By David Bautz, PhD



By David Bautz, PhD



Business Update

Licensing Agreement with GSK for ARO-HSD; Interim Clinical Data Presented at The Liver Meeting

On November 22, 2021, Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) announced a licensing agreement with GlaxoSmithKline (GSK) for ARO-HSD, Arrowhead’s investigational RNAi therapeutic that is currently being evaluated in a Phase 1/2 clinical trial for the treatment of patients with nonalcoholic steatohepatitis (NASH).

Arrowhead will receive an upfront payment of $120 million and is eligible for additional payments of $30 million at the start of a Phase 2 trial, $100 million upon the successful readout from the Phase 2 trial and the first patient dosed in a Phase 3 trial, and if approved commercial milestone payments of up to $190 million at first commercial sale and up to $590 million in sales-related milestone payments. In addition, Arrowhead is eligible to receive tiered mid double-digit to 20% royalties on net product sales.

ARO-HSD targets hydroxysteroid 17β-dehydrogenase 13 (HSD17B13), a member of the HSD17B family that is markedly upregulated in patients and mice with non-alcoholic fatty liver disease (NAFLD) (Su et al, 2019). Loss-of-function mutations in HSD17B13 provide the strongest known protection against non-alcoholic steatohepatitis (NASH) cirrhosis, alcoholic hepatitis, and cirrhosis (Abul-Husn et al., 2018). In the CDAA (choline-deficient, methionine-reduced, 60% fat) mouse model of NASH, once-weekly treatment with 3 mg/kg ARO-HSD resulted in decreased steatosis, inflammation, and hepatocyte degeneration along with inhibition of liver fibrosis.

The company recently presented interim clinical data from AROHSD1001, an ongoing Phase 1/2 clinical trial of ARO-HSD, at The Liver Meeting 2021. A copy of the poster can be found here. The following image gives an overview of the trial design. Patients with NASH or suspected NASH (based on MRI-PDFF >8% and ALT>ULN) were administered 25, 100, or 200 mg ARO-HSD (N=6 for each cohort) subcutaneously on Day 1 and Day 29. Liver biopsies were performed at screening and at Day 71 (week 10) and patients were followed until Day 113 (week 16).

The following table gives a summary of the pharmacodynamic data compiled thus far. For Cohort 1b (25 mg), 3/6 patients have completed the study with the other patients having completed through Day 85. For Cohort 3b (100 mg), 5/6 patients have completed the study and the last patient has completed up to Day 85. For Cohort 4b (200 mg), 5/6 patients have completed the study and the last patient has completed up to Day 85. The data shows a robust reduction of hepatic HSD17B13 mRNA at Day 71 for all doses, with all patients in the 200 mg cohort experiencing a ≥90% reduction. Levels of HSD17B13 protein were also reduced, with multiple measurements below the assay’s lower limit of quantitation (LLOQ). Serum ALT levels were reduced in both the 100 mg and 200 mg cohorts. Liver fat reductions were seen at all dose levels with a mean decrease of -7.6% and -7.3% for the 100 mg and 200 mg cohorts, respectively.

ARO-HSD was safe and generally well tolerated, with no ARO-HSD-related serious adverse events reported, no adverse events leading to drug discontinuations, and no ARO-HSD-related clinically significant adverse laboratory trends observed. A treatment emergent serious adverse event of soft tissue injury that required hospitalization was reported in cohort 4b (200 mg), however the event was considered unrelated to study drug.

These data are encouraging and show that ARO-HSD is engaging with its target, as shown by the decrease in hepatic HSD17B13 mRNA at Day 71. We are also encouraged by the decreases in various liver biomarkers along with decreases in liver fat (at higher drug doses), which could be an indicator of decreased liver inflammation. We look forward to additional updates on the trial.

ARO-APOC3 Decreases Key Lipid Parameters in FCS and non-FCS Patients

On November 15, 2021, Arrowhead announced additional data from the Phase 1/2 clinical trial of ARO-APOC3 was presented at the American Heart Association Scientific Sessions 2021. ARO-APOC3 is being developed at a treatment for patients with hypertriglyceridemia (HTG), severe hypertriglyceridemia (sHTG), and familial chylomicronemia syndrome (FCS).

The presentation included data for four genetically confirmed FCS patients who received 50 mg ARO-APOC3 and 26 multifactorial chylomicronemia patients who received 10, 25, 50, or 100 mg ARO-APOC3 on Days 1 and 29. The following chart shows a similar decrease in serum APOC3 (lower left) and triglycerides (TG, lower right) for both confirmed FCS and non-FCS patients.

ARO-APOC3 was generally well tolerated for both FCS and non-FCS patients. The following table provides treatment emergent adverse events (TEAEs) that occurred in two or more subjects along with the number of serious TEAEs. There was no pattern of increased frequency or intensity of adverse events (AEs) with increasing dose level. The two serious AEs (SAEs) were chest pain and acute pancreatitis, both of which were deemed to not be related to ARO-APOC3. They occurred in two non-FCS subjects and both were able to complete the study.

This was an encouraging update for the ARO-APOC3 program as the drug is able to modulate key lipid parameters in both FCS and non-FCS patients. In addition, the drug exhibited a similar safety profile in both groups of patients.

ARO-AAT Clears Z-AAT Protein in AATD Patients

On November 12, 2021, Arrowhead announced the presentation of additional interim clinical data from the AROAAT2002 study was presented at The Liver Meeting 2021. AROAAT2002 is an open label, multi-dose, Phase 2 trial in approximately 16 patients with alpha-1 antitrypsin deficiency (AATD). The following image gives an overview of the trial and the data presented was through the August 31, 2021 cutoff.

ARO-AAT decreased intra-hepatic mutant AAT protein (Z-AAT) polymer by 72-100%. This decrease in Z-AAT was accompanied by decreases in liver fibrosis, as shown in the following table. A total of 6/14 patients experienced a ≥1-point improvement in METAVIR fibrosis stage from baseline to week 24 or 48. Another six patients had no change in fibrosis from baseline to week 24 or 48. Two patients had an increase from F2 at baseline to F3 at week 48. However, both of those patients had substantial reductions in PAS+D globule burden along with reduced ALT and GGT.

Treatment with ARO-AAT also improved multiple liver health biomarkers. The following graphs show that there was a mean reduction from baseline of 42%-56% for ALT and from 33%-54% for GGT at week 28 and week 72. Each group showed normalized (below the upper limit of normal [ULN]) ALT and GGT following treatment.

There were no treatment emergent AEs related to a change in pulmonary status or pulmonary function reported. In addition, there were no meaningful changes in ppFEV1 from baseline (mean 85%) to Week 40 (mean 81%) or Week 72 (mean 84%).

These data point to ARO-AAT having a clear, positive impact on AATD and that reducing Z-AAT can lead to improvements in liver fibrosis.

Financial Update

On November 22, 2021, Arrowhead announced financial results for fiscal year 2021 that ended September 30, 2021. The company reported revenue of approximately $138.3 million for fiscal year 2021 compared to approximately $88.0 million for fiscal year 2020. This revenue consists of the recognition of $90.8 million associated with the Takeda License Agreement, $20.2 million related to the agreement with Janssen, $6.7 million associated with the Horizon Licensing Agreement, and $20.0 million in option and milestone payments from Janssen.

R&D expenses for the year ending September 30, 2021 were approximately $206.3 million compared to $128.9 million for the year ending September 30, 2020. The increase was primarily due to increased salaries, facilities-related expenses, the progression of pipeline candidates into and through clinical trials, R&D discovery expenses, and non-cash stock-based compensation. G&A expenses for fiscal year 2021 were $81.0 million compared to $52.3 million for fiscal year 2020. The increase was primarily due to increased salaries, professional services, and non-cash, stock-based compensation.

Arrowhead exited fiscal year 2021 with approximately $613.4 million in cash, cash equivalents, and investments. As of November 15, 2021, Arrowhead had approximately 104.5 million shares outstanding and, when factoring in stock options and restricted stock units, a fully diluted share count of approximately 111.8 million.


The good news continues for Arrowhead with the recent announcement of the collaboration with GSK and the multiple recent data presentations for ARO-HSD, ARO-APOC3, and ARO-AAT. While the liver-focused programs are proceeding nicely, it is encouraging to see the company expand the pipeline into diseases outside the liver and we anticipate two CTAs for pulmonary indications in 2022. With no changes to our model, our valuation remains at $100.

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