Arrowhead Pharmaceuticals - Earnings Call - Q2 2020

Transcript

Speaker 0

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 over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Speaker 1

Thanks, Buena, and sorry about the delay, everybody. We were having some technical difficulties on the line. But good afternoon. Thank you for joining us today to discuss Arrowhead's results for its fiscal second quarter ended 03/31/2020. With us today from management are President and CEO, Doctor.

Christopher Anzalone, who will provide an overview of the quarter Doctor. Javier San Martin, Chief Medical Officer, who will discuss our clinical programs Doctor. Curt Bradshaw, our Chief Scientific Officer, who will discuss our discovery, platform development and manufacturing efforts and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. In addition, James Hassard, our Chief Commercial Officer, will be available during the Q and A session of today's call. This is the first earnings call without Doctor.

Bruce Given, who retired last week since he joined the company ten years ago. I want to start by thanking Bruce for all of his contributions to Arrowhead. Bruce developed strong relationships with the investment community over the years, and I'm certain that Javier, Kurt and Jim will do the same. Before we begin, I would like to remind you that comments made during today's call contain certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including without limitation those with respect to Arrowhead's goals, plans and strategies are forward looking statements.

These include statements regarding our expectations around the development, safety and efficacy of our drug candidates, projected cash runway and expected future development and commercialization activities. These statements represent management's current expectations and are inherently uncertain. Thus, results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's annual report on Form 10 ks and the company's subsequent quarterly reports on Form 10 Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call.

With that said, I'd like to turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Speaker 2

Thanks Vince. Good afternoon everyone and thank you for joining us today. I'd like to start by thanking Doctor. Bruce Given. He did a fantastic job developing the R and D organization and instilling a culture of innovation that will be a lasting legacy.

Bruce's contributions are clear to all who know him or have worked with him, and I'm confident that we have assembled and developed the right team to enable us to continue to execute in true Arrowhead fashion. Javier, Kurt and Jim are seasoned executives who are expanding and professionalizing their respective functions and have put Arrowhead in a very strong position to prosper during this next phase of growth. 2020 is the year that we intend to make the promise of RNAi outside the liver a reality. We hope to gain clinical proof of concept in the lung and solid tumors and then rapidly expand our pipeline much as we did with our hepatocyte targeted pipeline in 2018 and 2019. This could provide new treatment options for countless patients and provide Arrowhead shareholders with continued value growth.

While of course we're looking to expand our reach, we are also looking to squeeze as much risk out of our business as we can. We have also made good progress on this front. First, we are well capitalized. Second, we are developing an increasingly validated platform in TRiM. We treated a total of two seventy three human subjects with five seventy doses across our clinical programs.

And keep in mind that this does not include all the people who have been treated by Janssen and Amgen with our partner candidates. Third, RNAi is an increasingly validated modality. Fourth, we are addressing gene targets that experts generally view as well validated. Fifth, we are addressing unmet medical needs. And sixth, we are the first RNAi player in all of our clinical programs.

All of this puts us on solid footing, but the elephant risk in the room is COVID-nineteen. This has to be the lens through which you view our business, at least in the near to midterm. Therefore, I will use my portion of this call to provide a high level overview of our programs and how they may be affected by the outbreak. Let's start with ARO AAT, our investigational medicine against alpha-one liver disease. In March, we voluntarily paused new patient screening and enrollment for at least a four week period in the Phase twothree SEQUOIA study and the ARO AAT2002 open label study.

We are now working with sites and investigators to begin the process of resuming screening and enrollment. Any patients already enrolled in these studies continue to be dosed per protocol and continue to come in for their follow-up visits. Importantly, protocol deviations have not been out of the ordinary. Before the enrollment pause, we are already fully enrolled in the first cohort of the 2002 study, so we are still on schedule to collect six month biopsies in the summer. We intend to report those data in the fall at an appropriate venue.

We believe this is an important readout for the program and for the field. While we don't expect to see histological changes after that short amount of treatment, it may provide an early indication that the drug is doing what it is designed to do, which is to reduce new production of the mutant misfolded AAT protein. This will be assessed by measuring the amount of AAT monomer in hepatocytes. Further, it will be interesting to compare pre and post treatment levels of accumulated AAT polymer. This might give us a view of the pace at which hepatocytes can break down and clear the polymerized protein, which is the root cause of the progressive liver disease in patients with homozygous ZZ mutation.

We believe these data are important for us in the field and we expect this readout to be the first of its kind anywhere. This underlines both our substantial lead in developing a treatment for alpha-one liver disease and our position as thought leaders in the field. There are other RNAi based approaches, but to date none have reported data demonstrating tolerability and pharmacologic activity even in normal healthy volunteers. In addition, there are other approaches to treating AAT deficiency by correcting the mutant AAT protein in hopes of allowing it to be more efficiently exported from hepatocytes. We see some serious challenges for that approach to show clinical benefit for patients with liver manifestations of AAT deficiency.

First, liver produces an estimated two grams of AAT protein per day. We do not believe it is feasible to administer enough small molecule corrector to address that level of protein production. So we think some portion will likely still accumulate in the liver. So if the goal is to correct 20% to 30% of protein, which would still require a very large amount of corrector, That would mean 70% to 80% of the misfolded protein is still present, which is a lot for the liver to handle. Our data suggests that ARO AAT is nearly completely suppressing liver production of the mutant Z AAT protein, and we still believe that it may take two years of treatment to show a meaningful change in liver histology.

So how long would you have to treat with a corrector that is leaving a large majority of Z AAT protein in the liver? Eight years? Ten years? We think that presents a serious challenge in a clinical trial setting and gives us confidence that we are in a strong competitive position. Let's now talk about the status of our two cardiometabolic candidates ARO APOC3 and ARO ANG3.

ARO APOC3 is being developed as a potential treatment for patients with severe hypertriglyceridemia and history or high risk of pancreatitis. Some of these patients have a single genetic cause for their disease such as familial chylomicronemia syndrome or FCS, but a significantly larger population has polygenic causes for their hypertriglyceridemia. This is called multifactorial chylomicronemia or MCM, and we believe there are around thirty thousand patients with this condition in The U. S. Alone.

FCS and MCM have very similar clinical manifestations. They are both severe diseases that can lead to severe abdominal pain, recurrent pancreatitis, emergency room visits and hospitalizations and even death. These come with a very high cost with respect to both patient quality of life and economic cost of the healthcare system. We've decided to focus on the MCM population and are working on a plan for a potentially pivotal study in MCM patients. We intend to request a meeting with the FDA and EMA this year to discuss some key study design considerations for a registrational study.

We designed the Phase onetwo study to provide sufficient data to enable ROLLUM directly into a Phase three study. We will know more after we speak with regulators, but our hope is that we can start a pivotal study in the first half of twenty twenty one. We believe that should be a relatively short study, so we continue to believe that ARO APOC3 could be our first marketed product. We continue to generate data in the Phase onetwo clinical study. It was nearly fully enrolled prior to the COVID-nineteen outbreak, and we have experienced a slight delay in accruing the remaining patients.

We already have a substantial amount of data that we intend to present at various times this year and are hopeful that we may that we will be able to present a full data set later this year. With the disruptions to the traditional medical meeting cycle because of the COVID-nineteen outbreak, it is unclear what form these data releases will take. We're committed to finding alternative ways to present data if medical meetings continue to be canceled or postponed. The early data have been exciting and we expect that trend to continue. As we reported on our last conference call, we have seen approximately ninety five percent reduction of circulating triglycerides in hypertriglyceridemic patients after only a single dose of ARO APOC3.

This is truly stunning. These patients have triglycerides in the thousands, so we would expect a reduction of this magnitude to be quite meaningful for patients like these. We are in a slightly more advanced position with ARO ANG3, which is being developed as a potential treatment for patients with mixed dyslipidemia. Let's talk about that patient population for a moment. Mixed dyslipidemia patients have both elevated triglycerides and elevated LDL cholesterol and are at heightened risk of atherosclerotic cardiovascular disease.

There is strong evidence that both triglycerides and LDL contribute to that risk. This is a very high prevalence disease with an estimated potential patient population of between ten million to fifteen million people in The U. S. Alone and is not adequately addressed with current standard of care. We see ARO ANG3 potentially being able to reduce triglycerides to a far higher degree than other available treatments and also reduce LDL in a non LDL receptor mediated manner, making LDL reduction potentially greater than with statins and PCSK9 inhibitors alone.

As with ARO APOC3, we reported early patient data at our last conference call, and I believe that was impressive. We saw approximately eighty percent reduction in triglycerides and 40% reduction in LDL after only a single dose of ARO ANG3. Importantly, all of these patients were already on LDL lowering drugs such as statins and PCSK9 inhibitors. The patient population we expect to address is quite large and a pivotal study to show a reduction in cardiovascular events would also be large. We and we think most experts in the field believe strongly that mixed dyslipidemia patients are in need of new treatment options and we believe the mechanism of ANGPTL3 reduction is very intriguing.

So we are now determining what the regulatory and development path would look like for that indication. Because of our focus on this high prevalence population, we will likely need to run a Phase 2b study instead of rolling directly into a pivotal study as we may be able to do with ARO APOC3. We plan on engaging with FDA this year and hope to initiate the Phase 2b in the first half of twenty twenty one. The ARO ANG3 Phase onetwo study is making good progress even in the COVID-nineteen environment. The study is fully enrolled, so we do not expect any real delays as we continue to follow patients and generate data.

We believe we will have a full data set to report later in the year and we'll also look for opportunities to share data subsets throughout the year. Just like ARO APOC3, will assess alternative ways to present data if medical meetings continue to be canceled or postponed. I would now like to move on to our newest clinical candidates. ARO HIF2 in development to treat the clear cell form of renal cell carcinoma for which we filed an IND in December ARO HSD in development to treat alcohol and non alcohol related liver disease for which we filed a CTA in December and ARO ENaC in development to treat cystic fibrosis for which we filed a CTA recently. We expect the ARO HIF2 Phase one study to begin enrolling shortly.

We have one site open now for screening and enrollment and we anticipate the first patients will be dosed this quarter. The startup process for the study has taken longer than we had hoped, which is likely due in part to COVID-nineteen. Many of the investigators are at academic centers and the contracting and initiation process may be experiencing delays due to health and safety precautions. We expect to potentially have proof of concept data for the candidate and for the tumor targeted TRiM platform this year, but the timing may be too tight to report anything publicly until next year. We should have a better idea about this as we see the pace of enrollment.

We are already thinking about additional targets for the tumor program and we intend to build out the pipeline once we have clinical proof of concept on our own and potentially in collaboration with a partner. So what does success look like for the current Phase one? We will be taking biopsies from metastases and if we see good HIF2alpha knockdown, we will be happy that we are on the right track. First, because HIF2alpha is a well validated target for the approximately eighty percent of patients with clear cell RCC who have the von Hippel Lindau mutation, we would have an expectation that ARO HIF2 could be helpful for these patients. Second, because our targeting strategy is intended to work across different solid tumor types rather than just in RCC, HIF-two alpha knockdown would suggest that we might have a broad solid tumor franchise.

Once we achieve clinical proof of concept that we are knocking down HIF-two alpha, our goal is to quickly expand into new solid tumors against new targets. We view this as a scalable and rapid value creation strategy. ARO HSD began dosing in the Phase onetwo study in March. We are through the first cohort and we previously received approval from the Safety Monitoring Committee to escalate to the next higher dose. Because of COVID-nineteen related restrictions in New Zealand, enrollment of this second cohort was paused, but we expect it to reopen for healthy volunteers shortly and patients sometime after that.

Are working with the site on plans to restart enrollment and believe this is only a minor delay that we don't think will have any lasting effects in the program or our general guidelines. For ARO ENaC, we filed a CTA last month to begin a Phase onetwo study in healthy volunteers and in patients with cystic fibrosis. It's too early to say if there will be any COVID-nineteen related delays in this program. That largely depends on what happens in the next couple of months and beyond. Our belief is that we will be able to generate data on the safety and activity of the compound and by proxy the pulmonary platform, but we don't know if we will have enough data by key abstract deadlines to present data at scientific conferences this year.

I want to talk briefly about the CF patients we hope to help. Clearly, there has been an enormous amount of progress over the last several years in CF treatment options. But there are still opportunities to: a, help those who don't respond to standard of care and b, to make those that do respond even better. The gene target of ARO ENaC is the epithelial sodium channel or ENaC. There is good genetic validation that CF patients who are also essentially heterozygous ENaC knockouts have a mild form of CF or even no discernible lung complications several decades into life.

We see this as an indication that therapeutic ENaC inhibition in the lung may benefit all patients with CF regardless of the genotype. The idea is that reduction of ENaC expression in the lung helps to rehydrate CF related dehydrated mucus and may help improve mucociliary clearance. Importantly, this first study is designed to give us a readout on both tolerability and efficacy in the target patient population. This could be a potentially important value inflection point for both ARO ENaC and for the pulmonary platform broadly. If the data are supportive of further development, we hope to launch a Phase III study in 2021 and move rapidly to expand the pipeline with product candidates that address other underserved pulmonary diseases such as COPD, asthma and pulmonary fibrosis.

Toward that goal, I'm pleased to announce that we have completed discovery and optimization work on our second lung targeted program and have nominated ARO Lung2 as our next candidate. Are not disclosing the target at this point, but we can say that it is designed to address COPD patients. We have been very encouraged by the data in this program and for ARO ENaC and are eager to begin the expansion of our pulmonary franchise. We are now working on manufacturing and IND enabling toxicology studies for ARO Lung2 and plan on filing a CTA in the first half of twenty twenty one to begin first in human studies. We had previously hoped this could happen by the end of this year, but COVID has slowed development down a bit and will delay first human studies by probably one or two quarters.

In the past, we've discussed our excitement in establishing a rapidly expanding pulmonary franchise and you were seeing that start to play out now. Given our studies in rodent, primate and sheep models spanning several years, we have a high degree of confidence that our inhaled delivery will be well tolerated and active in humans. Further, the lung represents a target rich environment that enables us to address a number of indications in innovative ways. So we see this as a big opportunity for patients and a significant value driver for our shareholders. In addition to CF, COPD, asthma and IPF, people have asked us about applying inhaled TRiM to coronavirus.

We have not disclosed any work previously, but are happy to report today that we have an active program to address the current novel coronavirus that causes COVID-nineteen and other possible future pulmonary borne pathogens. We are not disclosing more details about this program or the strategy, but we wanted to provide this update. We are looking to bring the same ingenuity and innovative thinking to this issue that we did in revolutionizing the approach to Hepatitis B. All of us who work in biopharma and drug development play a role in improving global health and Arrowhead is proud to say that we have joined the fight. A number of factors give us confidence that we could play an important role in the current novel coronavirus, future coronaviruses and other pulmonary borne pathogens.

First, we are clear RNAi leaders in addressing the lung and have a clinic ready inhaled program. Second, history suggests that we are faster than any RNAi company and arguably any other biotech company going from concept to clinic. And third, we are the leading RNAi company in antivirals and are known as HBV thought leaders. We look forward to keeping you up to date on progress with this program. The final program I'd like to mention is our muscle targeted program.

We have not yet disclosed the initial indication or gene target of our first clinical candidate, but consistent with our other programs, we view the indication as having substantial unmet medical need, the gene target is well validated and we expect to be the first RNAi company there. As with the solid tumor and pulmonary franchises, we view our ability to address skeletal muscle as a sharp end of the spear. Once we achieve clinical proof of concepts, we expect to rapidly expand our pipeline into new indications and gene targets addressable via muscle delivery. We remain on track to file a CTA by the very end of twenty twenty. I believe we have unmatched reach into diverse indications, unmatched speed to the clinic and unmatched depth of pipeline for a company our size.

Our partner programs continue to look good as well. Amgen stated on its recent quarterly conference call that it expects to begin a Phase II study with AMG eight ninety in the second half of this year. Janssen continues to conduct its first two Phase IIb studies with JNJ thousand nine hundred eighty nine against chronic HBV and we are actively working together on the three undisclosed additional targets. COVID-nineteen has introduced a new set of challenges, but Arrowhead is adapting. We believe that we have important medicines that can potentially help countless patients, so we feel very fortunate that the current environment has only caused minor delays to our development programs and that we are well resourced.

Our employees continue to be a great inspiration to me as their focus, work ethic and innovative spirit have never waned during these difficult times. With that overview, I'd now like to turn the call over to Doctor. Javier San Martin. Javier?

Speaker 3

Thank you, Chris. I'm happy to join the call and hope I can be a good resource to everyone listening today. Chris gave a good overview of the clinical development programs. I will provide some further details on the status and study designs. Let's begin with ARO APOC3, our candidate targeting A.

Olapoprotein C3 being developed as potential treatment for patients with hypertriglyceridemia. As Chris mentioned, we believe this may be a good treatment option for MCM patients that have severely elevated triglycerides, often in the thousands of milligram per deciliters. These patients can experience recurrent abdominal pain at a high risk for pancreatitis and in some cases can require frequent visit to the ER and be admitted for multiple days hospital stay. In the most severe cases of pancreatitis, these attacks can even be fatal. In addition, this patient with a very restrictive difficult to maintain and even if they comply, they still can have extremely high triglycerides levels.

This patient has severely impacted quality of life and are desperately in need for better therapies that can achieve deep and durable reductions in triglyceride levels and therefore reduce the risk of pancreatitis and allow for a better quality of life. As Chris mentioned, we previously announced some preliminary results in the patient population, but I want to review them today because they were very encouraging. After a single dose of fifty milligrams of eight zero eight Positri in patients with severe hypertriglyceridemia, we demonstrated reduction of around ninety five percent in cycloentradiolitinib. We would expect this type of reduction to have substantial clinical benefit, particularly in patients with history of pancreatitis. We're currently conducting our Phase one single and multiple dose study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics effect of ARO APOC3.

The single dose portion of the study is in adult healthy volunteers and the multiple dose portion includes patients with severe hypertriglyceridemia. Seventy one subjects have been enrolled and dosed in this study. We still have a few patients to go in order to reach the planned enrollment. We're working with investigator and sites to ensure that we reach this planned enrollment as soon as possible. We look forward to the opportunity to present additional results from this study later in the year.

Our other cardiometabolic candidate is ARO ANG3 targeting angiopoietin like protein three or ANGPTL3 and is being developed as a potential treatment for patients with mixed dyslipidemia. This program is also moving forward efficiently. ANGPTL3 is the regulator of lipid and lipoprotein metabolism inhibiting HpTl3 should result in lower triglycerides and LDL cholesterol and potentially provide improvement in other lipids and metabolic markers. Our data in animal models and our early clinical data strongly support that. For example, at doses of two hundred or three hundred milligram, maximum mean triglyceride reduction in the high triglyceride cohort approached 80% and the maximum mean reduction in LDL cholesterol in the various high LDL cohorts are averaging around 40%.

These patients were already on maximum medical care consisting of statins plus or minus acetamide with PCSK9 inhibitors in some of them. Lowering both triglycerides and LDL to this extent was an exciting result and we think could serve to hit multiple cardiovascular risk factors simultaneously. The current clinical study is a Phase onetwo single and multiple dose study to evaluate safety, tolerability, pharmacokinetics and pharmacodynamics effect. The single dose portion of the study is in adult healthy volunteers. The multiple dose portion is in normal volunteers and in patients with various type of dyslipidemia.

This include patients with hypertriglyceridemia, patients on stable LDL treatment regimen, but with persistently elevated LDL cholesterol, patients with heterozygous or homozygous familial hypercholesterolemia and patients with non alcoholic fatty liver disease. We have enrolled and dosed 93 subjects in this study and have reached full and planned enrollment. The data for both the ARO APOC3 and ARO ANG3 strongly support further development and we intend to find appropriate ways to share the data publicly this year. Earlier, Chris discussed some of our future plans for ARO ANG3. It seems likely that a Phase IIb study that assess various dose levels and dosing intervals will be a smart addition to our data package before embarking on a Phase III cardiovascular outcome trial.

This will give us more certainty on the magnitude of the treatment effect in a large data set, allows us to select the right dosing regimen and also build our safety database. We are developing our strategy and plan to engage with regulators this year to discuss the development and regulatory path. ARO HST, our new investigational candidate targeting HST17B13 for the potential treatment of alcohol and or non alcohol related liver disease is another exciting program that has made progress recently. We see this as the most intriguing target for NASH at the moment. Population based genetic data have shown strong protection against NASH cirrhosis, alcoholic hepatitis and cirrhosis in human that poses loss of function mutation in the HSD17B13 enzyme.

We're eager to see how that translates therapeutically in patients that receive ARO HSD treatment. Our current clinical study is a Phase one single and multiple dose escalating study to evaluate the safety, tolerability, PK and pharmacodynamic effect of ARO HSD in normal healthy volunteers as well as in patients with NASH or suspected NASH. Additional exploratory objectives include assessment of various measure of drug activity using liver biopsies. The first cohort of volunteers received their dose and tolerability data was collected. The DSMB reviewed those data and recommended continued dose escalation.

The study will resume enrollment shortly once some of the COVID-nineteen related restrictions are eased in New Zealand. We expect to begin enrolling the first cohort of NASH patients in the multiple dose portion of the study after the review of the safety parameter from the second cohort of healthy volunteers. This parallel design strategy makes the time to patients' activity data far shorter than a traditional sequential Phase I single ascending dose to a Phase II multiple ascending dose design. It's another innovative way that Arrowhead operates. Lastly, I want to do an update on ARO AAT, our second generation investigational RNAi therapy being developed as treatment for the rare genetic liver disease associated with alpha-one antitrypsin deficiency.

There are two ongoing clinical studies, the potential pivotal SEQUOIA study and the open label 2,002 study. We voluntarily put both on a four week post for new screening and enrollment due to concerns around the COVID-nineteen. Many ALPHA-one patients have compromised lung function and maybe at increased risk of severe illness in the event of a COVID-nineteen infection. Continuing to enroll new patients might have also jeopardized the integrity of study data as patients who have difficulty completing study visits and could miss doses or relevant studies related to procedures as a result of travel restrictions or concomitant illness. We're now working with participant sites to restart screening enrollment where and when it's prudent to do so.

We're still on schedule to collect six months biopsy from cohort one of the 2,002 study by the end of the summer, we will then work on processing and analyzing results and subsequently plan on sharing those data in an appropriate venue. This may be the first liver biopsy data for patients treated with any therapy designed to address alpha-one liver disease. We will be looking intently to learn what happens to the Z AAT monomers level and accumulate Z AAT polymers in addition to other possible measures. I will now turn the call over to Doctor. Kurt Braschow, Arrowhead's Chief Scientific Officer.

Kurt?

Speaker 4

Thank you, Javier, and good afternoon, everyone. I'm pleased to meet you all virtually and hope to connect more when things ease up a bit. I want to give you a little color on what we're working on in our early programs and how we're addressing resource needs in research

Speaker 2

and

Speaker 4

manufacturing. First, from a discovery standpoint, we have a lot of programs in active development and more in planning stages. As Chris mentioned, ARO Lung2 has already been nominated and we are now in manufacturing and IND enabling study phase for that program. We have been highly encouraged by our non clinical results with ARO ENaC and Lung2, So we're moving as quickly as possible into new targets that leverage our success with the pulmonary TRiM structure. This includes some ideas and initial work on pulmonary infectious diseases like the novel coronavirus that causes COVID-nineteen and other corona and non corona viruses were knocked down of a target in the pulmonary epithelium may be helpful.

The idea of a long duration and intervention which RNAi generally has demonstrated gives some unique advantages over other approaches. Our inhaled delivery platform has been developed and optimized over the last several years. So we think we have a significant leg up over other potential RNAi solutions. Moving on to our other more advanced preclinical efforts. In the liver, we are working towards several new programs.

Importantly, these include new targets as well as possible dimer or bispecific programs designed to silence two gene targets with a single drug candidate. In muscle, we have one lead program and another two that are in active development but earlier stage. So how are we building and allocating resources to support these plans? One of the positive aspects of being a company built around a single mechanism and a single scalable platform is that learnings from one program tend to inform the development of others. This is absolutely true for Arrowhead research team.

We've not needed to drastically increase headcount and are only selectively adding when specialized expertise is needed. For example, we are adding a few folks to support the growing pulmonary area. There will be some additional needs for some of the new cell types we're working on. This is partly why we the new San Diego R and D facility, which we opened last month is helpful. It allows us to tap into additional skill sets in one of the country's premier biotech hubs.

It has also expanded our capacity for preclinical models, so we are able to do more of that early work in parallel. Lastly, I want to touch on our manufacturing capabilities and what we are seeing in this COVID-nineteen environment. We are monitoring the situation very closely because we never want drug manufacturing to delay a clinical study. So far, we have not seen any supply disruptions. We have not encountered any material delay in receiving raw materials needed for the manufacturing processes and we've not seen any contract manufacturer delays either.

We utilize a combination of internal manufacturing and external CMOs. So we typically manufacture all material for preclinical tox studies and Phase one clinical studies in house and then use CMOs for Phase two and beyond. We maintain redundancies both internally and with various CMOs in different geographies in order to guard against the risk of supply disruptions. So to summarize, we think we are probably in a good position to supply the needs of our clinical development team now and into the future even with the uncertainty of COVID-nineteen. I will now turn the call over to Ken Myszkowski, Arrowhead's Chief Financial Officer.

Ken?

Speaker 5

Thank you, Kurt. As we reported today, our net loss for the quarter ended March $31.20 $2,019,800,000.0 dollars or $0.20 per share based on $101,700,000 fully diluted weighted average shares outstanding. This compares with net income of $23,900,000 or $0.24 per share based on 98,100,000.0 fully diluted weighted average shares outstanding for the quarter ended March 3139. Revenue for the quarter ended 03/31/2020 was $23,500,000 compared to $48,100,000 for the quarter ended March 3139. Revenue in both periods related relates to the recognition of a portion of the upfront payments and milestones received from our licensing collaboration agreements with Janssen.

So we continue to work toward completing our performance obligation of managing the current Phase onetwo HBV clinical trial. Revenue from the Janssen agreement is recognized based on our estimate of the proportion of effort expended toward fulfilling our performance obligations primarily overseeing the completion of the current Phase onetwo clinical program. We expect the remaining $33,200,000 of deferred revenue to be recognized in this calendar year. Any additional milestones achieved with Janssen or Amgen would be additive to this projection. Total operating expenses for the quarter ended 03/31/2020 were $45,800,000 compared to $26,100,000 for the quarter ended March 3139.

This increase is primarily due to increased non cash stock compensation expense. Stock compensation expense has increased because the valuation of our new stock options and restricted stock awards granted has increased with the growth of our stock price. Additionally, stock compensation expense increased due to the timing of the achievement of certain performance based awards in each period. The increase in total operating expenses was also driven by increased clinical trial costs as our pipeline of clinical candidates has increased and increased personnel costs both in both R and D and G and A as our headcount continues to grow. Net cash used by operating activities during the quarter ended 03/31/2020 was $27,600,000 compared with net cash used by operating activities of $19,600,000 during the quarter ended March 3139.

The increase in cash used by operating expenses during the quarter is consistent with the increase in our cash operating expenses. We estimate our near term cash burn to average $30,000,000 to $35,000,000 per quarter. Turning to our balance sheet. Our cash and investments totaled $498,200,000 at 03/31/2020 compared to $302,900,000 at September 3039. The increase in our cash and investments is primarily due to the December 2019 equity financing we completed, which generated $250,500,000 in net cash proceeds for the company.

Our common shares outstanding at 03/31/2020 were $101,700,000 With that brief overview, I will now turn the call back to Chris.

Speaker 2

Thanks Ken. COVID-nineteen has caused everyone to rethink how they operate in their personal and professional lives. We at Arrowhead are not immune to that. We are committed to protecting our employees, business partners and patients that participate in our studies and have taken decisive action toward that goal. From an investment standpoint, we are encouraged that the outbreak has not so far caused wide scale disruptions to our business and at worst we have seen some minor extensions to our anticipated timelines.

Importantly, we are excited to be leveraging our leading inhalation franchise and actively working on treatments for the current novel coronavirus as well as future pulmonary viruses. This is directly in our wheelhouse and we are confident that we have much to offer. In addition, we believe 2020 holds great potential to be an important year for the company in terms of expanding our reach into new indications and continuing to validate the TRiM platform in hepatocytes, solid tumors, the lung and skeletal muscle. We intend to have readouts across most of our programs and we expect these to be important data. We also expect to start to gain clinical proof of concept for our extrahepatic platforms, begin the pipeline expansion phase of our growing pulmonary platform, expand the TRiM platform into new opportunities, engage with regulators to gain clarity on our plans to move our cardiometabolic candidates into pivotal studies and maybe even have a breakthrough or two to discuss.

We've had equally ambitious plans in the past and we think we have a pretty good track record of meeting or exceeding those expectations. Thanks again for joining us today. I would now like to open the call to your questions. Operator?

Speaker 0

Your first question comes from the line of Murray Raycroft. Your line is now open.

Speaker 6

Hi, everyone. Thanks for taking my questions. And just wanted to add a quick congrats to Bruce and best wishes and next steps in retirement. For AAT, you mentioned you don't expect to see histological changes at six months. Just wondering if that's based on preclinical data, modeling estimates or something else?

Speaker 2

Yes, sure. So

Speaker 3

both, one of the things that we've been doing is looking at all the preclinical data. This is a huge opportunity for translation drug development. So we're learning a lot about that. And what I would say is the two major parameters that we aim to see One is the amount of monomers and polymers and second is inflammation.

So we're focused on those two parameters at the earlier possible response rate. But as you know, looking at other diseases that may behave similarly, in order to see definitive histological changes, particularly around fibrosis, it may take longer. These initial biopsies that we hopefully may present later this year are only six months treatment for the first four patients in Cohort one Study 2,002.

Speaker 6

Got it. And for you mentioned the inflammation. Are there are you going to be looking at specific inflammatory biomarker data? And also for the serum biomarkers, do you plan on reporting those? And, or I guess can you remind what kind of serum biomarkers you're going to report on?

And do you expect those to correlate to the liver data?

Speaker 3

Sure. So the key serum biomarker is AAT, of course, is the mutant and total protein, and we're working on that. We are going to disclose that data when we have it. So that's number one. And with regard to inflammation, we're working on that as we speak.

We're trying to define a way to quantify inflammation in a way that we can validate that and be a reliable approach to compare baseline to endpoint and compare between treatment groups. So this is work in progress. And what I can tell you is that we're planning to go to the FDA with our proposed approach to this primary endpoint that will be mainly focused, as I said, in protein accumulation and inflammation. So a number of things are going into that. I can't go into a lot more detail now, but as I said later in the year we will disclose more specifics around the inflammation component of the SCOR system that will be used as primary endpoint.

Speaker 6

Got it. That's very helpful. And I may have missed this, but for the updated development plans for Ang3 and APOC3, can you say if these updates are based on preliminary feedback from FDA?

Speaker 3

We're going to the FDA or sending the FDA briefing document for APOC in about three weeks to a month from now. We already request a meeting. We're going to have an interaction with them. It might not be a face to face meeting, but it would be either a call or a written discussion with them. So that is with regard to APOC.

For ANG, we are going to go to the FDA approximately in August, September of this year with a similar approach. Chris already mentioned the two different plans with APOC, we're going now with a pre IND proposing a Phase twothree study with the objective have a registration study in MCM population. With AINGE, as you know, we're going to propose a Phase 2b study to define the dose, the dose regimen and the overall study design for the final clinical outcome study or cardiovascular outcome trial. So both interactions this year, about two months apart.

Speaker 6

Got it. That's helpful. And as you're preparing those briefing documents, do have any initial thoughts on the trial sizes and timelines or any other details of the trials that you can provide?

Speaker 3

Yes. So for APOC, we think it's going to be the first study about 300 patients. We don't need 300 patients actually to show statistical significant difference in triglyceride level by any stretch. But we wanted to enlarge the study to have sufficient safety data set so the agency will be hopefully okay with this one Phase II, Phase III study for this first indication. For ENG, you know, a Phase IIb study.

We still need to figure out exactly if we're going to have to study more than one regimen and definitely more than one dose level. You know, we're still waiting for the final data from the current study in order to define that precise. But a Phase IIb study is going to be in that same range as I said for the ACOS C3.

Speaker 6

Great. Okay. Thank you very much and I'll hop back in the queue.

Speaker 2

Thanks, Maury.

Speaker 0

Your next question is from the line of Ted Tenthoff. Your line is now open.

Speaker 7

Great. Thank you very much guys and thanks for taking the time to update us. I'm glad everyone is doing well. I wanted to kind of get a sense for what could be next steps in terms of APOC. Is this something where you really do you think you could move rapidly to a pivotal study for targeted patients?

And how do you kind of balance sort of the development plans between more targeted orphan diseases with higher, trig levels versus broader population? Thanks so much.

Speaker 3

Well, that's a great question. And what I can say is we're working on that right now. I think we have a good case because the goal of treatment for this patient is really to reduce the risk of pancreatitis, which as you know is a very severe condition. And yes, the patient in the rare, very severe FCS population had a very high risk of pancreatitis. But those patients that are NCM and have past history of pancreatitis also have very significant risks.

Also some of those patients have very extreme levels of triglyceride level. So we're working together with the agency to define what is that right patient population that will benefit from this intervention. And again, the goal of therapy is reduce the risk of pancreatitis. So we're going to define a population that is at risk of that condition.

Speaker 2

But to your point though, Ted, and I appreciate that question, there's a lot of things that are really interesting about this drug candidate to us. Factor one is that it appears to be a very potent drug candidate. As we talked about in the data, we were seeing after just a single dose of fifty milligrams, we see ninety five percent reduction in triglycerides in these hypertriglycerides in patients. That is truly just stunning to us. So that's helpful.

But second, we really like the optionality of this. There is an orphan population within these MCM patients are an orphan population, but it's not an ultra orphan. 30,000 patients that have severely impaired quality of life and are relatively expensive to the healthcare system. We think we can do a lot of good for them. We think that's a relatively short pivotal study, maybe relatively small as well.

But look beyond that, I think as we're treating them and as we are increasing our data set, look, we can always decide to do a follow on study in much larger populations. We're pretty confident that elevated triglycerides are an independent risk factor. And the fact that we can really whack triglycerides with APOC3, we think is a pretty powerful tool. And so while we are focused on MCM in the near term, look, I wouldn't be surprised if we do follow on longer studies to expand that a bit.

Speaker 3

Chris, if I may add

Speaker 2

one more thing.

Speaker 3

So I'm going add some comments to the company. And one thing that is really impressive about this, when you look at the A2C study, there is a number of different populations from normal all the way to patients with severe hypertriglyceridemia. And the magnitude of treatment effect is consistent and the response rate is one hundred percent. So you don't see that very frequently. And so that I think support the idea that we can expand from population to population because the underlying problem is the same and the magnitude of treatment effect is also very consistent.

Speaker 7

That's great. And one real quick follow-up. We've seen certainly the potency of siRNA as an antiviral mechanism. And while I'm not looking to jump on the bandwagon here, have you guys considered developing siRNAs against SARS CoV-two either in a partnership or with the government or anything along those lines? Thanks so much.

Speaker 2

Yes. We have an active program that we discussed in against the current novel coronavirus as well as potentially future coronavirus outbreaks. We think that we have a real role to play A, we think that we are best in the field in the RNAi field at antivirals. We've got a lot of good experience with HBV. I think we revolutionized that field with the way that we were treating it.

Second, look, we've been working on lung delivery for several years now. It's taken an awful lot of work, but we are now paying some time there. So I expect that we'll have something that should be active and well tolerated that could give us a long durability of action. So we're excited about the program. It's ongoing.

And so we expect to have more to tell you about that throughout the year.

Speaker 8

Great. Excellent. Thanks so much

Speaker 7

for the time and stay safe, stay well.

Speaker 2

Thanks, Ken.

Speaker 0

Your next question is from the line of Mani Foroohar. Your line is now open.

Speaker 8

Hey, good afternoon, everyone. This is Rick on the line for Mani. Congrats on all the progress. First, I wanted to discuss the ENaC program. So if you compare this to the Phase I trials of ARO ANG3 and ARO APO3, you were able to assess target knockdown in healthy volunteers in those studies given that those are proteins that are expressed in the serum.

Will there be an opportunity or anything analogous to this built into the clinical studies of ENaC so you can gauge target engagement in the healthy volunteers? Or is the first readout of potential efficacy going to be the FEV readouts in cystic fibrosis patients?

Speaker 3

Yes. So for ENaC, we're not going to look at that in normal healthy volunteers. So the answer to that question is no. But we're going to have in this same study, patients with cystic fibrosis that were measuring pharmacodynamic parameters, S1, quality of life. So we have a sizable study.

We hope to enroll this study relatively fast since we're doing this in New Zealand, South Korea, for example, and Hong Kong. So that's the first part of the question.

Speaker 9

I didn't get the second one.

Speaker 8

All right. Thanks. I did have a follow-up question. So it sounds like for the ARO ANG3 program, you're going to be conducting a Phase II trial in addition to a larger cardiovascular outcome study. So could you maybe share your most current thoughts on potentially partnering this asset versus developing it alone?

And if that is something that's on the table, at what stage of development would it make sense to start looking for a partner?

Speaker 2

Yes. So here's what we think about both ARO APOC3 and ARO ANG3. We just think those are really exciting targets, and we think we have really good drug candidates against both of them. That's first point. Second point is we're well capitalized now and we can certainly afford to push those programs deep in the clinic.

And so look, will we're happy to talk to people, but there's not a forcing function at least right now, for us to jump into a partnership. If the right one should present itself, we're happy to talk. But we're also happy to go on alone, at least for right now. Again, these assets are just too valuable, I think, to jump into a partnership that is not quite right.

Speaker 8

Great. Thanks for taking our questions.

Speaker 2

Yes. Thank you.

Speaker 0

Your next question is from the line of Alethia Young. Your line is now open.

Speaker 10

Hey, guys. Thanks for taking my questions and hope you guys are doing well over there on the West Coast. A couple for me. One, I mean you guys kind of have a problem of which is many pipeline items. And I just wonder in light of what's going on with like all the variable kind of clinical trial delays and adjustments, does this change your prioritization of your pipeline anyway?

The second question is when you're thinking about AAT and the biopsies, it sounded like you were quite confident around the summer. Is there a potential grace period perhaps the timelines were to slip or anything, that would kind of be kind of buffer at that point? And the third point is, just curious about hearing about more of your confidence around going after COPD, in light of what you are seeing with ENaC or maybe not. I just kind of wanted to get another feel for kind of increased confidence on the lung platform you have there that's emerging things.

Speaker 2

Okay. So let's see if I can get this off. So first, with respect to has COVID caused us to reprioritize

Speaker 8

pipelines?

Speaker 2

The answer is no at this point. We have not seen any effect on COVID that has really drastically affected any of our timelines. It has affected all of our timelines to some extent, but generally not in material ways we don't think. And so we're still business as usual at least right now pushing them all forward. The one thing I guess it has done is it has opened up a new opportunity for us.

To be totally honest, maybe we should have been thinking about this in December or November of last year, but we just weren't. This has opened up an opportunity to go after coronaviruses more broadly and the novel coronavirus that causes COVID-nineteen specifically. But we think that we've got a lot to offer there. We've got good experience in lung, we've good experience in antivirals. When we started that, were excited to be part of that fight.

And so that's added some work to our nonclinical teams. But look, everyone is on board with this. And so that has not slowed down the other programs. So there's a long way of saying no, COVID has not reprioritized any of our pipeline. Second, you mentioned AAT biopsies in the summer and could the could that timeline slip?

The answer is sure it could. We feel pretty good about it though. Look, we that cohort is fully enrolled. They are due for biopsies I think, in the August or so timeframe. Look, it is possible that one or two of them may be delayed a little bit.

I don't expect that, but it's possible. But what's great about this drug and frankly all of our drugs is that the durability is such that if somebody came in a week or two or three weeks later or even more, I don't think it really affects our data because it's not like we would expect a big drop off in activity. This drug, I expect many months, maybe six months of activity after one dose. So we don't expect any problem there. And again, if there are some minor problems, don't expect it to change the integrity of the data.

And look, think these are important data. No one's ever seen what the liver looks like after some period of reducing production of AAT. I think it's important and I think that we're excited to see what the monomer looks like, what the polymer looks like. We're excited to see what inflammation looks like. And as I said in my prepared remarks, I think this underlines not only our substantial lead in this space, but also our position as a thought leader in the field.

And third, you mentioned our confidence in COPD. So a couple of things give us confidence in this new program, ARO Lung2. Thing one is that, look, our nonclinical data with the pulmonary platform have been quite good. And it's not good in one or two animals, but it's been good in rodent models and nonhuman primate models and sheep models. And so it wasn't like we just started this a year ago.

This is something we've been working on for quite some time, and we think we're there. And second, look, as I mentioned in the prepared remarks, the lung is interesting because it's a target rich environment. There's a lot of good validated gene targets to go after, and that also applies to COPD. So we feel like the biology is in our favor here and our data are quite good too. So excited about that.

We think this is a big year for pulmonary. We've said it before that we think the pulmonary franchise is a big value driver for us going forward. And we are taking the first steps now and really blowing out that franchise I think.

Speaker 10

Thank you very much.

Speaker 2

Sure. Thank you, Nikita.

Speaker 0

Your next question is from the line of Mayank Mamtani. Your line is now open.

Speaker 9

Thanks for taking my questions and great to have Javier and Kurt on the call and appreciate the efforts navigating the current environment. Just quick follow-up on the AAD relative to sort of what we've heard from you before. Maybe could you just call out the bookend of scenarios that you think and again, assuming this is still the lowest dose that you're working within the open label study and there is the optionality to go higher on the doses with the longer term study. So could you just lay out what you expect to see there in the different outcomes?

Speaker 2

Sorry, so my just I understand. So you're asking what we expect to see in the six month biopsy data for the open label study?

Speaker 9

Yes, just the bookend of scenario, the expectation because obviously you have the serum protein data and then you have the biopsy data. But I was just curious like the it's still a lower dose you're studying, right? And then you have the option now to go to a higher you're studying in parallel a higher dose. So just could you just lay out how you think about the impact of the broader study?

Speaker 2

Yes. So I'll leave that to Javier. But just to clarify, so the open label study is not a dose escalation study. All the patients are receiving two hundred milligram doses.

Speaker 3

Yes. So we're now using two thousand and two for that. What we're doing, as you probably know, is the 2,001 study. The potential registration study has two parts. Part A is the one where we're assessing three different doses, first 36 patients.

At the end of that part, we're evaluating the PD response and safety and the DSMB will help to select the right dose. So the rest of the study will be enrolled. And when we get to the Part B, which will be what I would call the Phase III or the registration part of that study that will go on with just the decided or the defined final dose. But based on the Phase I study, all doses have a very profound suppression of AAT. So I'm really interested to see how all three doses from the 2001 study will look like.

But again, at the end of those first 36 patients, we're going to look at the data and make the call continue on the final Phase three part of the 2001 study.

Speaker 1

And Mike, the data that we're talking about reporting publicly are just from the open label study. We won't be reporting any of the pivotal study data publicly until it's complete.

Speaker 9

Understood. And then on ANG3, of the ninety three patients, how many are NAFLD patients? And not just for NAFLD, what is the median follow-up you'd have in the next update you may have?

Speaker 3

The NAFLD patient, about eight patients approximately, give or take one or two. By when we're gonna have the data, probably at the end of this year. You know, in that That particular patient population were also on top of the metabolic profile while doing MRI and that data may be available at the end of the year, maybe Q1.

Speaker 9

Okay. So assume the mixed lipidemia study would only focus on lipid part of the metabolic syndrome disease. Is that right, the Phase 2b study?

Speaker 2

Yes. So the what we're thinking about for the Phase 2b study next year, and again, there's 1,000 caveats, nothing which is we have not discussed this with the FDA yet. But what we're thinking of is the mixed dyslipidemia. We're not right now contemplating more metabolic syndrome type patients just because, look, we don't have insulin sensitivity data yet. We don't have liver fat data yet.

That's still a bit up in the air. What we do know is that this drug does a great job of reducing triglycerides and does a great job of reducing LDL and a non LDL receptor mediated fashion. So we're running with that. Anything else could be great, but that's the focus for right now.

Speaker 3

And it's likely to that population, some of them will have metabolic syndrome, of course.

Speaker 9

Great. Appreciate the clarification. And last question on the HIF-two alpha program. I understand these are obviously cancer patients, so enrollment may not be as impacted. Just curious in your guidance for the update by the end of the year as proof of concept, what do you expect in terms of number of patients or medium follow-up you could have then?

Speaker 2

Yes. We don't want to speculate on that now because it's just a bit early, right? We only have one site open. We haven't dosed patients yet. So give us some time to start enrolling patients and see how this goes.

I think that and let me just be clear on the proof of concept that you mentioned. I think that we're going to know if this is working at least internally by the end of the year. Will we have enough data by key abstract deadlines to submit an abstract and then present it to present these publicly? I don't know yet. That could certainly be tight and who knows what's going to happen with those conferences anyway.

So look, we feel good about where we are now. It's been a bit slower than we expected because COVID has slowed our opening of sites. But I expect we'll start dosing patients this quarter and then we'll see how this goes.

Speaker 9

Just can you remind us the dose escalation, the doses you're looking at in that if that is disclosed yet?

Speaker 3

It's three, nine and thirteen mg per kg weekly IV.

Speaker 9

Single dose?

Speaker 3

This is weekly. Yes, Phase two, yes. It's three, nine and thirteen mg per kg weekly IV.

Speaker 9

Thank you. I appreciate you taking my questions. Sure.

Speaker 0

Your next question is from the line of Madhu Kumar. Your line is now open.

Speaker 11

Thanks for taking our question. So curious about the APOC3 program, the focus on multifactorial chylomicronemia syndrome. How does like targeting that population affects the kind of endpoints you might look at? So obviously, there's evidence that multifactorial chylomicronemia syndrome has a lower pancreatitis incidence, it's acute pancreatitis incidence than FCS, but has a higher incidence of cardiovascular complications. So you plan to look at both as endpoints?

Or how do you think about that?

Speaker 3

Well, so that's a great question and we've been thinking about that quite a bit. What I would say is the number one study, it would be looking at triglycerides level. And we want to have that conversation with the agency. There is precedent for that. This is not going to be the first drug approved to treat patients with about five hundred milligrams per deciliter without specifically clinical outcome as an endpoint.

Yes, the goal of therapy will be to reduce pancreatitis risk and the risk of pancreatitis in this population vary. You have people with very high risk and very high triglyceride level and you have people with lower risk. So we're working on the study design because we do want to select a population that will be an excess risk compared with the average hypertriglyceridemia patients to be part of the study. So this is an important discussion that we have to have with the FDA. We're going to do this within the next couple of months.

And so we'll see how it goes. But of course, in the future, I think APOC has huge potential for the cardiovascular outcomes and something that I think we need to think about it. And I don't know, Chris, you wanted to comment?

Speaker 2

Yes. I think that's it. For 2021, think of this as likely focused on the MCM population. And then going forward, we consider broadening that out at some point, we'll see.

Speaker 11

Okay. And then for an MCM trial, would you restrict other concomitant triglyceride lowering medications? Or would you allow them to kind of stay on concomitant medications in parallel?

Speaker 3

We will allow to stay in concomitant medication. The data we have from the Phase I study in those patients while we concomitant medication is extremely good. You can't tell the difference. So I think we will probably allow for other medication that is people are starting. So any other thing for this epidemiologic, they will remain on.

Speaker 11

Okay. And then stepping back, you mentioned several times in the prepared remarks the idea of finding an appropriate venue. So kind of like if push comes to shove and kind of there's a prolonged dearth of medical conferences for presenting this kind assemblage of clinical data you guys are building over this year. Would you plan to kind of do something internally? Or how are you envisioning that?

Speaker 2

Yes. Thanks for asking that question. So yes, we are look, we're committed to pushing data out when we can. As you know, Maru, we've been really good, I think, at not press releasing data generally, but presenting it at appropriate conferences. We just think that's the right way to go.

And so that's obviously our preference. Should these conferences continue to be disrupted, then we will find other ways to do it. And that could be via press release, via webinar, what have you. I'll give you example though. We're still submitting abstracts, of course.

In fact, we have approval. We've got abstracts approved from both APOC3 and ANGPTL3 the National Liquid Association Conference for again both those as well as the European Society of Cardiology.

Speaker 11

Okay, great. Thanks very much.

Speaker 2

Thank you.

Speaker 0

Your next question is from the line of Robert Tociccianda. Your line is now open.

Speaker 2

Good afternoon, guys, and thank you so much for taking my question. Congrats on an exciting quarter. I was curious about your new facility in San Diego. When do you expect it to be fully staffed and running? Will it focus on a specific area of development such as pulmonary?

And what benefit or advantage are you looking to gain with it? For example, will it help increase the number of drugs to clinic on a yearly basis? Kirk, you want to address that, please? Certainly. Mean it's

Speaker 3

not of course,

Speaker 4

if we had chosen our timing, it's unfortunate in terms of the current environment. But we are staffing it today, and we're in the early stages of filling the facility up. And really, the intention there is, yes, to increase capacity and our drug pipeline ultimately, and it also to tap into scientific expertise in in the California about from California biotech. So there's a lot of, skill sets that we're looking for to increase both our throughput and our sophistication sophistication in terms

Speaker 3

of

Speaker 4

the some of the newer programs that we have underway.

Speaker 2

Yes. Look, as you know, we've got this platform that is so flexible. And now that we've gotten outside the liver, we can go out for so many indications and so many gene targets that it's incumbent upon us to maximize that value. And while Madison has been great and will continue to be great and we've got a phenomenal team there, we've had no problem staffing that up and building that out. I don't think there's any one single area anywhere where you can attract all the talent that you want with a platform this flexible

So it just made sense for us to open up a second R and D facility. We'll see how it goes. I don't know that we know right now how that's going to interact with Madison and what each facility is going to do. We're going to see what our needs are and see where we can bring people, whether it's Madison or San Diego. But it's going to a big help to us, think.

It's to allow us to continue to push a lot of drug candidates into the clinic. Excellent. Thank you so much. And congrats to Bruce out there on his retirement. Thanks very much.

Speaker 0

At this time, I would like to turn it back to Chris Anzalone for any further comments.

Speaker 2

Well, thanks, everyone, for joining the call today, and I hope everyone stays safe. Talk to you soon.

Speaker 0

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