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

Thanks so much. Good afternoon and thank you for joining us today to discuss Arrowhead’s results for its fiscal 2023 first quarter ended December 31, 2022. With us today from management are President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter; Dr. Javier San Martin, our Chief Medical Officer, who will provide an update on our mid and later-stage clinical pipeline; Dr. James Hamilton, our Chief of Discovery and Translational Medicine, who will provide an update on our earlier stage programs; and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. In addition, Tracy Oliver, our Chief Commercial Officer and Patrick O’Brien, our Chief Operating Officer and General Counsel, will be available during the Q&A portion of the 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 fact are forward-looking statements and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. 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. Arrowhead currently occupies a unique position within the biopharma world. I believe that RNAi’s modality and our proprietary TRiM platform, in particular, are increasingly validated. RNAi is a potentially powerful way to treat many disease states. It appears to largely work as intended across numerous clinical studies, has the potential to be highly specific and has been generally well tolerated. Overlay on top of this, a scarcity premium. There is a clear scarcity of companies capable of developing RNAi therapeutics well and extreme scarcity of those capable of bringing RNAi outside the liver. These factors combined to position Arrowhead to create substantial value for our shareholders and the patients who rely on us for life-altering new medicines. I think this also frames how we should view Arrowhead currently, the progress we will discuss today, and what these mean for the future. The two primary components of this sort of analysis are the ways in which we are expanding our technological reach and the ways in which we are leveraging our more proven technology. Let’s begin with how we are expanding our reach. As you know, our pulmonary franchise is currently comprised of three clinical candidates: ARO-RAGE, ARO-MUC5AC, and ARO-MMP7. With our announcement last week that the ARO-MMP7 Phase 1/2 study initiated, we are now treating subjects in all three programs. We remain on track to begin early data disclosures for ARO-RAGE and ARO-MUC5AC in the second quarter. This is an important milestone for us. We view the lungs as a target-rich environment and don’t see two or three drugs coming out of that franchise, but rather potentially eight or nine as with hepatocytes, once we have clinical validation that we are able to address the cell type and reduce expression of a target gene in a well-tolerated fashion. We believe the franchise will be substantially derisked. At that point, we have an expectation of success for future programs in terms of our ability to safely file the target gene. As such, clinical proof-of-concept in the first one or two programs within a cell type has a potential to unlock substantial value. We believe we will be there for our pulmonary franchise next quarter. And given what we learned with ARO-ENaC and our non-clinical data using ARO-RAGE, ARO-MUC5AC, and ARO-MMP7 across several animal models, we are optimistic that we will see clinically relevant gene knockdown in a well-tolerated fashion. We have not spoken about our muscle targeting franchise for some time, and I am pleased to announce today that we intend to move ARO-DUX4, our candidate designed to treat facioscapulohumeral muscular dystrophy, or FSHD, into clinical studies next quarter. This is another example of our drive to apply RNAi to unmet medical needs wherever they are. We have completed a large number of non-clinical studies, including acute and chronic GLP toxicity studies, and we look forward to bringing this potentially important medicine to the patients who need it. Another important milestone relating to technology expansion that we expect next quarter, the disclosure of the next cell type we will be targeting and a presentation of our supporting non-clinical data. This and our work in the pulmonary and skeletal muscle spaces represent substantial growth opportunities for the company and would bring RNAi closer to reaching its full promise as a revolutionary therapeutic modality with the potential to address many new diseases. These programs are early, but they are the next great leaps forward for Arrowhead. The second calendar quarter of 2023 is indeed a busy time for demonstrating Arrowhead innovation. Let’s now turn to our liver programs. We have demonstrated across multiple candidates in many clinical studies and in thousands of patients that our liver-directed candidates appear to achieve high levels of target engagement and have encouraging safety and tolerability profiles. As such, we are focused on executing on our current liver programs and aggressively expanding our pipeline where we can. Last month, we announced top line results for the Phase 2 SEQUOIA clinical study of fazirsiran for the treatment of liver disease associated with alpha-1 antitrypsin deficiency. The active treatment arm had results that were highly consistent with the AROAAT-2002 open-label study, which we previously published in the New England Journal of Medicine. Fazisiran appears to be active against its targets with all treated patients achieving a high level of reduction of mutant Z-AAT protein, which is known to be the root cause of AATD liver disease. This reduction over 12 months led to promising downstream changes in markers of liver disease, including reductions in inflammation and 50% of patients experienced a regression in fibrosis. These encouraging results are exactly what we had hoped for. The only data point that was a bit difficult to interpret was in the placebo arm. There, three of eight patients with paired biopsies showed an improvement in fibrosis. We know that scoring fibrosis is a notoriously noisy measure and enhancing the accuracy of such data requires a large enough sample size. Unfortunately, with just eight patients, a single patient in either direction can lead to confusing percentages. We believe that is what happened here. Fortunately, we can look to previous studies for guidance on what fibrosis should look like in untreated patients. For instance, a previous natural history study that followed over 50 AATD patients showed about 15% had improvement in fibrosis. We believe that the 50% of patients who showed improvement in fibrosis on fazisiran is a reliable measure because a) the treatment groups had a larger sample size than placebo; and b) the improvements in fibrosis were part of a larger dataset that made sense together. Patients on fazisiran had dramatic reductions in AAT monomer, globules, and they demonstrated decreased inflammation. The patients in the placebo arm showed none of these features. Takeda is now initiating a Phase 3 study that will enroll up to 160 patients, which is designed to be sufficiently large to smooth that variability to approximately the levels expected on natural history. Arrowhead is eligible to receive a milestone payment from Takeda when the Phase 3 study begins. During the previous quarter, two of our other partner programs generated milestone payments as they advanced into the next stage of development. Horizon Therapeutics enrolled the first subject in a Phase 1 study of HZN-457, formerly called ARO-XDH for the treatment of gout, earning Arrowhead a $15 million milestone payment. In addition, we earned a $25 million milestone payment from Amgen after the first subject was enrolled in Amgen’s Phase 3 trial of olpasiran for the treatment of cardiovascular disease. We believe in that program and in the potential of olpasiran to help patients with the risk of cardiovascular disease associated with elevated levels of Lp(a). However, with the recent presentation and publication of positive Phase 2 data, we determined that the timing was right to monetize our royalty stream associated with potential future olpasiran sales. To that end, in exchange for rights to the olpasiran royalties, Royalty Pharma paid us $250 million in cash upfront and up to $160 million in additional payments contingent on the achievement of specific clinical, regulatory, and sales milestones. In addition, we retained rights to $400 million in development, regulatory, and sales milestone payments potentially due from Amgen from the 2016 license agreement including the $25 million milestone payment I just mentioned. During the quarter, promising new clinical data across three late-breaking presentations were presented at the American Heart Association meeting on three investigational candidates for cardiometabolic diseases, ARO-APOC3, ARO-ANG3, and olpasiran. The totality of these data demonstrates the significant progress achieved in RNAi drug development and they specifically suggest a potential future treatment paradigm where RNAi may be prominently leveraged in preventative cardiology. As I mentioned, a Phase 3 study has already been initiated with olpasiran. ARO-APOC3 is also being investigated in a Phase 3 study against FCS. And we expect that 48-week study to be fully enrolled next quarter. We also expect end of Phase 2 meetings this year to speak with the regulators about Phase 3 studies using ARO-APOC3 in sHTG patients and broad mixed dyslipidemia populations. My expectation is that we will launch those Phase 3 studies at the end of the year. Similarly, I expect that we will move ARO-ANG3 into Phase 3 studies in familial hypercholesterolemia this year. I also expect several data presentations from four Phase 2 studies with these candidates throughout the year. Finally, we continue to make progress in our Phase 1/2 study of ARO-C3, our candidate designed to treat several complement-mediated diseases. I expect to release initial data next quarter. Janssen has also made progress with their Phase 1 study in JNJ-0795, our partnered candidate against NASH, and we expect a data disclosure that includes liver fat reduction this quarter. Turning to JNJ-3989, we have seen the media reports about Janssen deprioritizing HBV broadly, and that is consistent with our understanding. We have not received a termination letter for our license agreement, and it is our understanding that some legacy HBV studies are continuing, but we do not know where JNJ-3989 will ultimately end up. We will assess our options and rights when Janssen decides the path forward for the program. With that overview, I’d now like to turn the call over to Dr. Javier San Martin. Javier?

Thank you, Chris, and good afternoon everyone. I want to describe the fazirsiran SEQUOIA data that we presented last month and then give an update on where we are with mid and late-stage studies of our cardiometabolic candidates. As Chris mentioned earlier, the SEQUOIA data from the treatment arms were very encouraging and consistent with the prior data generated from the 2002 open-label study. This is what we and our partners at Takeda wanted to see. Patients receiving 25, 100, or 200 milligrams of fazirsiran who had baseline fibrosis demonstrated a dose-dependent mean reduction in serum Z-AAT concentration at week 48 of 74%, 89%, and 94% respectively. All three doses led to a dramatic reduction in total liver Z-AAT with a median reduction of 94% at the post-baseline liver biopsy visit. In addition, PAS-D globule burden, a histological measure of Z-AAT accumulation, had a mean reduction of 68%. Improvement in portal inflammation was observed in 42% of patients while only 7% showed worsening. Lastly, 50% of patients achieved an improvement in fibrosis of at least one point by METAVIR stage. In contrast, by week 48 patients receiving placebo who had baseline fibrosis saw no meaningful changes from baseline in serum Z-AAT, had a 26% increase in liver Z-AAT, and had no meaningful change in PAS-D globule burden. No placebo patients experienced an improvement in portal inflammation while 44% experienced worsening. Three of the eight placebo patients experienced an improvement in fibrosis at the post-baseline liver biopsy visit. This finding highlights the known variability on histologic fibrosis assessment. With a larger sample size, like in the planned Phase 3 study, the rate of improvement in patients receiving placebo may more closely approximate results from natural history studies of untreated patients with AATD. Fazirsiran has been well tolerated with treatment emergent adverse events reported to-date generally well balanced between fazirsiran and placebo groups. There were no treatment-emergent adverse events leading to drug discontinuation, dose interruptions, or premature study withdrawals in any study group. Compared with placebo, no dose-dependent or clinically meaningful changes were observed in pulmonary function tests over one year with fazirsiran. These are all encouraging signs for the program and for patients. We know this is a progressive disease of the liver caused by one thing: the accumulation of the mutant Z-AAT protein, which cannot efficiently get out of the liver. The data suggest that fazirsiran can reduce the production of new Z-AAT and then the liver starts the process of breaking down and clearing the accumulated Z-AAT in the liver, reducing inflammation and ultimately regressing fibrosis. This is essentially the cascade of progressive liver disease in reverse. We believe that this reversal can only start with the removal of the insult to the liver, which is the accumulation of the mutant Z-AAT protein. These data represent hope for physicians and their patients with this disease who have no approved treatment options. We also announced that Takeda is initiating a randomized, double-blind, placebo-controlled, Phase 3 study to evaluate the efficacy and safety of fazirsiran in patients with F2 to F4 fibrosis. Approximately 160 patients will be randomized 1:1 to receive fazirsiran or placebo. The primary endpoint of this study is the decrease from baseline of at least one stage of histological fibrosis METAVIR staging in the centrally read liver biopsy done at Week 106 in patients with METAVIR stages F2 or F3.

Thank you, Javier. We announced last week the initiation of a Phase 1/2 study of ARO-MMP7. So I want to talk about that first. ARO-MMP7 is designed to reduce expression of matrix metalloproteinase 7 or MMP7 as a potential treatment for idiopathic pulmonary fibrosis, or IPF. MMP7 is thought to play multiple roles in IPF pathogenesis, including promoting inflammation and aberrant epithelial repair in fibrosis. Significant unmet medical need exists for patients with IPF who experience progressive decline of lung function despite current therapies. ARO-MMP7-1001 is a Phase 1/2a single ascending dose and multiple ascending dose study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of ARO-MMP7 in up to 56 healthy volunteers and in up to 21 patients with IPF. Now moving on to our two other pulmonary programs, ARO-MUC5AC and ARO-RAGE, our investigational RNAi therapeutics designed to reduce production of mucin 5AC or MUC5AC, and the receptor for advanced glycation and products, RAGE, respectively, as potential treatments for various muco-obstructive and inflammatory pulmonary diseases. As Chris mentioned, we are on schedule to have initial data from the healthy volunteer portion of the Phase 1/2 studies in the first half of this year. The healthy volunteer portion of these studies has two parts: a single ascending dose part and a multiple ascending dose component. The studies are designed to assess safety and tolerability, pharmacokinetics and pharmacodynamics. We will be assessing pharmacodynamics by measuring available biomarkers in bronchoalveolar lavage fluid, induced sputum, and for RAGE, we are also measuring serum sRAGE protein. The second portion of the studies is in patients with moderate to severe asthma. We recently initiated enrollment in asthma patient cohorts in both the ARO-MUC5AC and ARO-RAGE studies. Initial data should be available around the end of the year. Finally, moving on to ARO-C3, which is our investigational hepatocyte-targeted RNAi therapeutic targeting hepatic C3 expression as a potential treatment for complement-mediated hematologic and renal diseases. We remain on track to report data from Part 1 of the study in healthy volunteers in the first half of this year. Based on an analysis of data from the healthy volunteer single and multiple escalation dose cohorts, we anticipate selecting doses for the Part 2 open-label patient cohorts this month and we are on track to open patient cohort enrollment in the first half of this year.

Thank you, James, and good afternoon everyone. As we reported today, our net loss for the quarter ended December 31, 2022, was $41.3 million or $0.39 per share based on 106 million fully diluted weighted average shares outstanding. This compares with a net loss of $62.9 million or $0.60 per share based on 104.5 million fully diluted weighted average shares outstanding for the quarter ended December 31, 2021. Revenue for the quarter ended December 31, 2022, was $62.5 million compared to $27.4 million for the quarter ended December 31, 2021. Revenue in the current period primarily relates to our collaboration agreements with Amgen, Horizon, and Takeda. Revenues recognized as we complete our performance obligations, which include managing the ongoing AAT Phase 2 clinical trials for Takeda and delivering a Phase 1 ready candidate to Horizon. There remains $107 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over the next one to two years. Additionally, Horizon enrolled the first subject in a Phase 1 trial of HZN-457 formerly known as ARO-XDH, which triggered a $15 million milestone payment to us, and Amgen enrolled the first subject in its Phase 3 registrational trial of Olpasiran, which triggered a $25 million milestone payment to us. Both milestone payments were received in the second quarter of fiscal 2023. Revenue in the prior period primarily related to the recognition of a portion of the payments received from our license and collaboration agreements with Takeda and Horizon. Total operating expenses for the quarter ended December 31, 2022, were $104.7 million compared to $90.8 million for the quarter ended December 31, 2021. The key driver in this change was increased candidate costs and salaries as the company’s pipeline of clinical candidates has both increased and advanced into later stages of development. Net cash used by operating activities during the quarter ended December 31, 2022, was $75.5 million compared to $61.3 million for the quarter ended December 31, 2021. The increase in cash used by operating activities is driven primarily by higher research and development expenses. We expect our operating cash burn to be $70 million to $90 million per quarter in fiscal 2023 and capital expenditures up to $200 million as we approach completion on our footprint expansion projects, including GMP manufacturing. Turning to our balance sheet. Our cash and investments totaled $617.6 million at December 31, 2022, compared to $482.3 million at September 30, 2022. The increase in our cash and investments was primarily related to the $250 million payment from Royalty Pharma, offset by our operating cash burn, along with continuing capital projects. Our common shares outstanding at December 31, 2022, were $106.1 million. With that brief overview, I will now turn the call back to Chris.

Thanks, Ken. We’re making good progress on our 20 and 25 initiative, where we expect to have 20 individual drug candidates in clinical trials or at market in the year 2025. We currently have 12 drug candidates in clinical studies, six of which are wholly owned and six are partnered. I expect that 12 to become 15 or 16 by the end of this year. I mentioned ARO-DUX4 moving into the clinic next quarter, and I expect two or three additional new drug candidates, and we have never talked about them publicly. Having such a large clinical pipeline provides us with a broad base to build value and spread risk, and it also gives us consistent opportunities to share data and progress. In the near term, we think these opportunities include the following: Phase 1 NASH data from JNJ-0795 this quarter, fazirsiran SEQUOIA full 12-month biopsy data in the second quarter; initiation of ARO-HSD Phase 2b in Q1 or Q2. Early ARO-RAGE Phase 1/2 data in the second quarter, early ARO-MUC5AC Phase 1/2 data in the second quarter; early ARO-C3 Phase 1/2 data in the second quarter; initiation of the ARO-DUX4 Phase 1/2 study in the second quarter, disclosure of our next cell type and supporting data in the second quarter. ARO-APOC3 data throughout the year, ARO-ANG3 data throughout the year, initiation of two to three new Phase 1 studies towards the end of the year, initiation of JNJ-0795 Phase 2 in Q3 or Q4, early ARO-MMP7 data in Q4, initiation of ARO-ANG3 Phase 3 studies in Q4, and initiation of additional ARO-APOC3 Phase 3 studies in Q4. As you can see, we expect a busy 2023. Thank you for joining us today, and I would now like to open the call to questions.

Our first question comes from the line of Ellie Merle of UBS. Your line is open, Ellie.

Hi, thank you so much for taking my question. Just in terms of the data in the second quarter from the pulmonary franchise, I guess, what exactly are we getting in terms of the number of patients and dose levels? And what are you looking to see, I guess, what degree of lowering, and use dose levels is sort of the target levels that you’re looking for and will confirm, I guess, kind of this target engagement that we’re hoping to see? Thanks.

So look, I don’t know that we have a target knockdown threshold that we’re looking for. This is our first – this will be our first data in the healthy subjects, so we’ll see what sort of knockdown we catch. Again, I don’t know that we have out. James, do you want to talk about some of the cohorts we have seen?

Sure, right. So we will have data in the SAD cohorts for the first four dose levels and then likely as well in the MAD cohorts through at least the first three cohorts, the two dose cohorts. That’s all in the healthy volunteers. We won’t have any patient data at that point.

Great. Thanks.

Thank you. Our next question comes from Maury Raycroft of Jefferies. Your line is open, Maury.

Thanks for taking my question. I had a question about the pulmonary data as well. Wondering if you expect the bronchoalveolar lavage data to correspond with the serum PD biomarker data. I guess, maybe you could talk a little bit more on just what kind of proof of concept we should be looking for in this update. James?

Yes. I think directionally, I would expect, based on what we’ve seen in animals and monkeys specifically, that the lavage data should directionally behave the same as the serum data.

And my thing on that is that we will see what they look like. But my sense is that the lavage data may give us better knockdown because it’s local. Of course, the challenge with the systemic is that there may be extra pulmonary sources of RAGE. And so that may muddy the data a bit. But that will give us a better idea of duration because we’re not bringing these individuals more than once.

Got it. Okay. That’s helpful. And also just with the JNJ media reports, I’m wondering if you’ve had any discussions with JNJ regarding 398 ongoing studies and have a sense of when they could make a decision on the program? And what are some options you’re considering if JNJ terminates the license agreement?

So this is all new for us. And so I don’t have too much to comment on this at this point. Again, we understand that they are deprioritizing HBV broadly. This doesn’t have anything to do with our candidate as I understand it. And so they do not have, again, my understanding and Patrick O’Brien can correct me if I'm wrong. My understanding is that they don’t have the right to sublicense this, but they could assign it. And so we will see what they decide to do there. If they do decide to assign it, it requires our approval, otherwise it will come back to us. And so we don’t know what their goals are here, and we will just have to wait to see. But look, we believe in that program. I think that drug clearly does what it is designed to do. We’re seeing substantial reduction in viral antigens. I think that’s important that is maybe the critical component to getting to a functional cure. It’s not the only component, but I think it’s the critical one, and they were interrogating a number of different strategies to what they can combine with that to get to functional cures. We look forward to seeing more of those data because we are only so close to it at this point, of course.

Got it. Okay, makes sense. I will hop back in the queue. Thanks for taking my questions.

Yes. Thank you.

Thank you. Our next question comes from the line of Mayank Mamtani from B. Riley. Your line is open, Mayank.

Hi, thanks for taking questions. Looks like a busy year 2023 for you than last year. So maybe just following up on the pulmonary programs. On the safety and tolerability data that we will have for RAGE and MUC5AC, could you talk about sort of the implications of that broadly for your delivery system? And just maybe remind us of the nebulizer system; is it the same across the different programs? And a second part of the question on the MMP7. What is the frequency of administration you’re looking to target there? As you know, in IPF, now there is a lot of progress in the pipeline with some antibody approaches also coming in.

Sure. Yes. So I think the safety data that we will have for RAGE and MUC5AC, I think while it will be candidate specific and target specific, I think will be applicable to the broader platform and will help to support the pulmonary delivery platform generally. In terms of the nebulizer question, this is – it’s the same nebulizer system that we’re using across the three different programs. It’s different than what we used with ARO-ENaC. So this is a more efficient nebulizer versus what we used with ENaC. And then there was a third question there, I think...

MMP7 dose interval.

So the initial dosing interval for MMP7 is every two weeks in the MAD cohorts. In the SAD, of course, we just do single doses, but then we’re investigating day 1, 15, and 29 in MMP7 similar to what we’re doing in the MAD cohorts for MUC5AC. Now that may not be the dosing regimen going forward. That’s sort of a more intensive regimen consistent with what we used in the animals to generate maximum knockdown. We will have to see what the duration of knockdown is after both a single dose and after the multi-dose administration.

Got it. And then just a quick follow-up on JNJ-0795, can you just remind us what the target there is and sort of the progress – how far along that program is – I know it’s a J&J partnered program. And then just broadly on the partnership with J&J. Is it product program by program, I am assuming and whatever happens with 3989 has no implications on how things may progress with 0795?

Yes. Those are different divisions within Janssen. The target is PNPLA3, maybe the most genetically validated target for NASH. They are in a Phase 1 study that includes SAD as well as the MAD portion. And it is my expectation that we can start to report at least some, not at least certainly some SAD data this quarter.

Okay. Thanks for taking the question.

Thank you. Our next question comes from the line of Joel Beatty of Baird. Your line is open, Joel.

Hello. Can you hear me?

Yes.

So, for the lung programs and the data coming in Q2, could you elaborate on how meaningful the data is for other programs? In the prepared remarks, you talked about eight or nine programs that could come for long. How de-risking is this data that we get in Q2?

I think it’s substantially de-risking. This will be the first clinical data from our lung franchise. The structure of these candidates is really quite similar between MMP7, MUC5AC, RAGE, and future ones. They are simple conjugates, as you know. It’s simple RNAi, trigger that is chemically modified linked to targeting. So, to the extent that it is well tolerated and can get into these pulmonary epithelial cells, I think it is telling as it relates to future candidates. These cells don’t care what the sequence of the RNAi trigger is. Once you get into this cell and get loaded into the risk complex, it can be any sequence. So, I think that it is a substantial de-risking event, again, to the extent that we do show clinically relevant knockdown in a well-tolerated fashion.

Great. That’s helpful. And then for AAT, are you going to discuss the powering assumptions or otherwise, just kind of speak at a high level as to what gives you confidence in the powering for the 160-patient registrational Phase 3 of this plan?

Yes. I can give you a high-level concept, but this is Takeda’s protocol design and is already in the public domain in clinicaltrial.gov. But essentially, if you look at what Takeda has been thinking is taking a conservative approach for the active treatment group, and not as conservative for the placebo group. But with that made the assumptions and the typical standard deviations that are expected and with that in mind to power calculation, they took, we think, good and conservative approach with regard to the duration, which is 106 weeks, so two years essentially and the sample size and the patient population they selected. So, it’s not just the assumption, but it’s the assumption in the context of sample size of 160 patients, a two-year observation and all patients we have at least F2 fibrosis stage patients with NAFLD. So, when you look at the totality of the study design, we believe this study is well set to show the benefit in fibrosis levels. And then the details for Takeda will eventually come out with more details.

Okay. Thank you.

Thank you. Our next question comes from the line of Madhu Kumar of Goldman Sachs. Your line is open, Madhu.

Great. Thanks for taking our questions. So I guess our first one relates to the idea in the lung of which cell type matters? And how do you think about in various pulmonary indications targeting the lung epithelial cells in the lung epithelium versus, say, other cell types that are just present in the lung, particularly immune cells in the lung? How do you kind of thread that needle? And then kind of secondly, along the question of threading the needle, how do you think the phenomenon of knockdown pretty powerful inflammatory modulators where want to suppress enough so that you reduce the kind of autoimmune functions, but you don’t suppress them so much that you reduce the viral protective solutions? How do you think about kind of that balance?

Sure. So well, first of all, regarding the epithelial cells, those are the cells that we are trying to target. Those are generally the cell types where we are looking for targets. So, we are looking for targets that are expressed by lung epithelial cells. And if there is a target related to a disease that we could knock down, that’s the ideal situation. I think that’s where our system performs the best, is in getting into those cell types and knocking down targets expressed in pulmonary epithelial cells or some of the derivatives, including basaloid cells in a patient population. Right now, we are not targeting any gene targets in macrophages or other immune cells in the lung. We are pretty focused on the epithelial or epithelial cell-derived types of cells. And then the other question was about modulating inflammation, so for something like RAGE that knocking down RAGE, like you said, could be fairly powerful as an anti-inflammatory. There are some redundancies built into the system. So, I think some of the innate immune functions that would be inhibited by silencing RAGE can also be activated through a TLR4 pathway. So, you are not completely wiping out the innate immune system altogether. There is some redundancy there.

Okay. Thanks so much for taking our questions.

Thank you. Our next question comes from the line of Mani Foroohar of SVB. Your line is open, Mani.

Hi, good afternoon. I have a question regarding the pulmonary program. What level of knockdown is expected to achieve a functional benefit in the clinical setting?

We don’t know the answer to that. There are advantages and disadvantages to being pioneers here. The advantages are the way the first one; the disadvantages are that no one has done this before. And so, we will be learning the field as we go. So, I don’t have a good answer for you on that, unfortunately.

Alright. I guess we will have to ask you a little later. And so I guess maybe just a different question in terms of the HBV program. So, should the assets be returned by J&J, what would be your development line? Would you consider – given that most assets in this sector are partnered, especially for the combination program? Would you consider developing it internally or seeking out a new partner?

Yes, that’s a good question. So, look again, as I mentioned, that drug is doing what it’s designed to do, and that’s exciting. Janssen has done a phenomenal job with a number of very large studies. And so they are sitting on a ton of data. We are familiar with some of those data but not all of them. And so it’s hard for us to make – it’s impossible for us to make a decision about how we might develop that drug until we get into those data. We are certainly interested, again, because the drug appears to be doing what we intended to do. And so we just have to take a look at all the data to see what the path forward will be. I do firmly believe that there is a path forward. I just don’t know what it is until we see the data.

Thank you. And I guess lastly, would there be any sense of timing in terms of maybe when you would be able to either get maybe more clarity from J&J access to the data so you could make an informed decision?

I don’t have an answer for that, unfortunately. I don’t know what their timeline is. As I mentioned in prepared remarks, my understanding is that there are some ongoing studies; I assume that those are still ongoing, but I do not know, to be honest. I think this is all happening real-time, and my expectation is that we will have better clarity from Janssen over the next coming weeks.

Alright. Thank you.

Thank you. Our next question comes from the line of Luca Issi of RBC Capital Markets. Your line is open, Luca.

Alright. Thanks so much for taking my question. I have two. Maybe circling on A1AT, circling back on the prior question, Javier, can you just talk a little bit more about the powering assumption here in the Phase 3 at 160 patients in the primary endpoint of 2 years? What is the minimum delta in fibrosis between the active arm and placebo that is actually sufficient to hit the stat? Any color there would be great. And then maybe on DUX4, can you just talk a little bit more about that program? I think in the past you have mentioned that expression could be quite variable there. So, wondering how you are planning to mitigate their risk? I mean, maybe more broadly, how confident are you in that program?

Yes. Luca, so I don’t know how much detail I can provide on the specifics of the Takeda team and this situation, the work they did to power the study or to size the study with 160 patients. And like I said, the primary endpoint or the primary analysis is at 2 years, 106 when all patients with F2 and F3 that would be about 110 or so complete the 2-year study. So, that gives you really for what we learned so far and we can take this 50% reduction in fibrosis that we observed twice in two different studies with the same and similar patient population as a good point of reference, I would say. And then, you need to look at the natural history data versus the SEQUOIA data and go somewhere in between. And if you do that exercise, you will come out with the same number, more likely. So, that’s how I will address this comment. But Chris...

And importantly, as Javier mentioned, that two-year time point is at around 110 patients, not the full 160. And importantly, it was powered based on that. So, given their assumptions, they determined that 110 should be sufficient. James, do you want to…

Sure. Yes, the DUX question. It’s correct that the expression of DUX4 is variable. And or the measurement of the protein in the muscle and the downstream DUX4 affected genes can be challenging. At least one other company has demonstrated. And that was one of the reasons, if you recall, that we wanted to be sure that we had the tox coverage to cover a longer Phase 2 study. Something if we weren’t able to see any knockdown in gene expression that we could do a longer study and see some proof of concept efficacy with imaging, specifically with MRI or with functional endpoints, things like reachable workspace. We now have that tox coverage at least from the chronic monkey study. I think the chronic rat readout should be available shortly. So, we have the ability to design a study that not only could potentially give us biomarker readouts if we are able to measure DUX4 and downstream gene expression but also a study that would have MRI and functional endpoints built into it as well.

Got it. Thanks so much.

Thank you. Our next question comes from the line of Prakhar Agarwal of Cantor. Your line is open, Prakhar.

Hi. This is Prakhar from Cantor. Thanks for taking my questions. So, first on ARO-AAT, how long do you think will it take to enroll the Phase 3 trial? The clinical trial entry for it suggests a primary completion date of March 2027. So, that would imply roughly two years for enrollment. Is that the right proxy to think about the timing of this readout, or would the timelines be expedited? And I had a quick follow-up.

Yes. I think it’s inappropriate for us to opine on that since Takeda will be running that. I think probably best to ask them what their expectations are.

Okay. And second on ARO-APOC3, any comments on how you are thinking about the trial size and duration for the CV outcomes trial? And what do you think you need to show on the CV outcomes for that asset to have a broad uptake in the market?

Yes. Well, at the very beginning of that process, as you know, it’s not a simple process. We will work with a group of experts. We are at the beginning of establishing the governance on how to design and execute that study. As we said during this call, we are wrapping up the Phase 2 study within the next quarter or two quarters; that will be the way that we will define the study design. We are planning to have interaction with the FDA to talk about that this year. And the expectation is that we will start this study in 2023. So, the beginning of the process; a lot of work that needs to be done. Some important decisions that will be related to the specifics of the study design, how loading will last. It’s likely to be of course, an event-driven trial as most of these studies are. So, a lot to come. I would like to talk about it in the next few quarters.

There are at least a couple of things that are gating for us to figure out what those CVOTs might look like. And one thing is, look, we still haven’t read out the entire Phase 2 studies yet. We have interim analysis that looks quite positive and we are excited about. But we need to finish those studies and see what those look like. That’s the first. Second is that we haven’t had discussions with the FDA about their expectations. We have to have those. I think once we get through those two issues, we will have – we can have a better idea about what these things might look like.

Understood. Thank you for taking the questions.

Thank you. At this time, I would like to turn the call back over to Dr. Chris Anzalone, President and CEO, for closing remarks. Sir?

Thanks everyone for joining us today and have a nice evening.

This concludes today’s conference call. Thank you for participating. You may now disconnect.