Arrowhead Pharmaceuticals - Earnings Call - Q2 2021
May 4, 2021
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 call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
Speaker 1
Thank you, Jesse. Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal twenty twenty one second quarter ended 03/31/2021. With us today from management are President and CEO, Doctor. Christopher Anzalone, who will provide an overview of the quarter Doctor.
Javier San Martin, our Chief Medical Officer, who will provide an update on our pipeline and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. In addition, James Hassard, our Chief Commercial Officer and Doctor. James Hamilton, our Senior Vice President of Discovery and Translational Medicine, will be available during the Q and A session of today's call. Before we begin, I would like to remind you that comments made during today's call contain certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, 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, the receipt of future milestone and licensing payments and expected future development and commercialization activities. These statements represent management's current expectations and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10 ks and subsequent quarterly reports on Form 10 Q. Arrowhead disclaims any intent and undertakes no duty to update any of the forward looking statements discussed on 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. As we've discussed in the past, our driving focus has always been to bring our technology to patients who can benefit from it. This means treating all types of diseases, both common and rare, and getting to any part of the body. Put simply, it means going to where disease is, from a population standpoint, and a physiological and anatomical standpoint.
As such, we are constantly working to expand the reach of our products to address various populations by scaling our production capabilities, improving administration convenience, and optimizing dosing schedule. We're also constantly striving to expand our proprietary TRiM platform to reach new cell types and address new disease areas without adequate treatment options. By the third quarter of this year, we expect to have clinical candidates targeting four distinct cell types, addressing high prevalence indications such as chronic HBV and cardiovascular disease, to rare conditions such as cystic fibrosis and AAT liver disease. It was not that long ago that many thought RNAi may only be relevant to conditions with liver expressed proteins, and even then, only for rare diseases. We at Arrowhead have always been committed to reaching different diseases throughout the body, and have devoted considerable resources and many years of innovation and effort to strive to make that a reality.
We believe that we are now on the cusp of potentially gaining clinical validation and showing the world that RNAi can reach and silence gene targets in the lung, tumor, and skeletal muscle. We expect a data rich next couple months, including ARO HSD data in NASH patients, as well as those at risk of having NASH, ARO AAT data in patients with AAT liver disease, ARO ENaC data in healthy volunteers in a small number of CF patients, ARO HIF2 data in patients with renal cell carcinoma, and ARO DUX4 data in animal models for FSHD. Three of these expected data readouts relate to three cell types that, to our knowledge, have not been successfully addressed by RNAi in humans. It is not big pharma with tens of thousands of employees and hundreds of billions in market value that may be on the cusp of a breakthrough in one of these areas. It is Arrowhead with less than 300 employees and a market value of approximately $7,000,000,000 that may be nearing a breakthrough in all three.
Think about how that positions us for potential value creation over the near, mid, and long term, and what it says about our ability to innovate, and our potential to lead in this field. Our liver directed pipeline already has six candidates in clinical studies, with additional undisclosed programs in preclinical development. In addition, as you've seen over the last couple years, once we achieve clinical validation, each successive candidate in the same cell type builds on learnings from each program that went before it. We believe this provides a higher probability of success and lower risk profile than other modalities. We expect our pipeline to potentially double in size over the next few years.
We also hope to access a new cell type every eighteen to twenty four months, so we believe our potential for growth will continue to expand dramatically. It's this leverage that gives us confidence about the future of our company, our rapidly expanding pipeline, and the patients we hope to serve. We believe this represents the future of Arrowhead and for the RNAi field broadly. We're also making substantial progress on our current pipeline programs with the potential for key value drivers in the near term. Let's talk about a few of these.
First, we announced some of the twelve month biopsy results from the 2,002 open label study for ARO AAT last week. We intend to present a fuller dataset at an upcoming medical meeting, pending abstract acceptance, but I want to provide some context. These results were incredibly exciting to us, our partners at Takeda, the investigators in the study, and to the patient community. To review, the results demonstrated the ARO AAT treatment led to a consistent and substantial reduction in intrahepatic mutant Z AAT proteins, both monomer and polymer, a consistent decrease in histologic, immunological globular burden, improvements in fibrosis, and improvements in other relevant biomarkers of liver health. Specifically, after forty eight weeks of treatment with ARO AAT in Cohort two, the following results were observed.
Four of the five patients achieved a one or greater stage improvement in Metevere fibrosis stage, with no worsening of fibrosis in the fifth patient. All five patients demonstrated reductions in histological globule assessment scores, and total intrahepatic Z AAT decreased by seventy seven to 97%. After only twenty four weeks of treatment, the following results were observed. Two of the four patients achieved a one or greater stage improvement in the metaverse fibrosis stage, with no worsening of fibrosis in the other two patients. The two patients who improved fibrosis stages during treatment had cirrhosis at baseline.
All four patients demonstrated reductions in histological globule assessment scores, and total intrahepatic ZAT decreased by 72 to 95%. I wanna highlight a few important points about these results. First, the results were remarkably consistent. We are seeing one hundred percent response rate in terms of deeply reducing expression, indicating that ARO AAT is doing what it is designed to do in all patients that have been studied. Second, we saw that as new ZAT protein is silenced, the liver has an amazing ability to rapidly heal.
As I mentioned, fifty percent of patients who received only six months of treatment saw a regression in fibrosis. And this grew to eighty percent of patients when they received twelve months of treatment. This is faster and more dramatic than we expected for this disease, and I believe it is faster healing than has been shown for other liver diseases, such as NASH and viral hepatitis. The third important point is that even patients with cirrhosis, which is advanced late stage liver disease, have the potential to heal rapidly. The two patients we studied who started the trial with cirrhosis, or F4, metaverse fibrosis stage, improved to F3 and F2 after only six months of treatment.
I believe that this type of rescue from cirrhosis has rarely been demonstrated in any liver disease this rapidly. Based on our extensive work in animal models, we believe that ARO AAT could improve outcomes regardless of stage of disease. These are the first data in humans with late stage disease that support that belief. In addition, the safety assessments continue to be positive, and consistent with previous reports. We have not had any discontinuations due to drug, no clinically meaningful changes in measures of lung function, and no patients have required augmentation therapy, other than those that entered the study already on regular augmentation therapy.
ARO AAT appears to be generally well tolerated in those patients studied to date, which was our expectation, and is consistent with our other liver directed programs. ARO AAT is a great example of a smart target selection for an RNAi based intervention. Alpha-one liver disease is caused by the accumulation of the mutant Z AAT protein that cannot efficiently get out of hepatocytes. This leads to aggregation of the protein into polymers that form globules, liver inflammation, and ultimately fibrosis. This cascade is well understood.
It is a monogenic disease whose biology is crystal clear. What ARO AAT seeks to do is cause that cascade to reverse by removing the insult. Our data indicate that the liver is a resilient organ with a strong ability to heal, and ARO AAT appears to improve every step in this cascade. These are encouraging results, and we believe they could help support our goal to seek a potential accelerated path to approval. We We look forward to interacting with regulatory authorities later this year.
In addition to ARO AAT, we've also made good progress on our cardiometabolic programs. These are ARO APOC3 and ARO ANG3, which are wholly owned, and olpasiran, formerly called AMG eight ninety, which was licensed to Amgen. On the latter program, Amgen recently disclosed that enrollment in a Phase II study in patients with elevated lipoprotein A is expected to be complete this quarter, with data expected in the first half of twenty twenty two. For ARO APOC3 and ARO ANG3, we completed IND filings in The United States, which were reviewed by the FDA and are now active. And we intend to initiate four or more studies across the two programs.
We'll give more detail on the designs when each study gets up and running, but here are the patient populations that we are targeting. For ARO APOC3, which is focused on patients with hypertriglyceridemia, we intend to start three studies: A phase IIb study in patients with triglycerides over 500 milligrams per deciliter, a phase IIb study in patients with triglycerides between one hundred and fifty and five hundred milligrams per deciliter, and a phase III study in patients with familial chylomicronemia syndrome, or FCS. For ARO ANG3, which is focused on patients with mixed dyslipidemia, characterized by elevated triglycerides and elevated LDL cholesterol, we intend to start a phase 2B study. For both programs, we are also exploring additional smaller studies to answer specific questions about the compounds. But the four just mentioned are the primary studies we are focused on initiating first.
Before I discuss expectations on timing of key near term events across our pipeline, I want to highlight an announcement we made a few weeks ago. We announced ARO DUX4 as Arrowhead's first muscle targeted candidate built on the TRiM platform. ARO DUX4 is designed to target the gene that encodes human double homeobox four protein, or DUX4, as a potential treatment for patients with fascioscapulohumeral muscular dystrophy, or FSHD. FSHD is a genetic disease associated with the failure to maintain complete epigenetic suppression of DUX4 expression in muscle. This leads to overexpression of DUX4, which is a myotoxic, which is, excuse me, which is myotoxic, and can lead to muscle degeneration.
There are currently no effective treatments specifically for FSHD. DUX4 fits perfectly with our strategy, not only to bring RNAi outside the liver, but also to select gene targets that we believe are clear causes of specific diseases, and for which there is a strong biologic and genetic validation. We intend to file for regulatory clearance in the third quarter of twenty twenty one to begin clinical studies of ARO DUX4. Let's move on to our expectations for the near and midterm. It's gonna be a busy time, with several potentially important events and readouts.
This is especially true for the next few months, so I'm gonna focus on events planned for June and July. We expect to do the following in roughly this order. One, dose the first patients in the first ARO APOC3 Phase 2b study, with a second Phase 2b and a Phase three study in patients with FCS planned for shortly thereafter. Two, dose the first patients in the ARO ANG3 two thousand and one Phase IIb study. Three, report initial interim results from the ARO ENaC first in human study.
This will likely include the single ascending dose safety results in healthy volunteers, gene knockdown data in the cohort of healthy volunteers that received bronchial brushings and lavage, and data from the first cohort of patients with cystic fibrosis. Four, report full twelve month biopsy results from the 2002 open label study of ARO AAT. Five, report initial interim results from the ARO HSD first in human study. Six, present preclinical data on ARO DUX4 at the FSHD Society International Research Congress. Seven, report initial interim results from the ARO HIF2 first in human study.
Eight, file a CTA for ARO DUX4, and potentially host a KOL webinar to discuss the disease, the market opportunity, and the potential development path. And nine, announce additional programs in the pulmonary space that are already deep into preclinical development, and in IND enabling stage. These are just the events that we expect over the next couple of months. We clearly have a very full plate in the near term, and we expect continued regular important catalysts going forward. We have been expanding in R and D to support this growing pipeline and are thrilled to see that we can still execute efficiently even as a larger organization.
Innovation, speed, precision and capital efficiency have been hallmarks of the Arrowhead culture from the beginning, and these principles will continue to be part of our DNA as a company. With that overview, I'd now like to turn the call over to Doctor. Javier Stemarty. Javier?
Speaker 3
Thank you, Chris, and good afternoon, everyone. Since we just reported top line results on the twelve month biopsy of the ARO AAT 2,002 open level study, and we plan on reporting full data on the first five patients shortly, I want to talk about that program first. As Chris mentioned, the consistent fibrosis regression at this early time points was unexpected and very exciting. Importantly, we think they demonstrate the clear biological relationship between intrahepatic Z AAT and the downstream cascade of events that lead to liver inflammation and fibrosis. The relationship between ZAT and fibrosis is a key link.
The idea is that substantial reduction in accumulated ZAT protein may allow the liver even at the stages of cirrhosis to reverse this cascade and ultimately heal and remodel itself. So what is next? If you recall, the original idea of the SEQUOIA study was an adaptive design phase twothree study with a dose selection stage, and then two years of treatment at the selected dose in additional patients. Given the encouraging data we have seen in the 2002 open label study, we thought a potentially faster route to NDA would be to make SEQUOIA into a more traditional Phase II study, then discuss approval endpoint with regulators in the context of all the data we will have generated. We are nearing completion of enrollment of the 36 patients in the SEQUOIA Phase II and expect to have twelve month payer biopsy for them next year.
In addition, we expect to have data from the 16 patients in the 2,002 open level study, which gives us approximately 50 patients with payer biopsies. We will also be able to compare data from multiple time points and with different dose levels. For an orphan disease, this is a substantial amount of data. We look forward to discussing the rich data set with regulators. We feel very strongly that we will have a comprehensive picture of how ARO AAT performs.
I can't say that this will be enough to file an NDA, but we believe that data continue to support some form of accelerated path to approval. ARO AAT is being co developed with Takeda. We're still leading development and regulatory interaction The plan is to transfer the IND and give the lead to the team at Takeda once the Phase two studies are complete. As Chris mentioned earlier, we expect ARO ENaC, ARO HST and ARO HIF2 to have initial interim data readouts over the next couple of months.
Since these are preliminary results from ongoing study, we will likely provide highlights in press release and then present a fuller data set at an appropriate medical meeting. Let's talk about what data might be included and which cohorts are available for each program. I will start with ARO ENaC, our inhaled RNAi therapeutic candidate designed to target the epithelial sodium channel to treat cystic fibrosis or CF. CF is a rare disease caused by a genetic mutation that leads to mucus buildup in the lung. It is characterized by airway deterioration and reduced mucociliary transport.
Patients with CF can have difficulty breathing and experience frequent and persistent lung infections. The current strategy is to administer ARO ENaG in what we call dose cycles. Each dose cycle is three consecutive days of receiving a nebulized dose of Aero Enag or placebo. Repeat dose cycles occur three weeks later. So for example, if a patient receives two dose cycles, they will receive a nebulized dose on day one, two, and three.
And then again, on day 22, 23, and 24. ARO ENaC is in phase one, two dose escalation study. We have administered ARO ENaC in 16 normal healthy volunteers who receive a single dose cycle at four different dose levels to assess safety and tolerability. We have also administered ARO ENAC in additional 12 normal healthy volunteers who undergo bronchoscopy with bronchial brushings and bronchial varial lavage or VAL. At baseline and at day eighteen to evaluate ENaC knockdown in the lab.
These subjects received one dose cycle of one hundred and eighty milligrams of Aero ENaC or placebo. The CF patient portion of the study includes three cohorts, two with six patients each and one with 12 patients. Patients in this cohort received two dose cycles and it is placebo controlled. The first cohort of six patients, four of which received Eroinac at a dose of forty milligrams and two received placebo is complete and were still in the blinded follow-up stage. The second cohort will receive a dose of sixty five milligram and the third cohort will receive a dose of one hundred and eighty milligrams.
We will be reporting interim results of the four single ascending dose healthy volunteer cohorts in the one healthy volunteer bronchoscopy cohort at the first cohort and the first cohort of the CF patients. What we'll be watching most closely is safety and tolerability across the cohorts at the NAIC knockdown from the bronchoscopy cohort. For the CF patient cohort, we will also be measuring FEV1. However, at this lowest dose and with only four patients on active draw, we do not expect to be able to detect changes in lung function. As we get the higher doses, longer exposures, larger sample size, and are able to select a more homogeneous patient population, it is our hope that ENaC inhibition will lead to improvements in conciliatory clearance and lung function.
The next program with planned readouts over the coming months is ARO HSD, our investigational candidate for the potential treatment of alcohol and non alcohol related liver disease. We think the genetic data supporting HST17B13 as a target for NASH and alcoholic liver disease is strong. We're conducting a Phase onetwo study in normal healthy volunteers as well as in patients with NASH or suspected NASH. We have completed a single dose portion of the study in healthy volunteers and have completed dosing in two of the four multiple dose cohort in patients with NASH or suspected NASH. Particle engagement in patients in the form of HSD17B13 mRNA and protein knockdown will be assessed with liver biopsy.
In this study, the purpose of the biopsy is to obtain tissue to evaluate gene target knockdown. As the study showed in duration, we're not assessing change in histology. This mechanism is not intended to reduce liver fat, so we don't expect to see any change in MRI PDFF. We will be looking at other biomarkers of liver health to see if there are any early encouraging signs. But we're most focused on ARO HSD's ability to reduce expression of each gene target at different dose.
NASH has been difficult area for drug developers, but HSD17B13 is a novel target and we believe there is a very strong genetic validation. If we can show good knockdown and safety, we have confidence in moving towards a Phase two study to assess efficacy. The last program for which we expect to have a clinical readout in the near term is ARO HIF2, which is designed to inhibit the production of HIF2 alpha to treat clear cell renal cell carcinoma or RCC. We're currently conducting a Phase 1b dose finding clinical study in three cohorts with advanced clear cell RCC. The study is designed to evaluate the safety of ARO HIF2 to determine the recommended phase two dose and to assess pharmacokinetics and preliminary efficacy based on RECIST and post dose tumor expression of HIF2 alpha and HIF associated genes.
We have completed dosing in two of the three cohorts and should be able to report on those two cohorts in the coming two months. We made a protocol amendment last quarter to add patients to the study. These are heavily pretreated patients with metastatic lesions in different locations. So, biopsy collection is challenging. The new patients were added to give us a better chance of having tumor samples that can be processed, evaluated and analyzed.
We'll be looking for data suggesting functional delivery to tumors as well as measuring level of HIF2 note down. I will now turn the call over to Ken Myszkowski, Arrowhead's Chief Financial Officer.
Speaker 4
Ken? Thank you, Javier, and good afternoon, everyone. As we reported today, our net loss for the quarter ended 03/31/2021 was $26,800,000 or $0.26 per share based on 103,900,000.0 fully weighted fully diluted weighted average shares outstanding. This compares with a net loss of $19,800,000 or $0.20 per share based on 101,700,000.0 fully diluted weighted average shares outstanding for the quarter ended 03/31/2020. Revenue for the quarter ended 03/31/2021 was $32,800,000 compared to $23,500,000 for the quarter ended 03/31/2020.
Revenue in both periods related to the recognition of a portion of the upfront payments and milestones received from our license and collaboration agreements with Janssen, and our revenue in the current period also includes the recognition of a portion of the $300,000,000 upfront payment due upon the signing of our collaboration agreement with Takeda. This payment was received in January. 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 $266,000,000 of revenue associated with Takeda collaboration is anticipated to be recognized over approximately two years. Our performance and revenue recognition under the Janssen agreement is substantially complete.
Any additional milestones achieved with our collaboration partners would be additive to this projection. Total operating expenses for the quarter ended 03/31/2021, were $61,000,000 compared to $45,800,000 for the quarter ended 03/31/2020. This increase is primarily due to increased personnel costs, non cash stock compensation and R and D as our headcount continues to grow. The increase is also due to increased candidate specific and discovery R and D costs. Net cash provided by operating activities during the quarter ended 03/31/2021, was $263,900,000 compared with net cash used by operating activities of $27,600,000 during the quarter ended 03/31/2020.
The key driver of this change was the upfront payment received from Takeda in January. We estimate our cash burn rate to be 50,000,000 to $60,000,000 per quarter. Turning to our balance sheet. Our cash and investments totaled 674,800,000.0 at 03/31/2021, compared to $453,000,000 at 09/30/2020. The increase in our cash and investments was primarily due to the upfront payment received from Takeda, offset by cash used for operating activities.
Our cash excuse me, our common shares outstanding at 03/31/2021, were $104,000,000 With that brief overview, I will now turn the call back to Chris.
Speaker 2
Thanks, Ken. Clearly, there is a lot of progress being made, and our pipeline is becoming broader and more advanced. The upcoming data readouts are exciting on their own because they potentially represent progress towards new therapies for patients without adequate treatment options. These are people with serious diseases, and this is important to remember. What is also exciting to us as a company is that these data readouts, in new tissue types potentially represent clinical validation for our expanding TRiM platform.
This is the future of Arrowhead and holds the promise of initiating our next phase of rapid pipeline growth and value creation. Thanks again for joining us today. I would now like to open the call to your questions. Operator?
Speaker 0
As a reminder to all participants, you may ask questions over the phone by pressing the star key followed by the number one. You may all press to withdraw your request. Speakers, our first question is from the line of Maury Raycroft of Jefferies. Your line is now open.
Speaker 5
Hi, everyone. Congrats on all the progress and thanks for taking my questions. First question is on ENaC. So for the cystic fibrosis patients in Cohort one and the patients you plan on enrolling in the next two cohorts, can you provide any more specifics on baseline FEV1 or patient histories? And then were the sixty five mg and one hundred and eighty mg doses predetermined or informed by the healthy volunteer data?
And can you talk about your degree of confidence in maximizing potential with Cohorts two and three?
Speaker 2
Sure. Thanks, Maury. I can give you sort of broad answers there, and leave it to Javier for the more granular ones. So the doses were chosen before we saw any data from healthy volunteers. And so these initial doses were based solely on our GLP tox studies and studies in other animal models.
I think we mentioned in the past, we've gone through all the various doses in healthy volunteers. And so far, at least in those individuals, it's been well tolerated. So we are cautiously optimistic that that will continue to be the case. And we're looking forward to seeing if we see any changes in FEV1, as we escalate the dose. So you had a question about FEV1 parameters as they came into the study.
And I'm sorry, what was the third question?
Speaker 5
And then, I guess, yeah, the FEV1 parameters or patient histories, if you can comment on that.
Speaker 3
Okay, Javier? Yeah, so generally speaking, I'll give you a sense of inclusion criteria, which was similar to the VERTIS study, FEV140 to 90 at baseline. So that's kind of the range for patients in this study. For the most part of this first cohort were relatively young patients and the average was close to about 70 or so. In this study, is one interesting feature which is those patients who have more than 70% will be candidates to do the LCI sub study.
But so in general, these are relatively young patient population all from Australia and New Zealand, and the FE1 in average is about 70.
Speaker 2
And let me also I mentioned this in the prepared remarks. So let me tell you what we're really looking for here. We're looking for good knockdown in the healthy volunteer cohort, that, are undergoing the bronch analysis. We think that's the most important take home right now. Let's see if we're getting good knockdown.
I think that with just this first cohort, all we have is four patients the first cohort of CF patients, all we have is four individuals on active drug, and it's a low dose, of course. And so it feels to us like it is it's gonna be very difficult, at those small numbers to see small changes in FBV1. So again, we're really focused on good knockdown. I think that if we can see 50% knockdown, I think we're in good shape there. Because as we've talked about in the past, if you look at the heterozygotes in the genetic analysis, those patients with CF, but are essentially heterozygote knockouts of ENaC, they did have a they did show a clinical benefit.
So really our bogey right now.
Speaker 5
Got it. That's really helpful. And maybe one last follow-up, and then I'll hop back in the queue. But for the Cohorts two and three for cystic fibrosis patients, could we expect data from those cohorts at the end of the year? And do you have if you can comment on potential to see ENaC knockdown in the CF patients, if there's any strategy in place for that?
Speaker 2
Yes. So that's a good question. So yes, on the first part the question, yes, I would expect, for us to have those data, in the next two cohorts in CF patients that we can present at some point, this year. Look, we haven't dosed those patients yet. And so, we're not holding those back, but I do expect that we'll have those by the end of the year.
James, do you want to address the question about doing bronchs on CF patients?
Speaker 6
Yeah, so we've right now opted not to bronch the CF patients more just because that presents a potential hindrance to enrollment and it's a rare disease population already. So the intent currently is to do the bronchs and the healthy volunteers obtain knockdown data from those subjects and then dose the CF patients without bronx at the same dose levels.
Speaker 5
Makes sense. Thank you very
Speaker 7
much for taking my questions.
Speaker 6
Thanks, Maury.
Speaker 0
Next question is from the line of Alethia Young of Cantor.
Speaker 2
I think we've lost Alethia.
Speaker 8
Can you hear me? Can you hear me?
Speaker 2
Can you hear me? Yeah. We got
Speaker 8
Cool. Sorry. My first question my first question was just, like, with this 50% knockdown on ENaC, like or is that kind of Vertex level FEV level when you're at the right dose, or is it kinda lower? How do you think about that? And then just, you know, also on the NASH, I mean, with this particular target, do you think there's a certain group of NASH patients where it'll, you know, live work in the more severe or, you know, less severe?
And I just wanted to confirm that, you know, we 'll get some biopsy data that looks at, like, kind of, you know, histology in addition to, like, liver enzymes things.
Speaker 2
Sure. So so we are not looking at histology in this in this first study. It's it's too short exposure. We're really just looking at knockdown, because this study is really just designed to pick a dose, and we'll be picking that based on knockdown levels. Your other question is a really good one about whether or not there are certain patient populations that will be building more amenable to this sort of therapy.
I'll let James and Javier answer that. The answer is I think no. We don't know. You know, I think it's too early to tell at this point. The genetic validation has been quite good.
The genetic studies have been quite good. This does silencing of this gene product does appear to confer a protective effect. I don't know if it's known, if that would be more pronounced in certain patient populations. Do either of you know that?
Speaker 3
Yeah. I can make a couple of comments. This is Javier. Really good question. It's something that we've been thinking a lot about it because as you know, NASH is a big condition with many different stages and different causes, and there's many, many drugs in development
So it is important to start to narrow down and say what would be the best patient population. So it will need to be a lot more work to really start to think about that with HSD. What we'll say is we don't believe that it's about metabolic. We don't believe that it's about liver fat. There are drugs in development for NASH that has that focus.
So it's likely to be more genetic because the data, as Chris said, was positive not just for NASH but also for alcoholic liver disease. So that tells you that it's above the underlying mechanism of NASH. That is a hint. It's an initial hint to start to think about clinically the next step in development of Phase II and Phase III. So more work needs to be done.
But right now that's how I think about it. And we're working with experts in the field to really fine tune this. Again, this is I think a key question for the next step in the development of this drug.
Speaker 2
And your question, around ENaC, about what sort of knockout percentage, you know, would could translate into certain FEV1 improvement, the answer is that's a great question. We don't have any idea at this point. I will say, though, however, and I'll remind you and others, and I think you know this, Alethia, that we're not the success of this drug is not dependent upon putting Virgex out of business. Rather, our patient our initial patients, target patient populations here are those who are not indicated for TRIKAFTA, for instance. Know, these are the null nulls, you know, that have no 10% of the population or so that have no CFTR to correct.
It'll be those patients who are not able to take TRIKAFTA, etcetera. And so we think that given that, given those parameters, look, if we can just show a 5% improvement in FEV1, that's a win for these folks because, again, they don't have any other real therapeutic options right now. Going forward, we can see if we can expand that, but at least initially, that's the target patient population.
Speaker 8
That's fair. And just one follow-up on the NASH. Do you think you need, like, a really deep knockdown to drive, you know, benefit, or is it kinda like that 50% level? I'm just trying to get a feel for this particular
Speaker 2
I think I I think for that, more knockdown is better. I think if we if we show only 50% knockdown, I'd be disappointed because, as you know, you know, we're I think we're we're generally pretty good at knocking down, liver transcripts. So I would expect better than that. And I think, again, as high as you can get is probably better. It does not appear to be a negative phenotype, with silencing that gene product, so it's not like we're trying to titrate to some level but not go above some level.
Speaker 8
Okay. Cool. That's very helpful. Thank you very much.
Speaker 3
You're welcome.
Speaker 0
Next question is from the line of Esther Rajavelu of UBS. Your line is now open.
Speaker 9
Hey, thank you for the question and congrats on all the progress this year. So two from me. The first is on the APOC3 trial strategy here. It sounds like you've decided to go with the broader patient population for triglyceride management. So can you talk about enrollment and timing expectations in the three different patient segments and how progress in each of those trials may offset filing timelines and kind of broader strategy around commercialization there?
Speaker 2
Sure. So look, we are our primary focus here really is on those severe hypertriglyceridemic patients, those patients with TRIDGs above 500. And we think there's probably a bit more than four million of those in The United States alone. We believe that an approval endpoint there is simply lowering triglycerides. We know we can lower triglycerides substantially given the data in our Phase III study.
And so that just seems to be a pretty straightforward market for us. Having said that, we also are interested in the FCS market because we believe that we can get to market much more quickly there. As we talked about, we think we can initiate a Phase III study shortly. We think that's a yearlong study once everyone's enrolled. So that will allow us to get to market quickly and start to just to be in the market.
But now the reason you mentioned the broader the broader population. The reason that we're going that we're also doing a phase two b study in those patients, you know, from 200 to 500, or one fifty to 500. I'm sorry. One fifty to five is just to really retain optionality. It could be that we're that we're going to want to to do a broader phase three study in that population that would be, I I believe, probably a, you know, an outcome study.
I don't know that we'll get that we're we're gonna wanna do it now, but I want the optionality, such that if we do decide to go there, we can we can go there quickly. Javier, do wanna talk about timing and such?
Speaker 3
Yeah. I would say, another comment about this broad population and why we're doing the Phase IIb study. One is what Chris just said, but the other is because we're really focused on the first filing will be FCS followed by severe hypertriglyceridemia. And we want to have a good pool of patients to really describe the safety profile and be able to accelerate the approval and the phase three for severe hypertriglyceridemia patients. So I be very concrete about the timing other than we're starting the screening process for APOC3 severe hypertriglyceridemia patients as we speak.
We got the IND in. We're just submitting the FCS protocol. So the entire APOC3 program is starting kind of at the same time or about a month, one study after the other. And I think we're planning to do these three things, get ready for a broad population clinical outcome study and have a phase two data that will enable the study for severe hypertriglyceridemia, which we believe will be in about one year study and it's not required clinical outcomes. So biomarkers, in this case, triglyceride is sufficient.
And we're starting a Phase III study for the ultra rare FCS indication also in the next couple of months. So it's a very broad program with these three major paths.
Speaker 9
Got it. Thank you. And then another one really quickly is this latest program at the muscle targeting agent that you have that you're planning to file the DUX4 asset. Can you talk about that in the context of some of the other preclinical agents that are being considered by others?
Speaker 2
Sure. James, do you want address that?
Speaker 6
Yes, sure. So I'm assuming that you're referring to some of the other oligos that are preclinical that that are targeting that. I have not seen data with any of those preclinical compounds. I think, you know, our approach is a little different given the targeting approach that we're using. We use a small molecule targeting approach with the siRNA mediated mechanism of action versus antisense targeted with transferrin or siRNA targeted with transferrin targeting ligand.
Again, I think those other compounds are still early preclinical. And as Chris mentioned, we should be filing with in in the next quarter or so.
Speaker 2
Yeah. And and as we mentioned in the in the prepared remarks, we will be presenting animal data, in June, at the FSHD, conference. And so we look forward to sharing that with you, and and we're excited about the data. We we think those are good data. We're excited about the, the drug candidate.
Speaker 9
Great. Thank you.
Speaker 1
You're welcome.
Speaker 0
Next question is from the line of Kent Tenthoff of Piper Sandler. Sir, your line is now open.
Speaker 10
Great. Thank you very much. Actually, a lot of questions have been asked, and there's just so much going on. Maybe with respect to DUCs four, and I apologize if this was asked. But with respect to some of the competitive programs out there, how do you deliver to the muscle, and what do you sort of see as the market opportunity?
Thank you.
Speaker 2
Sure. So so stay tuned on those. You know, I expect that we're that we'll have a webinar to go to go into the market dynamics of that a bit, the way we the way we view the market. Look. It is a substantial muscular dystrophy.
Yeah. We we think it's a substantial opportunity there. There are no good therapies that are designed, you know, directly for FSHD. The biology here is crystal clear. You know, we know it is the continued expression of this protein that that causes this disease.
And and and look, we we believe we can knock it down, at least in animal models we have. And so and so, you'll you'll see, some some nonclinical data in June. I expect sometime thereafter, we'll have a webinar where we'll talk about the way we see the market and such. And with respect to to competitors, as James mentioned, there's not a ton of data out there. People have talked about the data they've generated, but we haven't seen very much of it.
And so we are hanging our head on the fact that we're pretty good at RNAi. We're pretty good at getting outside deliver. We are we'll be the first of the I think, we'll be the first of this type of molecule, to the clinic. And so we'll just we'll see how we stack up.
Speaker 10
Perfect. I appreciate it. Excited for all the data coming, guys.
Speaker 3
Yes. Thanks, guys.
Speaker 0
Next question is from the line of Luca Issy of RBC Capital Markets. Your line is now open.
Speaker 11
Fantastic. Thanks so much for taking my question. Congrats on all the progress. Maybe one quick one on A180. Can you give us some directional color on the ongoing dialogue with the FDA here?
Is there a scenario where the impressive data from the 2002 trial plus the first 36 patients from SEQUOIA is actually sufficient for an accelerated approval? If so, what gives you confidence that, that could be the case? Maybe if there's any comps that we should think about it? And then the second one on ENaC, maybe for Javier here. I think we've seen Ionis showing an improvement in FEV1 of four point five percent at the highest dose.
Wondering if you believe that you can actually show something better here given that the cellular uptake for your molecule is receptor mediated via integrin, while that is not the case for Ionis. If got any color there, it would be great. Thanks so much.
Speaker 2
Yeah. So I'll address the AAT question. It's a great question, and it's one that I just don't want to tackle. You know, we'll have those discussions with the FDA. We've had a good collaborative relationship with the FDA in the past, and we expect that to continue.
And so, you know, we've got an awful lot of data to unpack and see how we can move forward as quickly as possible to get to patients. Look, I think that we are aligned on this. The FDA and other regulators recognize this as a real unmet medical need. You know, we offer, I think, you know, a good opportunity to help an awful lot of people with this liver disease. And so I think we all wanna see regulators and us, of course, and the patient group.
We all wanna see, you know, a drug to market as quickly as possible. We'll just see what that route is. You know, as Javier mentioned in his in in the prepared remarks, you know, we're gonna have paired biopsies for around fifty fifty people, which is a lot, for an Orban indication. And so we think there's an awful lot of data there. And then we'll just have to see how you know, if if that if that that could be enough for the FDA.
We just We just can't opine on that at this point. Javier, do want to talk about ENaC?
Speaker 3
Oh, yes. So your question with regard to ENaC, whether four percent or five percent we can do more than that, certainly that's our expectation and we would like to see whether that will be related to the level of knockdown with what we've seen in other RNAIs and our experience with other target tissues. So that's the expectation that we may see 50 or more percent of the knockdown and that should translate into improvement in MCC or mucociliary clearance that eventually will translate into an improvement in FEV1. So we do believe based on our previous experience that those response is likely to happen. We believe that will be very successful and have the ENaC get into the epithelial cells and therefore knock down the gene to a point that we'll see the clinical benefit.
So that's the belief, that's what we believe that we're going to see a very significant knockdown and the consequence improvement in in the clinical aspect of the disease, which is MCC and FEV1 or tumor.
Speaker 2
Yeah. You know, I again, you know, of course, we're cautiously optimistic that we can that we can that we can achieve that and maybe beat it at some point. The re the reason that I that that I I I'm trying I'm trying to manage our our expectations here on this first data readout is because not only it's a low dose, but it's only for patients. And and FEV1, as you know, can be an awfully noisy measure. And so that just feels like such a small sample size that to expect to see changes in FEV1 at that point is asking a bit much.
And so let's just wait, and we are cautiously optimistic that we have something that can help some of these patients.
Speaker 11
Got you. Super helpful. Maybe just a super quick follow-up over there, Javier. I want to make sure you captured the So it's my understanding that you guys are conjugating your siRNA within integrin receptors, right, a ligand that binds integrin receptor. Will that matter?
Will that drive better potentially better seller uptake versus, yes, Jonas, the person does not have a conjugation with an integrated receptor? Is that a factor we should think about it or not? Any color there would be great. Thank you.
Speaker 5
James, would you like to
Speaker 3
take this?
Speaker 6
Sure. I take that one. Mean, based on our animal data, the targeting ligand matters. We get better knockdown with, the targeting ligand than when we don't use the targeting ligand. Of course, that's with siRNA in animals.
We haven't looked at antisense, but that's our experience.
Speaker 11
Got you. Super helpful. Thanks so much.
Speaker 0
Next question is from the line of Patrick Trucchio of H. C. Wainwright. Your line is now open.
Speaker 12
Hi, thanks. Good afternoon. Just a couple of questions for me, follow-up questions on capital allocation and the development strategy. So I'm wondering how we should think about the pipeline build out and strategy, particularly if we see evidence with the extrahepatic programs that the TRiM platform is capable of successful target knockdown in tissue beyond the liver. Specifically, how many programs could you build out in the lung muscle and other tissue with you based on your current capital position?
And then secondly, I'm wondering what the requirement is for moving forward in a particular indication. Specifically, you evaluating potential programs in these extra product tissues based on genetically validated targets? Or would you be looking for clinically validated targets in additional tissue and how we should think about that? And then lastly, I think you've mentioned in the past the intention to partner HIF2 and possibly other programs. So I'm wondering what the latest thinking is on potential partnering for liver targeted programs and the extrahepatic programs?
Speaker 2
Boy, there's a lot to unpack there. So let's see. How many targets can we go after? The answer is I don't know the answer to that. Look.
We I think we're well capitalized right now. We've got access to, I don't know, 600 more potential millions of dollars in Amgen milestone payments, something around Several billion dollars of possible milestone payments from Janssen, 700 and change or so million dollars of possible milestone payments from Takeda. So we've got access to a fair amount of additional capital. Put it this way. We're look.
We're not slowing anything down right now because of capital conservation. We have enough capital to push all these programs forward. And and if you look at our burn compared to some of our competitors, I think we do it in a pretty capital efficient manner. So we're not at a point where we are capital constrained. And frankly, I sort of don't see that in the near term at least.
We've got good bandwidth and capital for a number of programs. The question then is what do we hold on to and what do we partner? And that's dynamic question. As we've talked about in the past, what we our pipeline is gonna be so large that no company, much less a company our size, can't commercialize all that. And so we will do some targeted, no pun intended, partnerships.
You you saw that with Takeda, you saw that with Amgen, you've seen that with J and J. We'll continue to do some of that. But but, you know, an important part of our value creation model here is to hold onto a fair number of molecules and commercialize drugs. That's why Jim Hassard is here in this room. He's gonna be developing our commercial infrastructure.
When we look at at where we make our we we place our bets here, what we're what we're gonna be looking to do is is to create some synergy and some leverage among among our various products. We've talked about in the past the idea of of some synergy around cardiometabolic assets. We'll have APOC3 and ANG3. We like the idea of building commercial infrastructure to sell both of those drugs into lipid clinics and cardiologists, etcetera. Similarly, we like that for pulmonologists.
There are, you know, somewhere between 30,000 pulmonologists in The US, and the lung is a target rich environment. You know, we've got one lung candidate in the clinic right now in ARO ENAC, but we've got several that we're developing in addition. And so so we like the idea of packing our pipeline and and and addressing, you know, those large markets, you know, with the commercial, infrastructure.
Speaker 12
Got it. That's helpful. And then just another, if I may, just a quick follow-up on opacirin and L2a. So you mentioned that the next Phase II data set is expected in the first half of twenty twenty two. So I'm just wondering, what are the expectations ahead of that data?
And what are the relative advantages as compared to the ASO approach? And what, if any, milestones or payments are expected to Arrowhead at that time?
Speaker 2
We can't give you any guidance on what the data will look like or even, frankly, when it's going to come out. Amgen has said publicly that they expect, to have data in the first half of 'twenty two, and I can't give you more granular than that. Look, we're excited about that. We think that's a great drug. Given the data that we've seen that they have presented publicly, that looks like a very potent drug, with good durability.
And we're excited to see what this Phase II study looks like in terms of really blowing out how durable that is. But I think that's going to be a key advantage to ASOs. I think generally speaking, when you look at ASOs versus siRNAs, at least as it relates to hepatocyte directed constructs, I think that we will beat ASOs in durability. That has a theoretical basis as well as clinical basis. You know, we know that RNAi is a catalytic process, whereas antisense oligos work on a consumptive process, and then that has been borne out in clinical data.
We're generally just substantially more, durable, than antisense oligos. With respect to safety, if you look back at at at the the safety profiles of various antisense oligos, we think that they're that they're that they will have advantage there also. You know, there's no for instance, there's there's been no class effect that's been that's been seen in in in siRNAs with respect to thrombocytopenia, but we have seen that in antisense oligos. So so we'll look. We're excited for Amgen.
We think they're the right partner, and we think they got the right drug.
Speaker 12
Got it. That's helpful. Thank you very much.
Speaker 3
You're welcome.
Speaker 0
Next question is from the line of Salveen Richter of Goldman Sachs. Your line is now open.
Speaker 13
Hi. Thank you so much for taking our question. This is Sonia on for Salveen. Could you provide the rationale for why you chose FSHD as the first indication for your skeletal muscle, asset?
Speaker 2
Sure, thanks for that question. We think FSHD is a perfect, or as close to perfect as you can get, I think, target for this. It is the biology is clear. We know that the continued expression of DUX4 causes this disease. You you and I shouldn't be expressing that right now.
Somebody with this condition does. You know, if we can just turn that off, then that should alleviate sequelae around that disease. We also don't run the risk of over silencing, if you will. As I mentioned, I think more knockdown is better than less. And so it's not like we have to get to a certain level of knockdown and go no further.
So that's helpful to us. The only thing that is troublesome about the target is that there's no, at least that I know, there's no known circulating biomarker. And so when determining what our dose is going forward, when determining our knockdown levels, we're likely going have to do biopsies. Look, that's not a dealbreaker. That's just a little bit more cumbersome.
But this is a patient population that is in desperate need of new therapies. And so we think we really have something that could be helpful for them.
Speaker 13
Thanks.
Speaker 1
You're welcome.
Speaker 0
Next question is from the line of Keay Nakae of Chardan. Your line is now open.
Speaker 10
Thanks, Chris. You mentioned your other pulmonary targets that are under development. I'm wondering when we get the initial knockdown data for CF patients, what kind of read across could that provide to your other pulmonary programs? So in other words, are you using the same inhaled route of administration, the same conjugated ligand for epithelial cells, and it's just a different siRNA payload?
Speaker 2
Yeah. That's a great question. So yes, we expect to be able to read through these data, to read gosh, let me put that better. We do expect this to to read through to to our potential other programs here in pulmonary. And we are using the same targeting ligand.
You know, we're targeting alpha b beta six integrins. And so to the extent that we see knockdown in AeroVenac, we would expect that that would suggest we should see knockdown in the other ones. As you point out, it's just a different sequence. You know, they're modified differently, of course, as well. But if we get knockdown in one, we I would expect to get knockdown in the other.
And so that's why this data readout is so important to us. It reads on our ability to create, you know, a real pulmonary franchise. If we can do that, there is a ton of value that we can create, and there is a ton product candidates that we can create and a ton of drugs that I think we can bring to various diseases.
Speaker 3
Okay, great. Thanks.
Speaker 1
You're welcome.
Speaker 0
Next question is from the line of Mayank Mamtani of B. Riley Securities.
Speaker 14
So maybe just a quick follow-up on EMAK. Yes, another one. Could you maybe comment on the safety profile given the history of the target? And and the reason I ask is how much you think you can push the envelope on efficacy beyond the doses that you're testing and and and, you know, patients that are null null versus those with partial function? And and, basically, like, at what point you can kind of make that determination that you can quickly move to the next, you know, phase two or three study?
Speaker 2
Yes. Sorry. That that line was not great. But but what I what I think I heard you ask, was about the safety profile that we've seen so far. And and, you know, we we can't go into detail, of course, until we present the data.
But but we have said publicly, you know, that we that that we've seen a, you know, a good safety profile so far. We've had no discontinuations to the drug. You know, we we we've been we have been, you know, really pleased with what we saw. And look. We didn't we we didn't expect, you know, problems in the safety in safety for this, but you just never know, you know, when you're bringing a new a new class of drugs into into a new cell type, particularly the lungs.
And we've been, you know, we've been we've been really, you know, really quite thrilled that we that the safe profile has been good. I think a follow on question here is, again, I I apologize that that that the connection wasn't great, was, was could you go higher if you needed to go higher? And and I'll defer to to, to James on this, but but I but I believe that there has been no reason to
Speaker 14
And how do you balance it, you know, going into a phase two, phase three study, and then, you know, null patients versus those with partial function? I hope you can hear me fine now.
Speaker 6
Yeah. I I can cover the the question on on safety and dose escalation. We have not seen any safety findings in the clinical studies that would prevent us from increasing the dose. And what was the other other question?
Speaker 2
Yeah. Yeah. You're talking about considerations for phase two, three. And, again Right. The you're getting had crackling on the on the line, so I'm not sure what He
Speaker 1
said, are we limited in the pay the background patients that we can enroll in this? So they do they have to have a lung function above something some certain level?
Speaker 6
No. I don't I don't think it I mean, at this point, as Chris mentioned early on, we're very interested in in the nulls just because they don't have any other options. But, we are certainly looking at and enrolling patients now that are on CFTR modulators, and that there's no reason we can't study that population down the road.
Speaker 14
Okay. And, maybe just a quick follow-up on, the HPV, readout, that, you know, is expected later in the year. I understand, you know, it's run by J and J, but just given the deep and durable HPV, the antigen knockdown that you had, and maybe just also touch on, you know, the differences between Reef one and two, and and what what, learnings we could have from the two different studies.
Speaker 2
Yeah. I can't give you any any guidance on when those might read out. I certainly can't give any guidance on what on what might be in there. Haven't seen anything, of course. REEF one is four hundred and fifty patients, as I recall, and it's a it's a triple combination or it's various permutations of three different, compounds.
A NUC, one of Janssen's capsid inhibitors, and then our RNAi drug. Again, it's various permutations of that. And the endpoints have to do with S antigen, as I recall, after twelve months of therapy and then a six month follow-up as well. REEF two is similar, but it also has some stopping criteria. You know, if S antigen, or if other parameters reach certain criteria, then then it's my understanding that that that, therapy could be withdrawn.
That's gonna be interesting, I think, just given the the the nuke stoppage studies that have been done over the last several years. So look, I'm I'm as excited to see those data as you are, and I and I also and I can't give you any better guidance on when those data will come out.
Speaker 14
Great. And and final question, which new cell type should we expect to hear from you given, I think we are getting close to that eighteen to twenty four month window since you said that, you know, you'll be going after muscle?
Speaker 2
Sorry. You were breaking up. I couldn't I couldn't get that question. No. I'm I'm joking.
I I I I can't answer. We are we are we are we are, of course, working on other cell types, and I I can't give you any guidance on what's gonna on what's gonna pop there. You know, there there are there are several of words that we are But, you know, stay tuned.
Speaker 14
We'll talk about going on. Thanks for taking my questions.
Speaker 2
You're welcome.
Speaker 0
Last question is from the line of Mani Foroohar of SVB Leerink. Your line is now open.
Speaker 7
Yes. Thanks, guys. A couple of quick ones. First, when you think about, targeting HIF, you're talking about a much more heterogeneous pool of, pool of cells within a single patient and much more heterogeneous disease between patients than in other inherited genetic defined diseases. Other mechanisms in terms of biopsy approach, patient selection, etcetera, that you can pursue to try and get a better sample and more accurate assessment of how effectively you're targeting the target tissues and where your knockdown is across the population of cells?
And then I have a follow-up kind of boring financial question.
Speaker 2
Yeah. That's a good question. So the answer is, at least in the first part of the study, we're just seeing what we're going to see. And then follow on questions, follow on studies, will be, you know, we'd like to see if we can find patients that are enriched. James, do you want to is there anything you want to add to that with respect to what we're looking for now and what we in the biopsies, what can we see and what can we might might be able
Speaker 6
to Sure, sure. I mean, the critical aspect of this study, it's all about target knockdown. And of course, HIF2 target really drives a large percentage of RCC tumors. We think this is a critical target for this disease. In terms of ways to maximize biopsy yield, I think there certain tissue types that we have asked sites to preferentially biopsy over others that just give higher yield in terms of number of tumors and number of tumor cells and improve our ability to measure knockdown.
I'm not sure if that addresses your question or not.
Speaker 2
Yeah. And maybe also what you're getting at, and we don't know the answer to this, is, Boy, it would be nice if we can tell if those, you know, better responders and if we see a difference in response rates, those better responders, they are higher expressers of integrins versus the low responders. I don't know how much we can tease that out in this study, but that would be something that would be helpful going forward, I think.
Speaker 7
Great. That's helpful. And on the financials question, as you guys move into a state where you're running more mid and late stage studies, across a broader pipeline, across many different tissue types, different types of clinicians that you're addressing, cardiologists, pulmonologists, oncologists, how should we think about modeling growth in r and d expense? And then and then as proportionate stock based comp from expense, do you expect that to stay to stay linear on a percentage basis, become a larger or smaller portion of comp as the company scales in terms of absolute headcount in future years? Like, how should we think about those trends?
Speaker 2
So we haven't I'll answer the first question, sort of. We haven't given any guidance on increase in R and D spend. We're not fair to do
Speaker 3
that quite yet. Give us a bit
Speaker 2
of time, but we haven't given any guidance there. Ken, you want to address the
Speaker 4
Yes. So stock compensation is really hard to estimate because it's really based upon the value of our stock when we issue our equity. It is a noncash expense. So I would sort of use that as a guide and leave that out. But we really can't give you better guidance on sort of the growth of what that expense will be.
Speaker 0
Thank you, participants. I'll now hand the call back over to Chris Anzalone for closing remarks. Sir, you may proceed.
Speaker 2
Thank you all for joining us today, and we look forward to talking to you again soon. Enjoy the rest of your week.
Speaker 0
And that concludes today's conference. Thank you all for participating. You may now disconnect.