By David Bautz, PhD
NASDAQ:ARWR
READ THE FULL ARWR RESEARCH REPORT
Business Update
Plozasiran Update
On January 17, 2025, Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) announced that the U.S. Food and Drug Administration (FDA) accepted the New Drug Application (NDA) for plozasiran for the treatment of familial chylomycronemia syndrome (FCS), with a Prescription Drug User Fee Act (PDUFA) action date of November 18, 2025. The agency also indicated that it did not currently plan to hold an advisory committee meeting. We anticipate the company submitting additional applications for approval of plozasiran for the treatment of FCS with other regulatory agencies in 2025.
The NDA is based in part on the successful Phase 3 PALISADE trial, the results of which were recently published in The New England Journal of Medicine (Watts et al., 2024). The trial met its primary endpoint and showed that treatment with plozasiran led to a median change from baseline of 80% in fasting triglycerides along with a statistically significant 83% reduction in the risk of developing acute pancreatitis compared to placebo.
In addition to FCS, Arrowhead is also developing plozasiran as a treatment for severe hypertriglyceridemia (SHTG), with the Phase 3 SHASTA-3 and SHASTA-4 studies expected to complete enrollment in 2025. The company is also performing the MUIR-3 study in patients with mixed hyperlipidemia, which is also expected to complete enrollment this year. All three studies should complete in 2026 and lead to a subsequent sNDA filing. The SHASTA-5 trial, which will have a primary outcome of reduction in acute pancreatitis in patients with SHTG and a history of pancreatitis, is expected to initiate soon. The company continues to believe that plozasiran could have peak revenues of $2-$3 billion/year just in SHTG. Lastly, during the recent quarterly conference call, the company stated that it still sees value in performing a cardiovascular outcomes trial (CVOT), however additional capital will need to be available in order to initiate the study.
Obesity Program Update
Arrowhead has two early stage programs in obesity, ARO-INHBE and ARO-ALK7. ARO-INHBE is designed to reduce the expression of activin E, which is a ligand for ALK7, while ARO-ALK7 is designed to reduce the expression of the ALK7 receptor. Activin E (dimeric INHBE protein) is a hepatokine that is secreted by the liver and promotes adipose storage by suppressing lipolysis in adipose tissue. The receptor for activin E is ALK7, which is a TGF-β superfamily member that is expressed in adipocytes. Support for targeting INHBE comes from genome wide association studies (GWAS) that show loss of function (LOF) variants of INHBE are associated with reduced abdominal fat and a lower risk of cardiovascular disease and type 2 diabetes (Deaton et al., 2022). In addition, Inhbe knockout mice show reduced body weight gain on a high fat diet (Adam et al., 2023).
The company has initiated a Phase 1/2a trial of ARO-INHBE. This is a dose-escalating study designed to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of ARO-INHBE in up to 78 adult volunteers with obesity. Part 1 of the trial will assess single and multiple doses of ARO-INHBE monotherapy, while Part 2 of the study will assess ARO-INHBE in combination with tirzepatide. We anticipate results from Part 1 of the trial in late 2025.
Arrowhead recently received clearance in New Zealand to initiate a Phase 1/2a dose-escalating study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of ARO-ALK7 in up to 90 adult volunteers with obesity. Manufacturing of drug product is currently ongoing and we anticipate this trial getting underway in mid-2025.
CNS Program Update
In addition to plozasiran and the obesity pipeline, the third area that Arrowhead believes will be a near-term growth driver is the company’s central nervous system (CNS) pipeline, which includes a new TRiM platform that appears capable, in animal models, of delivering siRNA across the blood-brain-barrier (BBB) following a subcutaneous injection. The initial efforts are focused on three development products: ARO-HTT (Huntington’s), ARO-MAPT (Alzheimer’s), and ARO-SNCA (Parkinson’s disease). Sarepta has the right to advance ARO-HTT forward through the collaboration agreement, Arrowhead is planning to keep ARO-MAPT in-house, and a decision on ARO-SNCA has not been made yet. CTA’s are expected to be filed for ARO-HTT and ARO-MAPT by the end of 2025 and in the first quarter of 2026 for ARO-SNCA.
Muscle Programs Update
ARO-DUX4 and ARO-DM1 are two muscle-targeting development products and both are part of the Sarepta collaboration. Each of these is currently in a Phase 1/2a trial that Arrowhead will continue to run until completion, at which time Sarepta will assume responsibility for clinical development and commercialization.
For ARO-DM1, a Phase 1/2a dose-escalating study is currently underway that is evaluating single and multiple ascending doses in up to 48 subjects with myotonic dystrophy. The company expects to reach enrollment targets in the Sarepta agreement, which will trigger an additional $300 million in payments (see Financial Update). ARO-DUX4 is also in a Phase 1/2a dose-escalating study in up to 52 subjects with FSHD type 1. For both studies, data should be available to report in 2025, pending discussion and agreement with Sarepta on disclosure timing.
Additional Pipeline Update
In the cardiometabolic space, Arrowhead will be initiating a Phase 3 trial of zodasiran (which targets ANGPTL3) in the second quarter of 2025 in patients with homozygous familial hypercholesterolemia (HoFH). The company believes there is sufficient clinical data to support advancing it for that indication, and if approved would fit nicely as an add-on to the FCS and SHTG sales representative’s portfolio. In addition, the Phase 3 study will be small and will only utilize “fairly modest resources”.
This year the company is also planning to submit a CTA for the first dimer. It is designed to silence the expression of both APOC3 (for the triglyceride lowering capabilities) and PCSK9 (for the LDL-c lowering capabilities).
Rounding out the rest of the company’s pipeline:
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While Janssen generated compelling clinical data for ARO-PNPLA3 in MASH, the company will not be moving it forward on its own and will look to partner
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ARO-RAGE showed good knockdown data, however developing it as an asthma or COPD drug will be very complex and expensive so a partnership will be necessary to move it to Phase 2 and beyond.
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The clinical data for ARO-C3 and ARO-CFB were both very good and there are clear market opportunities for the right partner in C3 glomerulopathy, IgA nephropathy, and certain Lupus populations.
Financial Update
On February 10, 2025, Arrowhead announced financial results for the first quarter of fiscal year 2025 that ended December 31, 2024. The company reported revenue of approximately $2.5 million for the first quarter of fiscal year 2025 compared to approximately $3.6 million for the first quarter of fiscal year 2024. The revenue was mainly driven by the revenue recognition associated with the collaboration agreements with GSK and Takeda. Revenue recognition related to the Sarepta license and collaboration agreement will begin during the quarter ending March 31, 2025 and will be recognized over a period during which performance obligations are provided. To recap what Arrowhead is expected to receive (or has received) from the Sarepta agreement:
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$500 million upfront
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$325 million from the purchase of Arrowhead common stock at $27.25 per share
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$250 million to be paid in installments of $50 million over 5 years
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$300 million associated with the continued enrollment of the Phase 1/2a trial of ARO-DM1
In addition, Arrowhead is eligible to receive development milestone payments of between $110 million and $410 million per program and sales milestone payments of between $500 million and $700 million per program.
R&D expenses for the quarter ending December 31, 2024 were approximately $137.0 million compared to $116.5 million for the quarter ending December 31, 2023. The increase was primarily due to increased candidate costs and salaries as the company’s pipeline increased and advanced into later stages of development. G&A expenses for the first quarter of fiscal year 2025 were $26.9 million compared to $23.6 million for the first quarter of fiscal year 2024. The increase was primarily due to higher salaries and professional services.
Arrowhead exited the first quarter of fiscal year 2025 with approximately $552.9 million in cash, cash equivalents, and investments. Including the $825 million in upfront payments from the Sarepta agreement, the proforma cash and investments as of December 31, 2024 was approximately $1.4 billion. We estimate the company will have approximately $1 billion in cash at the end of 2025 and is financed into 2028. As of February 3, 2025, Arrowhead had approximately 126.1 million shares outstanding and, when factoring in stock options and restricted stock units, a fully diluted share count of approximately 133.0 million.
Conclusion
We look forward to a busy 2025 for Arrowhead, with the PDUFA date for plozasiran in FCS on November 18, 2025 and a full schedule of trial initiations and data readouts. The company’s balance sheet has been strengthened by the Sarepta agreement and there is sufficient cash to fund operations into 2028, which could be past multiple commercial launches. With no changes to our model our valuation remains at $73 per share.
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