, doing a bit faster than we expected. And so, we are going with those data and probably some additional data to the FDA to talk about changing endpoints and changing size and maybe changing the duration of the study. Until we have those discussions, it's probably not appropriate for us to speculate on the specifics of what those changes could be. I don't want to get out in front of this conversation. We've had a very good collaborative relationship with the FDA as it relates to this program. We expect this to continue to be collaborative and I just don't want to jeopardize that. I want to have that discussion – an open discussion with them then, come back to you and tell you what we have decided together.

Okay. And then, stepping back on the macro, so, you mentioned at the beginning of the call, the idea of going after targets where there is kind of validation from the outside scientific community. So, what does that exactly mean? Like, are we talking kind of genetic validation? Are we talking like earlier kind of iterations of therapy? Like, how do you think would that be moving forward kind of what you need for a given target to get you all excited of it?

Yes. I think it's all those things, right? I think it is early data from some other drugs that looks good, but because of safety reasons – off-target safety reasons, they couldn't go forward. I think at GWAS analysis, with all of the increasing amount of GWAS data that are coming out, there is an awful lot of important genetic data that can validate a target. I think HSD, I think to a lesser extent, but still ENaC and also experimental data. There are a number of targets that have been studied in animal models, but for one reason or another it couldn't be druggable in humans. So look, we're just looking – this is a very – as you know, this is a business full of risk and we are just looking at where we can lop off risk. And we think if we can remove or at least limit target risk, that's a good thing for us. And so, we don't – you've heard me say this before. We should not be in the target validation business. When we are, you need to shake me by the lapels and remind me of that, because I think this is an important thing. This is an important luxury that we have, at least at this point, especially given that we can go outside the liver, we've got all these new tissues now. And so, we can go through an awful lot of validated targets before we have to start taking target risk, I think.

Okay. And one last one. How do you think about multi-organ targeting? And what the opportunities pieces where you could go after targets that are expressed from more than one tissue type?

Multi-organ targeting, so with one construct addressing different cell types, is that the question?

Maybe not one, maybe it would be – I think the same target by targeting by going after knockdown of that gene across multiple different tissue types at once?

Sure. We are not doing that. Not right now. But yes, for some diseases certainly that would be of interest. That's –we try to limit complexity. What you talk about is elegant complexity. And so, I don't think that – again, I think that there are enough good targets out there right now that we don't have to introduce that level of complexity. That may change at some point, but right now, that's not a real focus of ours.

Got you.

Okay. Thanks very much.

Thank you. And we have time for one more question. So, last question comes from the line of Patrick Trucchio with H.C. Wainwright. Your line is now open.

Thanks, good afternoon. I have a few follow-ups. First one is on NASH. So, just regarding the Phase I/2 trial in NASH. Can you remind us if participants in this study are expected to be confirmed now to your NASH patients and if it is to be confirmed by fiber scan or biopsy or some other methodology? And then, secondly, can you tell us how you think about the regulatory/NASH, specifically as it regards to 2018 guidance in Phase 2b and 3 trials against the backdrop of some of these recent challenges in drug development in the space? And then, finally, can you talk about what mechanisms do you believe if any, could be synergistic with ARO-HSD in potential combination treatment of NASH?

Just repeat the first one of the three questions.

Yes. The first one is just on the Phase 1/2 trial in NASH. If you can remind us if the participants in the study are expected to be confirmed NAFLD or confirmed NASH patients?

Got it. So, thank you. We are enrolling patients that we have suspected NASH and that's a broad definition that includes the MRI - so that others can - the MRI data in terms of liver fat and metabolic syndrome and baseline LFD. So it's a combination of those three things that will not require to have confirmed NAFLD or NASH, but most of the people who have those clinical features are likely to have NAFLD. If someone has a biopsy prior to the study that defined as NASH, then that patient will be enrolled in this study. The broader question of our clinical development in NASH, of course, is a very complex situation and as you know, many, many large pharma companies or mid-sized pharma companies are working on this. The development of the guidance took easily a year – 10 years or so to get to where they are right now. And it is complex. The whole endpoint that they are asking for to be approved is complex, because of the way people read this biopsy, the category of fibrosis level and all of those complexities. So, we are at the very beginning of our journey. We are looking at the proof-of-concept that the ARO-HSD is doing what it is supposed to and at that point we need to think carefully about developing a drug for NASH and as we understand better perhaps the mechanism of action we may be able to select the patient population in a more smart fashion, but with regards to the overall development plan, Phase 2, Phase 3 biopsies and whether it is necessary to be approved; for now we may need to follow what is being proposed as guidance.

And last question on…

Synergies.

Synergy with other mechanisms or agents.

Well, NASH seems to be a disease that can start-up with different starting points and evolve via different mechanisms and when you look at broadly, all the drugs in development, you can try to target different aspects of the disease; those were more metabolic-oriented, more inflammation-oriented or more fibrotic-oriented. Where are we in that mix? We don't know. We don't think that maybe we are in the metabolic side. So that could be an interesting and clinically – like, in my opinion, like a scenario, how to go about this. But, I think we need to wait. We need to learn more about our own role and how the field of NASH evolves in the next couple of years.

Yes. And if I may, just one follow-up on the imaging and biopsy and evaluation of patients for NASH. Can you talk about the advances in evaluation of non-invasive imaging or biomarkers that can enable potentially quicker enrollment of mid and later stage NASH studies, as compared to what we've been accustomed to historically and where we are in that process?

Sure, sure. I can take a stab at that. Yes, certainly, if there is another option, an alternative to liver biopsy, something like MRI, PDFF or MRE, that would be preferable. Those, at least in the setting of MRE, that may not be something that's quite ready for prime time as an approvable endpoint. But looking down the road, I mean MRI PDFF is already used a lot in clinical studies, Phase II clinical studies. And I would suspect that MRE will become more commonly looked at as a key endpoint in NASH studies or other studies of liver disease broadly down the road.

That's helpful. Thank you very much.

Thank you. And this does conclude today's question and answer session. I would now like to turn the call back to Chris Anzalone for any closing remarks.

Okay. Well, thanks everyone for participating today and listening to the call. I hope that you all have a happy and safe Thanksgiving weekend.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you for participating.