Arrowhead Pharmaceuticals - Earnings Call - Q4 2015

Transcript

Speaker 0

Ladies and gentlemen, welcome to the Arrowhead Research Corporation Fiscal twenty fifteen Year End Financial Results 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

Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal twenty fifteen fourth quarter and year ended September 3035. With us today from management are President and CEO, Doctor. Christopher Anzalone, who will provide an overview of the year Bruce Given, our Chief Operating Officer and Head of R and D, who will discuss our clinical programs and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to your questions.

Before we begin, I would like to remind you that comments made during today's call may 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, but are not limited to, statements regarding the anticipated safety and or efficacy of ARK-five twenty, ARK-five twenty one, ARK AAT, ARK F12 and our other programs as well as anticipated timing for study enrollment and completion and the potential for regulatory and commercial success. They represent management's current expectations and are inherently uncertain. Thus, actual results may differ materially.

Arrowhead undertakes no duty to update any of the forward looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's Annual Report on Form 10 ks and the company's quarterly reports on Form 10 Q for additional matters to be considered in this regard. With that said, I'd like to turn the call over to Doctor. Christopher Anzalone, President and CEO of the company. Chris?

Speaker 2

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. During fiscal twenty fifteen and the recent period, Arrowhead made dramatic progress with our clinical stage drugs, our rapidly expanding pipeline and on the underlying technology platform that enables us to develop what we think are best in class RNAi therapeutics. We accomplished some important multi year goals and before discussing some of the specifics, I want to spend a moment to provide context about how you should view the company now versus a year ago. We've always said that the key benefit of developing a suite of RNAi therapeutics is that data and experience from each program can be leveraged to inform the development of new drugs.

Each of these new drugs can potentially have progressively lower risk and a faster path from discovery to human trials if they are built on an underlying delivery platform humans. Once this validation is achieved in one candidate, it may provide better certainty in future candidates. We believe that recent data on the ARK-five twenty drug candidate against chronic hepatitis B infection validate our DPC delivery system and show definitively that we can achieve robust well tolerated knockdown of target genes. So what do we show? As you probably know, we've been very active over the last few months discussing new data on ARK-five twenty and our growing HBV program.

We hosted an Analyst and Investor Day in September, presented data in several presentations at the ASLD Liver Meeting last month and presented additional data during two presentations at the HepDAR conference last week. These presentations included data from the ARK-five twenty clinical program as well as from a multi dose study in chimpanzees. These studies were going on in parallel which allowed us to learn a lot about ARK-five twenty in the HBV viral cycle. Some of these new concepts challenge long held beliefs about HBV and we believe push the field forward. First from our clinical studies, we showed that Arrowhead's proprietary DPC platform can consistently and deeply silence target genes in humans.

In HBV e antigen positive patients who were not previously on antiviral treatment, a single four mgkg dose of ARK520 showed reductions in circulating e antigen of up to 98% and reductions in surface antigen or S antigen of up to 99%. For those who are around last year, you'll remember that there was a commonly held view on Wall Street that a one log or 90% reduction in S antigen would be seen as a positive result. We far exceeded that level. The clinical study combined with insights from our work in HBV infected chimpanzees also helped us to identify subpopulations of HBV patients based on relative levels of viral cccDNA versus viral DNA integrated into the host genome. Specifically, we learned that e antigen negative patients and patients that have been on chronic therapy with nucleoside analogues or NUCs tend to have lower levels of viral ccc DNA.

We also learned that DNA that integrates into the patient's genome becomes a significant source of S antigen production. ARK-five 20 was specifically designed to target all mRNA transcripts and thus all proteins produced by HBV CCC DNA, but not necessarily those produced by integrated DNA. We believe this is why we were seeing less S antigen reduction in E negative and treatment experienced patients. This is a key finding that helps to inform the direction of the program. So where does this position ARK-five twenty as a potential therapy of chronic HBV?

Our data suggests that be very we potent in e antigen positive patients who have not been on long term nuke therapy. This is a very large patient population. It's thought that this population makes up approximately one half of chronic infections in The U. S. And about one third in Europe.

It is believed that the Asian populations will be similar to The U. S. In this respect. So taken together this represents a huge global population. If this were the only patient type that we could address and ARK-five twenty could enable consistent functional cures, it would represent an extremely large market opportunity for a company of any size.

But we think ARK-five twenty has potential even outside this population. Based on our clinical and chimp data, we would expect to moderately reduce S antigen production after a single dose of ARK-five twenty and deeply suppress all other viral proteins in other populations. We have good data indicating very deep reductions of E antigen and correlated antigen production and we would expect this to carry over to X antigen and other proteins. These viral proteins are all immunosuppressive and involved in various parts of viral lifecycle, deeply suppressing them particularly over time under multiple dosing, could have destabilizing effects on the virus and help achieve functional cures. It is not unreasonable to expect that the virus requires production of at least some of these proteins to enable chronic infection and evasion of immune control.

Therefore, blocking them as we have shown with ARK-five twenty could have important therapeutic effects. What if we're wrong about this and ARK-five twenty is only capable of addressing the admittedly large population of e antigen positive patients who have not been treated with NUCs. What about the rest of the market? We have nominated ARK-five twenty one to address these populations as an insurance policy for ARK-five twenty and to better ensure we can address more of the HPV market. ARK-five twenty one targets both cccDNA and integrated DNA.

Our chimpanzee study showed that in E negative animals predicted to have higher relative levels of integrated DNA administration of the new RNAi trigger in ARK-five twenty one led to a further two logs of S antigen reaction. This served as a powerful proof of concept that between ARK-five 20 and ARK-five 21, we can potentially address all of the HPV market. We expect to file an IND or equivalent for ARK-five 20 by the middle of twenty sixteen. Turning to our chimpanzee study, we believe this was the longest and most comprehensive study of chronically HBV infected chimpanzees ever conducted. The wealth of data that continues to emerge from this study has been invaluable to us as we plan and execute our HBV development programs, some of which we have discussed publicly and some we have not.

We have made multiple presentations recently, but I want to highlight a key finding that we just discussed last week at the Heptar conference. We found that after treating chronically infected chimpanzees with between six and eleven monthly doses of ARK-five twenty in combination with nucleoside analogs, seven of nine chimpanzees showed signs of immune reactivation during the ARK-five twenty treatment phase. To review, the hepatitis B virus causes infected cells to produce several proteins that suppress the host immune system and therefore enable chronic viral infection by removing immune control. Our goal with ARK520 is to reduce expression of all those proteins and thereby enable reconstitution of immune system. Our Chimp data demonstrated that we can do this and it is a real breakthrough.

We consistently enabled immune reconstitution not by directly stimulating the immune system, which is challenging and carries with it ancillary risks, but by essentially turning off the virus. As we said in the press release announcing these data, this is a big deal. This finding represents a strong proof of principle that ARK-five twenty can begin the process of waking up the immune system even in those genes without deep reductions in S antigen, which can potentially lead to immune control and functional cures. We've been asked questions over the last few years, what evidence do you have that ARK-five twenty can consistently lead to a therapeutic immune response? Our answer was that it was a theory that made sense and that many experts subscribed to, but we had no direct evidence of it.

The Chimp data now provides that evidence. Between our extensive Chimp data and our ongoing clinical data, we believe we have clearly established ourselves as leaders in HBV. Small biotech companies at their best strive to lead a field in the translation of science from the lab to development of new therapeutic agents. We are clearly doing that, but we are also leading the scientific community in understanding many aspects of the viral life cycle and that is uncommon. We have changed the HBV textbooks and this is important for the entire field and of course gives us tremendous ammunition in developing therapeutics that may lead to consistent functional cures.

As I mentioned, we have discussed some of these data and some we have not. We have a clear lead in developing a potentially powerful therapeutic aimed at inducing functional cures and our deep understanding of the virus helps us increase this lead. So we have clear time, data and knowledge advantages over our competitors, but safety has to be the overriding priority in any drug development. We must ensure that our products have an appropriate safety profile. So where do we stand on this?

ARK-five twenty has now been given to over 100 people and we continue to see no signs of end organ toxicity. We have had no discontinuations due to the drug and have seen no adverse events rated as serious or severe. ARK-five twenty has been very well tolerated. I would put our safety profile up against any of our competitors in the HBV and the RNAi fields. This has important ramifications not only for ARK-five twenty, but any candidate that we develop using the same DPC.

These include ARK-five twenty one, ARK AAT and ARKF12. We see this as an important risk mitigator and therefore a significant value driver. With these exciting data behind us, we now focus on our ongoing multiple dose and combination Phase 2b studies. During 2015, we initiated five multiple dose studies of ARK-five twenty in The U. S, Europe, Asia, Australia and New Zealand.

Those studies are HEPARC-two thousand and two, 02/2003, 02/2004, 2000 and eight which we also call Monarch and an open label extension to two thousand and one. Bruce will discuss these during his clinical update. Beyond ARK-five twenty, it has been a similarly productive year for us in terms of platform development and pipeline expansion. The platform front, we acquired Novartis' entire RNAi business. We anticipate this acquisition will provide us with expanded freedom to operate, proprietary technology that appears to enhance the activity of RNAi triggers and a license to non delivery Alnylam RNAi IP for 30 targets.

We now have additional flexibility to optimize each new candidate using the most effective RNAi trigger design and modifications. In terms of pipeline expansion, during 2015, we added multiple internal programs. We initiated a Phase one study of ARK AAT against alpha-one antitrypsin deficiency or AATD, which is a rare genetic disorder that can lead to lung damage and liver disease. During the Phase one study, we met a predetermined level of knockdown in healthy volunteers and transitioned the study to enroll patients with AATD. ARC AAT was also granted orphan drug designation by the FDA this year.

Beyond our two clinical stage programs, we added and presented data on the following preclinical programs. As discussed earlier, ARK-five twenty one is a new therapeutic in Arrowhead's HBV portfolio that was developed to target both cccDNA derived mRNA transcripts like ARK520 as well as those from HBV DNA that has integrated into host DNA. ARKF12 is designed to reduce the production of Factor XII with the goal of providing a prophylactic treatment for hereditary angioedema or HAE and thromboembolic diseases. ARKHIF2, which is that is designed to reduce the production of hypoxia inducible Factor XII alpha or HIF2 alpha to treat clear cell renal cell carcinoma. It is the first drug candidate using a new DPC delivery vehicle designed to target tissues outside the liver.

An ArcLPA that is designed to reduce production of Apolipoprotein A or ApoA, a key component of lipoprotein A or Lp which has been genetically linked with increased risk of cardiovascular diseases. ArcLPA employs Arrowhead's new hepatic delivery format being developed for subcutaneous administration. We have clearly been very busy this year. So what does this mean for the company and for our shareholders going forward? Arrowhead is a substantially more mature company from a development standpoint as well as from an investment standpoint.

Our pipeline is more diverse with an additional clinical program and multiple candidates progressing toward the clinic. Our underlying technology, the DPC delivery systems has achieved clinical proof of concept with ARK-five twenty. We have expanded beyond just IV administered liver targeted therapeutics and now have a subcutaneous candidate and an extrahepatic candidate. Our toolbox of RNAi chemistries has expanded, giving us additional capabilities and flexibility. With that overview, I'd now like to turn the call over to Doctor.

Bruce Given, our COO and Head of Development. Bruce?

Speaker 3

Thank you, Chris, and good afternoon, everyone. As Chris mentioned, we presented data on ARCH520 at multiple venues over the last few months. These presentations are available on the Events page of our website if you would like more information. But let me take a moment to highlight some of the key findings. In the HEPPARC 2001 clinical study, fifty eight patients with chronic HBV received doses between one and four mgs per kg of ARK520 in seven cohorts.

The cohorts varied by ARK520 dose, E antigen status, and prior NUC treatment status. The primary objectives of the study were to determine tolerability and to measure the depth and duration of surface antigen reduction in response to a single dose or two doses in the case of cohort six of ARK-five twenty in combination with entecavir. Arrowhead also assessed additional secondary and exploratory endpoints. On the safety side, ARK-five twenty was well tolerated with no serious or severe adverse events, no dose limiting toxicities, no discontinuations due to the drug, and a modest occurrence rate of AEs that were all deemed unrelated to study drug by the principal investigator. No AE occurred more than once.

There was a low occurrence rate of abnormal laboratory tests with no observed relationship to timing or dose. There were no laboratory changes believed to indicate drug toxicity. On the activity side, surface antigen was reduced substantially with a maximum reduction of 1.9 logs or 99% and a mean maximum reduction of 1.5 logs or 97% in treatment naive E antigen positive patients in cohort seven. Also in cohort seven, ARK-five twenty in combination with entecavir achieved maximum reductions of HBV DNA, E antigen, and correlated antigen of 4.3 logs or 99.995%, 1.7 logs or 98%, and 1.2 logs or 94% respectively. So clearly the drug has shown very good single dose activity.

Consistent with findings from our chimpanzee study, also presented at AASLD, variations reduction indicated that patients previously treated with chronic entecavir and patients that were treatment naive and negative for E antigen likely had lower levels of cccDNA derived mRNA transcripts. As such, E antigen positive treatment naive patients experienced a greater relative reduction in S antigen than patients that were E antigen negative or treatment experienced. We are now focused on our global multiple dose and combination Phase 2b studies, which are currently enrolling patients. These studies are as follows. The 2002 study testing ARK520 plus NUCs in NUC experienced E negative patients.

2003 is testing ARK520 plus NUCs in NUC experienced E positive patients. 2004 is our US only study testing NUCs plus R520 in NUC experienced E positive patients. The 2001 extension study is open to patients who were treated in our single dose 2000 and one study. We'll be testing R520 plus NUCs in E negative and E positive patients who were both NUC experienced and NUC naive when they entered the 2001 study. Unlike 02/1934, this study is open label, so we will have flexibility as to when we disclose data.

The final study in the series is 2,008 for our Monarch study. Let me say a few words about this study which, as with the others, is currently actively enrolling patients. We view Monarch as a test kitchen of sorts, in which we intend to assess various dosing regimens of ARK-five twenty in combination with other agents. It is a flexible, iterative design, so we can ask specific questions about ARK-five twenty in small open label cohorts and quickly initiate additional cohorts based on the answers that we get or the availability of new agents to be tested in combination. The goal of Monarch is to identify the recipes, if you will, that enable functional cures in patients.

Today the test kitchen only has a few ingredients to work with, ARK-five twenty, NUCs, and interferon. So the initial six cohorts that are enrolling now are looking at ARK-five twenty as monotherapy and in combination with NUCs and interferon. These cohorts are currently recruiting both e antigen negative and positive treatment naive patients and are stratified by HBV genotype. Based on data recently presented at HepDART, ARK-five twenty in combination with NUCs led to immune reactivation after multiple doses in seven of nine chimpanzees chronically infected with HPV. So we are very eager to see results as they emerge from Monarch and our other multiple dose studies.

As mentioned, Monarch is open label so we have flexibility as to when and how we disclose data. As far as additional ingredients for the test kitchen, there are definitely some other interesting agents and mechanisms that when ready, we would like to add to a monarch cohort. Stay tuned during 2016 on this front. Let's now turn to ARP five twenty one, the second drug in our HBV portfolio. As we've discussed, this drug takes the best RNAi trigger from ARK520 that targets all transcripts produced by viral CCC DNA and has a second trigger that targets the S antigen transcript produced by integrated DNA.

We are currently conducting GLP toxicology studies and manufacturing the drug supply to support clinical studies that we plan to begin in the middle of twenty sixteen. While the study protocols are still being developed, I do want to mention that it is our intent to have Phase onetwo development path that can hopefully get us to multiple dose data in patients quite quickly. Remember that we are using the exact same DPC as ARK-five twenty, and our experience and that of the investigators that have conducted the ARK-five twenty studies suggests that the safety profile should support an accelerated path. Let's now move to RKAT, our drug candidate for the treatment of liver disease associated with a rare genetic disorder alpha-one antitrypsin deficiency. We are conducting a phase one single dose escalation first in human study to evaluate the safety, tolerability, and pharmacokinetics of ARCA AT and the effect of circulating AAT levels.

The study has been enrolling in dose cohorts of six subjects each with participants randomized at a ratio of two active to one placebo to receive a single intravenous injection of either RKAT or placebo. The study consists of two parts, Part A in healthy volunteers and Part B in patients with the PIZZ genotype of alpha-1a trypsin disease. Part B is currently enrolling in Australia, Germany, UK and The Netherlands. We will continue to dose escalate in patients until we believe that RKAT is achieving maximal suppression of the AAT produced in the liver. With that, I'd like to turn the call over to Ken Myszkowski, Arrowhead's Chief Financial Officer.

Ken?

Speaker 4

Thank you, Bruce, and good afternoon, everyone. As we reported today, our net loss for the year ended September 3035 was $91,900,000 or $1.6 per share based on 57,400,000.0 weighted average shares outstanding. This compares with a net loss of $58,700,000 or $1.25 per share based on 46,900,000.0 weighted average shares outstanding for the year ended September 3034. Total operating expenses for the year ended September 3035 were $96,400,000 compared to $53,500,000 for the year ended September 3034. Net cash used in operating activities in fiscal twenty fifteen was $65,700,000 compared with $35,400,000 in fiscal twenty fourteen, an increase of $30,300,000 primarily due to higher R and D expenses of $24,100,000 reflecting higher drug manufacturing costs and higher clinical trial costs and progress of ARC-five twenty and ARC AAT.

Additionally, our salary and compensation related costs increased on higher headcount and general and administrative costs increased as a result of higher outside professional service costs. The change in operating expenses were additionally influenced by a charge of $10,100,000 for acquired in process research and development costs, a component of the accounting related to the Novartis acquisition. Turning to our balance sheet. Our cash and investments of cash were $98,800,000 at September 3035 compared with $177,300,000 at September 3034. The decrease in our cash and investments balance reflects the $65,700,000 cash used in operating activities as well as a $10,000,000 cash payment related to the Novartis acquisition and $2,000,000 in capital expenditures.

For the quarter ended September 3035, our cash used in operations was $12,000,000 compared to 13,100,000.0 during the quarter ended June 3035 and cash used in operations of $16,400,000 in the quarter ended March 3135. Our common shares outstanding at September 3035 were 59,500,000.0 and would be 62,200,000.0 assuming conversion of the preferred shares outstanding at September 3035. With that brief overview, I will now turn the call back to Chris.

Speaker 2

Thanks, Ken. We feel very good about where we are today and we expect considerable progress over the next several quarters and beyond. We've been asked about capital needs, so I wanted to address that briefly here today. We are not prepared to give forward guidance on our cash burn since it will depend largely on the number, size and speed of enrollment of the clinical trials we have opened at any given time. I would however like to go through a list of goals we believe that we will hit during calendar twenty sixteen and based on our internal forecasting can all be accomplished with the cash we currently have on hand.

These goals are one, fully enroll the currently planned six Monarch cohorts two, add new Monarch cohorts three, enter into one corporate collaboration in Monarch with a new compound for combination therapy four, complete enrollment of HEPARC-two thousand and two five, complete enrollment of HEPARC-two thousand and three six, complete enrollment of HEPARC-two thousand and four seven, complete enrollment of HEPARC-two thousand and one open label extension eight, file an IND or equivalent

Speaker 5

for

Speaker 2

ARK521 nine, file an IND or equivalent for ARKF12 10, complete Phase one study of ARK AAT in healthy volunteers and patients 11, initiate longer term multi dose study of ARK AAT and 12, report additional preclinical data for ARK LPA and ARK HIF2. As you can see, we have many events over the coming year that are opportunities to drive substantial value creation for our shareholders. I would now like to open the call up to questions. Operator?

Speaker 0

Thank you. And our first question comes from the line of Michael Yee with RBC Capital Markets. Your line is now open.

Speaker 6

Good afternoon. This is Judy Lujan for Michael Yee at RBC Capital Markets. Congrats on the quarter and thanks very much for taking the question. Two questions if you don't mind. One is thanks for the overview on all of your studies 02/1981.

And I was wondering with these multi dose studies could you give us a sense of when we might get data, when data will start rolling in?

Speaker 2

Yes. Thanks very much for the question. So it's a difficult question just because we don't know how fast we can enroll these. We'd like to release data in a proper way at scientific conferences. I expect that we could top line those data before conferences, but it's hard to know how fast we can get these all enrolled and then disclose.

And so I can't give you too much guidance on most of those. I can say however as Bruce pointed out in the prepared remarks that the launch or extension of 2000 and one as well as Monarch are both open label studies. And so we'll have we should have good flexibility on when and how we can disclose those data. We don't have to wait for the study to finish and to break the blind. We will have nearly real time data on how those are going and so we have some flexibility on disclosing those.

So I would just say stay tuned. It is we will as I mentioned for our goals in 2016, we expect to finish enrolling many of those studies in 2016 and I think we can be talking about some of those data also in twenty

Speaker 6

Great. So just to follow-up on that. So basically, with your especially with your open label extension studies, we should be getting some kind of interesting data by next year ASLD then?

Speaker 2

We have the flexibility to do that. Again, I can't commit that we will be presenting data at ASLD because A, we don't have the power to ensure that. Those are as you know, those are peer reviewed slots and so we'll see. And second, we just don't know on timing. My point though is that with those two studies, we expect those to be reasonably rapid enrollers and we should be able to see data on almost real time basis.

So we have the flexibility to provide interim data So just stay tuned on that.

Speaker 6

Great, thanks. And one last question if you don't mind. So previously you had also talked about recognizing the need for combination therapy and you talked a little bit collaboration partnership. Could you give us an update on where you are, where your thoughts are? Like are you actively engaging in talks right now?

And do you have a lot of conviction on going into collaboration partnership next year? Any

Speaker 2

Sure. Color

Speaker 0

here would be

Speaker 2

So we do have good conviction on entering a collaboration in an additional Monarch cohort next year. Here's what we have going for us. We've got a drug in ARK-five twenty that clearly works. It does what it's designed to do. It is active.

Is it efficacious? I don't know. That will depend upon whether or we see functional cures, but it is knocking down the production of proteins that are transcribed from cccDNA and it is clearly well tolerated. So we have I think a reasonably large lead in this field. So as there are other agents that are ready to be tested, we are a pretty good candidate because we are farther along than other people and because we have what appears to be right now a well tolerated drug.

So we feel quite confident that will happen next year. We are talking to an awful lot of people who are developing compounds And so they know who we are and they have a good understanding about what we're doing. So again, I'm confident that we will do something with a collaboration in Monarch in 2016.

Speaker 6

Thanks so much.

Speaker 2

Sure.

Speaker 0

Thank you. And our next question comes from the line of Yang with Jefferies. Your line is now open.

Speaker 7

Hi, this is Carmen on for Yun. Thanks for taking the questions. So you mentioned the human data presented in September showed greater treatment effect in the nuc naive E antigen positive patients. And then last week we saw more data in chimps showing evidence of immune reaction across E antigen positive and negative chimps. Could you just help us kind of reconcile this, and maybe talk about the implications of the findings in chimps on data observed in humans to date and your future, trial design?

Speaker 2

Sure. Thanks very much. That's a great question. So we never expected immune reactivation or anything like that after a single dose in humans. Remember these patients have been immunosuppressed for decades, many of them.

And so we always view that as asking way too much of the drug to see that kind of effect after a single dose. Now with the chimps, they've also been infected for quite some time and they've been immunosuppressed for quite some time. And so we also would not have expected with them to see immune reactivation after a single dose. But remember those chimps were treated monthly for between six and eleven doses. So they had more of a chance to their immune system had more of a chance to reconstitute itself.

And so I think that's the big difference there. But also now keep in mind about the chimp. And I think this puts the data into some perspective. There has never to our knowledge been a report of a chimp curing itself or functionally curing itself. And of course that's quite different than humans.

Humans can spontaneously functionally cure. So while the chimps we think are really good models for the life history or the life cycle of the virus and physiology of the animal in relation with it may be that you can only go so far with the chimp and you can't actually get to that cure. Because again, not only have we not seen spontaneous cure in a chimp, we haven't even seen a therapy derived or therapy induced functional cure in a chimp. So the fact that we were able to reawaken that immune system I think is a really big thing in those animals. And again, the fact that we didn't just see it in one or two chimps, but we saw it in seven of nine is a really big thing.

So the drug is doing what we wanted it to do, not only in chimps but also in humans and the chimps give a hint on how it may perform in humans upon multiple dosing. We're really looking forward to those data, not just in E positive NUC naive patients, but really in all patients. It's going to be really interesting to see how this plays out. As we mentioned in the prepared remarks, we are we should be knocking down production of all viral antigens. There's been an awful lot of focus on this S antigen theory, if you will, that you need to reduce level of S antigen to enable the immune system to reconstitute itself and then to control the virus.

And that may be the case, but we think it's probably even more complicated than that. And there is increasing information, increasing data that this X antigen as well as others could be important. So the fact that we have a really good complete or we expect a really good complete response with all of those proteins I think is going to be important even beyond again the new naive positive patients. So we are hopeful that the GIMPs are giving us some clue as to what we're going to see in humans, but we'll just have to wait and see. I think that twenty sixteen is going to be a fascinating year for ARK-five twenty and ARK-five twenty one.

Speaker 7

Great. Thank you very much. And then one quick follow-up. On ARK AAT, you mentioned you hope to initiate a long term study in 2016. Do you have any sense for when we might be able to see some data from the Phase I trial that's ongoing?

Speaker 2

Yes. So I don't have a good answer for that right now because we're still enrolling We have as you know, we were enrolling that entirely in Australia and then we expanded throughout multiple sites in Europe to ensure that we have a good wide net to catch as many patients as we can. And so I think that we've got we have structurally we've got a good design to bring in the patients we need. But even so, I just don't know when that's going to be complete. And we also don't know how high dose we're going to go.

We're exploring that right now. So stay tuned on that. My hope is that once that's finished we can and the data are analyzed that we top line the data and then present a more fuller dataset at a scientific conference, hopefully sometime in 2016.

Speaker 7

Okay, great. Thank you very much.

Speaker 2

You're welcome.

Speaker 0

Thank you. And our next question comes from the line of Donald Hutchison with State Farm Financial. Your line is now open.

Speaker 8

Good afternoon. Read recently where J and J purchased a early stage company involved in hepatitis B, I believe by taking a pill. I'm just wondering whether given the obvious industry interest in HEP B, Arrowhead has ever fielded any interest from larger companies along those lines?

Speaker 2

Yes, thanks for that question. So we're talking to companies large and small about ARC-five twenty, about ARC-five twenty one and about potential collaborations as appropriate in Monarch. And so while we're not going to speak to any particular discussions that we have with companies. One can be comfortable that we are speaking with all of the players and that we're not hiding the ball here. I think we're seeing some pretty exciting things between the Chimp study and our clinical study.

We've got we think a pretty exciting mode of action. We have a drug that appears to be quite well tolerated so far. And we now have an industry that has woken up to the big opportunity and the big unmet medical need of hepatitis B. So we are speaking with a number of companies at all times.

Speaker 8

Any thoughts about characteristics of future or whatever about the hepatitis B

Speaker 3

pill?

Speaker 2

It's we are ways away from a pill providing a functional cure. We haven't seen anything we haven't seen any oral drug that we think is quite close to that. So no, we have no opinion on a pill that will magically solve hepatitis B anytime soon.

Speaker 0

Thank you. And our next question comes from the line of Ted Tenthoff with Piper Jaffray. Your line is now open.

Speaker 5

Great. Thank you very much. Apologies if I was disconnected actually from the call earlier, so if my question has been answered. I guess I kind of had a sort of higher level question. With other companies developing RNAi approaches, how do you sort of stay ahead of the curve and not sort of inform the competition in terms of where we're going?

And in particular, I'm kind of thinking about the recent TIMP findings and in particular to me that really means that it's more than just S antigen holding immune reactivation. So just a kind of high level competition about how you stay competitive against the field in general, but RNAi companies in particular?

Speaker 2

Sure. Thanks very much, Ted. So gosh, Barry, even at a high level, think there's a number of answers to that. First is we stay ahead by staying ahead. We have a large time lead, I think, against our competitors.

Are the first ones in the clinic and we are deeper in the clinic than any of our competitors. And I think that's important. It's a very difficult virus. And I think that the company that ultimately solves this or is part of a solution, is going to it's going to learn a lot about the virus during clinical trials. That's why Monarch is so important to us that it's an iterative study.

So the fact that we are first out there and we're moving flexibly to make sure that we can employ what we learn is good is important. Second, I guess, answer is that we have a complete package here. ARK520 and ARK521 are both designed to knock out all these all the viral proteins. I think that's important. As you touched on it, there's been an awful lot of talk about this S antigen theory, if you will, and we think S antigen is important.

But we don't think it's the only thing. Mentioned S antigen as an example and there's an awful lot of talk that that is going to be an important player in inducing a functional cure. We knocked that out as well. So I think the fact that we are not just focusing on S antigen or something else is important to us. Third, we have now a pretty large safety profile or safety profile that's based on a pretty large

As I mentioned, we have been in over 100 people now and we have a safety profile that I would put up against anybody. You mentioned RNAi in particular. I put this up against any RNAi player. I think that we know we've been we always thought it was going to be a well tolerated drug and we have even exceeded our own expectations so far. And then finally, we have generated a ton of data in our clinical programs as well as in this GYM study.

We've got blood samples every two weeks in these GYMPs. We've got multiple biopsies and we have spoken a lot about them, but we've not talked about everything we've learned. So I think we still have a competitive advantage as it relates to what we've learned about the virus and we will certainly use that as we are designing our clinical programs and as we move forward in Monarch as well as other studies.

Speaker 5

That's really helpful, Chris. I appreciate it.

Speaker 2

No problem.

Speaker 0

Thank you. And I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Chris Anzalone for any closing comments.

Speaker 2

Thanks very much for everyone listening today, and we wish you all a happy holiday season, and we look forward to seeing you in 2016.

Speaker 0

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have