Arrowhead Pharmaceuticals Reports Fiscal 2024 First Quarter Results
- Arrowhead Pharmaceuticals, Inc. reported a net loss of $132.9 million for fiscal 2024 Q1.
- The company is focusing on cardiometabolic and pulmonary verticals and plans to reduce operating cash burn by $100 million.
- Arrowhead terminated development of two programs, ARO-SOD1 and HZN-457.
- The company strengthened its balance sheet through a $450 million stock offering.
- Financially, the company's cash, cash equivalents, and restricted cash decreased to $58.2 million from $110.9 million in the previous quarter.
- The net loss increased significantly from the previous year, indicating financial challenges for the company.
- The reduction in cash, cash equivalents, and restricted cash may raise concerns about the company's financial stability.
Insights
Arrowhead Pharmaceuticals' fiscal 2024 first quarter financial results indicate a significant increase in operating losses, jumping from $42,134,000 in the prior year to $136,545,000. This escalation in losses can be attributed to a marked increase in research and development (R&D) expenses, which rose from $83,695,000 to $116,491,000. This uptick in R&D spending is likely a strategic investment in their core cardiometabolic and pulmonary programs. However, it's critical to analyze the potential return on these investments and the expected timeline for revenue generation from these programs.
Furthermore, the company's balance sheet shows a decrease in total cash resources from $403,626,000 to $220,279,000. This is a significant reduction that raises concerns about the company's cash burn rate and the sustainability of its current R&D trajectory. The recent capital raise through a common stock offering, which brought in approximately $450 million, is a positive move to strengthen the balance sheet. However, investors should closely monitor the company's future cash flow projections and the impact of the reduced operating cash burn guidance of up to $100 million.
Lastly, the termination of development for ARO-SOD1 and HZN-457 could be viewed as a strategic refocusing on more promising candidates, but it may also signal challenges in the development pipeline that need to be scrutinized.
The advancement of Arrowhead's cardiometabolic vertical is noteworthy, with two new medicines targeting obesity and metabolic disease set for clinical trial application filings by the end of 2024. The use of the liver-targeted TRiM™ platform for ARO-INHBE, which aims to influence INHBE gene expression associated with obesity and type 2 diabetes, signifies a novel approach in the treatment of these prevalent conditions. The protective effects of INHBE loss-of-function variants against type 2 diabetes and their association with reduced visceral fat could be a game-changer if clinical trials yield positive results.
Arrowhead's focus on restructuring their R&D organization to prioritize late-stage clinical development and commercial infrastructure for cardiometabolic and pulmonary medicines reflects a strategic shift towards areas with potentially high unmet medical needs. The engagement of Dr. Bruce Given, with his extensive experience, as interim chief medical scientist, could provide valuable insights and accelerate the restructuring process.
It's also important to consider the implications of the promising toxicology results for pulmonary candidates ARO-RAGE and ARO-MMP7, which suggest safety margins sufficient to proceed to Phase 2 studies. The progression of these candidates could represent significant milestones in the treatment of inflammatory pulmonary diseases and idiopathic pulmonary fibrosis, respectively.
Arrowhead Pharmaceuticals' strategic focus on cardiometabolic and pulmonary verticals aligns with the growing market demand for innovative treatments in these areas. The prevalence of obesity, metabolic diseases and pulmonary conditions presents a substantial market opportunity for Arrowhead's pipeline candidates. The company's decision to concentrate R&D spending on development activities that advance candidates to an attractive stage for potential partnerships is a move that could facilitate future collaborations and licensing deals, which are common strategies for biotech firms to offset development costs and leverage external expertise.
The decision to terminate the development of ARO-SOD1 and HZN-457, while a setback, could also be interpreted as a strategic reallocation of resources towards more promising or strategic areas. These decisions are often made in the biotech industry to optimize the product pipeline and ensure that resources are allocated to projects with the highest potential return on investment.
Moreover, the underwritten registered offering of common stock suggests that the market has confidence in Arrowhead's long-term strategy, although it's essential to monitor how this influx of capital is invested and the subsequent impact on shareholder value.
- Conference Call and Webcast Today, February 6, 2024, at 4:30 p.m. ET
Webcast and Conference Call and Details
Investors may access a live audio webcast on the Company's website at http://ir.arrowheadpharma.com/events.cfm. A replay of the webcast will be available approximately two hours after the conclusion of the call.
For analysts that wish to participate in the conference call, please register at https://register.vevent.com/register/BId9fba8b41eb34305a8f07de301a9d42c. Once registered, you will receive the dial-in number and a personalized PIN code that will be required to access the call.
Selected Recent Events
-
Continued to build the cardiometabolic vertical to include two new additional complementary medicines designed to treat obesity and metabolic disease, both of which are on schedule for clinical trial application (CTA) filings before the end of 2024
- ARO-INHBE utilizes the liver targeted TRiM™ platform and targets the INHBE gene. INHBE expression is increased in obesity and INHBE loss-of-function variants identified in human genetic databases are protective of type 2 diabetes and are associated with reduced visceral fat and a reduced waste to hip ratio
- The second is based on Arrowhead’s adipose tissue targeting TRiM™ platform and addresses an undisclosed gene target
-
Performed a portfolio review and R&D organization restructuring resulting in key changes, including:
- Arrowhead will focus investment in late-stage clinical development and build out commercial infrastructure to support sales and marketing of medicines primarily in the cardiometabolic and pulmonary verticals
- Engaged Bruce Given, M.D., Arrowhead’s former chief operating officer and head of R&D for Arrowhead for several years before his retirement in 2020 after a more than 30-year career in biotechnology and pharmaceutical research, development, and sales and marketing, on an interim basis to serve as chief medical scientist to help with restructuring efforts and the process to recruit new therapeutic area experts to decentralize the chief medical officer function
-
Identified opportunities to reduce forward operating cash burn guidance by up to
$100 million $30 million - Focused R&D spending for non-core programs on development activities that advance candidates to an attractive stage for potential partnerships
- Terminated development of ARO-SOD1 and HZN-457
-
Strengthened the balance sheet through an underwritten registered offering of common stock gross proceeds of approximately
$450 million -
Presented data on cardiometabolic pipeline at the American Heart Association Scientific Sessions in November 2023
- Presented new Phase 2 clinical data from the ongoing SHASTA-2 and MUIR studies of plozasiran (ARO-APOC3) and the ARCHES-2 study of zodasiran (ARO-ANG3)
- Hosted a webinar to discuss plozasiran featuring experts in the treatment and management of lipid and lipoprotein disorders
-
Completed chronic GLP toxicology for pulmonary candidates ARO-RAGE, designed to reduce expression of the receptor for advanced glycation end products as a potential treatment for inflammatory pulmonary diseases, and ARO-MMP7, designed to reduce expression of matrix metalloproteinase 7 as a potential treatment for idiopathic pulmonary fibrosis
- Results were highly encouraging and suggest sufficient safety margins to proceed to Phase 2 studies
- Filed for regulatory clearance to initiate a Phase 1/2a study of ARO-CFB, Arrowhead’s RNAi therapeutic candidate for patients with complement renal disease such as immunoglobulin A nephropathy (IgAN), which is the world’s most common glomerular disease
- Filed for regulatory clearance to initiate a Phase 1/2a study of Arrowhead’s second RNAi therapeutic candidate targeting skeletal muscle, ARO-DM1, for patients with type 1 myotonic dystrophy
Selected Fiscal 2024 First Quarter Financial Results
ARROWHEAD PHARMACEUTICALS, INC.
|
|||||||
OPERATING SUMMARY |
Year Ended December 31, |
||||||
2023 |
2022 |
||||||
|
(unaudited) |
||||||
Revenue |
$ |
3,551 |
|
$ |
62,546 |
|
|
Operating Expenses: |
|
|
|
||||
Research and development |
|
116,491 |
|
|
83,695 |
|
|
General and administrative expenses |
|
23,605 |
|
|
|
20,985 |
|
Total operating expenses |
|
140,096 |
|
|
104,680 |
|
|
Operating loss |
|
(136,545 |
) |
|
|
(42,134 |
) |
Total other (expense) income |
|
(2,144 |
) |
|
340 |
|
|
Loss before income tax (benefit) expense and noncontrolling interest |
|
(138,689 |
) |
|
|
(41,794 |
) |
Income tax (benefit) expense |
|
(3,313 |
) |
|
|
17 |
|
Net loss including noncontrolling interest |
|
(135,376 |
) |
|
|
(41,811 |
) |
Net loss attributable to noncontrolling interest, net of tax |
|
(2,512 |
) |
|
(486 |
) |
|
Net loss attributable to Arrowhead Pharmaceuticals, Inc. |
$ |
(132,864 |
) |
|
$ |
(41,325 |
) |
Net loss per share attributable to Arrowhead Pharmaceuticals, Inc. - Diluted |
$ |
(1.24 |
) |
|
$ |
(0.39 |
) |
Weighted-average shares used in calculating - Diluted |
|
107,415 |
|
|
106,039 |
|
|
FINANCIAL POSITION SUMMARY |
|
||||||
December 31, 2023 |
|
September 30, 2023 |
|||||
|
(unaudited) |
|
|
||||
Cash, cash equivalents and restricted cash |
$ |
58,215 |
|
$ |
110,891 |
|
|
Investments |
|
162,064 |
|
|
292,735 |
|
|
Total cash resources (cash and investments) |
|
220,279 |
|
|
|
403,626 |
|
Other assets |
|
406,007 |
|
|
361,926 |
|
|
Total Assets |
$ |
626,286 |
|
|
$ |
765,552 |
|
Current deferred revenue |
$ |
- |
|
|
$ |
866 |
|
Other liabilities |
|
452,572 |
|
|
|
477,524 |
|
Total Liabilities |
$ |
452,572 |
|
$ |
478,390 |
|
|
|
|
|
|
||||
Total Arrowhead Pharmaceuticals, Inc. Stockholders' Equity |
$ |
160,407 |
|
$ |
271,343 |
|
|
Noncontrolling Interest |
|
13,307 |
|
|
|
15,819 |
|
Total Noncontrolling Interest and Stockholders' Equity |
$ |
173,714 |
|
$ |
287,162 |
|
|
Total Liabilities, Noncontrolling Interest and Stockholders' Equity |
$ |
626,286 |
|
|
$ |
765,552 |
|
Shares Outstanding |
|
107,500 |
|
|
|
107,312 |
|
About Arrowhead Pharmaceuticals
Arrowhead Pharmaceuticals develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and efficient modes of delivery, Arrowhead therapies trigger the RNA interference mechanism to induce rapid, deep, and durable knockdown of target genes. RNA interference, or RNAi, is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. Arrowhead’s RNAi-based therapeutics leverage this natural pathway of gene silencing.
For more information, please visit www.arrowheadpharma.com, or follow us on Twitter @ArrowheadPharma. To be added to the Company's email list and receive news directly, please visit http://ir.arrowheadpharma.com/email-alerts.
Safe Harbor Statement under the Private Securities Litigation Reform Act:
This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this release except for historical information may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “hope,” “intend,” “plan,” “project,” “could,” “estimate,” “continue,” “target,” “forecast” or “continue” or the negative of these words or other variations thereof or comparable terminology are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, expectations for our product pipeline or product candidates, including anticipated regulatory submissions and clinical program results, prospects or benefits of our collaborations with other companies, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements include, but are not limited to, statements about the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; our expectations regarding the potential benefits of the partnership, licensing and/or collaboration arrangements and other strategic arrangements and transactions we have entered into or may enter into in the future; our beliefs and expectations regarding milestone, royalty or other payments that could be due to or from third parties under existing agreements; and our estimates regarding future revenues, research and development expenses, capital requirements and payments to third parties. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of numerous factors and uncertainties, including the impact of the ongoing COVID-19 pandemic on our business, the safety and efficacy of our product candidates, decisions of regulatory authorities and the timing thereof, the duration and impact of regulatory delays in our clinical programs, our ability to finance our operations, the likelihood and timing of the receipt of future milestone and licensing fees, the future success of our scientific studies, our ability to successfully develop and commercialize drug candidates, the timing for starting and completing clinical trials, rapid technological change in our markets, the enforcement of our intellectual property rights, and the other risks and uncertainties described in our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other documents filed with the Securities and Exchange Commission from time to time. We assume no obligation to update or revise forward-looking statements to reflect new events or circumstances.
Source: Arrowhead Pharmaceuticals, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240206347296/en/
Arrowhead Pharmaceuticals, Inc.
Vince Anzalone, CFA
626-304-3400
ir@arrowheadpharma.com
Investors:
LifeSci Advisors, LLC
Brian Ritchie
212-915-2578
britchie@lifesciadvisors.com
www.lifesciadvisors.com
Media:
LifeSci Communications, LLC
Jason Braco, Ph.D.
646-751-4361
jbraco@lifescicomms.com
www.lifescicommunications.com
Source: Arrowhead Pharmaceuticals, Inc.
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