Conference Transcript - ARWR 2026-05-13

Jason Gerberry, Analyst — Bank of America

All right, everybody, we're going to get going here with our next company presenter at the B of A Annual Healthcare Conference. My name is Jason Gerberry. I cover pharma and biotech here, and I am joined by CEO Chris Anzalone of Arrowhead Pharmaceuticals. So, Chris, thanks for joining us. It's great to be here. So, Arrowhead's at a pretty interesting pivot point as a company. Historically, a lot of earlier-stage R&D efforts establishing siRNA therapies for different tissue types and figuring out where your kind of next shot on goal would be. Now you're at a point where you're pivoting to commercial, but you still have a lot going on in the pipeline. So maybe we can just start there as, you know, how you're managing that transition as a company to now becoming a commercial organization and how that alters your focus as a CEO.

Christopher Anzalone, CEO

Sure. So we're an and company. We're not an or company. And commercial is critical, obviously. You know, this is why we're all here. R&D is great, but unless you can bring these medicines to patients, then there's no point in that, right? So we've had a huge – it's been a big transition for us to start to build out this commercial force, and it's been successful so far. But in our core, we are an R&D company, and we needed to make sure that that drive didn't slow down, and it has not. In fact, if it's even sped up, you know, we are now able to address, I think, seven different cell types. Five of those are in clinical studies as we speak. You know, we are now on the cusp of blowing out our dimer or bispecific approach. You know, we've got an increasingly validated platform there. And so, you know, there's a ton of good opportunities there to knock down multiple genes with the same, you know, single molecule. We'll have our first data coming out of the dimer platform. later this year, I guess in the third quarter. That's our PCSK9 APOC3 dimer. We think we can address the 20 million or so person population in the U.S. that's mixed hyperlipidemia. Of course, our CNS platform now will have our first data to come out at the end of Q3, early Q4. So this is still an important part of our growth, of course, and an important part of the culture of this company. And we continue to be, I think, at the forefront of R&AI innovation.

Jason Gerberry, Analyst — Bank of America

So let's maybe start with Redemplo, given you recently had your quarterly earnings call. That was a focus of the discussion as you, you know, that's your commercial intro, and then we can get into pipeline. So you've launched Redemplo now for FCS, and you've got pivotal data in 3Q for the larger commercial market that will drive future revenue for Redemplo, which is severe hypertriglyceremia. Maybe talk about the early FCS launch, what you've learned from that, how you'll be able to carry forward those learnings into the eventual launch into SHTG.

Christopher Anzalone, CEO

Sure. So the launch has gone well so far. As we mentioned on our conference call last week, we've had more than 400 scripts, and that's just one full quarter, I guess, of sales. And so adoption has been a bit more rapid than we expected even. you know this is an education market even fcs is an education market of course the genetic fcs population you know many of those of those folks are are diagnosed but that's we think you know quite a small portion of the overall fcs population as you recall in our phase three study we studied you know both clinical fcs as well as genetic fcs and the clinical fcs are those patients that don't have the known genetic mutations associated with traditional fcs but still have very high triglycerides you know a substantially increased risk of pancreatitis um and and we again we viewed that as the as the lion's share of that market and so and so um many of those folks will be undiagnosed or misdiagnosed um so it's incumbent on us you know to you know to educate the community that that those folks need to be treated and and and we've had we've uh we've been pleased you know with our uh progress in in buying those patients and helping those patients and and frankly that that bleeds into shtg a little bit so a lot of that you know a lot a portion of the high risk shtg population we think can be and frankly should be diagnosed as fcs these are clinical fcs patients and so and so you know it is i think we will be getting into what is the traditional shtg market right now because because we think those folks have been misdiagnosed as as having severe hyperglyceridemia where they should be diagnosed with having FCS.

Jason Gerberry, Analyst — Bank of America

So with FCS, my sense was some of it was patient identification, and the other part was, as you alluded to, maybe educating the doctor. As we think about SHTG and the challenges, my sense is it's less about patient identification and perhaps more educating the healthcare provider on the importance of treating and preventing acute pancreatitis. Do I have that distinction correct?

Christopher Anzalone, CEO

So I think that's right, although those are related, of course. You know, I think there's tons of patients walking around who should be treated, who should get their TGs under control, and they have no idea that they're at risk. And, frankly, their physicians may have no idea that they need to get them under control. And so, you know, the sharp end of the spear there are those physicians. You know, this is a brand-new market. You know, folks aren't used to thinking about triglycerides as bad actors. This is a bad analogy because it's ASCBD. But think of this almost as monitoring LDL decades ago before there were statins. You know, people didn't know that they should be looking at their LDL. And then statins came around, and lo and behold, this is something that we should all be thinking about. We think that elevated triglycerides are similar in that people have not monitored their TGs, even physicians haven't really monitored TGs, but at least for the severe population above 500, they should be looking at that, and we think they should all get under control. Now, this is a multi-step process, right? The first step, I think, has been to help the community understand the severity of FCS and get those patients treated, both genetic FCS and clinical FCS. The next step is SHTG more broadly. These are the high-risk FCS patients. I'm sorry, high-risk SHTG patients. And so these are folks with triglycerides above 880, you know, with or without history of pancreatitis. We think there's 750,000 or maybe a million of those folks in the United States. There's increasing data, you know, from our competitor as well as from our own studies that those folks are at high risk of pancreatitis. And so we need to help the community understand that we absolutely need to get their TGs under control. I think the next step then is the less severe SATG population. You know, these people with triglycerides at 700 or 600 milligram per deciliter. you know we are really looking forward to seeing what our pancreatitis data look like in shasta 3 and shasta 4 our competitor you know showed very good data very promising data and and most of those of those acute pancreatitis events were in the very high risk population we're looking forward to seeing you know whether or not you know you see events in those in those less traditional severe population if that's the case then then that is the third step in this in this market where physicians start to understand, you know what, it's not just the high-risk folks who need to get under control. It's anybody who has trigs above 500 that we need to get under control.

Jason Gerberry, Analyst — Bank of America

So as you mentioned, this is a two-player market in APOC3-modulating drugs with thionicis tringolza. You know, as we look ahead to the Shasta 3-4 study readouts, based on some of the Phase 2 work that you've done, FCS work, what do you think, A, in terms of potential clinical differentiation for redemplo in shtg and does does it ultimately matter or is this big category two players can grow it and two players can kind of enough to feed yeah look this is this is uh it's a big category um there's a lot of patients that need treatment and there's a lot of education to be had and and i just think that that that this is better served frankly by two players than one player, but one player, Ionis has a good drug, and that's helpful.

Christopher Anzalone, CEO

And so I think that we will grow this market much more rapidly, much more completely with two of us rather than one of us. And again, there's plenty of room for both of us to be successful there. Now, with regard to what we're going to see, who knows? This will read out in the third quarter. Last patient, last visit in Shasta 3 and 4 is towards the end of June. And so once we lock the database and analyze data and such we can we can at least top line this we expect a good safety profile we we have seen that now and in many many patients we expect that to continue um we you know we don't see hypersensitivity we don't see thrombocytopenia um the question here is i guess you know do we see an increase in liver fat uh we don't expect to see that but but our competitor has seen that and so we'll see if um you know if um if that is another differentiator for us uh i just don't know at this point yep um with triglycerides you know that is the approval endpoint you know lowering triglycerides. We've seen that in spades. You know, this essentially works in 100% of people. We had no non-responders in our FCS phase three study. Our competitor had about 20% non-responders. And so we expect that to continue. You know, this is not one of those, you know, I don't think, you know, scary binary phase three readouts where drug is either worth a lot or worth zero, depending upon what the data show. You know, the drug appears to work well and consistently. And so I think it's going to work and we'll see very good. My expectation is we'll see very good reductions of triglycerides now will we see an improvement in pancreatitis we will see um you know we were really pleased to see that that the ionis showed that you know those those data were good um and historically you know we've seen frankly better you know tg reduction than than ionis and so we would expect that if they saw that we've got a good chance you know these are still small ish numbers and funny things can happen with small numbers and so you never know until you know but but we are we we are cautiously optimistic that we will see an improvement in pancreatitis once, once we have the full data sentence.

Jason Gerberry, Analyst — Bank of America

Yep. Okay. So you guys have been vocal about, uh, that this is a category and a value proposition of drug that's worth a price premium. I think you've talked a lot about in the past about mass drugs. You've priced at a slight premium to tringles, uh, presumably on the quarterly convenience dynamic. Uh, I would assume, I know you don't want to specifically comment on, on gross to net, but, uh, from everything I hear from you guys, it sounds like you don't think this is a category where you need to offer huge concessions in terms of rebates and discounts, mindful that there are some things that perhaps are a little bit out of your control, probably. And that's what limits your ability to guide to it today, because you have a competitor that still has to go through those negotiations. And that kind of impacts how you kind of have to respond. Is that a fair summary of kind of the pricing dynamics? It is a very topical aspect of the story right now with investors.

Christopher Anzalone, CEO

Yeah, I think that's fair. I don't know what the what the gross net is going to be. But But qualitatively, we don't expect to aggressively discount this. You know, think of, you know, the way I think about this is not as necessarily a triglyceride lowering drug. I think about this as a pancreatitis drug. You know, our goal here is to lower substantially, hopefully, lower the risk of pancreatitis in patients with severe hypertriglyceridemia. And as you point out, that feels to me more analogous to a mash market. And so this, to me, feels like it should be a premium-priced product. Now, as it relates to our competitor, you know, we're comfortable with a list price that is a slight premium to theirs because we think we've got, we think that the data support that, right? You know, it's more convenient dosing once a quarter rather than once a month. The safety profile is substantially cleaner, and at least historically, our TG reduction has been better. You know, again, not to wipe my feet on Tringolza, I think that's a good drug. I think that their data have been impressive and have been really helpful for a lot of patients. I just think that we should price a slight premium to that given these other benefits. Yeah, okay.

Jason Gerberry, Analyst — Bank of America

So the SHT pivotal, the primary endpoint of triglyceride lowering, that seems like a very highly de-risked endpoint. Thus, the focus is on the key secondary endpoint, which is acute pancreatitis benefit, which is important, I think, across all geographies. uh our general sense is you know if your event rate was similar to core you've got a very good chance of showing stats as long as nothing in the statistical hierarchy gets in the way um if it's kind of mid-teens number of events in absolute numbers then you just need to show a really high absolute reduction but could still hit stats is that sort of a general sense and ultimately i do wonder how much of this matters if your benefit on trigs and apoc3 is as good or better um and it's just a function of trial design where maybe there are some differences

Christopher Anzalone, CEO

in either percentage of ap reduction or the statistical parameters yeah i think that's all fair and and we do have belt and suspenders here you know we designed shasta 5 um you know a while ago um that is powered to show an improvement of pancreatitis and that's ongoing and it's an venture and study and so that will you know assuming that we continue with that study and you know we'll see when shasta 3 and 4 read out if we hit if we hit on on acute mancreatitis it could be that we that that we decide to uh shutter that that that study but you know it's ongoing and so and so one way or the other i think we will have this on the label i think our lives are easier if we can show it with shasta 3 and 4 but but ultimately to your point um you know these are still small-ish numbers and funny things can happen with small numbers and if that's the case then fine you know our commercial team is going to have to work a bit harder um but as long as we're seeing very good, you know, TG reduction and good APOC3 reduction, you know, this, you know, we still would expect to see good adoption. Excuse me.

Jason Gerberry, Analyst — Bank of America

What's the timeline for Shasta 5 in a scenario where you do have to roll that out to completion and get those data from the outcomes trial versus, say, your pooled Shasta 3-4?

Christopher Anzalone, CEO

It's a bit hard to say because it's an event-driven study, as I said. You know, it's accruing patients now. You know, we've seen events, and so it's ongoing. I can't give you a good idea about when that could read out. I just don't know right now.

Jason Gerberry, Analyst — Bank of America

And to your point, in a scenario where, you know, if you didn't have it from the initial pooled analysis, just makes life a little bit harder, is that more commercially with doctors in those discussions with payers, or is it all about OUS and the pathway there?

Christopher Anzalone, CEO

Yeah, it's a good question. I think it's not about payers in the United States. You know, I don't think that showing AP is gating for payers in the United States. We feel good about that. It will, you know, it will require our commercial team to, you know, talk a bit more, you know, with providers potentially, you know, about the drug and show our data. And, you know, our commercial team likes to say that if, you know, if you're explaining, you're losing. And so it'll take an extra step or two for them. But look, we have a drug that works. And so I think that we can get around that. I think your point is a good one about XUS. I think that in some geographies, we're going to truly need to have AP on the label in order to get reimbursed. And so, again, hopefully we see it in Shasta 3 and 4. But if not, we have Shasta 5 where we're quite confident that we would see it.

Jason Gerberry, Analyst — Bank of America

And I hate to belabor the point, but I just wanted to make sure. If you think about Shasta 3-4, the main differences or just uncertainties as you think about kind of projecting the number of events, is it that it's 25% smaller study? Is it that we just don't have a lot of data around AP events? We're talking small numbers, and so perhaps that's a little bit tricky. Or maybe any slight differences in baseline characteristics, say, versus the core study. How would you kind of rank order those uncertainties?

Christopher Anzalone, CEO

Yeah, I think it's one, two, not three. so um um um our baseline characteristics um um are quite similar to core and core two so so i feel good about that um um but it's you know it's i think i'm gonna get these numbers wrong but we have we have around 750 people and so that's not a huge number um um and you know small numbers can it can have funny effects so so it's it's really it's really just that it's only it's only a one year study right you know if these if we're carrying this out for for more than a year for two years or three years for sure we'd be quite confident but but let me take a step back um so when we first designed shasta three and four um it was not powered to show ap um that's why we decided that's why we decided we we decided to design shasta five um and and when and so we didn't have any expectation at all of showing any improvement in ap and shasta three and four and then when people would ask us about about um the honest studies core core two um you know they would ask us if we thought they would show ap in those and we said absolutely not you know you know but this pancreatitis event is it's severe but it is it it doesn't happen every day and so um we didn't think they were gonna they were gonna show it well they did show it um and and we are seeing a bench and shasta three and four what we learned and the field has learned um is that is that pancreatitis um tg related pancreatitis is a lot more common than we all used to think it was And so it just underlines the fact that these patients really do need to be treated, not just, you know, those severe patients, you know, above 8080 with history of pancreatitis, but really, you know, anybody with substantially elevated triglycerides. So we are now, again, cautiously optimistic that three and four will show it, and we are also much more confident that these are important drugs that need to get to patients. Okay.

Jason Gerberry, Analyst — Bank of America

Last question. Do you think this is a category that ramps and launches fast, given some of the patients who are high risk, who've had past AP events? I presume that they would be highly motivated to treat, and I think Ionis is guided to like a $3 billion peak. Is that a rough proxy of how you see a Redemplo peak in the U.S.?

Christopher Anzalone, CEO

Yeah, I'll be a bit more aggressive on that. You know, I think the peak for us is $3 to $4 billion. But that peak is not going to happen in the first six months. This is an education market. And so I do expect, you know, a bit of a – well, slow is a strong word. I wouldn't use the word slow, but, you know, I'll use the word slow. I expect a bit of a slow adoption curve because this really is an education play. Again, you know, I'm glad that there are two good drugs out there and there are two companies that are bringing the story to providers and to payers. But that will take a bit of time.

Jason Gerberry, Analyst — Bank of America

Now maybe shifting gears to obesity in the last 10 minutes, a couple of pipeline topics to hit. In HIDB, plus teresepetide, more data this year. I think the goal is to improve the weight reduction, maybe 5% versus teresepetide alone. You know, maybe the additional data you expect to generate here, you know, how that will inform your confidence level on a go forward strategy, I imagine in type two obese patients would be the play for inhibi. Is that right? Yeah, yeah, yes.

Christopher Anzalone, CEO

So we've thought all along, even before we started clinical studies for Aero INHBE, we always thought that the play here, if there's a play, you know, if this translates from animals to humans, the play is in combination with the GLPs, that's a good class of drugs. There's no reason to try to make this a monotherapy. And frankly, I think the biology doesn't support that. But, you know, we always thought that this could be a powerful addition to GLPs to increase weight loss potentially, and more importantly, or equally importantly, to make that high-quality weight loss. And we saw that in the early data. And we really saw that in this, you know, in this obese diabetic population. We saw a doubling of fat reduction and a tripling of liver fat reduction. And so, you know, that was really eye-opening to us. It wasn't entirely shocking to us, but it was eye-opening and important. And so we are designing phase two studies as we speak. I expect to start those, you know, this year where we'll be looking, you know, at that population. and we'll be looking at, you know, we'll be looking at inhibiny to contribute to, you know, as a, as a, as a MASH therapy as well as potentially an obesity therapy. And sorry, one more thing on that. And, and, and there are additional good targets in the liver against obesity. And so, you know, we talked about, or I mentioned earlier, you know, this burgeoning platform we have in dimers. And we have an awful lot of interesting ideas about what we can combine, you know, in a dimer or by specific with inhibiting to make it an even more complete and powerful drug class. And so I think you'll hear more about that, you know, into 27 and beyond.

Jason Gerberry, Analyst — Bank of America

And so if we're to think ahead, the 5% seems very relevant to the regulatory bar.

Christopher Anzalone, CEO

What else, you know, in terms of composition or blood sugar, do you feel like is table stakes to having a differentiated product that can compete given just how competitively intense obesity is and we know that lilies with hetratide can push the boundary even further for weight loss reduction so i imagine you know how are you thinking about some of those other aspects of the profile yeah we'll see you know you know i don't know i don't know if inhibiting is a is you know will be helpful with blood sugar i just don't know you know it's too early to tell with our data now but but you know what appears to be good at is moving fat around in a in a healthier fashion you know getting fat out of um decreasing liver fat decreasing decreasing visceral fat and liver fat um i think that's important and and and and retaining um lean muscle mass look you know if we have something that that could enable patients to use a relatively low dose of a glp or a standard GLP-1, and get better weight loss with a lower dose of those and have that a higher quality weight loss and potentially treat, you know, a fatty liver. I think that's a really compelling set of possibilities.

Jason Gerberry, Analyst — Bank of America

And so then what would you be looking for for AUK7? Is it maybe proof of principle on adipose targeting, and that opens up the door for a lot of other things that could be interesting? Or, hey, we don't know. We just want to see what the data is, and then we'll kind of inform you on maybe the strategy on how to utilize this tool and what it may be beneficial for.

Christopher Anzalone, CEO

So we think this active in E, ELK7 axis is a really interesting biology. And so interrogating ELK7 is really essentially a different way of interrogating this axis. And we think it's interesting. And so I look forward to seeing what that looks like. But you're right. You know, the value here is at least, well, I guess threefold. You know, one, let's see what ALEC-7 does in terms of weight loss. We are a bit, we are, what, two quarters behind inhibiting EU with ALEC-7, but also the MAD portion of that study, the doses are separated by three months rather than one month. So it just takes us a bit more time to generate those data. So you'll see more data, you know, second half of this year. Let's see what that looks like. We're excited to see what that looks like. So that's value, potential value, number one. Potential value number two is, as you mentioned, this opens the door to our ability to deliver to adipose. We've seen really good data in animal studies. Let's see if it translates to humans. If it does, there's a number of good targets that we can go after. And so I think that is a value creation event. And the third is, as with inhibony, this is a potential component of a dimer approach. You know, what if you can knock down ALK7 and something else? And there's several good targets that we like in adipose. that we can think of pushing into the clinic sometime in 27, maybe, and beyond. So we look forward to seeing these data, and we look forward to this being potentially a franchise of its own.

Jason Gerberry, Analyst — Bank of America

So I imagine between the work you're doing on your PCSK, APOC through DIMER, if that looks good, if the obesity assets look interesting, companies in your space eventually do need to consider partnering at a time, just given constraint of resources and the ability to sort of maximize what you're working on. So I think you moved off of obesity as a partnership candidate. Could that be revisited? I'm just curious. I imagine anything can be revisited.

Christopher Anzalone, CEO

Yeah, anything can be revisited. Look, you know, we reported on our last conference, on our queue last week, about $1.8 billion of cash. And so we're well capitalized. um um um and so you know we we are positioned to take all of these for ourselves and that that's our posture right now i think there's a ton of value there you know that may change at some point in the future but right now at least you know we we really like blowing out obesity you know ourselves not just inhibiting lx7 not just the dimers that could be made with those two candidates uh but other ones you know i mentioned i mentioned cns you know they're they're really interesting obesity candidates, you know, in the brain. And we'll have data from Aromap-T, our, you know, our first, you know, sub-Q administered CNS drug. And we'll have data, you know, later this year. And if that's positive, then that opens up a whole new area for obesity, talking about obesity, you know. So we want to hold on to that. Cardiometabolic between plizacirin and zodacirin. Zodacirin is our ANGPTL3 program where we're treating um um hof patients um you know we have no interest in partnering either of those we're going to bring those for ourselves the dimer as you say pcsk9 apoc3 that is a big opportunity to treat the 20 million or so people with mixed hyperlipidemia we want to hold that hold on to that ourselves um and then let's let's see what you know where we sit with um with the broader cns platform yep okay so we only have like two minutes so i'm going to lump these two assets together in one question, which is your MAPT and your ALC 7 data updates this year.

Jason Gerberry, Analyst — Bank of America

Right to think about these as primarily safety, and you just want to see deep target knockdown, and that's going to be the key learning that will inform, hey, we got something here.

Christopher Anzalone, CEO

Let's keep going. Yeah, I think that's fair, particularly for MAPT. You know, the data we'll have this year is just in healthy volunteers. I think that's important. You know, let's see if this translates from NHPs to humans. Let's see if we get good knockdown of tau. Let's see if this is well tolerated. If those are the case, you know, it opens up a lot of opportunities for us in CNS and beyond. And we're preparing for that. You know, we've got a number of CNS programs behind that that, you know, should this initial readout be positive, we're going to push as quickly as we can. And so I think you'll see a number of new CNS candidates in clinical studies in 2027. And you might see the first one at the end of 2026. So certainly MAPT. For ALK7, same thing. We are really interested in safety. We're really interested in knockdown. But look, we're also interested to see if this active in E ALK7 axis translates from animals to humans, that we do see some effects in terms of maybe weight loss, but also in terms of fat distribution. Okay.

Jason Gerberry, Analyst — Bank of America

So if you think about MAP-T and if you do validate systemic delivery, some of the opportunities that that may open up, or should we be thinking about that as some of the areas where maybe intrathecal ASOs have been studied, but like Huntington's or even ALS or different Alzheimer's settings or targets, I should say, what does the menu of options start to look like?

Christopher Anzalone, CEO

It's a large menu. So certainly all those things. But there are other conditions. I don't want to pick on obesity, and that's not our sole focus, obviously. But let's talk about obesity. It's inconceivable to me that an obesity therapy could be administered via intrathecal injection. It is certainly conceivable that obesity therapy could be a simple sub-Q injection at home once every two or three months. And so it opens up less severe, if you will, diseases if we really can translate the systemic delivery from animals to humans. And so it runs the gamut, you know, from grindingly, you know, awful neurodegenerative conditions, you know, to things like obesity that, you know, are less severe.

Jason Gerberry, Analyst — Bank of America

Well, we're out of time and there's a lot we didn't get to cover, but appreciate your time and the insights as always.