Arrowhead Pharmaceuticals (NASDAQ:ARWR) Q3 2021 Earnings Call

0:00 Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

0:23 Thank you. Good afternoon, everyone. Thank you for joining me. June 30th, 2021. 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.

1:17 All statements other than statements of historical fact, including, without limitation, those with respect to Arrowhead's goals, plans, and strategies, are forward-looking statements. These include statements regarding our and the rest of the company.

2:20 Chris? Thanks, Vince. Good afternoon, number one, and thank you for joining us today. The fiscal third quarter and the period since our last conference call has been incredibly busy for Arrowhead. We made important advances in several of our development programs. This includes discovery stage programs and early, mid, and later stage clinical programs. It also includes programs from existing partnerships as well as a new business development transaction. As a platform company, there are a few areas of critical importance where we focus our attention. Thank you for your time. and lastly, we need to selectively use partnering to expand the reach and maximize the value of our trim platform and bring in non-dilutive capital that helps to fund our internal development. I think we're doing well in all these areas.

3:27 Let's take a moment to briefly review some key events in the last quarter that are good examples of this. For our discovery and early stage clinical pipeline, we had a very productive quarter. We completed discovery and optimization work on two new pulmonary programs and nominated them both as clinical candidates. They are now in the IMD enabling stage, which includes GLB toxicology studies and manufacturing of drug products for clinical studies. We have not yet disclosed the gene and disease targets, but we will be talking more about these programs later in the year. We also presented very promising preclinical data on AeroDux4, our first muscle-targeted program being developed as a treatment for patients with fascioscapulohumeral muscular dystrophy, or FSHD, at the 28th Annual FSHD Society International Research Congress.

4:16 The data showed that the TRIM muscle delivery platform can achieve functional delivery to various types of skeletal muscle and achieve deep, durable, and dose-dependent knockdown target genes. of FSHD-like muscle phenotype in relevant preclinical animal models. As DUX4 expression is recognized as the cause of muscle pathology in FSHD patients, Ehren believes that the selective targeting and knockdown of DUX4 using RNAi may prevent or reverse downstream myotoxicity and lead to muscle repair and improvement in muscle function in patients. There are currently no effective treatments specifically for FSHD so patients need new therapeutic options that address the root cause of the disease.

5:02 We've been pushing aggressively toward the clinic with Aerodux 4, as well as the two new pulmonary candidates we nominated this year. We expected to file CTAs for all three of them by the end of the year, but securing timely slots at CROs for IMD-enabling toxicology studies has been challenging, so scheduling on the CTAs will be pushed into the first half of next year. That is unfortunate, but we have seen this become more of a bottleneck in the industry since the beginning of the pandemic. We have continued work on a number of other early programs and I am pleased to announce a previous AeroC3 as a hepatocyte-directed candidate against complement C3. Overactivation of the complement cascade is thought to be causative of a number of diseases, including paroxysmal nocturnal hemoglobinuria and C3 glomerulopathy, and complement-mediated injuries involved in many other conditions, including IgA nephropathy, as well as many other renal, vascular, hemologic, and neurologic conditions.

6:02 Complement C3 is a central node in all three of the complement pathways, including the classical, lectin, and alternative pathways of complement activation. And it has recently been shown that inhibition of C3 can be both safe and effective in the treatment of complement-mediated diseases. We have a strong track record in trim-enabled hepatocyte-directed candidates, including AeroHBV, AeroLPA, AeroAET, AeroAng3, AeroApoC3, and AeroHST. These programs give us confidence that positive non-clinical data from the Arrow C3 may translate well in humans. We believe that an siRNA capable of substantially reducing C3 levels for three months or more could be the modality of choice for C3 inhibition, and we expect to file CTA for Arrow C3 by the end of this year.

6:52 During the quarter, we also announced positive interim data for two of our early states, Thank you for joining us. of efficacy in at least one patient. Specifically, the HIF-2-alpha protein H score was assessed via immunohistochemistry.

7:38 Nine of 17 patients had tumor samples that could be evaluated, and seven of those nine demonstrated reductions in HIF-2-alpha protein H scores. These reductions ranged from minus 9% to minus 82%, with a mean reduction of minus 48%. Thank you for watching. We also presented positive interim data for AeroHSD, being developed as a potential treatment for patients with liver diseases, such as NASH, at the Easel International Liver Congress. AeroHSD was well tolerated in healthy volunteers, given a single dose at 25 mg, 50 mg, 100 mg, or 200 mg, and in 5 patients with suspected NASH, given a 100 mg dose of AeroHSD on days 1 and 29.

8:38 All five patients with suspected NASH showed a strong pharmacodynamic effect as measured by liver biopsy at day 71. HSD17-Beta13 protein was reduced by 92% and 97% in two patients, while the other three patients' day 71 measurements were reduced below the lower limit of quantitation. Importantly, ALT showed... We believe that Arrow HST is the first investigational therapeutic to demonstrate robust inhibition of hepatic HST17B13 mRNA and protein expression. We are also highly encouraged to see ALT levels Thank you for joining us.

10:04 Thank you for your time. First, we presented additional positive interim 48-week liver biopsy results at the Easel International Liver Congress. These results demonstrated that arrow AAT treatment led to rapid improvements in multiple measures of liver health, including fibrosis, with substantial and sustained reductions in the level of mutant AAT protein. Mutant AAT protein has been identified as the cause of progressive liver disease in patients with alpha-1 antitrypsin deficiency. AAT treatment was generally well tolerated after up to one year of treatment. This is very important data and suggests to us that the drug is doing what it is designed to do and that removing the mutant AAT protein can give the liver a chance to begin the healing process even when intervening in patients with late stage liver disease. We and our partners at Takeda were thrilled to see these results and we have received similar responses from physicians and others in the Alpha-1 treating community.

11:19 We also fully enrolled the Arrow AAT Phase II Sequoia Study with the 40th patient being dosed recently. Combined with the various cohorts in the Open Label 2002 Study, we will have paired biopsies from approximately 50 patients receiving various dose levels and various treatment durations. Lastly, for Arrow AAT, we are granted Breakthrough Therapy designation by the U.S. FDA. Arrow AAT was also previously granted Orphan Drug designation and Fast Track designation from the FDA and Orphan designation from the European Commission. Our goal is to expedite the development path of Arrow AAT, and each of these important designations provide potential ways to achieve that. We will work with regulatory authorities and our partners from Takeda to identify the best path to bring this important drug to patients quickly.

12:07 Now moving on to progress that we've made with partnering. As I mentioned, we believe a platform company should use partnering selectively to expand the reach and maximize the value of the platform technology and to bring in non-dilutive capital that helps to fund internal development. This is a key component of our business strategy and an area where we've seen important recent progress. The collaboration with Janssen, which was executed toward the end of 2018 for Arrow HBB against Thank you for watching. Also during the quarter, we announced a global collaboration and license agreement with Horizon Therapeutics for Arrow XDH, a previously undisclosed discovery stage candidate being developed by Arrowhead as a potential treatment for people with uncontrolled gout. Arrowhead received $40 million as an upfront payment from Horizon and is eligible to receive up to $660 million in potential development, regulatory, and commercial milestones, and is further eligible to receive royalties in the low to mid-teens range on net product sales.

13:22 will receive a worldwide exclusive license to the therapeutic and will be wholly responsible for clinical development and commercialization. This is a great example of an attractive partnering opportunity. It expanded the reach of our technology to an area that we had not intended to enter independently and brought in non-dilutive capital. It also brought in needed expertise in the gout field to help understand the disease, the clinical path, the tremendous unmet medical need, and a dominant player in the space with an existing commercial organization. For all these reasons, we thought Horizon was the ideal partner, and the deal made perfect sense for both of our companies. We look forward to working closely with Horizon as we advance this potential new therapy for patients in need. We experienced the latter in the AeroENAC program, our candidate being developed as a potential treatment for cystic fibrosis last quarter.

14:29 To review, we voluntarily paused the clinical study of AeroENAC after receiving a preliminary update from an ongoing chronic toxicology study in rats that contained unexpected signals of local lung inflammation. Because of this preliminary update, we instructed investigators to pause new screening enrollment in any further dosing of investigational aeroenac, pending additional data from the ongoing chronic rat toxicology study and an additional ongoing chronic primate toxicology study. We have not seen any concerning safety or tolerability signals in people enrolled in the aeroenac 1001 study. They participate in our clinical trials above all else, so we will continue to keep the Aeroline Act clinical study on pause for now. We do not yet have full data back from the toxicology studies nor from additional studies that we are conducting internally, so we do not yet know the extent of the findings.

15:22 We are investigating this fully and are still in the information gathering stage. We should know more in the coming weeks and months, and we intend to provide an update when we are able. Javier San Martín.

15:35 Javier. Thank you, Chris, and good afternoon, everyone. I want to give an update on our clinical studies and provide details on the design of a couple of our newest studies. First, I will discuss ROHIF-2, which is designed to inhibit the production of HIF-2-alpha to treat clear cell renal cell carcinoma, or RCC. We were encouraged by the positive interim results from the first two cohorts of ROHIF-2-1001, a Phase I The dose-finding printer study in three cohorts will advance clear cell RCC. We are currently enrolling cohort three, which is designed to include up to 10 patients who will receive a weekly IV infusion of 1,050 milligrams of AeroHIF-2. The study is designed to evaluate the safety of AeroHIF-2 to determine the recommended phase 2 dose and to assess pharmacokinetics and preliminary efficacy based on resist, and Paul Storrs' tumor expression of HIF-2-alpha and HIF-associated genes. Patients will continue to receive weekly error HIF-2 indefinitely until they experience disease progression, have a complete response or they discontinue.

16:48 Our intention is to share additional interim data from this study, including data from Cohort 1, 2, and initial results from Cohort 2, 3, at the appropriate medical meeting in the future. We have not yet selected the intended meeting. The next program I want to detail is ARO-HST, our investigational candidate for the potential treatment of alcohol and non-alcohol-related liver disease. Within the interim data, we presented that ESL was highly encouraging, and in fact, our presentation was highlighted in the ESL official scientific press conference on NAFLD in Nash. It was exciting to see ALT levels drop significantly following just two doses of ARO-HSD. We expected a high level of target gene no doubt because our TRIM system has been extraordinarily consistent across our different liver-directed programs.

17:41 but the improvement in ALT at this early time point was a very welcome surprise. This data and the strong genetic evidence of HSD17beta13 as a potential therapeutic target provide us with increased confidence as we design our clinical study for ARO-HSD. We are thinking about innovative designs that seek to answer key questions about the medicine, the disease, and the mechanisms of HSD17beta3 inhibition. and what other signs of improvement may look like. We're approaching this in a similar way to how we approach 8080. In the meantime, we're still conducting the phase one, two in patients with NASH or suspected NASH and we're happy to report that the study is fully enrolled.

18:29 As Chris mentioned, we start dosing in two Phase IIb studies of our cardio-metabolic candidates, AeroApoC3 and AeroEng3 during the last quarter. I will give a brief description of these study designs so you all can think through potential timing. We intend to initiate additional studies shortly and we will provide details on the design of the additional studies when they start. For AeroApoC3, we initiated AeroApoC3 2001. A double-blind placebo-controlled, face-to-be study to evaluate the efficacy and safety of AeroApoC-3 in adults with severe hypertriglyceridemia, or SHTG. Three dose levels of AeroApoC-3, 10 mg, 25 mg, and 50 mg, will be evaluated against placebo in participants who have mean fasting triglycerides of greater than or equal to 500 mg per deciliter at screening.

19:27 A total of approximately 300 participants will be enrolled in the study. All those cohorts will enroll in parallel with 100 participant-previous cohort randomly assigned in a 3-to-1 ratio to receive aeroeposy-3 or placebo. Each participant will receive subcutaneous injections on day 1 and week 12. The duration of the study is approximately 54 weeks for screening to the week 48 end-of-study examination. The primary objective of the study is to evaluate the safety and efficacy of ARH3 in adults with SHTG and to select a dose ingestion for later stage clinical studies in this patient population. For ARH3, we initiated ARH3-2001, a double-brained placebo-controlled Phase IIb study to evaluate the efficacy and safety of investigation of ARH3 in adults with mixed dyslipidemia.

20:25 Three dose levels of LNG3 50mg, 100mg, 200mg will be evaluated against placebo in participants with mixed dyslipidemia who had the following at screening. LDL cholesterol greater than or equal to 70mg per deciliter or non-HDL cholesterol greater than or equal to 100mg per deciliter. And mean fasting triglycerides between 150 and 500mg per deciliter. A total of approximately 180 participants will be enrolled in the study. All those cohorts will enroll in parallel with 60 participants per cohort randomly assigned in a 3-to-1 ratio to receive a Succutaneous Injection of Arrow H3 or Placebo on day 1 and week 12. The duration of the study is approximately 42 weeks from screening to the week 36 end of study examination.

21:21 After completing the week 36 visit, participants will be eligible to continue in an open-level extension study. The primary objective of the ROH-3-2001 study is to evaluate the safety and efficacy of ROH-3 in adults with mixed dyslipidemia and select a dosing regimen for later stage clinical studies in this patient population. I will now turn the call over to Ken Miskowski, ROH's Chief Financial Officer.

21:51 Thank you, Javier, and good afternoon, everyone. As we reported today, our net loss for the quarter ended June 30, 2021 was $29.9 million, or $0.29 per share, based on 104.1 million fully diluted weighted average shares outstanding. This compares with a net loss of $13.6 million, or $0.13 per share, on 101.8 million fully diluted weighted average shares outstanding for the quarter ended June 30, 2020. Revenue for the quarter ended June 30, 2021 is $45.9 million compared to $27.4 million for the quarter ended June 30, 2020. Revenue in the current period primarily relates to the recognition of a portion of the $300 million upfront payment received under our collaboration agreement with Cicada, as well as a $10 million option exercise payment received from Janssen for the ARO J&J One program in May 2021.

22:51 The revenue for the Takeda agreement will be recognized as we continue to work toward completing our performance obligations of managing clinical trials in process and certain manufacturing-related services. The remaining $230 million of revenue associated with the Takeda collaboration is anticipated to be recognized over approximately two years. Any additional milestones achieved with our collaboration partners would be additive to this projection. Revenue in the prior period primarily related to the recognition of a portion of the milestones received from our license and collaboration agreements with Janssen. Our performance and revenue recognition under the Janssen Agreement, or HBV, is substantially complete.

23:36 Total operating expenses for the quarter ended June 30, 2021 were $77.8 million, compared to $43.3 million for the quarter ended June 30, 2020. This increase is primarily due to increased candidate-specific and discovery R&D costs, as the company's pipeline of clinical candidates has both increased and advanced. Net cash used by operating activities during the quarter ended June 30, 2021 was $29.6 million, compared with net cash used by operating activities of $33.4 million during the quarter ended June 30, 2020. The key driver of this change was the $10 million option exercise payment received from Janssen for ARO J&J One program in May 2021.

24:22 Excluding any potential milestones from our collaboration partners, we estimate our cash burn win rate to be $50 to $60 million per quarter. Turning to the balance sheet, our cash and investments totaled $644.7 million at June 30, 2021, The increase in our cash and investments was primarily due to the upfront payment received from Takeda, offset by cash used by operating activities. In July, we also collected the $40 million upfront payment due under our recent collaboration with Horizon. Our common shares outstanding at June 30, 2021, were $104.2 million.

25:09 With that brief overview, I will now turn the call back to Chris.

25:13 Thanks, Ken. As I mentioned, we think we're making strong progress across the spectrum of activities required to be a successful platform company. We are innovating on the platform and pushing the bounds of what our trim technology can do. Thank you for joining us today. I would now like to open the call to your questions. Operator. Thank you, Chris. And as a reminder to ask a question, just press star and then the number one on your telephone keypad. Again, just press star and then the number one on your telephone keypad. And to remove your line from the queue, just press the pound key.

26:08 Please stand by while we compile the Q&A roster. Your first question comes from the line of Maury Raycroft from Jefferies. Your line is open.

26:22 Thanks for taking my questions and congrats on the progress. I was wondering for the bottleneck for the CTI filings for Dux4 and the two pulmonary candidates, can you comment on whether this has anything to do with waiting for additional preclinical data for MENAC?

26:39 It does not. It has to do with just finding slots and zeros. We talked about this, I think, Since the pandemic, there's been a non-human primate shortage. And also, these pulmonary studies are a bit more difficult to do because there's not many CROs that do them. And so, given all that, we've just had a bit of a bottleneck. And so, we'll get these done. It's just that we're going to get them done a quarter or two later than we had hoped.

27:16 Okay, and then also just wanted to check on if you're providing a status update on how the ENAC NHP study is going. And you mentioned you may know more in the next few weeks and months. Is it fair to assume that there could be an update on this in 4Q then? And in the next update, are you going to provide some of the clinical data that you saw?

27:38 Yeah, so I just don't. We're not going to have the NHP data towards the end of the year, so that will be a black box until then. That's still ongoing, so there's just no data there yet. We don't have final reports for the room piece of that. That's still ongoing. We just got an interim update. We're working on it right now. And I think beyond that, it doesn't make sense for us to talk about the clinical program until we have a better idea about where this is going to go and how quickly we might be able to get back on track if, in fact, that's going to work out.

28:31 Okay, that makes sense. And last question for me is just for AeroVip 2, the first data in the refractory RCC was good.

28:40 At this point, do you have more insight into the relationship between knockdown and related tumor activity?

28:46 And how do you think activity could change at higher dose? So with respect to the first question, we don't yet have any more information. With respect to the second question, I don't know. We're looking at this in real time, and we haven't seen data from a higher dose yet, so we'll see where that goes. What was encouraging to me, at least, was that it appears that we're on the board. We're getting good results. and Target Engagement, it appears that we're getting knocked down. So now let's just see where this goes. I don't, I would not expect, you know, a rapid sort of physiological response, if you will, with respect to tumor shrinkage and such through this pathway. That may take a bit longer. So the fact that we are seeing right now, you know, some knockdown suggests to us that our platform is working.

29:42 And so now we just need to see how that's going to go going forward. Okay, that's helpful. Thanks for taking my questions, and I'll hop back in the queue. Sure. Thanks, Maureen. Thank you. Your next question comes from Alicia Young of Cantrell. Your line is open. Hi, this is Nanon for Aletheia, and thank you for taking our questions. We are wondering if you could share more on your Dux4 program and how it compares to competitors, and also if there's any read-through from the Phase 2b results for LostMapMod, which missed on the primary endpoint in change of Dux4.

30:21 Yeah, so I'll let James comment on that. I don't, I don't, well, I'll let him comment on that. I don't know that there's read-through, you know, with the other one, because it's different, you know, it's a different compound entirely, of course, but James? Sure, maybe I'll take the first question first about the, how we compare with the competing programs. There's not a whole lot out there, you know, with regards to the other oligo programs, the targeted oligo Antisense programs are all preclinical and there's really not much data available. And so the primary difference would be the way that we target the muscle cells that we use a peptide targeting ligand versus their antibody or antibody fragment approach. So I think that's the main difference as far as comparing them.

31:17 There's really no way to compare efficacy or knockdown levels as the other competing programs have not shared any data at this point. And then the other question was around the fulcrum read-through. Is that right? Yeah, it's tough to say. I mean, it's a very different compound, different mechanism. I think they've in this population and with this specific target where there's this sort of stochastic expression of the target that may be difficult to catch or to monitor, if you will, with biopsy.

32:10 We will look at downstream gene expression, but we'll likely also look at other parameters that might help us select a dose for later stage clinical studies.

32:22 This is Javier. I wanted to add another comment about this data. which I think despite the biomarkers, the clinical data in some aspects was positive. So I think the target still is in a good place because if you look at the PRO and the physical function, there is a number of those that were statistically significant. We don't know how clinically relevant those changes is and we're looking at that to try to see if some of those changes correspond with the minimal relevant changes and that I think will help us to understand this. So I think there is a mix. of results here, despite the biomarker now being positive, are these clinical signs of potential improvement in this patient population, which I think is for the pathway. Okay, that's helpful. Thank you.

33:10 Thank you. Thank you. Your next question comes from the line of Esfer Rezavelu from UBS. Your line is open. Thank you for taking my question. I have two, one on ENAC. So it's historically been a tough target, but what are some takeaways from the tox signals that you're seeing? Is it specific to the lung or is there evidence of exposure in other tissues? And what would your considerations be if you find that the tox is limited to the lung?

33:44 So let me just say two words, and then I'll hand it over to James on this. The talk that we saw, or that we heard about, again, we haven't had a final report on this rat study yet, so we have limited data, but what we understand is that it was local lung inflammation. We didn't see broader issues. What was the other part of the question? The other part of the question was if you sort of consistently see that the toxin, when you get the NHP data, if you see the toxin limited to the lung, would it, I mean, how would you interpret that? Is that a good thing because you know the drug is getting to the lung and you just have to find another target that works maybe in a different indication?

34:49 Or would you have to go back and change the chemistry? Well, the tox being limited to the lung, as Chris has stated, is not surprising. The systemic bioavailability with inhalational oligos is not that great. in the lung. I think it depends on what we would see in the final results from the RAD and in the NHP study in terms of what the toxicity is and at what dose levels and dose frequencies. Again, depending on the results, and we don't have these results yet, there may be an opportunity to resume the study as is or to amend

35:55 We dose it relatively frequently, and so to James' point, or as he alludes, if this appears to be clean in the NHPs, it could be that we have an opportunity just to space out the dosages a bit more. That's all speculation. Let's see where the data come in, and we can go from there. Got it. Thank you. And then on AAP, are you still on track to revisit the registrational trial design with the FDA? I think you said in the third quarter, late summer or after.

36:29 Javier? You said the initiation of the Phase III study? The interaction. The interaction, yes. So as you probably know, we've been granted a breakthrough designation about a week or two weeks ago. We're already working on the briefing document to engage in the first and what is called multidisciplinary meeting in the Q3, Q4 timeframe. Thank you. Thank you. Thank you. Your next question comes from the line of Joel Beattie from Baird. Your line is open. Hi, congrats on the progress. A couple of questions on the HIPAA program. Well, the dose response and reduction of HIP2A is seen among the two doses in that study, and then I have a follow-up.

37:25 James? Dose response between the first two cohorts? Yeah, I think we're still in the process of dose escalating and analyzing all the data from the second cohort. A lot of those patients are still on drugs, so

37:42 I think it's too early for us to really give a clear answer on dose response. And a further complicated factor is that, I might get these numbers wrong, so correct me if I'm wrong, you know, we had of 17 individuals, I think we only had usable biopsy material from nine of them.

38:07 The only thing that we've had is that we did see knockdown in both doses. That's a good point. And the press release, we were just giving kind of overall top line on this. And so our intent, we said this in the prepared remarks, is to present a more full data set at an appropriate medical meeting, which would include the top dose level as well. So stay tuned on that. Yeah, you got it. That all makes sense and is helpful. So I guess just one follow-up on that is you mentioned how there's one responder with a fairly strong response. Are you able to share anything about the F2A reduction that was seen in that patient? Yeah, not at this time. I think we can share that when we present the full data set at an upcoming medical meeting.

38:57 Great. Thank you so much. Thanks. Thank you. Your next question comes from the line of Salveen Richter from Goldman Sachs. Sir, your line is open. Thank you for taking our question. This is Sonia on for Salveen. We were just wondering, like, beyond the pulmonary target and the muscle target, what other extrahepatic tissues would you be looking to go into on the forward?

39:25 We have active programs in a number of areas. We have not disclosed other areas that we're working on. So, yeah, just stay tuned on that. We have mentioned in the past, though, that CNS clearly is a target-rich environment, so it's a place that we want to go at some point. We are not there yet, but there's a number of tissue types that we're looking at. Thanks. Sure. Thank you. Your next question comes from the line of Luca Isi from Royal Bank of Canada. Your line is open. Oh, great. Thanks for taking the question. This is Lisa on for Luca. Just wondering on A1AT, can you give us some directional color here on more with the ongoing dialogue with the FDA? Now that you have the breakthrough designation, is there maybe a scenario where the data from the 202 study and the first 36 patients from Sequoia will be sufficient for accelerated approval, and I also have a follow-up on ENAC.

40:34 This is Javier. Yeah, we're thinking about all of those options. Right now, we will need to focus on the first interaction. And typically, this first interaction, as I said, is a multidisciplinary meeting. We will touch upon different aspects of the filing process, discuss the phase three study design, the approval endpoint, and the time to filing. It's going to be critical, but it's not a one-stop conversation. It's a process. and we will, of course, entertain that thinking and that potential step forward.

41:11 And we've had really, so far, limited interactions with the FDA, particularly with the current division, but our interactions have been quite positive and collaborative. They clearly appreciate that this is an unmet medical need and I think that they're really interested in

41:51 And to your point, breakthrough resignation essentially opens the path to an accelerated approval based on a surrogate likely to translate into clinical benefit. And that's precisely what we will discuss the next time around. That was a significant component of the breakthrough resignation briefing document. So, yes, we're going to talk about this, you know, throughout the process. Great, that's helpful. And then just one on ENAC. Just wondering if you can talk about the doses at which you have seen the tox result in rats and how those doses scale into humans. Just trying to figure out here whether the signal, the tox signal seen in rats was seen at maybe super therapeutic doses or at doses that scale within the 40 to 180 mg range that are being tested in humans.

42:50 But look, it has been our policy not to talk about tox data in particular because we don't even have a final report here. We've just been given a small synopsis about part of a rat study. We don't even know anything about the NHP. So we're unable to give you any more color on that at this point. Okay, got it. Thanks for taking the question. Thank you. Your next question comes from the line of Patrick Trucchio from HC Wainwright. Your line is open. Hi, thanks. Good evening. Just a couple of follow-up questions on the C3 program.

43:35 First, can you discuss what, if any, potential advantages there are to targeting C3 rather than C5? And secondly, do you know which indication or indications the C3 program would initially focus on when the clinical development could begin? And is this a program you would bring into clinical development on your own, or would you seek a collaboration partner?

43:57 I will answer the last of those questions and then I'll hand the rest over to James. So we do not have plans to seek a partner right now for this program. Look, that may change in the future, but right now we are happy to take this forward. This is directly in our wheelhouse in terms of... I'll take the first part of the question that I think was about C3 versus C5. So C3 in the complement cascade is a central node that is involved in all three different components of that pathway, the leptin, the alternative, and the classical pathways.

44:51 So if you can inhibit C3, you can really take out everything that's downstream of C3, and so the effects should be broadly applicable to various complement-mediated diseases. Now, specifically to two interesting indications, PNH and C3 glomerulopathy that Chris mentioned during the earlier remarks, PNH is a disease that's been reasonably well treated with C5 inhibition. However, there is a component of that population primarily driven by C3. So that residual, that population with the residual anemia that's refractory to C5 inhibition could be specifically treated with, potentially treated with C3 inhibition.

45:54 There is another population, the C3 glomerulopathy patients, where their disease is really driven by So that's really a C3-driven disease. Beyond those, there are other conditions where the disease is complement mediated, maybe not as specific to C3 as those other two conditions, but complement mediated. And we think that C3 inhibition may have applicability in those other complement mediated diseases.

46:42 One other question was about when we can enter clinical development by the end of the year. Or will we be filing a CTA by the end of the year? Got it. That's helpful. And then just a follow-up on the gout program. Can you tell us where Arrow XDH would fit in the gout treatment paradigm and the potential cadence of the $660 million in potential milestones from Horizon? And to the extent that you could comment, when the program could be expected to enter clinical development?

47:23 So we did not split out how the $660 million of potential milestone payments could be achieved with respect to how this could fit into a clinical paradigm. This Got it. That's helpful. Thank you very much. You're welcome. Thank you. Your next question comes from the line of Ted Centhoff from Piper Sandler.

48:17 Your line is open. Thank you very much. I appreciate all the updates. And I just wanted to get a sense a little bit more on the new pulmonary targets. You know, what are gating factors, and is there anything you expect to learn from the ENAC program that could impact those programs going into the clinic? Thank you very much.

48:43 Yeah, so that's a good question. It's still just too early. We don't know what's going on or what happened in those rats in the EMAC program. And so until we have more information, I just don't know how that might read on future programs. I can tell you that it's not slowed us down. This is still, we think, a big opportunity for us, and we're still moving as quickly as we can. We are excited about these two new programs. We haven't talked about the gene targets. We haven't talked about the disease areas. I expect that we will maybe later this year. I will say, though, that what we think we've seen, because again, we've only seen a small amount of data from that RET study, but what we have seen there has caused us to do a bit more work while we're waiting.

49:50 These are non-GLT toxic. These are just so we understand a bit more internally on the other programs. That makes a lot of sense. And with respect to EMACs, With the patients who have already been dosed, how do we anticipate hearing about that data? I know you're not dosing anyone going forward, but is that going to be a substantive update so that it's going to be informative and is that something you would share publicly? Thanks.

50:32 We don't know what's going to happen with that program, and if we can restart it, we don't know when we can restart it. So until we have more information, we just would rather not give any sort of guidance one way or the other. Totally understand. Yeah. Totally understand. Awesome, Chris. Thanks so much for the update, and really a lot of great progress this year. So excited for the back up. Thank you, Ted. Thank you. Your next question comes from the line of Key MacKay from Shardam. Your line is open. Yeah, hi, thanks. Yeah, Chris, just following up on the new loan programs. What are the similarities between the construct for those versus ENAC? Obviously, you're going to have a different sequence for the targeted gene, but are you using the same targeting ligand?

51:28 Help us try to better understand what the potential read-across of risk is from the ENAC tox.

51:36 Right, so we're using the same targeting ligand, as you say, different sequences. I would expect that we'll be using less material in the next two, because at least in animal studies, they both appear to be more potent than aeroenac. Is that important? I don't know, but I believe that's, well, I know that, Okay, thanks for that. And then just for HIFS, the biopsies that you received and, you know, the fact that some of them, you know, weren't usable, can you just further characterize that and how do we think about the risk there going forward of not being able to get good data to do your assessments?

52:40 James? Yeah, so far, maybe I'll make one comment on to enroll up to a sufficient number of patients to get enough biopsies that we think are adequate, paired biopsies to do our analyses. As was described in the press release, the biopsy samples are not always analyzable, but so far in the first and second phase Cohort, and so far in the third as well. We've been able to get enough biopsy samples to do the work that we need to.

53:33 I hope that answers the question. Yeah, thank you. Your next question comes from the line of Mayank Mamthani from B. Riley. Your line is open. Hi, good afternoon. This is for Mayank. Thanks for taking our questions. Maybe a brief one on HIF-2. Could you provide any color on kind of how the enrollment's been tracking, maybe in the context of the Merck program nearing approval, or just increased awareness on VHL disease associated with OCC? Yeah, enrollment has been actually really good in that program throughout. We've not seen any challenges with enrollment, and all the slots have filled very rapidly. So I know that the Merck study is ongoing, but it has not detracted from enrollment into this study.

54:30 Great. And then maybe on HBB, do you have any insight into kind of what forum J&J might present the 24-week off treatment data from Reef, or any high-level thoughts on kind of what we can incrementally learn from that study?

54:52 to see in those data, but I don't know what their plans are, to be honest, about where that could be presented. Got it. Thanks for taking our questions, and congrats on the project. Thank you. Thank you. Your next question comes from the line of Manny Forohar from SVB Lyric. Your line is open. Hey, good afternoon. This is Rick on the line for Manny. Thanks for taking our questions. Just two from us. So first, for HIC-2, could you speak to some of the variability of knockdowns seen in the data? I know there aren't a lot of data sets exploring RNAi in tumors, so could some of this variability just be due to the heterogeneity of tumors in general, or is it something that could potentially be resolved by looking at higher doses or either earlier lines of patients?

55:45 Yes, I think that you hit the nail on the head. I mean, I think there's Heterogeneity of expression in the tumors from patient to patient and also heterogeneity in between paired biopsies. You're not necessarily getting into the same area of the tumors. So heterogeneity is definitely an issue and probably explains a good and the component of the variability. Alright, got it. I also have a much more broad question. So just in general, Arrowhead's approach to extra-hepatic delivery seems to be focused around targeting integrants with specific ligand conjugates. Can you maybe speak to why these are so favorable to target other class of molecules and If the company is currently exploring any other targeting strategies preclinically?

56:56 We are not an integrin targeting company. We're an RNAI company. And so, you know, we tend to use what works best. And we are agnostic. You know, we have done work with antibodies, with antibody fragments, with peptides, with molecules and such. And so, you know, we just, you know, we have ideas about what might work best, but ultimately the data will tell us. And so it just so happened that we've, that integrin-based targeting has been quite good for us. James? I'll echo that, that We go with what works, and we went with integrin receptor ligand pairs, not because that was our area of expertise, but because that was what was looking the best. And we continue, we've historically evaluated multiple different receptor ligand pairs and continue to do so. And I think we'll continue to go with what works, regardless of what the modality is, if it's an antibody or a small molecule or something else.

58:04 Thank you. There are no other questions on cue. I will now turn the call over back to Chris. Please go ahead.

58:11 Thank you all for joining us today, and I hope you have a nice evening and afternoon. This concludes today's conference call. Thank you for participating. You may now disconnect.