Arrowhead Pharmaceuticals, Inc. (ARWR) September 2026 Conference Transcript

All right. Hello, everyone, and thanks for joining us at the Morgan Stanley Global Health Care Conference. I'm Michael. It's one of the biotech analysts here, and it's my pleasure to introduce the team from Arrowhead Pharmaceuticals. To my immediate left is Chris Anzalone, CEO, and to his left is James Hamilton, CMO. And just as a reminder, the format for today is the fireside chat, but before we get into the Q&A, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com backslash research disclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. So with that, Chris and James, thanks so much for sharing your time with us today. And I thought we could start with Aerodimer PA just following some of the updates you provided this morning. So maybe walk us through, you know, some of that early data and what it means.

Thanks again for having us here. It's really a pleasure to join you today. So the Aerodyner PA, I think, was a breakthrough for us and I think for the field for a couple You know, one, broadly, you know, this is the first time anybody has shown knockdown of two genes, you know, with a single molecule using RNAi. And I think that that is an extraordinarily powerful approach that can be used across indications. And so I think that's important as a proof of concept that we can do this. We have several additional dimers that we are developing as we speak, and you'll probably see those enter the clinic or see some of them enter the clinic next year in 2027. Now, more specifically, we're excited about the candidate, you know, because it could be a quote-unquote complete way to treat mixed hyperlipidemia patients. These are about 20 million people in the United States who have elevated LDL and elevated triglycerides. And these folks can be treated today with PCSK9 inhibitors to lower the LDL portion, but there's nothing to completely treat them. And so our goal here was to be in the ballpark, was to enable, was to lead to a reduction in LDL that is somewhere similar to current PCSK9 inhibitors, and then on top of that, lower triglycerides as well, that is somewhere similar to what we're doing in plizaciran as a pancreatitis drug. And I think we hit those in spades. You know, we are seeing at least as good LDL reduction in this population as folks have seen with PCSK9s writ large, and we are seeing similar TG reductions that we saw with plizacirin. And so we go forward with something that we think is really compelling. And, James, do you want to talk a bit more about the granular data?

Sure. Yeah, I think one of the things to emphasize in the data we released this morning was the APLB reduction, fairly large APO-B reduction of about 50%. That is a little bit better than what some of the PCSK9 inhibitors have shown in a similar mixed hyperlipidemia population, and that's likely attributed to what we showed was the PCSK9 effect, but the additional effect of APOC3 knockdown on APO-B. So I think this is evidence that you're hitting all of those atherogenic lipoproteins from two different pathways, the PCSK9 pathway and the APOC3 pathway. And then, of course, the data today were just single-dose data. The study is fully enrolled, so we should have multi-dose data at a medical conference down the road.

Yep.

Go ahead.

I was going to say, of course, you never know how good a drug is until later in development, of course. But what we have here, I think, is a really unique situation that at this very early stage, early in a phase one study, it appears that we have a drug. We know how our drugs interact with people from a safety standpoint. point. We've been in thousands and thousands of patients with our galnet constructs, and so we feel pretty good about where the safety should go. We know how APOC3 inhibition affects people with plizaster right now in many, many patients. The keys here are PCSK9 reduction and LDL reduction on the one side, and APOC3 reduction and triglyceride reduction on the other side, and we're seeing just blanket consistent good results there. So it certainly feels like we have something that could be extraordinarily powerful for this population. Now we just need time. Our hope here is that we can have this dual regulatory pathway where we can run to two pivotal programs. One is based solely on LDL reduction as a primary endpoint. All the PCSK9s were first approved based solely on LDL reductions. That is a year-long study. And by doing that, we think we can get to market fairly quickly and start to penetrate this market while we're doing a cardiovascular outcomes trial. And if you look at Inclisiran, that has a run rate of around $2 billion right now, and they haven't had outcomes data read out yet. So I think that you can address a sizable part of this market fairly quickly based solely on the biomarkers.

Can you just talk a little bit about some of the dosing intervals you're exploring? or what that might look like and when we might see that data? Sure.

So the single-dose cohorts enroll sequentially, and what that means is that we have different lengths of follow-up right now at each dose level. Based on the duration we've seen for the majority of the dose levels, we just don't have duration for the top dose level yet, but I think we're looking at quarterly at the most frequent. We'll see if we can push that to every six months as the data come in. but I feel confident around quarterly dosing. And we'll talk more about that when we present the data at a medical conference down the road, maybe Q4.

And in terms of the path forward, Chris, you mentioned there's maybe a quicker path with LDL reductions. Would that be sort of the next step after this study, go right into a pivotal, or is there more work that needs to be done prior to that?

There's a baby step before the pivotal.

I think our plan would be to amend the current study to add a part three. Part one was single dose. Part two was the two dose. And then part three would be a study that probably looks something like our Shasta 2 study. Different patient population, though. We're enrolling mixed hyperlipidemia population into part three of this study. Maybe you look at two or three different dose levels, treat them quarterly for a year, and just build that safety database and really understand depth and duration with multiple doses, safety with multiple doses, before you then go into a pivotal phase three with LDL as a primary.

Makes sense. Chris, you talked about other potential dimers you may consider. I guess, I don't know if you can give us a flavor for what those might look like and kind of what's the trigger to start advancing these other programs. Is there some more data you want to see with DIMER PA before you have the confidence to then move into others? Or maybe your thoughts there.

Yeah, so you may have heard us talk about this in the past. We're an and company. We're not an or company. And so we were doing a lot of that development at risk. Now, it makes us feel good that those data look good, but we were planning on those data working out, and so we've spent a lot of time on developing a number of different dimers. For instance, we will have some in obesity and MASH. Inhibony and ELK7 are interesting targets. Inhibony looks like more for MASH. ELK7 could be more for obesity. and we are developing dimers on both those sides. There are also additional dimers that we're developing on the cardiovascular side. And so you'll hear more about these in 2027. We have not talked about what the next ones are going to be, but you'll hear more in 2027.

Okay, great. Maybe we can switch to just plizacirin, obviously. A lot of interest there. Large market opportunity for you guys. You're currently launching in FCS, so maybe let's just start there and talk about some of the dynamics you're seeing, you know, payer coverage, et cetera?

So the launch has been smooth. It's been about what we expected, maybe a little bit faster than we expected. I think that we are learning that there are more clinical FCS patients out there than we first anticipated. That's a good thing. And so we have ramped up our sales force a bit more quickly than we had expected. That's also, frankly, a bit defensive as IONUS launches Tringolza in SHTG. We didn't want to be outgunned, if you will. So that has gone well. Payer interactions have been good, and we have policies for most payers at this point in FCS. That's been good. We're now shifting our attention to SHTG. We've got good data that you'll probably want to talk about, and James can fill you in on in Shasta 3 and 4. And so we are moving as quickly as we can to SHTG approval. In fact, we acquired a priority review voucher to speed that process up even more. We think that's important because I think we have something that is powerful here, and we have a good value proposition, and the quicker we can get to those patients, the better. You know, they're waiting for good treatments, and I think we've got one. We are, you know, we're really happy with the way this, the profile looks right now after Shasta 3 and 4, and we have to talk about that more after James goes through it.

Yeah, so just a quick overview of the Shasta 3 and 4 data. Triglyceride reductions, 80% from baseline, which we were really pleased with, and then that translated, as we anticipated, into a statistically significant reduction in the AP event rate, and then also a statistically significant reduction in the time to event, or improvement in the time to event, rather. Additionally, we saw large improvements in the number of patients that were reaching goals, both less than 150 as well as less than 500. And then probably one of the most important aspects of the data, the pooled cohorts, were the safety data that, you know, we didn't see any signs of hypersensitivity or any anaphylactoid reactions, no thrombocytopenia, and really a pretty quiet liver safety profile that there was no statistically significant difference between active and placebo in terms of liver fat changes. and then the transaminase change was pretty placebo-like as well for the active group.

And we think our value proposition here is you could not be clearer. We think there's about 3.5 million people with TRIGs above 500. We know that above 500 there is substantially increased risk of acute pancreatitis. We saw an improvement in pancreatitis risk in the study in a broad population as well as in the high-risk population. We are, you know, this drug appears to be safe, simple, and strong. You know, it is our safety profile, as James said, is sterling. You know, we saw no hypersensitivity, no thrombocytopenia, no increases in liver fat, you know, no real increases in transaminases. It's a simple therapy. You know, it's a once-a-quarter dosing, not once-a-month dosing. we don't require we don't expect to acquire any transaminase monitoring and changing of doses that simple and it's strong we see better trig reduction than anybody else in the field and so we think that this is a profile that just fits really well with frankly the broad population but at least early times in the high risk population. These are people with triglycerides above 880 with or without pancreatitis as well as those above 500 with history of pancreatitis Can you talk a little bit more about the differentiation?

You mentioned several of these points already, but just what do you think is the most important piece of the differentiation and what are the other areas where you're different?

Again, we're an and company. We're not an or company. I think all these together make it a differentiated product. But let me take a step back. So Ionis has a product that is good. This is a drug that works, and I think it's going to help a large swath of patients. and I think that it's a good thing that both of us are promoting these two good drugs because this is an education play. I think there's an awful lot of patients who need to have their triglycerides under control and we need to help the world appreciate the importance of that. Having said all that, I like where we sit among the two. You know, our safety profile is, I think, clearly better. Our therapy is clearly simpler because of monitoring and because of convenience of dosing and historically we've been substantially stronger in lowering triglycerides.

Since you shared the detailed results at ESC, maybe just chat about some of the doctor feedback you've gotten on your profile?

Yeah, I think in general it's been consistent along the lines of what we were getting post-FCS approval, I think with an emphasis on the favorable safety profile. That makes things easier for physicians, for prescribers, if they don't have to worry about patients bouncing back with transaminase elevations or injection site AEs or thrombocytopenia. It makes their life in general easier not to have to worry about those things or to have to worry about dose adjustments. We have one dose that was studied in the study.

And also, I think that the pancreatitis data were helpful. It wasn't – so we had a very strong risk reduction in the high-risk population. We had no events, you know, in the high-risk patients on plisaciran. But we also, you know, showed that patients with triglycerides between 500 and 880 also do give pancreatitis. And I think it's important for the field to see that, that it's not just those patients with trigs above 880 that need to be cared for. Those patients with trigs between 500 and 880, also we need to get their triglycerides under control to decrease the risk of pancreatitis.

Can you also just touch on pricing? You kind of set the price before you had the final data. So any updated thoughts there? How are you feeling about current pricing?

The price right now, the net price is $45,000 per year, and we think that's priced right. This, to us, feels more analogous to a MASH drug than a cardiovascular drug. Our challenge was this. Triglycerides show up on a lipid panel, and so people jump to, okay, well, this is a lipid drug, and therefore this price ban makes sense. Well, that's not exactly the case here. You know, this drug is not intended to decrease risk of cardiovascular disease. This drug is intended to decrease risk of pancreatitis. It's a pancreatitis drug, and that is a severe medical condition that is expensive and painful and can be fatal. And given that and given how strongly it reduced the risk of pancreatitis, this to us makes economic sense. You know, our number of patients needed to treat was three in the high-risk population. That's a really compelling value proposition when, you know, one bout of pancreatitis can cost upwards of $60,000 or $80,000. And this number of patients needed to treat is after only one year. You know, who knows what that's going to be, you know, over two or three years. It could be even more compelling than that. In fact, Shasta 5 is an event-driven study, and so we'll have more data, you know, on a longer-term number of patients needed to treat for that, I think.

I guess maybe when you're launching next year, obviously you mentioned Tringolza is out there, so there's a competitor there a little bit ahead of you, but you made up some time with the PRV. I guess, you know, where do you expect, you know, Redempla to kind of be used relative to Tringolza?

In terms of market share?

Just patient population, are you going to get switches? Is it more high risk?

Is it broader? Yeah, so our commercial focus now is not switch. We will see those, but that's not our focus. Our focus is bringing this drug to patients who need it, you know, full stop. You know, we are starting discussions with payers now on contracting in SHTG. I think we can do that right now. because we have the priority voucher. I think without that, we probably wouldn't be able to have those discussions quite yet. I think that's a help for us. I think that could help our launch, and it could be a bit of a quicker launch given that. But let me just temper expectations. This is not one of those launches that is going to be a hockey stick, I don't think. It's a slow burn over the next couple of three years because it is an education play. Now, sure, there is a bolus of patients that are high risk, have a history of pancreatitis. These patients and their physicians are actively looking for treatments. And so, yes, you know, they are out there, and they should be fairly easy to convert. But these patients aren't seeing these physicians quarterly or even, you know, every six months. You know, they're seeing them maybe once a year. And so it's just going to take some time to bring this drug to them. And, again, as I mentioned, look, I think that it is helpful to patients, it's helpful to the health care system to have two drugs that both work. And so having IONOS out there promoting is a good thing for all of us and a good thing for patients.

Makes sense. And you think there's a good proxy out there in terms of how we should think about the early sort of launch trajectory, or is it, you know, just something unique?

I guess nothing is really unique, right? But it's hard for me to put my finger on a really good analogy. Now, we are promoting this with specialists, endocrinologists, cardiologists, and so it is less of a heavy lift than if we were going after primary care physicians. But still, people just aren't used to treating this because, you know, why even measure something that you can't treat? Now all of a sudden we've got a really good drug that can treat this. And so it will just take a bit of time for people to get used to that.

Maybe we can shift gears now to some of your other pipeline programs, maybe AeroMap-T. You know, maybe just give us a background there on that program and what makes it unique.

Sure.

James, you want to?

Yep. Yep, happy to cover that. So, of course, AromapT silences the expression of the MAPT gene, which codes for tau protein. And tau protein, when it becomes misfolded and tangles into the neurofibrillary tangles inside the cell, is one of the key drivers of Alzheimer's disease, but also misfolded aggregated tau can lead to other so-called tauopathies, things like progressive supranuclear palsy or MAP-T variant-driven frontotemporal dementia. So there's some, and Alzheimer's is the big indication, but there's some smaller, more rare disease, orphan indications that we can go after there. The key unique feature that, you know, there's an ASO out there that silences tau that's administered intrathecally, so requiring a lumbar puncture. And we don't do that. our drug is subcutaneously administered. We use a fab fragment to facilitate delivery of the S-RNA using the transferrin receptor across the blood-brain barrier into the cells. So we're coming from the blood side rather than the CSF side to facilitate delivery. And I think there's two key advantages there. I mean, one, you don't have to undergo a lumbar puncture several times a year for treatment to administer the drug. But the other and maybe more substantial advantage is the distribution that we see, at least in monkeys, when we administer subcutaneously. We get a pretty homogeneous concentration and knockdown across various different brain regions. And compare that to the intrathecal route, where you get a lot of drug in the cord. as you'd expect, right, since it's sort of right there when you're given the drug. You get some into the more superficial layers of the cortex, but not a lot into the deep layers of cortex and the deep brain like the striatum. So that may be an advantage for this intrathecal BBB shuttled route of administration.

And let's just be clear here. I don't think you can overestimate the potential value or power of what we're trying to do here. You know, if we can show proof of concept, if it's well-tolerated, if we're seeing good knockdown, that clearly means a lot for Aromap-T. And there's an awful lot of patients that can be helped, both Alzheimer's patients as well as some of these other chiropractic patients. But the broader value here is clear. We are the first and, at least right now, only ones, if this works out, to be able to knock down a single gene, in the deep brain, there are a number of important targets that we can go after, and we're developing as we speak. We're not waiting for positive data for MAP-T. Just as we're doing with dimers, we are developing these, assuming that this is going to work. Now, we don't know that. We should have some data at the very end of this month or early in October. We'll see if those do translate. Those data suggest that this drug translates from animals to humans If it does, then we need to move very quickly because there's an awful lot of need here and there's an awful lot of opportunities for us to get into a number of different CNS targets.

And, James, you mentioned sort of an ASO that recently had some data, phase two data. So maybe just, you know, share what were your sort of key takeaways from that update and maybe how it reads through.

Yeah, I thought those data were generally positive and generally supportive of the tau hypothesis of going after tau with a knockdown approach. I mean, they've shown tau knockdown in total CSF tau, translated that into improvements in PET signals, and then had subsequently translated that into improvements in various cognitive rating scales of 20% to 40%, depending on which scale you're looking at. So that all seems really encouraging. You know, I think there was some debate around the dose response or maybe lack of dose response, but at least at one of the dose levels, they were kind of ticking off all the boxes that I think you'd want to hit. And I think even the safety, it seemed like with tau knocked down, was probably fine, particularly for such bad diseases. We'll see if we can do better than that with the BBB approach, approaching the cells from the blood side, and if that better distribution of knockdown makes any difference in terms of efficacy.

In terms of the level of knockdown, kind of what are you looking for? And if you can get more, is that better or not necessarily? Or is it more to what you just said, more distribution might be better and maybe similar or even less knockdown could work, or just how do you think about that?

Right, yeah, I think, so for us, we feel like that 50% to 60% knockdown in CSF-TAL, that's the threshold to get over. That's sort of the hurdle to get over. We feel like we at least need to hit that. That being said, we're doing a full dose escalation, dose range-finding study, so we want to understand the effect of different doses of the drug on target expression, and, you know, we'll pick a dose or probably a few doses to carry forward into phase two.

You know, and also, you know, 50% to 60% knockdown, you know, with an ASO that's administered intrathecally may not be the same as 50% to 60% knockdown of a drug that is better distributed throughout the brain. So, in other words, it could be that the majority of the knockdown you see with IT injection is in the cord and areas that may not be super relevant to the disease. But if you're getting more consistent and homogeneous knockdown throughout the brain, that could lead to even better clinical outcomes than one would expect.

Okay. Maybe we can switch gears now. Just the obesity program. Chris, earlier you mentioned that there's two targets in development, so maybe just give us a little bit of background on those targets and then broadly the strategy and obesity, just given the level of competition these days.

Yeah, so the two programs that we have, AeroInhibony and AeroAlc7, both target this inhibin pathway where the liver is essentially signaling to the adipocytes to store fat, and ALK7 is the receptor on the adipocyte, and inhibiny or activiny, rather, is the ligand. And so we're looking at two different ways of intercepting that signal with inhibiny silencing the liver component and ALK7 silencing the receptor on the adipocyte. Inhibiny is a little bit ahead of the ALK7 program. We released some of the top-line data earlier in the year, and we'll have still an update with some additional inhibitor but more ALK7 data towards the end of the year. We're also in the process of launching a Phase II study with arrow inhibitor that's mostly focused on MASH. In fact, we have some of the key biopsy-driven MASH endpoints in that study as well as liver fat as an endpoint in that study. but we'll also use MRI to assess all the different body composition and points like visceral fat, total fat, lean mass. So we'll get a good idea of what's happening in terms of body composition in that inhibiting phase 2 study. So that program may be a MASH-focused drug with some improvements in body composition. I think we already showed the improvements in visceral fat, as an example, in the phase one. And then ALK7, it still remains to be seen, although that still may be more the pure play, weight loss, fat loss story. I think we're still generating data there, and again, we'll share some data at the end of the year.

And I think that's an important point. I think if I were on this stage a year ago, I would have told you that ALK7 and Hibini are probably a bake-off. you know, let's see what these look like, and whichever one is more active in weight loss, we're going to take into a phase two, but not the other one. What we found is that inhibony appears to be a pretty, potentially a pretty powerful MASH drug, and so we like the idea of focusing inhibony should the data continue like this, focusing inhibony on MASH, and then let's see if LX7 becomes, as James said, you know, more of this pure play fat loss, weight loss drug.

Okay, great. So a lot to look forward to here, but maybe in the last four minutes, I can just fire off a couple sort of survey questions we've been asking all our biotech companies and, you know, on key themes in this space. So, like, the first question is, you know, just impact of innovation from China and, you know, how you're staying ahead of that or what's your view on the potential there?

Yeah, so at any given time, there is, I don't know, know, a dozen Chinese siRNA companies, and many of them are fast. Look, that's just good. We're all patients, right? That's good for patients. The more folks going after these intractable problems, the better for all of us. But look, we've been banging our head against the RNAi wall for over 15 years now. We've learned an awful lot over those 15 years, and we've been spending time trying to get outside the liver, and we can now address seven different cell types. We've got clinical programs in five of those cell types. We're the only ones to be able to employ this dimer technology. We can get into CNS now, as we talked about. There's an awful lot of things that we are just pushing the boundaries of RNAi, and there is just no substitute for history to get there. We've been at this for a long enough time that even with this upswell of activity in China, we will have multi-year headstarts in all these. Now, it's multi-year headstarts. It's not forever headstarts. And so we need to keep on our game, move as quickly as we can. And as I said with CNS, should these data be positive with MAPT, we need to run because there will be other competitors. And, again, that's a good thing for patients. There will be other competitors following us. And so we need to get in, you know, to the most validated targets as quickly as we can and move as quickly as we can, you know, into pivotal studies. So, you know, we are, of course, monitoring all competitors, and China is one of those. But, you know, innovation is on our side, at least right now.

And then the second question is just around AI and how you're using it and what impacts it has or may have on your company going forward. We do use it. James, do you want to talk about that?

Yeah, it's been primarily used in the realms of new target discovery to help run target screens and sort out targets that we want to take forward based on a variety of factors. We've also used it in the area of novel ligand design and sequence selection. So I think there's a lot more we could do there, though. We do have a dedicated team at Arrowhead that's sort of focused on applying AI in those areas and the areas of discovery. So we probably just kind of scratch the surface and look forward to all the additional ways we can apply AI.

And let me add to that and also touch back to the Chinese biotech question. So there is some thought that AI, that utilizing AI well can help people leapfrog more entrenched players. And I think that's true in a lot of areas, but that's harder in this area. So we have made hundreds of thousands of RNAi molecules in the years, hundreds of thousands. And we've learned an awful lot about what makes some potent and some not so potent in terms of patterns, in terms of chemistries and such. And there is no substitute for that sort of data set with an AI engine because an AI engine is only as powerful as the data you can throw into it. And so with these hundreds of thousands of triggers and all this experience, we can educate ourselves. It is very difficult for an upstart to use AI and to chip away at that because brute force is a hell of a thing.

There's also no substitute for running the clinical trial. I mean, if it shaves a few months off of the discovery, that's great, but, you know, you still have to kind of grind through all the stages of development.

Yeah. Okay. Great. Looks like we're out of time. So, Chris and James, thanks so much. Really appreciate your time today.

Thank you.