ARROWHEAD PHARMACEUTICALS, INC. (ARWR) Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 results: Revenue $2.50M; Diluted EPS $(1.39); Net loss $(173.1)M on higher R&D as programs advanced .
• FDA accepted plozasiran NDA for FCS with a PDUFA date of November 18, 2025, positioning a potential first commercial launch late 2025 pending approval .
• Closed a transformational Sarepta deal: $500M upfront cash, $325M equity, plus $250M over five years and potential $300M near‑term payments; pro forma cash/investments would be ~$1.4B; management guides runway into 2028; revenue recognition from Sarepta begins in the March quarter .
• Street consensus (S&P Global) for Q1 FY2025 EPS and revenue was unavailable due to access limits; therefore, beats/misses vs estimates cannot be assessed at this time.

What Went Well and What Went Wrong

What Went Well

• Sarepta collaboration closed, delivering immediate and staged non‑dilutive capital and reducing future R&D burden as partner assumes development on multiple muscle programs; company now “funded into 2028” .
• FDA accepted plozasiran NDA for FCS; PALISADE met primary and key secondary endpoints, including an 83% reduction in acute pancreatitis risk and ~80% median TG reduction at 25 mg .
• Commercial readiness accelerating: market access and medical affairs engaged; plan for late‑2025 U.S. launch (pending approval) and European commercialization with a partner .

What Went Wrong

• Operating expenses rose to $163.9M (R&D $137.0M), widening the net loss to $(173.1)M vs $(132.9)M YoY; cash used in ops rose to $146.3M, reflecting pipeline advancement .
• Revenue remained minimal ($2.5M), primarily from GSK collaborations; Sarepta revenue recognition will only begin next quarter, leaving Q1 top line light .
• Equity declined sharply on the balance sheet ($52.6M at 12/31/24 vs $185.4M at 9/30/24), with liabilities elevated (credit facility $409.4M; royalty liability $346.8M) .

Financial Results

P&L comparison (oldest → newest)

Notes:

• YoY: Revenue down 29.6%; EPS loss widened by $0.15 .
• QoQ: Revenue improved vs Q3 (from $0), but net loss and EPS loss slightly worsened as R&D spend elevated .

Operating expense detail (oldest → newest)

Balance sheet KPIs

Revenue composition: Management indicated Q1 revenue relates to GSK collaborations; Sarepta revenue will be recognized beginning in the quarter ending March 31, 2025 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are now funded into 2028 and potentially through multiple commercial launches by Arrowhead and our partners.”
• “Pending positive FDA review and approval, [plozasiran] launch could take place late this year.”
• “We believe plozasiran has the potential to be a $2 billion to $3 billion per year drug in the SHTG market alone.”
• “Including the $825 million in upfront payments from the Sarepta agreements, our pro forma cash and investments would be $1.4 billion at December 31, 2024… we expect approximately $1 billion at the end of calendar 2025.”
• “Revenue recognition related to the Sarepta license and collaboration agreement will begin during the quarter ending March 31, 2025.”

Q&A Highlights

• Obesity strategy: INHBE being evaluated as monotherapy and in combination with tirzepatide; Part 1 to assess body composition by MRI and weight loss; no fixed “bogey,” data‑driven approach .
• SHASTA‑5 outcomes study: First pancreatitis‑focused outcomes trial; event‑driven duration, critical for payer/HTA engagement, especially in EU .
• Competitive positioning vs olezarsen: Emphasis on unprecedented ~80% TG reduction, achieving guideline risk thresholds (<500 mg/dL), statistically significant AP risk reduction, quarterly dosing .
• Europe commercialization: Planning with a commercial partner for FCS .
• Capital allocation and CVOT: Desire to run triglyceride CVOT; gating item is additional capital despite ~$1B YE2025 cash/investments; partnering non‑core assets considered to fund CVOT .

Estimates Context

• S&P Global consensus for Q1 FY2025 EPS and revenue was unavailable due to access limits during retrieval. As a result, we cannot determine beats/misses vs Street for this quarter at this time.
• Reported results: Revenue $2.50M; Diluted EPS $(1.39); Net loss $(173.1)M .

Key Takeaways for Investors

• Regulatory milestone secured: FDA acceptance and firm PDUFA date materially de‑risk near‑term FCS launch timing; commercial build is underway in the U.S. and EU partner engagement is planned .
• Balance sheet inflection: Sarepta deal transforms liquidity (pro forma ~$1.4B), extends runway to 2028, and should begin contributing recognized revenue starting the March quarter; reduces forward R&D burden on partnered programs .
• Execution catalysts in 2025: Full enrollment of SHASTA‑3/4/MUIR‑3, SHASTA‑5 initiation, obesity program readouts, complement program data, CNS CTAs—multiple shots on goal beyond FCS .
• Commercial narrative: Management emphasizes plozasiran differentiation (TG depth/durability, AP risk reduction, quarterly dosing), framing market expansion rather than head‑to‑head share fight with olezarsen—supports pricing/access discussions .
• Risk lens: Elevated cash burn and liabilities (credit facility, royalty obligation) and limited current revenue; execution on launch, payer access, and study timelines remains paramount .
• CVOT optionality: Desire to run a triglyceride outcomes study exists, but contingent on additional capital/partnerships; not needed for SHTG label expansion path already in motion .
• Near‑term trading implications: Watch for formal Sarepta cash receipt timing, confirmed revenue recognition in Q2 FY2025, and any EU partnership disclosures—likely stock catalysts alongside regulatory updates .