Arrowhead Pharmaceuticals - Earnings Call - Q2 2025

Executive Summary

• Q2 FY25 revenue surged to $542.7M, driven by upfront and related recognition from the Sarepta deal, yielding GAAP diluted EPS of $2.75; prior-year quarter had no revenue and a $1.02 loss per diluted share. Management reiterated funding runway into 2028 and advanced toward plozasiran’s first commercial launch pending approval.
• Regulatory momentum: FDA accepted the plozasiran NDA with a PDUFA date of November 18, 2025, and no advisory committee currently planned, positioning FCS as the initial launch indication; EU MAA validated and ex-U.S. plans progressing.
• Pipeline and clinical execution: SHTG Phase 3 (SHASTA-3/-4) last patient enrollment now anticipated “this summer,” enabling sNDA timing clarity by late summer; SHASTA-5 outcomes study underway to support payer discussions, especially in Europe.
• Commercial readiness building: U.S. commercial team hiring on track for a late-summer fully trained sales force; payer pre-approval exchanges indicate interest given triglyceride and pancreatitis risk reduction profile.
• Potential stock catalysts: plozasiran label dynamics on pancreatitis and triglyceride targets, SHTG Phase 3 enrollment completion, obesity programs’ initial clinical readouts by YE25, and potential near-term Sarepta milestones ($300M).

What Went Well and What Went Wrong

• What Went Well

  • Massive revenue inflection from the Sarepta licensing and equity deal ($542.7M recognized; fixed contract revenue to be recognized over time thereafter), driving Q2 profitability and bolstering cash/investments to $1.10B.
  • Regulatory and clinical progress for plozasiran: FDA acceptance with 11/18/25 PDUFA, no AdCom planned; robust PALISADE data with ~80% median TG reduction at 25 mg and significant acute pancreatitis risk reduction.
  • Commercial buildout and payer engagement advancing; management cites strong resonance for deep, durable TG reduction and pancreatitis risk signals, with quarterly dosing convenience.

• What Went Wrong

  • Revenue quality is non-recurring: Q2 revenue was primarily deal-related accounting recognition, not product sales; future recognition will be lumpy and tied to performance obligations and milestones ($90–$125M expected over next 12 months from fixed contract revenue recognition).
  • Operating expenses remain elevated as pipeline scales (R&D $133.1M vs. $101.1M prior year), reflecting late-stage studies and platform expansion.
  • Visibility on label differentiation for pancreatitis claims remains uncertain; management emphasized different adjudication approaches vs. competitor and noted label negotiations have not begun.

Transcript

Operator (participant)

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

Vince Anzalone (VP of Investor Relations)

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2025 second quarter ended March 31st, 2025. With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview; Dr. Bruce Given, Interim Chief Medical Scientist, who will provide an update on our cardiometabolic pipeline; Andy Davis, Senior Vice President and Head of Global Cardiometabolic Franchise, who will provide an update on commercialization activities; Dr. James Hamilton, Chief Medical Officer and Head of R&D, who will discuss our earlier stage development programs; and Ken Myszkowski, our outgoing Chief Financial Officer who is retiring this week, who will give a review of the financials. We also welcome Dan Apel, our incoming CFO, who is also with us on the call today. Following management's prepared remarks, we will open the call to questions.

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 are forward-looking statements 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, please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. I'd now like to turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Chris Anzalone (President and CEO)

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Before I start, I want to say thank you to Ken and wish him the best in his retirement. Ken has been a valuable member of the Arrowhead team, and he retires at a time of great financial strength for the company. The financial organization that Ken built over the years is very capable and provides strong support to our ambitious development and commercialization plans. From all of us at Arrowhead, thank you for all the important contributions over the last 16 years. I'm also excited that Dan Apel will join us as our new CFO at a critical time for Arrowhead. We expect to make the transition from development stage to commercial stage with the planned launch of Plozasiran this year, pending regulatory review and approval.

Dan is an accomplished pharmaceutical executive who can make an immediate and important impact on our business. Let's now talk about our business and the progress we've made toward our short, mid, and long-term goals. Arrowhead is at an important point both in terms of capabilities and potential value as we drive our organization toward our first commercial launch, which we anticipate this year. Following this, we expect multiple additional independent and partner launches over the next few years. The combination of commercial expansion, our extraordinarily productive discovery engine, the increasingly validated nature of our platforms and R&D modality, our large pipeline of clinical stage assets, our strong balance sheet, and clear access to additional non-dilutive capital together provide us with a level of upside potential and stability that I believe is a rarity in our industry.

This is always attractive, but is even more valuable at a time when biotech markets have been depressed for the past several years and the near-term capital markets are uncertain at best. As the current biotech market weakness causes people to weigh the trade-off of stability versus the potential for explosive value growth, I think we have the tools for both. I view our value proposition in layers. Layer one is Plozasiran. It constitutes our primary near and mid-term value driver and provides a strong base for us. Plozasiran has shown to be a potent triglyceride-lowering agent across multiple clinical studies in hundreds of patients. We believe there are three to four million people in the U.S. alone who suffer from severe hypertriglyceridemia, or SHTG, as defined by fasting triglyceride levels above 500 milligrams per deciliter.

We are preparing to launch into a small subgroup of this population, patients with familial chylomicronemia syndrome, or FCS, and have a PDUFA date of November 18th, 2025. We also completed the submission of a marketing authorization application, or MAA, with the EMA and are working through additional planned submissions in other select geographies. The phase three data supporting our regulatory submissions were consistent and encouraging. Genetically defined and clinically defined FCS patients responded similarly with reductions in triglycerides of about 80% from baseline. Approximately 75% and 50% of patients had triglycerides go below 880 and 500 milligrams per deciliter, respectively, which are discussed in guidelines and the academic literature as important goals for minimizing pancreatitis risk. These are truly impressive levels to achieve in FCS patients, as the mean baseline triglyceride level in the study was approximately 2,500 milligrams per deciliter.

Plozasiran was generally well tolerated and showed triglyceride reductions in 100% of patients treated at the primary endpoint of 10 months. Our hope of treating FCS patients is important. This is an historically underserved population, and we believe Plozasiran could be an important medicine for them. However, we view this as just the beginning. SHASTA-3, SHASTA-4, and MUIR-3 are phase three studies designed to support a supplemental NDA and other applications on a global basis to enable us to treat a broader SHTG population. These studies are moving rapidly, and we believe they could be fully enrolled this summer. We are also in the process of initiating SHASTA-5, which is an outcome study to specifically evaluate the risk reduction of acute pancreatitis in high-risk patients with SHTG. We think this is an innovative strategy to potentially demonstrate meaningful value for patients, physicians, and payers.

Our second layer of value may be our initial obesity candidates and initial CNS candidates. Regarding the former, ARO-INHBE is currently dosed in obese patients, and we expect ARO-ALK7 to begin dosing in obese patients shortly. Both are designed to intervene in a biological pathway regulating fat storage. ARO-INHBE targets hepatocytes with the same TRiM platform using several ongoing clinical studies and has been in thousands of patients. It is designed to reduce hepatocyte expression of activin, which is a ligand for adipose ALK7. ARO-ALK7 is the first adipocyte-targeted siRNA with a new TRiM platform that, in animal models, has shown good uptake in adipose tissue and high levels of target gene knockdown with a long duration of effect that may enable Q4 month, Q6 month, or less frequent administration.

ARO-ALK7 is designed to reduce expression of the ALK7 receptor itself in adipose tissue. Both programs demonstrated substantial reductions in visceral fat versus control while simultaneously preserving lean mass in animal models. Both targets are also supported by human genetics, where loss of function carriers have favorable body composition and metabolic characteristics compared to non-carriers without any apparent safety cost. It's a very intriguing pathway that we believe may fill some important gaps left by standard-of-care obesity treatments, addressing some of the shortcomings of the GLP-1/GIP class. The possibility of long-acting agents that are well tolerated, spare muscle mass, and enable visceral fat loss without dependence on caloric restriction is exciting. ARO-INHBE began dosing a phase one two study in December 2024, and we anticipate having some initial data by the end of 2025.

As I mentioned, we expect ARO-ALK7 to begin dosing shortly, and we should have some initial data soon after ARO-INHBE results become available. Studies in both candidates include single-dose and multiple-dose monotherapy arms in obese subjects, as well as multiple-dose arms that include combinations with tirzepatide. Our CNS blood-brain barrier platform has made great strides in recent years. We have a substantial amount of preclinical data across multiple animal models that make us optimistic that we can deliver potent RNAi drugs to the brain via a simple subcutaneous injection. Delivering large molecule drugs systemically and getting past the blood-brain barrier has been a holy grail virtually as long as complex biological drugs have been developed, and we expect to be in the clinic late this year. Our first candidate, ARO-MAPT, targets the tau protein for potential treatment of Alzheimer's.

We expect to follow that with ARO-HTT, licensed to Sarepta against Huntington's disease by the end of the year. In the first half of 2026, we expect to bring ARO-SNCA to the clinic, which targets alpha-synuclein for potential treatment of Parkinson's. These are all well-validated targets against very important diseases for which effective agents have long been sought, and we look forward to seeing how they translate from animals to humans. A third layer of value could come from our other phase three drugs. We expect to begin enrolling a year-long phase three study of Zodasiran for homozygous familial hypercholesterolemia, or HoFH, shortly. The HoFH patients treated with Zodasiran in phase one and phase two studies give us confidence that they may have a potent LDL, I'm sorry, that it may have a potent LDL-C lowering agent that only requires quarterly dosing in this important at-risk patient population.

The sales infrastructure we are building for Plozasiran could easily be leveraged for this population, so this feels like a straightforward, relatively rapid, low-risk, and low-cost expansion of our commercial presence. Fazirsiran is our drug candidate against AAT liver disease. Our prior studies give us confidence that it could be an effective agent to reverse fibrosis in this largely unserved patient population. Fazirsiran is partnered with Takeda, and they have publicly guided that phase three studies could complete enrollment this year. They are two-year studies to primary endpoint. While this is partnered, our economics are substantial, with 50/50 profit share in the U.S., 20-25% royalties ex U.S., and up to $527 million of remaining milestones. While we view these as our primary near and mid-term value drivers, there are substantial pieces of our business underneath them providing redundancy and additional upside potential.

They include four wholly owned additional phase two-ready clinical programs in ARO-C3, ARO-CFB, ARO-RAGE, and ARO-PNPLA3. Two phase two programs partnered with GSK against chronic hepatitis B infection and MASH. Another phase three program partnered with Amgen in olpasiran. Four phase one-two clinical programs partnered with Sarepta. Three designated preclinical programs partnered with Sarepta, one of which I already mentioned in HTT, and six additional preclinical programs to be named by Sarepta. Of course, underlying all of this is a discovery engine that we believe is second to none in the siRNA field. We expect this to continue to drive value as a basis for many additional wholly owned drugs and through future partnerships. With all these layers, one can reasonably ask how many of these would be required to create a large, productive, sustainable pharmaceutical company.

We indeed have many opportunities to create durable value. Importantly, we believe we have the capital and access to substantial additional capital to support our work. The Sarepta deal was a critical component of this. During the last quarter, we closed the global license and collaboration agreement with Sarepta Therapeutics, materially strengthening our balance sheet. This transaction brought in $500 million as an upfront payment and $325 million through the purchase by Sarepta of Arrowhead Common Stock at $27.25 per share. Arrowhead will also receive $250 million to be paid in annual installments of $50 million over five years. In the short term, we have potential to receive an additional $300 million in milestone payments associated with the continued enrollment of a phase one two study of ARO-DM1, which we are on track to achieve during the next few quarters.

Taken together, this adds up to $1.375 billion in cash payments. The total potential value of this deal, including upfront payments, equity investments, and potential milestones, exceeds $11 billion. We are also eligible to receive tiered royalties on commercial sales. This will be a transformational deal in any environment. As I mentioned, with the state of biotech equity markets today, we feel very good about not having to raise equity capital at this time to fund our growth as we become a commercial company. We are now funded into 2028 and through multiple important milestones that we think can drive substantial value for our shareholders. With that overview, I now like to turn the call over to Bruce Given. Bruce?

Bruce Given (Interim Chief Medical Scientist)

Thanks, Chris, and good afternoon, everyone. Arrowhead has been working in RNAi interference for nearly 20 years.

During that time, we have made great strides creating a modality that is increasingly scalable, reliable, potent, and generally well tolerated. We have also made great strides bringing RNAi to where it is needed. In addition to delivering to hepatocytes, we are now able to address lung, CNS, muscle, adipose, and cardiomyocytes. We have always been a great R&D platform company, and we are now taking a next step forward as we seek our first marketing approval for Plozasiran in familial chylomicronemia syndrome, or FCS.

Most of you will be aware of the results of our phase three palliative study, which was published in the New England Journal of Medicine last year and showed statistically significant responses on all primary and alpha-controlled secondary endpoints, including a large reduction in the primary endpoint of triglyceride reduction in 10 months, as well as reduction in incidence of confirmed pancreatitis in the protocol-defined comparison of placebo and the combined 25 and 50 milligram dose groups. Following pre-NDA discussions with the FDA, a marketing application for approval for use in FCS was submitted on November 16th, 2024, and accepted for review by FDA with the due date of November 18th, 2025. At this time, we are not anticipating being asked to participate in advisory committee meetings. We've been frequently asked whether the changes in Washington have impacted the review.

While we have no special insights into the inner workings of the agency, our impression has been that the review is progressing as we would have anticipated, and we know of no FDA personnel or timing changes affecting our program at this time. We have also had routine pre-filing meetings with EMA and appointed CHMP rapporteurs that culminated in the submission of a marketing authorization application, or MAA, on February 28th, 2025, which was confirmed to be valid for review on March 20th, 2025. Our plan is to seek approval in the U.K. following approval in either the U.S. or Europe by leveraging the international recognition procedure. We've also had pre-filing meetings with the Canadian and Japanese regulatory authorities and have plans for filing marketing applications in those and other jurisdictions as well.

We are hopeful that these filings will lead to Arrowhead's first commercial launch, possibly beginning as early as late this year. As welcome as we believe that Plozasiran will be for FCS patients, this is just the beginning of the story for this important drug. While we were studying Plozasiran in FCS, we were also evaluating the drug in much larger patient populations, including severe hypertriglyceridemia, or SHTG, defined as patients with fasting triglycerides above 500 milligrams per deciliter, but without genetic FCS, as well as in patients with mixed hyperlipidemia. These important studies led to publications last year in the New England Journal of Medicine, JAMA Cardiology, and Circulation Journals. After receiving end-of-phase two feedback from FDA and EMA, we have initiated a phase three program in severe hypertriglyceridemia. This program is designed to meet key standards based on guidance documents from the International Council for Harmonization.

Key requirements and drug design considerations include two pivotal placebo-controlled trials in SHTG patients and a safety database of at least 1,500 patients treated with Plozasiran compared with placebo for 12 months. Hence, SHASTA-3 and SHASTA-4 are very similar studies designed to demonstrate statistically significant improvement of triglycerides with 25 mg of Plozasiran compared with placebo over 12 months of treatment. The two trials total around 700 patients and are highly tolerated. Given the results from the phase two SHASTA-2 trial, where the primary endpoint difference in triglycerides at week 24 compared to baseline at the 25 mg dose was -53%, with a p-value of less than 0.0001.

To reach the necessary 1,500 patients for the safety database, SHASTA-3 and SHASTA-4 are supplemented by a supportive year three trial in mixed hyperlipidemia, also blinded and comparing 25 milligrams quarterly with Plozasiran versus placebo for one year, with a planned enrollment of about 1,400 patients. We have previously guided that we expect the last patient to be randomized in the SHTG program this year. Based on enrollment today, we now anticipate the last patient to enroll sometime this summer. We've been encouraged by the enthusiasm of our investigators as indicated by the rapid enrollment and also by a very low premature discontinuation rate for adverse events and other reasons. The last patients entered will be treated for one year before the database can be locked, the data analyzed, and hopefully submissions made to regulatory authorities seeking approval for use in SHTG patients.

Thus, before the end of this summer, it should be possible to narrow the potential timing for SHTG supplemental NDA submission. The SHTG program also features a first-of-its-kind study named SHASTA-5 to directly assess the ability of Plozasiran to reduce the risk of acute pancreatitis in SHTG patients with a purpose-designed outcome study. We are conducting this study expressly to meet the needs of sophisticated payers, especially outside of the U.S. It is not gated for the SHTG filings and is unlikely to be complete prior to those submissions. We do hope that it will be completed during the review process in Europe and elsewhere to be available for pricing discussions with national payers post-approval.

We cannot provide precise timing expectations, not only because of uncertain timing to complete enrollment, but also because as an outcome study, treatment will continue until the required number of events have been collected rather than for a fixed duration. Screening is underway at centers currently open for a trial, so the trial is underway. More information on design will be presented following presentation and major medical meetings. The R&D group is also playing its role in growing the awareness that new treatments are reaching the market for treating FCS. Our Medical Affairs team, reporting into R&D, continues to play a vital role in educating the medical community. Our medical science liaisons are actively engaging healthcare professionals in scientific exchange, helping them better understand and raising awareness of familial chylomicronemia syndrome, the significant unmet medical needs, and the growing body of clinical data now available.

The team has been present at key medical conferences during this last quarter, including the American College of Cardiology meeting, the European Atherosclerosis Society, and British Atherosclerosis Society joint meeting, and the European Society of Endocrinology meeting taking place presently. In parallel, our publications team continues to generate and disseminate important data to support these scientific efforts and expand awareness within the clinical community. Most recently, at EAS, an abstract authored by experts in the field titled PALISADE: Plozasiran decreases risk of acute pancreatitis and improves indices of quality of life in FCS was featured. The authors concluded in the abstract that in patients with FCS, Plozasiran markedly reduced triglycerides and risk of pancreatitis with promising changes in indices of quality of life.

Those of you who have watched this for a while know that we have another agent in our cardiometabolic pipeline that, like Plozasiran, has very strong support from human genetics. I'm describing Plozasiran, an RNAi drug designed to reduce expression of angiopoietin-like protein 3 or ANGPTL3. This drug also produced strong results in two phase twos, including ARCHES-2 in mixed hyperlipidemia, also published in the New England Journal of Medicine, as well as the GATEWAY study in HoFH patients with data presented last week at the European Society of Cardiology conference. However, as we've discussed previously, we saw Plozasiran as positioned in the crowded LDL space where the unmet medical need has largely been addressed by statins and PCSK9 inhibitors.

There is an important population where we think Plozasiran would make an important contribution without requiring an outsized commitment of resources by Arrowhead, this being for patients with homozygous familial hypercholesterolemia. These patients have exceptionally high LDL cholesterol levels, and because their genetic abnormalities usually result in very low or absent LDL receptor function, they are usually not able to get to goal LDL levels even with maximal statin and PCSK9 therapy. This leaves them with very high risk of suffering cardiovascular events and early mortality. Monoclonal antibody against ANGPTL3 has already been proven effective in these patients, but requires monthly intravenous infusions and can lead to immunologic reactions. We conducted an exploratory phase two study in this population and saw similar benefit, but with convenient quarterly subcutaneous dosing.

Moreover, these patients are usually cared for by physicians which largely overlap the physicians who treat FCS and SHTG, making the potential marketing of zodasiran in these patients efficient for us, or to be approved. We have designed a phase three study of similar size to our phase three PALISADE study comparing zodasiran 200 milligrams quarterly to placebo and expect to be enrolling patients this year, assuming successful demonstration of safety and efficacy and successful regulatory submissions. Zodasiran could join plozasiran in the market as early as 2028 or 2029. As I said at the beginning of my remarks, we hope to see plozasiran emerge as our first commercially available drug to treat FCS patients as early as this year.

Based on our expected completion of enrollment in the SHTG phase three study this summer, we could see SHTG phase three completion in the summer of 2026 and an end in sNDA filing shortly thereafter. Interestingly, also before completion of the decade, based on public guidance, progress with phase three partnered programs for olpasiran and fizusiran in liver disease associated with alpha-1 antitrypsin isease could result in approvals for these programs in a similar timeframe, as well as with the possibility that some of our less mature partnered programs for important organ diseases might also find approval in that timeframe. It takes patience in this business to see an important new platform rise to prominence.

We feel there is some good reason to have confidence that RNA interference with joint small molecule drugs and monoclonal antibodies as a foundational technology in drug development, especially as the field, which we see Arrowhead still leading, continues to push into new cell types, opening up additional important diseases to be addressed. I'll now turn the call over to Andy Davis. Andy?

Andy Davis (SVP and Head of Global Cardiometabolic Franchise)

Thank you, Bruce. With the PDUFA date for Plozasiran set for November 18, just six months away, I'm pleased to share that our commercialization efforts are advancing rapidly and with strong momentum. As discussed by Bruce, the medical affairs team is in the field helping educate the physician universe and facilitating publication of the results of Arrowhead's clinical trials. We're also making strong progress in building our commercial sales team.

The national sales leader and a full complement of regional sales leaders are now on board and focused on hiring and onboarding top-tier talent with deep rare disease and therapeutic area expertise. Interest has been very encouraging, with thousands of resumes in the queue, and we're on track to fully hire and train our salesforce by late summer, ensuring ample time for target validation and disease state education in advance of launch. A market access team is executing effectively on our pre-approval information exchange, or PIE, strategy directed toward healthcare decision-makers to help them plan for our potential approval. We've now engaged with payers representing a significant number of U.S. covered lives, delivering compelling content on the clinical value and anticipated profile of Plozasiran. We're encouraged by their interest in Plozasiran, especially regarding its potential to reduce triglycerides and acute pancreatitis risk.

Additionally, our analytics team is deploying innovative technologies to identify individuals potentially living with FCS. We're connecting with these potential patients through disease state education efforts, including opportunities for them to opt in for continued communication and support. Across our research and stakeholder engagement, the clinical attributes of Plozasiran continue to resonate strongly. Our market research suggests that Plozasiran's deep and durable triglyceride reduction is compelling to numerous stakeholders. The PALISADE study showed that Plozasiran reduced triglycerides by approximately 80% from baseline as early as month one. With this effect sustained over 12 months and with limited variability, while placebo subjects showed variable changes ranging from plus 10% to minus 18%. As a reminder, the primary endpoint in Palisade was the median percent change from baseline and fasting triglyceride levels at month 10, where Plozasiran demonstrated a placebo-adjusted change of minus 59% with the planned commercial 25 milligram dose.

Our market research also suggests that healthcare providers, caregivers, and patients have a strong desire to see triglyceride levels fall below expert guideline threshold, such as 880 milligrams per deciliter and even 500 milligrams per deciliter. In Palisade, approximately 75% of patients at the 25 milligram dose achieved levels below 880, and approximately 50% achieved levels below 500. Numerous expert guidelines emphasize the importance of maintaining triglyceride levels below 500 milligrams per deciliter as the aspirational goal to reduce acute pancreatitis risk. Finally, we received feedback that patients are looking for a treatment option that minimizes disruption to their lives. Plozasiran shows a favorable dosing and safety profile, and as a reminder, Plozasiran is conveniently administered once every three months, potentially minimizing treatment burden and improving adherence. As our U.S. launch preparations continue at full speed, we're equally pleased to report steady progress on our European commercial efforts as well.

We've already established a field medical presence, interactively engaging in scientific exchange at key European scientific meetings, laying a strong foundation for a successful rollout. We remain on track and deeply motivated by the opportunity to bring investigational Plozasiran to individuals living with FCS and their families in both the United States and priority countries outside the United States. We believe this potential first-in-class siRNA therapy will mark a major advancement, and we're fully committed to unlocking its patient impact. I'll now turn the call over to James Hamilton.

James Hamilton (Chief Medical Officer and Head of R&D)

Thank you, Andy. First, I'd like to provide a status update on our two early-stage obesity programs, ARO-INHBE and ARO-ALK7.

Arrowhead INHBE is designed to reduce expression of activin, which is a ligand for adipose ALK7, while ARO-ALK7 is designed to reduce expression of the ALK7 receptor itself, both of which are involved in regulating adipose storage of fats. These programs have the potential to reduce visceral fat mass while simultaneously preserving lean mass, which we demonstrated in preclinical models and are now evaluating in clinical studies. ARO-INHBE began dosing in December of 2024 and is progressing on our planned timeline. As a reminder, the phase one two study will evaluate ARO-INHBE monotherapy administered to obese, otherwise healthy volunteers in both single and multiple dose escalation cohorts. The single ascending dose cohort dosing is now complete, and the multi-dose monotherapy cohorts are actively enrolling.

The study is also evaluating multiple doses of ARO-INHBE in combination with tirzepatide, and these combination cohorts are actively enrolling now on our planned timeline. We anticipate the ARO-ALK7 clinical program will be up and running shortly. The design of this study is very similar to the ARO-INHBE study with SAD and MAD monotherapy cohorts and MAD cohorts in combination with tirzepatide. This study will also enroll obese, otherwise healthy volunteers. Both studies are designed to assess safety, tolerability, pharmacokinetics, pharmacodynamics, and multiple exploratory obesity efficacy endpoints. We anticipate that some initial data may be available for ARO-INHBE around the end of 2025 and potentially for ARO-ALK7 shortly thereafter. Our muscle-targeted programs partnered with Sarepta, ARO-DUX4 for FSHD, and ARO-DM1 for myotonic dystrophy type one also continue to make good progress in the phase one two studies, which are ongoing.

While the decision to release data will be made jointly with Sarepta, it is our expectation that initial data release is possible in 2025. Lastly, I want to highlight some top-line results from part two of the phase one two clinical study of ARO-C3, designed to reduce liver production of complement component three as a potential therapy for various complement-mediated diseases. In patients with IgA nephropathy or IgAN, ARO-C3 achieved deep and sustained reductions in alternative pathway complement activity and proteinuria. The max mean reductions in C3 was 89% with serum AH50, which is an alternative pathway hemolytic assay reduced by 85%. ARO-C3 also led to an important improvement in proteinuria with a mean reduction in spot UPCR of 41% and a maximum individual reduction of 89% from baseline up through week 24.

ARO-C3 was generally well tolerated, and the observed duration of effect is supportive of once every three months or less frequent subcutaneous dosing. We are very pleased with these results and are planning to present a fuller data set at the upcoming European Renal Association or ERA Congress in June. I will now turn the call over to Ken Myszkowski.

Ken Myszkowski (CFO)

Thank you, James, and good afternoon, everyone. As we reported today, our net income for the quarter ended March 31,st 2025, was $370.4 million or $2.75 per share based on the 134.5 million fully diluted weighted average shares outstanding. This compares with a net loss of $125.3 million or $1.02 per share based on $123.3 million fully diluted weighted average shares outstanding for the quarter ended March 31st, 2024. Revenue for the quarter ended March 31st, 2025, was $542.7 million.

No revenue was recorded in the quarter ended March 31st, 2024. Revenue in the current period relates to our license and collaboration agreement with Sarepta. As you know, the agreement with Sarepta was significant. It included many assets, including clinical assets, preclinical assets, and other assets to be developed. County guidance requires that we allocate consideration to several items, including the value of the licenses we transfer, the ongoing work of certain clinical trials that we will oversee, as well as expected obligations regarding future assets to be developed. Initial fixed contract revenue to be allocated included the upfront payment of $500 million, the premium paid on a stock purchase of $84 million, and $250 million related to the five-year annual milestone payments. This totals to about $834 million, the majority of which was allocated to the license agreements and recognized immediately.

The balance will be recorded as we fulfill our performance obligations. We recognize revenue of $542.7 million during the quarter ended March 31st, 2025, and we expect the balance to be recognized over the period that we satisfy these performance obligations. These obligations include overseeing certain clinical trials as well as performing R&D work related to future clinical candidates. We expect $90-$125 million in revenue to be recognized over the next 12 months, solely related to the revenue recognition of the initial fixed contract revenue. The balance will be recognized over the next five years or so years, most of which will be recognized in the first half of that time period. We also expect future revenue related to cost reimbursement for certain discovery and manufacturing activities.

Future near-term milestones of $300 million related to the DM1 program are expected to be earned in the next few quarters and will be recorded in their entirety as revenue at that point, as would any other future milestone payments and royalties. Total operating expenses for the quarter ended March 31st, 2025, were $161.5 million, compared to $126.2 million for the quarter ended March 31st, 2024. Key drivers of this change were increased candidate costs as the company's pipeline of clinical candidates both increased and advanced into later stages of development. Net cash provided by operating activities during the quarter ended March 31st, 2025, was $460.1 million, compared with net cash used in operating activities of $92.4 million for the quarter ended March 31st, 2024. Increase in cash provided by operating activities is driven by the cash received for the Sarepta agreement.

Turning to our balance sheet, our cash and investments totaled $1.1 billion at March 31st, 2025. Our common shares outstanding on March 31st, 2025, were $138.1 million. With that brief overview, I will now turn the call back to Chris.

Chris Anzalone (President and CEO)

Thanks, Ken. Arrowhead is in a strong and stable position as a business, and we have made meaningful progress toward our long-term goal of developing and ultimately commercializing new innovative medicines for millions of patients. We are on schedule to launch Plozasiran this year, pending regulatory approval, with what we think is a best-in-class profile with meaningful differentiation from currently available therapies in FCS. We are also well on our way to fully enrolling this summer our suite of phase three studies designed to support regulatory submissions for the large SHTG patient population.

We are funded into 2028 and potentially through multiple launches of wholly owned and partnered programs in late-stage development. In addition, we believe our technology platform is the broadest and best in the field, giving us many opportunities to receive additional capital inflows from business development in areas that are outside of our core commercial focus. Thank you for joining us today, and I would now like to open the call to your questions.

Operator (participant)

Thank you. To ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Maury Raycroft of Jefferies. Your line is open.

Maury Raycroft (Equity Research Analyst)

Hi.

Congrats on the progress, and thanks for taking my question. Best wishes to Ken and welcome, Dan. Let's see. For INHBE and ALK7, you've noted that the goal there is not to compete with GLP-1s, but to be used in combination. What's the latest you're saying on how you're setting expectations for initial monotherapy and potential combo data? I guess for what you want to see in the initial update, including changes on weight loss, body composition, and relevant biomarkers.

Chris Anzalone (President and CEO)

Yeah, thanks, Maury. Look, we're not giving any guidance on what we expect to see because this is a first-in-human study. The AML data were compelling. We saw good weight loss as a monotherapy. We saw good weight loss in combination with tirzepatide.

As you know, this is a new pathway that we think could fill some of the massive amounts of white spaces in the GLP-1, GIP current standards. Look, we're looking forward to seeing what we see. The real benefits here, we think, are potentially not just weight loss, but quality of weight loss. Are we seeing the loss of visceral fat? Are we seeing a retention of lean muscle mass? We saw that in animal models. We hope to see that in humans as well. Also in animals, we did not see this was not the result of caloric restriction. It was in the context of normal feeding. That sort of thing would be helpful in humans. Look, let's just see what we see.

I think we'll have our first flood of data towards the end of this year, and then it should be data-rich, gosh, virtually every quarter for the next year or so after that.

Maury Raycroft (Equity Research Analyst)

Got it. That's helpful. Okay. Thanks for taking my question.

Chris Anzalone (President and CEO)

You're welcome.

Operator (participant)

Thank you. Our next question comes from Jason Gerberry of Bank of America. Your line is open.

Jason Gerberry (Managing Director and Equity Research Analyst)

Hey, guys. Thanks for taking my question. Just ahead of the pauses here and FDA review decision, I'm wondering how you think about the robustness of your pancreatitis data and how that might look or feel a little bit differently in the package insert. I noticed Tryngolza that just has a mention of the numerical incidence reduction in the clinical section, and I'm wondering if you guys feel like, based on policy, that you might get maybe a more robust front page reference to the pancreatitis benefit.

Anything you can just offer on the potential aspects of label differentiation would be much appreciated. Thanks.

Bruce Given (Interim Chief Medical Scientist)

Yeah. Hi, this is Bruce. We have not had any labeling negotiations with the FDA at this point, which, as you would expect, I mean, we are still in the midst of the review process, and labeling negotiations come later. It is really impossible for me to estimate how they may view things. We obviously like our data quite a bit. We did our study differently in that we looked at patients that had confirmed pancreatitis using the Atlanta criteria, while Ionis used a they developed a scale that also included possible and probable "pancreatitis," which actually do not meet the Atlanta criteria as definite pancreatitis. Frankly, it is a little bit of an apples-to-orange comparison, and I really do not know how that might play out during labeling discussions or even in the market.

It is a little bit apples-to-oranges. We went, I guess, what you might say is a more conservative route. We think, especially, for instance, with payers in Europe, especially, that might turn out to be important. Clearly, these drugs are extremely helpful, not just in reducing triglycerides, but also in turning that reduction of triglycerides into reduced abdominal pain and even pancreatitis. We will see. I really cannot give you any guidance for what labeling is going to look like. In our business, we do the studies. We submit. The FDA reviews and the FDA decides. Ultimately, it is going to be up to them. We will obviously discuss it with them, but I cannot speak for them at all.

Chris Anzalone (President and CEO)

Let me say that here more broadly. The biology here is clear.

In these patients, the higher the triglycerides, the higher the risk of pancreatitis, the higher the risk of abdominal pain. The goal here is to get triglycerides as low as you can. While we are monitoring for pancreatitis, of course, and in the SHASTA-3, SHASTA-4 studies, we are looking at abdominal pain. The real thing to focus here on is how low can we get triglycerides? As you mentioned in the prepared response for the marks, as well as we've presented in the past, we get something like 75% of patients in that phase three study below 880 mg and something like 50% below 500. That is a real feat for these FCS patients who, as you mentioned, came into a study with a mean triglyceride level of 2,500 mg. I think that's what we need to focus on here.

Jason Gerberry (Managing Director and Equity Research Analyst)

Got it. Thanks, guys.

Chris Anzalone (President and CEO)

Welcome.

Operator (participant)

Thank you.

Our next question comes from Ellie Merle of UBS. Your line is open.

Jasmine (Analyst)

Hey, this is Jasmine, on for Ellie. Thanks so much for taking our question. First, for Plozasiran and SHTG, just on acute pancreatitis, can you talk about what the latest is that you're expecting for your baseline rate of AP in your population for SHASTA-3 and SHASTA-4? What do you think the magnitude of effect that you think that you can show here is? Quickly, a second on Zodasiran. Can you clarify your current expectations in terms of potentially expanding beyond HoFH here? Thanks.

Bruce Given (Interim Chief Medical Scientist)

Let me take the second one first with Zodasiran. The expansion beyond HoFH would be in potentially some sort of high-risk HeFH population.

That's actually something we discussed with the agency and proposed a narrow approach of looking only at those patients that, despite maximal therapy, were not able to get to the goal of LDL reduction that would be associated with the greatest reduction of risk. They just were not comfortable with that because they thought, well, I cannot speak for why, but maybe because they thought it was going to set precedent. To get into HeFH, they wanted a full program, multiple adequate well-controlled trials, 1,500 patients or more, safety, etc. It did not make sense to us to go after such a sliver of high-risk patients with a very expensive, very long program. We are going to stay focused on HoFH. We do not anticipate at this time that we would expand zodasiran beyond HoFH. It is just not feasible. It is just not a good use of our resources.

Going back to Plozasiran, if I understood your question of what we think the mean entry triglycerides might look like and what sort of response we might see, we would expect the tests are pretty good that will pretty much replicate what we saw in phase two. In phase two, the mean triglycerides in the FHTG population in that study were around 900, I think, maybe 850-900. As I said, our placebo-adjusted change was 53% reduction. Substantial large reductions in triglycerides, which is why we said this trial is really, these trials are really overpowered because even with a smaller trial in phase two, we had a p-value of less than 0.201. It should be an impressive—can't say it will, but it should be an impressive. We expect it to be an impressive reduction in triglycerides.

But the mean enrollment of triglycerides is going to be around 900. Did I get your question right, Ellie? Did I understand your question?

Jasmine (Analyst)

Yeah. We also were just interested in the mean of what you expect for acute pancreatitis kind of at baseline.

Bruce Given (Interim Chief Medical Scientist)

Oh, in the pancreatitis study. Okay. I would expect that is going to be closer to the FCS, to the Palisade baseline. I would expect that the pancreatitis study baseline—it will not surprise me if it is around 2,000. Could be a little bit lower because patients, especially when they have had a history of pancreatitis, they are more susceptible to repeat pancreatitis even at lower values. But it will not shock me if it turns out to be somewhere around 2,000.

Jasmine (Analyst)

Okay. Thanks so much. Very helpful.

Bruce Given (Interim Chief Medical Scientist)

You are welcome. Thank you.

Operator (participant)

Our next question comes from Patrick Tuccio of H.C. Wainwright & Company. Your line is open.

Patrick Tuccio (Research Analyst)

Thanks.

Good afternoon and congrats on all the progress. I was actually curious about your ARO-C3 and ARO-CFB programs and your latest thinking regarding the potential positioning of these compounds in complement-mediated diseases and how you're viewing these compounds. Are they core to your portfolio or there's potential here for partnering? Thanks.

Chris Anzalone (President and CEO)

Sure. I'll take the second part of that and I'll leave the first part more for James. Look, we are open to discussing partnerships for C3 and Factor B. Those drugs, at least in my mind, those drugs work. They do what they're designed to do. They lower C3 and they lower Factor B, respectively. We think there's a number of places they can go. If push came to shove, we could certainly build out a commercial presence within a fairly narrow set of opportunities.

If we can find the right partnerships, I think that would be more beneficial to us. We'll just see if we can find the right partnerships with the right economics. Right now, it's too early to tell. James, you want to talk about some of the opportunities?

James Hamilton (Chief Medical Officer and Head of R&D)

Yeah, sure. The data that we talked about earlier today with ARO-C3, of course, that's the IgA nephropathy data. We're still pending some data in the C3G population with that molecule. Of course, ARO-CFB is also applicable or could be used in those renal disease populations, potentially in some of the hematologic complement-mediated indications as well. We think based on what we've seen so far with ARO-C3 that it stacks up pretty well against the other complement-mediated drugs approved or being studied in the renal indications in terms of proteinuria reduction.

We talked about the 41% reduction in proteinuria with ARO-C3. I think that relative to what else is out there is pretty competitive, particularly when you look at the infrequent dose administration that can be used with an RNAi dosing every three or every four months. That could have some advantages.

Operator (participant)

Thank you. Our next question comes from Andrea Newkirk of Goldman Sachs. Your line is open.

Andrea Newkirk (Biotechnology Equity Research)

Good afternoon. Thanks for taking our question. James, maybe one for you as you think about entering the obesity space. How are you thinking about advancing both ARO-ALK7 as well as ARO-INHBE through clinical development? Do you have interest or capacity to advance both, or would you look to make a decision of one versus the other following the initial data sets?

James Hamilton (Chief Medical Officer and Head of R&D)

Sure. Yeah. Our thoughts with those from a cost standpoint, it does not cost us that much to do the preclinical and at least the phase one development. We have ARO-INHBE, which targets the hepatocyte expression, uses the so-called GalNAc technology for delivery. That technology is pretty well vetted. We know what the safety profile, at least of the platform, is. We know that we should be able to knock down the gene target in the hepatocyte. In contrast, ARO-ALK7 uses a completely different platform. The animal data look really compelling with that molecule, but the platform has never been in humans before. Presumably, there is a little bit more risk there just because the platform has not been de-risked.

Our thought was to take both of those through phase one and then get a look at the data, both the safety and the PD and efficacy data, and then choose one to move forward. There may be opportunity for partnership either with one or both of those potentially. That was the thought of why we brought both of them into the clinic. Let's also be clear. I do not expect these to be our last two obesity assets with our ability to address adipocytes and our ability to address potentially CNS via this blood-brain barrier platform that we've got. There are a ton of really compelling metabolic and obesity targets that I think you'll see coming down the pike in the near term as well.

Andrea Newkirk (Biotechnology Equity Research)

Okay. Thank you so much.

James Hamilton (Chief Medical Officer and Head of R&D)

You're welcome.

Operator (participant)

Thank you. Our next question comes from Luca Issi of RBC.

Your line is open.

Luca Issi (Senior Biotechnology Analyst)

Oh, great. Thanks so much for taking my question. Congrats on the progress. Maybe, Bruce, circling back on a prior question, can you just maybe remind us how you're thinking about SHASAT-5 study design, what patients will you enroll, and maybe most importantly, how many patients do you need to actually hit the stats? If you can talk about powering assumptions, that would be much appreciated. Then maybe bigger picture on Plozasiran, Chris, how are you thinking about commercialization of the molecule ex-U.S.? Are you planning to do that by yourself, or are you still looking for a partner? Any thoughts there? Much appreciated. Thanks so much.

Bruce Given (Interim Chief Medical Scientist)

Yeah. Again, this trial will be, we believe, the first-ever trial where we're demonstrating a benefit in pancreatitis as the primary endpoint.

It's similar to a MACE trial from the standpoint of we're going to count events, and when we hit a certain number of events, we'll analyze. We haven't yet divulged what that number of events is. I think we probably will in the future, but so far, we haven't. We have a pretty good idea of, obviously, what that is. We also haven't said how many patients we're targeting. Again, my guess is that we may continue to enroll depending on sort of what the rate of pancreatitis is that we're seeing in the early days. The trial itself is a trial enriched from the perspective that it requires that patients have had a history of pancreatitis, including a history of pancreatitis in the recent past, which, those patients are at higher risk of pancreatitis than hypertriglyceridemic patients that have never had a pancreatitis event.

But again, no one's ever done a trial like this before. Understanding exactly what the observed risk will be is something that we'll get some understanding. Of course, I'll be blinded, but we'll get some understanding as the trial gets underway and gets moving. That will sort of determine. It is certainly not the size of a CBOT or anything like that. It is much smaller given the reduction in pancreatitis we saw in Palisade, for instance. We have not—I think we'll give more detail in the future, but we're not ready to give all the deep detail at this point. Hey, Luca. Regarding your question on Plozasiran, as you know, we're full speed ahead in the U.S. for FCS and eventually SHTG, hopefully. Rest of the world, we are open to finding partners. We are preparing right now in Europe.

Andy, do you want to discuss how we're approaching that right now?

Andy Davis (SVP and Head of Global Cardiometabolic Franchise)

Yeah, Luca. We think the European markets in particular, the large four European markets and the U.K., lend themselves extremely well to commercialization for a rare disease like FCS. Many of these patients on their patient journey are triaged through a small number of centers of excellence. With limited infrastructure and resources, we believe we're able to help these potential FCS patients through those centers of excellence. As far as priority markets outside the U.S., those large markets in Europe and the U.K. and also Canada are a priority for us.

Luca Issi (Senior Biotechnology Analyst)

Got it. Thanks so much, guys.

Andy Davis (SVP and Head of Global Cardiometabolic Franchise)

Good. Thank you.

Operator (participant)

Thank you. Our next question comes from Edward Tenthoff of Piper Sandler. Your line is open.

Edward Tenthoff (Managing Director and Senior Research Analyst)

Okay. Thank you very much. Appreciate taking the question.

Important to note that you guys are CDER-reviewed, not CBER-reviewed. Do you anticipate an adcom or anything like that? What other steps are you taking in preparation for hopeful approval and likely launch? Thanks.

Bruce Given (Interim Chief Medical Scientist)

As far as the adcom goes, we've not been advised that there's an expectation for an adcom. At this time, we don't think that an adcom's in our future. As you probably know, I mean, the agency could change their opinion on that at any time if data develops in their analysis that makes them want to have an adcom for some reason. At this point, there's no anticipation of an adcom. The likelihood, I suppose, is lower every day we get closer to potential approval. We can't say we won't have one because they could decide at any time that they need one. We don't see it, though.

Edward Tenthoff (Managing Director and Senior Research Analyst)

Then the second part, I guess, is the second part was what actions are we taking to be ready for launch?

Chris Anzalone (President and CEO)

Yeah. I mean, I guess we talked a bit about that. From the R&D perspective, we have an educational mission under our medical affairs function and MSLs. That is very much just a matter of helping physicians be ready for a new drug coming into the FCS space when really there has not been any promotional effort up until the Ionis launch ever, really, for FCS. There is a big challenge in this space.

Edward Tenthoff (Managing Director and Senior Research Analyst)

Bruce, do you think the launch from Ionis is helpful in terms of sort of priming the pump a little bit there and then hopefully you guys coming in with a better therapy after? Thank you.

Bruce Given (Interim Chief Medical Scientist)

I think any orphan disease that has had essentially no approved therapies has always benefited from as much educational effort as you can get. History tells us, and I could quote many examples where the first approved drug really did not fully open that market. It often takes two or more companies to be promoting into a space, even an orphan space, to really get those markets to open up and grow. It is paradoxical because people might think you are better off being alone. In many ways, you are actually better off when there are multiple competitors. Now, yes, they fight it out for who gets the most share in the end. Actually, the more educational noise, the better when you are trying to open up a market like FCS. The exact same will be true for SHTG as well. More noise is better than less.

Yes, the best drug usually wins the share battle, but the pie gets much bigger with more education going on.

Edward Tenthoff (Managing Director and Senior Research Analyst)

That's really helpful. Thanks.

Operator (participant)

Thank you. Our next question comes from Mike Ulz of Morgan Stanley. Your line is open.

Mike Ulz (Executive Director and Biotechnology Equity Research)

Good afternoon. Thanks for taking the question. Maybe just another one on Plozasiran and the upcoming FCS launch. Sounds like you guys are making good progress in launch prep, but maybe you could just talk about or remind us the U.S. patient population and then some of the progress you're making identifying patients and if there's any way to try and accelerate that trend. Thanks.

Andy Davis (SVP and Head of Global Cardiometabolic Franchise)

Yeah. Thanks for the call, Mike. You'd be familiar with the epidemiological data suggesting that the prevalence of FCS in the United States would be one to 13 per million.

That spans anywhere from the hundreds of patients in the U.S. to mid-single-digit thousands. We think the variability around the single-digit thousands is really around whether you think about genetic FCS or even clinically diagnosed FCS. That is why there is some variability there. As a reminder, of course, in Palisade, we studied Plozasiran in both the genetically confirmed and clinically diagnosed patients and showed similar results. That is how we think about the broader market for FCS. As far as patient identification, I would say that our internal team here, our analytics team, and our marketing team is comprised of seasoned professionals who have cut their teeth in cardiometabolic and lipids specifically and are really using the latest technologies to patient find and ultimately to support those individuals who may have FCS and do not know that they have FCS.

Patient finding will be absolutely critical as we move into this space, as it is with any ultra-rare condition. We feel like we have the people and the capabilities to excel there.

Mike Ulz (Executive Director and Biotechnology Equity Research)

Got it. Thank you.

Andy Davis (SVP and Head of Global Cardiometabolic Franchise)

Thank you.

Operator (participant)

Thank you. Our next question comes from Mayank Mamtani of B. Riley Securities. Your line is open.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Equity Research, and Senior Biotechnology Analyst)

Yes. Good afternoon, Dean. Thanks for taking the question. Congrats to Ken for 16 years of service. Just maybe on the INHBE, a quick follow-up on the SAD data. Is there anything that you can or are willing to share, what maybe the learnings there were? On the MAD, part 1b and part 2, which is the combination, are those sequential or are they happening in parallel? I have just one follow-up for Ken, if I may. Yeah, sure.

James Hamilton (Chief Medical Officer and Head of R&D)

On the second part of the question, the combo studies and the non-combination studies, those are in parallel. Those are enrolling at the same time. I think in terms of what we can share, as Chris said earlier, we'll have to wait and see later this year what kind of data that we have available.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Equity Research, and Senior Biotechnology Analyst)

Okay. Understood. Ken, what partnership-related milestones are factored in this 2028 runway guidance? If you could maybe just clarify that. Thanks for taking our question and congrats, Ken.

Ken Myszkowski (CFO)

We've included the near-term milestones that we expect to get from Sarepta. Beyond that, there are other milestones. If we think they are probable of happening, then we've included those as well. We're not providing specifics on that.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Equity Research, and Senior Biotechnology Analyst)

Understood. Thank you.

Operator (participant)

Thank you. Our next question comes from Mani Farouhar of Leerink. Your line is open.

Mani Faroohar (Senior Research Analyst)

Hey, guys. You have Ryan on for Moni. Thanks for taking our question. Maybe just a quick financial one. I noticed you guys started to pay down that credit facility. Just wondering, should we expect that to continue over the course of the year, or was this more of just a one-time paydown to kind of bring that total down? Thanks.

Ken Myszkowski (CFO)

The one-time paydown was because of the Sarepta agreement. There will be future payments on that, but it's only related to times when we have cash flow coming in from milestones and such. It's only attributable to when we have some cash that's coming in.

Mani Faroohar (Senior Research Analyst)

Got it. Thanks.

Operator (participant)

Thank you. Our next question comes from Brendan Smith of TD Cowen. Your line is open.

Brendan Smith (Director, Senior Analyst, and Equity Research)

Hey, thanks for taking the question, guys.

Maybe just similar to a couple of earlier questions, I wanted to ask a little bit more on your latest thing for the CNS assets. Is the plan as of today to carry those forward internally, or are you already kind of thinking that these could potentially be partnered or licensed? Maybe more specifically for MAPT, are there any subsets of the AD population you'll look to target first? Just kind of wondering how we should think about the potential design there and segmentation of that market. Thanks, guys.

Chris Anzalone (President and CEO)

Sure. Dean, why don't you take the MC, and then I'll take the broad question.

Sure. The second question on MAPT, not at this point for the phase one design. It's not entirely finalized yet, but suffice it to say that the main goal of the study will be to evaluate safety and measure PD markers of knockdown of tau and various subtypes of tau in different populations. We've not specifically pinned down subtypes of AD that we plan on studying. Regarding your first question, as we talked about, our first three candidates in the clinic are expected to be MAPT towards the end of this year for Alzheimer's, HTT, [Bryington], that's already licensed to Sarepta. We expect that to be this year too by the end of the year. In the first part of next year, Alpha-synuclein for Parkinson's. HCT is already off the docket for right now. We've got Alpha-synuclein and MAPT. We've always been clear to potential partners that MAPT is off-limits right now.

We view that as a potentially very high-value target. Look, we don't know yet if this CNS-BBB platform is going to translate from animals to humans. We will see. This is a bet that we're making, but we think it's a good one given the data we've seen in the preclinical models and given the validated nature of MAPT as a target. We're holding on to that for right, at least for right now. We'll see where that goes in the future. Alpha-synuclein, look, we like that target a lot. If a partner comes in with the right kind of deal, we would certainly consider partnering that so that we don't feel quite as strongly, at least in the near term, as we do on MAPT. Those are the first three of we think many.

Once we have this platform validated in humans, we're going to run. There's a number of additional good targets that we are developing internally. And my expectation is if we see that this translates as we hope it does, you're going to see a large number of additional CNS targets, some of which we'll hold on to, some of which we'll partner.

Brendan Smith (Director, Senior Analyst, and Equity Research)

Got it. Sounds good. Thanks, guys.

Chris Anzalone (President and CEO)

You're welcome.

Operator (participant)

Thank you. And our next question comes from Prakhar Agrawal of Cantor Fitzgerald. Your line is open.

Prakhar Agrawal (Managing Director)

Hi. Thank you for taking my questions and congratulations on the quarter. So Ionis has the phase three sHTG readouts coming soon. If Ionis achieves statistical significance on pancreatitis events in phase three, how does that impact your development strategy to have the pancreatitis reduction data in the label around the time of launch versus waiting for SHASTA-5 to read out?

Anything else you will be focusing on when Alzheimer's sHTG trial reads out? Thank you.

Bruce Given (Interim Chief Medical Scientist)

It will be interesting to see whether they can accrue enough events to actually achieve anything there. We will see. From our perspective, that was not a good enough bet for us to rely on that, especially in Europe, to do that. Our program is also designed to look at pancreatitis events, albeit we look at definite pancreatitis. We do not look at possible cases. We just do not think that we think there is a high chance that that is going to worry the health technology authorities in Europe. We really felt that it had to be definite pancreatitis from our perspective. We are adjudicating any pancreatitis that occurs in SHASTA-3 and SHASTAs4.

We have written those studies so that we can merge those two trials for the purpose specifically of looking at pancreatitis. We intend to do that. Ultimately, that for us feels like a high-risk strategy in all comers SHTG. I think that a purpose-built study rather than a secondary endpoint will be much more agreeable to the payers, the most sophisticated, difficult payers in the world, which are mostly the European payers and some other places as well.

Operator (participant)

Thank you. Our next question comes from David Lebowitz of Citi. Your line is open.

Ike Lee (Biotech Equity Research)

Hi, everyone. This is Ike Lee on for David Liebowitz. Thank you for taking our question. We have one on pricing for Plozasiran. How do you think about launching this in FCS and then waiting for the SHTG data in the interim?

We expect something like zodasiran also getting a label expansion in SHTG and therefore having to move from an ultra-rare pricing scheme into something that is a little bit cheaper. Is that something on your mind yet as you look towards commercialization? What are your thoughts on potentially having to navigate the ultra-rare versus much more prevalent disease pricing schemes? Thanks.

Chris Anzalone (President and CEO)

Sure. Look, I think we can have and we are having transparent and open conversations with payers. Should we be lucky enough to have plozasiran approved in FCS, it's a relatively narrow population. And so we would need to get reimbursed at a high level that is commensurate with an ultra-rare. Should we be lucky enough to have SHASTA-3 and SHASTA-4 read out well and get approved for a broader label, of course, we would bring the price down. Conceptually. So that we know.

On a more granular level about what those two prices are, we just do not know at this point. It is going to depend upon a lot. Conceptually, that is our strategy, but I cannot get more granular than that at this point.

Operator (participant)

Thank you. I am showing no further questions at this time. I would like to turn it back to Chris Anzalone for closing remarks.

Chris Anzalone (President and CEO)

Thanks, everyone, for joining us today. It is bittersweet to end this call. This is the last time that I am going to have Ken on my left during these calls. As we mentioned in the prepared remarks, I really appreciate his great work for the last 16 years. I am going to miss having him here. Having said that, I am, of course, excited to have Dan on board today to my right, maybe to my left once Ken is gone.

Thank you all for joining us today.

Operator (participant)

This concludes today's conference call. Thank you for participating, and you may now disconnect.