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What changed in ARROWHEAD PHARMACEUTICALS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ARROWHEAD PHARMACEUTICALS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+452 added−406 removedSource: 10-K (2023-11-29) vs 10-K (2022-11-28)

Top changes in ARROWHEAD PHARMACEUTICALS, INC.'s 2023 10-K

452 paragraphs added · 406 removed · 329 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

159 edited+49 added−31 removed216 unchanged
Biggest changeClinical Trials: Study Name: A Study of Different Combination Regimens Including JNJ-73763989 and/or JNJ-56136379 for the Treatment of Chronic Hepatitis B Virus Infection (REEF-1) A Phase 2b, Multicenter, Double-blind, Active-controlled, Randomized Study to Investigate the Efficacy and Safety of Different Combination Regimens Including JNJ-73763989 and/or JNJ-56136379 for the Treatment of Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT03982186 Study Name: A Study of JNJ 73763989+JNJ 56136379+Nucleos(t)Ide Analog (NA) Regimen Compared to NA Alone in e Antigen Negative Virologically Suppressed Participants With Chronic Hepatitis B Virus Infection A Randomized, Double Blind, Placebo-controlled Phase 2b Study to Evaluate Efficacy, Pharmacokinetics, and Safety of 48-week Study Intervention With JNJ 73763989+JNJ 56136379+Nucleos(t)Ide Analog (NA) Regimen Compared to NA Alone in e Antigen Negative Virologically Suppressed Participants With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT04129554 Study Name: A Study of JNJ-73763989 in Healthy Chinese Adult Participants A Randomized, Open-Label, Parallel, Single Dose Study to Investigate Pharmacokinetics, Safety, and Tolerability of JNJ-73763989 in Healthy Chinese Adult Participants ClinicalTrials.gov Identifier: NCT04586439 Study Name: A Study to Evaluate the Effect of Hepatic Impairment on JNJ-73763989 A Phase 1, Single-Dose, Open-Label, Parallel-Group Study to Evaluate the Effect of Hepatic Impairment on the Pharmacokinetics of JNJ-73763989 ClinicalTrials.gov Identifier: NCT04208386 Study Name: A Study of JNJ-73763989 + Nucleos(t)Ide Analog in Participants Co-Infected With Hepatitis B and Hepatitis D Virus (REEF-D) A Phase 2, Multicenter, Randomized, Double-blind, Placebo-Controlled Study With Deferred Active Treatment to Investigate the Efficacy, Safety, and Pharmacokinetics of JNJ-73763989 + Nucleos(t)Ide Analog in Participants Co-Infected With Hepatitis B and Hepatitis D Virus ClinicalTrials.gov Identifier: NCT04535544 8 Study Name: A Study of JNJ-73763989 + JNJ-56136379 + Nucleos(t)Ide Analog (NA) Regimen With or Without Pegylated Interferon Alpha-2a (PegIFN-α2a) in Treatment-Naive Participants With Hepatitis B e Antigen (HBeAg) Positive Chronic Hepatitis B Virus (HBV) Infection and Normal Alanine Aminotransferase (ALT) A Phase 2, Randomized, Open-label, Multicenter Study to Evaluate Efficacy, Pharmacokinetics, Safety, and Tolerability of Response-guided Treatment With JNJ-73763989 + JNJ-56136379 + Nucleos(t)Ide Analog Regimen With or Without Pegylated Interferon Alpha-2a in Treatment-naive Patients With HBeAg Positive Chronic Hepatitis B Virus Infection and Normal ALT ClinicalTrials.gov Identifier: NCT04439539 Study Name: A Study to Assess Intrahepatic and Peripheral Changes of Immunologic and Virologic Markers in Chronic Hepatitis B Virus Infection (INSIGHT) A Phase 2 Randomized, Open-label, Parallel-group, Multicenter Study to Assess Intrahepatic and Peripheral Changes of Immunologic and Virologic Markers in Response to Combination Regimens Containing JNJ-73763989 and Nucleos(t)Ide Analog With or Without JNJ-56136379 in Patients With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT04585789 Study Name: A Study of JNJ-73763989 in Adult Participants With Renal Impairment An Open-label, Single-dose, Parallel-group Study to Evaluate the Effect of Renal Impairment on the Pharmacokinetics of JNJ-73763989 in Adult Participants ClinicalTrials.gov Identifier: NCT04963738 Study Name: A Study of JNJ-73763989, Pegylated Interferon Alpha-2a and Nucleos(t)Ide Analogs in Participants With Chronic Hepatitis B Virus Infection (PENGUIN-2) A Phase 2, Open-label, Multicenter Study to Assess Efficacy, Safety, Tolerability, and Pharmacokinetics of Treatment With JNJ-73763989, Nucleos(t)Ide Analogs, and Pegylated Interferon Alpha-2a in Patients With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT05005507 Study Name: A Study of JNJ-73763989, JNJ-56136379, Nucleos(t)Ide Analogs, and Pegylated Interferon Alpha-2a in Virologically Suppressed Participants With Chronic Hepatitis B Virus Infection (PENGUIN) A Phase 2, Open-label, Single-arm, Multicenter Study to Assess Efficacy, Safety, Tolerability, and Pharmacokinetics of Treatment With JNJ-73763989, JNJ-56136379, Nucleos(t)Ide Analogs, and Pegylated Interferon Alpha-2a in Virologically Suppressed Patients With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT04667104 JNJ-75220795 (formerly referred to as ARO-JNJ1) JNJ-75220795 (ARO-JNJ1) is an investigational therapeutic being developed by Janssen.
Biggest changeClinical Trials: Study Name: A Study of JNJ-73763989 + Nucleos(t)Ide Analog in Participants Co-Infected With Hepatitis B and Hepatitis D Virus (REEF-D) A Phase 2, Multicenter, Randomized, Double-blind, Placebo-Controlled Study With Deferred Active Treatment to Investigate the Efficacy, Safety, and Pharmacokinetics of JNJ-73763989 + Nucleos(t)Ide Analog in Participants Co-Infected With Hepatitis B and Hepatitis D Virus 8 ClinicalTrials.gov Identifier: NCT04535544 Study Name: A Study of JNJ-73763989 Pegylated Interferon Alpha-2a, Nucleos(t)Ide Analog (NA) With or Without JNJ-56136379 in Treatment-Naive Participants With Hepatitis B e Antigen (HBeAg) Positive Chronic Hepatitis B Virus (HBV) Infection A Phase 2, Randomized, Open-label, Multicenter Study to Evaluate Efficacy, Pharmacokinetics, Safety, and Tolerability of Treatment With JNJ-73763989, Pegylated Interferon Alpha-2a, Nucleos(t)Ide Analog With or Without JNJ-56136379 in Treatment-naive Patients With HBeAg Positive Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT04439539 Study Name: A Study to Assess Intrahepatic and Peripheral Changes of Immunologic and Virologic Markers in Chronic Hepatitis B Virus Infection (INSIGHT) A Phase 2 Randomized, Open-label, Parallel-group, Multicenter Study to Assess Intrahepatic and Peripheral Changes of Immunologic and Virologic Markers in Response to Combination Regimens Containing JNJ-73763989 and Nucleos(t)Ide Analog With or Without JNJ-56136379 in Patients With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT04585789 Study Name: An Efficacy and Safety Study of a Combination of JNJ-73763989, Nucleos(t)Ide Analogs (NA), and a Programmed Cell Death Protein Receptor-1 (PD-1) Inhibitor in Chronic Hepatitis B Participants (OCTOPUS-1 ) A Phase 2 Open-label Trial to Evaluate Safety, Efficacy, Tolerability, and Pharmacodynamics of a Combination of JNJ-73763989, Nucleos(t)Ide Analogs, and a PD-1 Inhibitor in Chronic Hepatitis B Patients ClinicalTrials.gov Identifier: NCT05275023 Study Name: A Study of JNJ-73763989, JNJ-64300535, and Nucleos(t)Ide Analogs in Virologically Suppressed, Hepatitis B e Antigen (HBeAg)- Negative Participants With Chronic Hepatitis B Virus Infection (OSPREY) A Phase 1b, Open-label, Single-arm, Multicenter Study to Assess Efficacy, Safety, and Tolerability of Treatment With JNJ-73763989, JNJ-64300535, and Nucleos(t)Ide Analogs in Virologically Suppressed, HBeAg-negative Participants With Chronic Hepatitis B Virus Infection ClinicalTrials.gov Identifier: NCT05123599 Amgen Inc.
The approximate year of expiration for each of these various groups of patents are set forth below: 11 Patent Group Estimated Year(s) of Expiration* Targeting ligands and other RNAi delivery and platform technologies Targeting groups (Galactose derivative trimer-PK) 2031 Targeting groups (αvβ3/αvβ5 integrin) 2034, 2038, 2039 Targeting groups (αvβ6 integrin) 2037, 2038, 2041 Targeting groups (Galactose derivative ligands) 2037, 2037 RNAi agent design (5′-phosphate mimic) 2037 Physiologically labile linkers 2036 Biologically cleavable linkers 2036 Trialkyne linkers 2039 Muscle delivery platform 2041, 2041 PK/PD lipid modifiers 2041 Transferrin targeting 2028 LDLR targeting 2028 Peptide targeting (CPP-Arg) 2028 Peptide targeting (YM3-10H) 2032 Hydrodynamic delivery Third iteration 2024 *Assuming issuance of any pending patent applications, and excluding any patent term adjustments or patent term extensions.
The approximate year of expiration for each of these various groups of patents and applications are set forth below: 11 Patent Group Estimated Year(s) of Expiration* Targeting ligands and other RNAi delivery and platform technologies Targeting groups (Galactose derivative trimer-PK) 2031 Targeting groups (αvβ3/αvβ5 integrin) 2034, 2038, 2039 Targeting groups (αvβ6 integrin) 2037, 2038, 2041 Targeting groups (Galactose derivative ligands) 2037, 2037 RNAi agent design (5′-phosphate mimic) 2037 Physiologically labile linkers 2036 Biologically cleavable linkers 2036 Trialkyne linkers 2039 Muscle delivery platform 2041, 2041 PK/PD lipid modifiers 2041 Transferrin targeting 2028 LDLR targeting 2028 Peptide targeting (CPP-Arg) 2028 Peptide targeting (YM3-10H) 2032 Hydrodynamic delivery Third iteration 2024 *Assuming issuance of any pending patent applications, and excluding any patent term adjustments or patent term extensions.
European Data Laws The collection and use of personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679 (“GDPR”), which came into force in May 2018 and related implementing laws in individual EU member states.
The collection and use of personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679 (“GDPR”), which came into force in May 2018 and related implementing laws in individual EU member states.
For example, following the Schrems II decision of the Court of Justice of the EU on July 16, 2020, in which the Court invalidated the Privacy Shield under which personal data could be transferred from the EU/EEA to U.S. entities who had self-certified under the Privacy Shield scheme, there is uncertainty as to the general permissibility of international data transfers under the GDPR.
For example, following the Schrems II decision of the Court of Justice of the EU on July 16, 2020, in which the Court invalidated the Privacy Shield under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme, there is uncertainty as to the general permissibility of international data transfers under the GDPR.
In light of the implications of this decision, we may face difficulties regarding the transfer of personal data from the EU/EEA to third countries. On June 4, 2021, the EU Commission has issued a new set of SCCs which replace the old sets of SCCs that were adopted under the previous European Data Protection Directive 95/46.
In light of the implications of this decision, we may face difficulties regarding the transfer of personal data from the EEA to third countries. On June 4, 2021, the EU Commission has issued a new set of SCCs which replace the old sets of SCCs that were adopted under the previous European Data Protection Directive 95/46.
Department of Justice or private whistleblowers who bring civil actions (qui tam actions) on behalf of the federal government, imposes civil penalties, as well as liability for treble damages and for attorneys’ fees and costs, on individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false 29 or fraudulent, making a false statement material to a false or fraudulent claim, or improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government; • the U.S.
Department of Justice or private whistleblowers who bring civil actions (qui tam actions) on behalf of the federal government, imposes civil penalties, as well as liability for treble damages and for attorneys’ fees and costs, on individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, making a false statement material to a false or fraudulent claim, or improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government; • the U.S.
Individual EU member states will continue to be responsible for assessing non-clinical ( e.g. , economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. While EU member states could choose to delay participation in the joint work until three years after the rules enter into force, it will become mandatory after six years.
Individual EU member states will 25 continue to be responsible for assessing non-clinical ( e.g. , economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. While EU member states could choose to delay participation in the joint work until three years after the rules enter into force, it will become mandatory after six years.
Under both the former regime and the new CTR, national laws, regulations, and the applicable Good Clinical Practice and Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on Good Clinical Practice (“GCP”), and the ethical principles that have their origin in the Declaration of Helsinki .
Under both the former regime and the new CTR, national laws, regulations, and the applicable Good Clinical Practice (“GCP”) and Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on GCP, and the ethical principles that have their origin in the Declaration of Helsinki.
The downward pressure on health care costs in general, particularly prescription drugs, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert competitive pressure that may reduce pricing within a country.
The downward pressure on health care costs in general, particularly prescription drugs, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert 29 competitive pressure that may reduce pricing within a country.
Alpha-1 Antitrypsin Deficiency (AATD): AATD is a genetic disorder associated with liver disease in children and adults, and pulmonary disease in adults. AAT is a circulating glycoprotein protease inhibitor that is primarily synthesized and secreted by liver hepatocytes. Its physiologic function is the inhibition of neutrophil protease to protect healthy lung tissues during inflammation and prevent tissue damage.
Alpha-1 Antitrypsin Deficiency (AATD): AATD is a genetic disorder associated with liver disease in children and adults, and pulmonary disease in adults. AAT is a circulating glycoprotein protease inhibitor that is primarily synthesized and secreted by liver hepatocytes. Its physiologic function is the inhibition of neutrophil protease to 7 protect healthy lung tissues during inflammation and prevent tissue damage.
Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. The U.S.
Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product is eligible for the extension, and 19 the application for the extension must be submitted prior to the expiration of the patent in question. The U.S.
The Court did not invalidate the then current SCCs, but ruled that data exporters relying on these SCCs are required to verify, on a case-by-case basis, if the law of the third country ensures an adequate level of data protection that is essentially equivalent to that guaranteed in the EU/EEA.
The Court did not invalidate the then current SCCs, but ruled that data exporters relying on these SCCs are required to verify, on a case-by-case basis, if the law of the third country ensures an adequate level of data protection that is essentially equivalent to that guaranteed in the EEA.
Under the current regime all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU member state where they occur. A more unified procedure will apply under the new CTR.
Under the current regime all 20 suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU member state where they occur. A more unified procedure will apply under the new CTR.
However, this timeline excludes clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP, so the overall process typically takes a year or more, unless the application is 21 eligible for an accelerated assessment.
However, this timeline excludes clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP, so the overall process typically takes a year or more, unless the application is eligible for an accelerated assessment.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the 14 clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
Other Legislation Regarding Marketing, Authorization and Pricing of Pharmaceutical Products in the European Union Other core legislation relating to the marketing, authorization and pricing of pharmaceutical products in the EU exists as regulations and directives, while the implementing acts and guidelines based on these may vary in each EU 27 member state.
Other Legislation Regarding Marketing, Authorization and Pricing of Pharmaceutical Products in the European Union Other core legislation relating to the marketing, authorization and pricing of pharmaceutical products in the EU exists as regulations and directives, while the implementing acts and guidelines based on these may vary in each EU member state.
The European Commission has stated that the role of the HTA regulation is not to influence pricing and reimbursement decisions in the individual EU member states, but there can be no assurance that the HTA regulation will not have effects on pricing and reimbursement 25 decisions.
The European Commission has stated that the role of the HTA regulation is not to influence pricing and reimbursement decisions in the individual EU member states, but there can be no assurance that the HTA regulation will not have effects on pricing and reimbursement decisions.
Delivery Technologies : The delivery technology-related patents and patent applications, which include components used in Arrowhead’s TRiM TM platform, have been filed and/or issued in various jurisdictions worldwide including the United States, Argentina, Australia, Brazil, Canada, China, Eurasian Patent Organization, Europe (including validations in France, Germany, Italy, Spain, Switzerland, United Kingdom), GCC (Gulf Cooperation Council), Israel, India, Japan, Lebanon, Mexico, New Zealand, Philippines, Russia, South Africa, South Korea, Singapore, Taiwan, and Uruguay.
Delivery Technologies : The delivery technology-related patents and patent applications, which include components used in the Company’s TRiM TM platform, have been filed and/or issued in various jurisdictions worldwide including the United States, Argentina, Australia, Brazil, Canada, China, Eurasian Patent Organization, Europe (including validations in France, Germany, Italy, Spain, Switzerland, United Kingdom), GCC (Gulf Cooperation Council), Israel, India, Japan, Lebanon, Mexico, New Zealand, Philippines, Russia, South Africa, South Korea, Singapore, Taiwan, and Uruguay.
The NCA of the EU member states in which the 20 clinical trial will be conducted must authorize the conduct of the trial, and the independent Ethics Committee must grant a positive opinion in relation to the conduct of the clinical trial in the relevant EU member state before the commencement of the trial.
The NCA of the EU member states in which the clinical trial will be conducted must authorize the conduct of the trial, and the independent Ethics Committee must grant a positive opinion in relation to the conduct of the clinical trial in the relevant EU member state before the commencement of the trial.
Arrowhead’s patent applications have been filed throughout the world, including, in the United States, Argentina, ARIPO (Africa Regional Intellectual Property Organization), Australia, Brazil, Canada, Chile, China, Eurasian Patent Organization, Europe, GCC (Gulf Cooperation Council), Hong Kong, Israel, India, Indonesia, Iraq, Jordan, Japan, Lebanon, Mexico, New Zealand, OAPI (African Intellectual Property Organization), Peru, Philippines, Russian Federation, Saudi Arabia, Singapore, South Korea, Thailand, Taiwan, Uruguay, Venezuela, Vietnam, and South Africa.
The Company’s patent applications have been filed throughout the world, including, in the United States, Argentina, ARIPO (Africa Regional Intellectual Property Organization), Australia, Brazil, Canada, Chile, China, Eurasian Patent Organization, Europe, GCC (Gulf Cooperation Council), Hong Kong, Israel, India, Indonesia, Iraq, Jordan, Japan, Lebanon, Mexico, New Zealand, OAPI (African Intellectual Property Organization), Peru, Philippines, Russian Federation, South Africa, Saudi Arabia, Singapore, South Korea, Thailand, Taiwan, Uruguay, Venezuela, and Vietnam.
The key benefits of Fast Track Designation are the eligibility for priority review, rolling review (submission of portions of an application before the complete marketing application is submitted), and accelerated approval, if relevant 16 criteria are met.
The key benefits of Fast Track Designation are the eligibility for priority review, rolling review (submission of portions of an application before the complete marketing application is submitted), and accelerated approval, if relevant criteria are met.
An applicant seeking approval to market and distribute a new drug in the United States must typically undertake the following: (1) completion of preclinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; (2) submission to the FDA of an IND for human clinical testing, which must become effective without FDA objection before human clinical trials may begin; (3) approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; 13 (4) performance of adequate and well-controlled human clinical trials in accordance with the FDA’s current good clinical practice (“cGCP”) regulations, to establish the safety and effectiveness of the proposed drug product for each indication for which approval is sought; (5) preparation and submission to the FDA of a New Drug Application (“NDA”); (6) satisfactory review of the NDA by an FDA advisory committee, where appropriate or if applicable; (7) satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug product, and the active pharmaceutical ingredient or ingredients thereof, are produced to assess compliance with current good manufacturing practice (“cGMP”) regulations and to assure that the facilities, methods, and controls are adequate to ensure the product’s identity, strength, quality, and purity; (8) payment of user fees, as applicable, and securing FDA approval of the NDA; and (9) compliance with any post-approval requirements, such as any Risk Evaluation and Mitigation Strategies (“REMS”) or post-approval studies required by the FDA.
An applicant seeking approval to market and distribute a new drug in the United States must typically undertake the following: (1) completion of preclinical laboratory tests, which may include animal and in vitro studies, and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; (2) submission to the FDA of an Investigational New Drug (“IND”) for human clinical testing, which must become effective without FDA objection before human clinical trials may begin; (3) approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; (4) performance of adequate and well-controlled human clinical trials in accordance with the FDA’s current good clinical practice (“cGCP”) regulations, to establish the safety and effectiveness of the proposed drug product for each indication for which approval is sought; (5) preparation and submission to the FDA of a New Drug Application (“NDA”); (6) satisfactory review of the NDA by an FDA advisory committee, where appropriate or if applicable; (7) satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug product, and the active pharmaceutical ingredient or ingredients thereof, are produced to assess compliance with current good manufacturing practice (“cGMP”) regulations and to assure that the facilities, methods, and controls are adequate to ensure the product’s identity, strength, quality, and purity; (8) payment of user fees, as applicable, and securing FDA approval of the NDA; and 13 (9) compliance with any post-approval requirements, such as any Risk Evaluation and Mitigation Strategies (“REMS”) or post-approval studies required by the FDA.
Study Name: Study to Evaluate ARO-APOC3 in Adults With Severe Hypertriglyceridemia (SHASTA-2) A Double-Blind, Placebo-Controlled Phase 2b Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Severe Hypertriglyceridemia ClinicalTrials.gov Identifier: NCT04720534 Study Name: Study of ARO-APOC3 in Adults With Mixed Dyslipidemia (MUIR) A Double-Blind, Placebo-Controlled Phase 2b Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Mixed Dyslipidemia ClinicalTrials.gov Identifier: NCT04998201 Study Name: Study of ARO-APOC3 in Adults With FCS (PALISADE) A Phase 3 Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Familial Chylomicronemia Syndrome ClinicalTrials.gov Identifier: NCT05089084 ARO-ANG3 ARO-ANG3 is designed to reduce production of angiopoietin-like protein 3 (ANGPTL3), a liver synthesized inhibitor of lipoprotein lipase and endothelial lipase.
Study Name: Study to Evaluate ARO-APOC3 in Adults With Severe Hypertriglyceridemia (SHASTA-2) A Double-Blind, Placebo-Controlled Phase 2b Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Severe Hypertriglyceridemia ClinicalTrials.gov Identifier: NCT04720534 Study Name: Study of ARO-APOC3 in Adults With Mixed Dyslipidemia (MUIR) A Double-Blind, Placebo-Controlled Phase 2b Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Mixed Dyslipidemia ClinicalTrials.gov Identifier: NCT04998201 Study Name: Study of ARO-APOC3 in Adults With FCS (PALISADE) A Phase 3 Study to Evaluate the Efficacy and Safety of ARO-APOC3 in Adults With Familial Chylomicronemia Syndrome ClinicalTrials.gov Identifier: NCT05089084 Zodasiran (ARO-ANG3) Zodasiran (formerly ARO-ANG3) is designed to reduce production of angiopoietin-like protein 3 (ANGPTL3), a liver synthesized inhibitor of lipoprotein lipase and endothelial lipase.
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA.
If the ANDA applicant has provided a Paragraph IV 18 certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA.
Arrowhead’s reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to such periodic reports and Proxy Statements, are accessible through its website, free of charge, as soon as reasonably practicable after these reports are filed electronically with, or otherwise furnished to, the SEC.
The Company’s reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to such periodic reports and Proxy Statements, are accessible through its website, free of charge, as soon as reasonably practicable after these reports are filed electronically with, or otherwise furnished to, the SEC.
Therapeutics developed with the TRiM TM platform offer several advantages: simplified manufacturing and reduced costs; multiple routes of administration; and potential for improved safety because there are less metabolites from smaller molecules, thereby reducing the risk of intracellular buildup. Arrowhead also believes that for RNAi to reach its true potential, it must target organs outside the liver.
Therapeutics developed with the TRiM TM platform offer several advantages: simplified manufacturing and reduced costs; multiple routes of administration; and potential for improved safety because there are less metabolites from smaller molecules, thereby reducing the risk of intracellular buildup. The Company also believes that for RNAi to reach its true potential, it must target organs outside the liver.
The conceptual framework for the stabilization strategy starts with a more sophisticated RNAi trigger screening and selection process that identifies potent sequences rapidly in locations that others may miss. Pipeline Arrowhead is focused on developing innovative drugs for diseases with a genetic basis, typically characterized by the overproduction of one or more proteins that are involved with disease.
The conceptual framework for the stabilization strategy starts with a more sophisticated RNAi trigger screening and selection process that identifies potent sequences rapidly in locations that others may miss. Pipeline The Company is focused on developing innovative drugs for diseases with a genetic basis, typically characterized by the overproduction of one or more proteins that are involved with disease.
Arrowhead believes this, especially the elimination of hepatitis B surface antigen (HBsAg), may allow the body’s natural immune defenses to clear the virus and potentially lead to a functional cure. JNJ-3989 is currently being investigated in multiple Phase 2 clinical trials being conducted by Janssen. The Phase 1/2a study and its preceding studies were conducted by Arrowhead.
The Company believes this, especially the elimination of hepatitis B surface antigen (HBsAg), may allow the body’s natural immune defenses to clear the virus and potentially lead to a functional cure. JNJ-3989 is currently being investigated in multiple Phase 2 clinical trials being conducted by Janssen. The Phase 1/2a study and its preceding studies were conducted by the Company.
Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be submitted to or approved by the relevant NCA and Ethics Committees.
Any substantial changes to the trial protocol or other information submitted with the Clinical Trial Applications (“CTA”) must be submitted to or approved by the relevant NCA and Ethics Committees.
Pursuant to this acquisition, Roche assigned to Arrowhead its entire rights under certain licenses including: the License and Collaboration Agreement between Roche and Alnylam dated July 8, 2007 (the “Alnylam License”); the Non-Exclusive Patent License Agreement between Roche and MDRNA, Inc. dated February 12, 2009 (“MDRNA License”); and the Non-Exclusive License Agreement between Roche and City of Hope dated September 19, 2011 (the “COH License”) (collectively the “RNAi Licenses”).
Pursuant to this acquisition, Roche assigned to the Company its entire rights under certain licenses including: the License and Collaboration Agreement between Roche and Alnylam dated July 8, 2007 (the “Alnylam License”); the Non-Exclusive Patent License Agreement between Roche and MDRNA, Inc. dated February 12, 2009 (“MDRNA License”); 12 and the Non-Exclusive License Agreement between Roche and City of Hope dated September 19, 2011 (the “COH License”) (collectively the “RNAi Licenses”).
EU member states may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation. The GDPR also imposes specific restrictions on the transfer of personal data to countries outside of the EU/EEA that are not considered by the European Commission to provide an adequate level of data protection (including the United States).
EU member states may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation. The GDPR also imposes specific restrictions on the transfer of personal data to countries outside of the EEA that are not considered by the European Commission to provide an adequate level of data protection.
The processes for obtaining regulatory approval in the United States and in foreign countries and jurisdictions, along with compliance with applicable statutes and regulations and other regulatory authorities both pre- and post-commercialization, are a significant factor in the production and marketing of Arrowhead’s products and its R&D activities and require the expenditure of substantial time and financial resources.
The processes for obtaining regulatory approval in the United States and in foreign countries and jurisdictions, along with compliance with applicable statutes and regulations and other regulatory authorities both pre- and post-commercialization, are a significant factor in the production and marketing of the Company’s products and its R&D activities and require the expenditure of substantial time and financial resources.
Arrowhead continually evaluates the business need and opportunity and balances in-house expertise and capacity with outsourced expertise and capacity. Currently, Arrowhead outsources substantial clinical trial work to clinical research organizations and certain drug manufacturing to contract manufacturers. Drug development is a complex endeavor which requires deep expertise and experience across a broad array of disciplines.
The Company continually evaluates the business need and opportunity and balances in-house expertise and capacity with outsourced expertise and capacity. Currently, the Company outsources substantial clinical trial work to clinical research organizations and certain drug manufacturing to contract manufacturers. Drug development is a complex endeavor which requires deep expertise and experience across a broad array of disciplines.
Appropriate safeguards are required to enable such transfers. Among the appropriate safeguards that can be used, the data exporter may use the standard contractual clauses (“SCCs”). In this respect, recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of personal data from the EU/EEA.
Appropriate safeguards are required to enable such transfers. Among the appropriate safeguards that can be used, the data exporter may use the 26 standard contractual clauses (“SCCs”). In this respect, recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of personal data from the EEA.
The RNAi and drug delivery patent landscapes are complex and rapidly evolving. As such, Arrowhead may need to obtain additional patent licenses prior to commercialization of its candidates. Please see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
The RNAi and drug delivery patent landscapes are complex and rapidly evolving. As such, the Company may need to obtain additional patent licenses prior to commercialization of its candidates. Please see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
Arrowhead continues the formal training and processes initiated in 2021 to promote awareness of inclusion and diversity issues for management and employees, including anti-bias training and employee outreach and engagement. In fiscal year 2022, Arrowhead formed a Diversity, Equity, and Inclusion (DEI) committee comprised of a diverse group of employees across each of its worksites.
The Company continues the formal training and processes initiated in 2021 to promote awareness of inclusion and diversity issues for management and employees, including anti-bias training and employee outreach and engagement. In fiscal year 2022, the Company formed a Diversity, Equity, and Inclusion (DEI) committee comprised of a diverse group of employees across each of its worksites.
Pursuant to the RNAi Purchase Agreement, Arrowhead acquired or was granted a license to certain patents and patent applications owned or controlled by Novartis related to RNAi therapeutics, was assigned Novartis’s rights under a license from Alnylam Pharmaceuticals, Inc. (“Alnylam”) (the “Alnylam-Novartis License”) and acquired a license to certain additional Novartis assets (the “Licensed Novartis Assets”).
Pursuant to the RNAi Purchase Agreement, the Company acquired or was granted a license to certain patents and patent applications owned or controlled by Novartis related to RNAi therapeutics, was assigned Novartis’s rights under a license from Alnylam Pharmaceuticals, Inc. (“Alnylam”) (the “Alnylam-Novartis License”) and acquired a license to certain additional Novartis assets (the “Licensed Novartis Assets”).
To attract qualified applicants to the Company, Arrowhead offers a total compensation package consisting of base salary and cash target bonus targeting the 50 th to 75 th percentile of market, and offers a comprehensive benefit package and equity compensation to every employee. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility.
To attract qualified applicants to the Company, it offers a total compensation package consisting of base salary and cash target bonus targeting the 50 th to 75 th percentile of market, and offers a comprehensive benefit package and equity compensation to every employee. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility.
As a component of the TRiM TM platform, Arrowhead’s design philosophy for RNA chemical modifications is to start with a structurally simple molecule and add only selective modification and stabilization chemistries as necessary to achieve the desired level of target knockdown and duration of effect.
As a component of the TRiM TM platform, the Company’s design philosophy for RNA chemical modifications is to start with a structurally simple molecule and add only selective modification and stabilization chemistries as necessary to achieve the desired level of target knockdown and duration of effect.
The acquisition provided us with two primary sources of value: • Broad freedom to operate with respect to key patents directed to the primary RNAi-trigger formats: canonical, UNA, meroduplex, and dicer substrate structures; and • A large team of scientists experienced in RNAi and oligonucleotide delivery.
The acquisition provided the Company with two primary sources of value: • Broad freedom to operate with respect to key patents directed to the primary RNAi-trigger formats: canonical, UNA, meroduplex, and dicer substrate structures; and • A large team of scientists experienced in RNAi and oligonucleotide delivery.
Arrowhead’s broad portfolio of RNA trigger structures and chemistries, including some proprietary structures, enable the Company to optimize each drug candidate on a target-by-target basis and utilize the combination of structure and chemical modifications that yield the most potent RNAi trigger.
The Company’s broad portfolio of RNA trigger structures and chemistries, including some proprietary structures, enable the Company to optimize each drug candidate on a target-by-target basis and utilize the combination of structure and chemical modifications that yield the most potent RNAi trigger.
Pursuant to a Share Purchase Agreement entered into simultaneously with the Visirna License Agreement (the “Visirna SPA”), Arrowhead acquired a majority stake in Visirna (after accounting for shares reserved for Visirna’s employee stock ownership plan) as partial consideration for the Visirna License Agreement.
Pursuant to a Share Purchase Agreement entered into simultaneously with the Visirna License Agreement (the “Visirna SPA”), the Company acquired a majority stake in Visirna (after accounting for shares reserved for Visirna’s employee stock ownership plan) as partial consideration for the Visirna License Agreement.
Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA until any applicable period of nonpatent exclusivity for the RLD has expired. The FDCA provides a period of five years of data exclusivity for new drug containing a new chemical entity.
Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA until any applicable period of nonpatent exclusivity for the RLD has expired. The FDCA provides a period of five years of data exclusivity for NDAs containing a new chemical entity.
The GDPR imposes a number of strict obligations and restrictions on the ability to process (processing includes collection, analysis and transfer of) personal data of individuals within the EU and in the EEA, including health data from clinical trials and adverse event reporting.
The GDPR imposes a number of strict obligations and restrictions on the ability to process (processing includes collection, analysis and transfer of) personal data of individuals in the EEA, including health data from clinical trials and adverse event reporting.
Arrowhead’s website address is not intended to function as a hyperlink and the information contained on its website is not, and should not be considered part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
The Company’s website address is not intended to function as a hyperlink and the information contained on its website is not, and should not be considered part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
Acquisition of Assets from Novartis On March 3, 2015, Novartis and Arrowhead entered into an Asset Purchase and Exclusive License Agreement (the “RNAi Purchase Agreement”) pursuant to which Arrowhead acquired Novartis’s RNAi assets and rights thereunder.
Acquisition of Assets from Novartis On March 3, 2015, Novartis and the Company entered into an Asset Purchase and Exclusive License Agreement (the “RNAi Purchase Agreement”) pursuant to which the Company acquired Novartis’s RNAi assets and rights thereunder.
Targeted RNAi Molecule (TRiM TM ) Platform Arrowhead’s Targeted RNAi Molecule (TRiM TM ) platform utilizes ligand-mediated delivery and is designed to enable tissue-specific targeting while being structurally simple. Targeting has been core to Arrowhead’s development philosophy and the TRiM TM platform builds on more than a decade of work on actively targeted drug delivery vehicles.
Targeted RNAi Molecule (TRiM TM ) Platform The Company’s Targeted RNAi Molecule (TRiMTM) platform utilizes ligand-mediated delivery and is designed to enable tissue-specific targeting while being structurally simple. Targeting has been core to the Company’s development philosophy and the TRiMTM platform builds on more than a decade of work on actively targeted drug delivery vehicles.
Under the Visirna SPA, entities affiliated with Vivo Capital also acquired a minority stake in Visirna in exchange for $60 million in upfront capital to support the operations of Visirna. As further consideration under the Visirna License Agreement, Arrowhead is also eligible to receive potential royalties on commercial sales.
Under the Visirna SPA, entities affiliated with Vivo Capital also acquired a minority stake in Visirna in exchange for $60.0 million in upfront capital to support the operations of Visirna. As further consideration under the Visirna License Agreement, the Company is also eligible to receive potential royalties on commercial sales.
Department of Health and Human Services’ Civil Monetary Penalty authorities, which imposes administrative sanctions for, among other things, presenting or causing to be presented false claims for government payment and providing remuneration to government health program beneficiaries to influence them to order or receive healthcare items or services; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal and civil liability for, among other conduct, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes criminal and civil liability and penalties on those who violate requirements, including mandatory contractual terms, intended to safeguard the privacy, security, transmission and use of individually identifiable health information; • the federal false statements statute relating to healthcare matters imposes criminal liability for knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the federal Physician Payment Sunshine Act requires manufacturers of drugs (among other products) to report to the Centers for Medicare and Medicaid Services within the U.S.
Department of Health and Human Services’ Civil Monetary Penalty authorities, which imposes administrative sanctions for, among other things, presenting or causing to be presented false claims for government payment and providing remuneration to government health program beneficiaries to influence them to order or receive healthcare items or services; • HIPAA imposes criminal and civil liability for, among other conduct, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the HITECH Act and its implementing regulations, also imposes criminal and civil liability and penalties on those who violate requirements, including mandatory contractual terms, intended to safeguard the privacy, security, transmission and use of individually identifiable health information; • the federal false statements statute relating to healthcare matters imposes criminal liability for knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the federal Physician Payment Sunshine Act requires manufacturers of drugs (among other products) to report to the Centers for Medicare and Medicaid Services within the U.S.
Arrowhead’s DEI committee meets regularly, provides well-attended education and outreach opportunities to its employee base, and offers advice to its senior management concerning Arrowhead's efforts to build a more diverse, equitable, and inclusive workplace. Investor Information Arrowhead’s website address is http://www.arrowheadpharma.com.
The Company’s DEI committee meets regularly, provides well-attended education and outreach opportunities to its employee base, and offers advice to its senior management concerning the Company’s efforts to build a more diverse, equitable, and inclusive workplace. Investor Information The Company’s website address is http://www.arrowheadpharma.com.
Furthermore, should the Phase 3 trial read out positively, and the potential new medicine receives regulatory approval in major markets, the deal provides for commercial milestone payments to Arrowhead of up to $190 million at first commercial sale, and up to $590 million in sales-related milestone payments.
Furthermore, should the Phase 3 trial read out positively, and the potential new medicine receives regulatory approval in major markets, the deal provides for commercial milestone payments to the Company of up to $190.0 million at first commercial sale, and up to $590.0 million in sales-related milestone payments.
During the development of a medicinal product, the European Medical Agency (“EMA”) and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.
During the development of a medicinal product, the European Medicines Agency (“EMA”) and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.
Study Name: Study of ARO-RAGE in Healthy Subjects and Patients With Asthma A Phase 1/2a Study Evaluating the Effects of ARO-RAGE in Healthy Subjects and Patients With Asthma ClinicalTrials.gov Identifier: NCT05276570 ARO-MUC5AC ARO-MUC5AC is designed to reduce production of mucin 5AC (MUC5AC) as a potential treatment for various muco-obstructive pulmonary diseases.
Study Name: Study of ARO-RAGE in Healthy Subjects and Patients With Inflammatory Lung Disease A Phase 1/2a Study Evaluating the Effects of ARO-RAGE in Healthy Subjects and Patients With Inflammatory Lung Disease ClinicalTrials.gov Identifier: NCT05276570 ARO-MUC5AC ARO-MUC5AC is designed to reduce production of mucin 5AC (MUC5AC) as a potential treatment for various muco-obstructive pulmonary diseases.
There is a significant unmet need as liver transplant, with its attendant morbidity and mortality, is currently the only available cure.
There is a significant unmet need as liver transplant, with its attendant morbidity and mortality, is currently the only available treatment.
The marketing authorization application for the pharmaceutical product must include the results of all pediatric clinical trials performed and details of all information collected in compliance with the approved PIP, unless a waiver or a deferral has been granted, in which case the pediatric clinical trials may be completed at a later date.
The MAA for the pharmaceutical product must include the results of all pediatric clinical trials performed and details of all information collected in compliance with the approved PIP, unless a waiver or a deferral has been granted, in which case the pediatric clinical trials may be completed at a later date.
Diversity and Inclusion Arrowhead is committed maintaining a welcome, healthy and equitable environment where all employees can excel and contribute to its mission of bringing safe and effective medicine to patients in need.
Diversity and Inclusion The Company is committed to maintaining a welcome, healthy and equitable environment where all employees can excel and contribute to its mission of bringing safe and effective medicine to patients in need.
The TRiM TM platform is comprised of a highly potent RNA trigger identified using Arrowhead’s proprietary trigger selection rules and algorithms with the following components optimized, as needed, for each drug candidate: a high affinity targeting ligand; various linker and chemistries; structures that enhance pharmacokinetics; and highly potent RNAi triggers with sequence specific stabilization chemistries.
The TRiMTM platform is comprised of a highly potent RNA trigger identified using the Company’s proprietary trigger selection rules and algorithms with the following components optimized, as needed, for each drug candidate: a high affinity targeting ligand; various linker and chemistries; structures that enhance pharmacokinetics; and highly potent RNAi triggers with sequence specific stabilization chemistries.
The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDA regulations. Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on its ClinicalTrials.gov website.
The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDA regulations. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for public dissemination on its ClinicalTrials.gov website.
Arrowhead also controls a patent directed to hydrodynamic nucleic acid delivery that issued in the United States.
The Company also controls a patent directed to hydrodynamic nucleic acid delivery that issued in the United States.
Study Name: Study of ARO-MUC5AC in Healthy Subjects and Patients With Asthma A Phase 1/2a Study to Evaluate the Effects of ARO-MUC5AC in Healthy Subjects and Patients with Asthma ClinicalTrials.gov Identifier: NCT05292950 ARO-MMP7 ARO-MMP7 is designed to reduce expression of matrix metalloproteinase 7 (MMP7) as a potential treatment for idiopathic Pulmonary Fibrosis (IPF).
Study Name: Study of ARO-MUC5AC in Healthy Subjects and Patients With Muco-Obstructive Lung Disease A Phase 1/2a Study to Evaluate the Effects of ARO-MUC5AC in Healthy Subjects and Patients with Muco-Obstructive Lung Disease ClinicalTrials.gov Identifier: NCT05292950 ARO-MMP7 ARO-MMP7 is designed to reduce expression of matrix metalloproteinase 7 (MMP7) as a potential treatment for idiopathic Pulmonary Fibrosis (IPF).
(“Amgen”) On September 28, 2016, Amgen and Arrowhead entered into two collaboration and license agreements and a common stock purchase agreement. Under the Second Collaboration and License Agreement (the “Olpasiran Agreement”), Amgen has received a worldwide, exclusive license to Arrowhead’s novel RNAi Olpasiran (previously referred to as AMG 890 or ARO-LPA) program.
(“Amgen”) On September 28, 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement. Under the Second Collaboration and License Agreement (the “Olpasiran Agreement”), Amgen received a worldwide, exclusive license to the Company’s novel RNAi olpasiran (previously referred to as AMG 890 or ARO-LPA) program.
The depth and versatility of Arrowhead's RNAi technologies enables Arrowhead to potentially address conditions in virtually any therapeutic area and pursue disease targets that are not otherwise addressable by small molecules and biologic.
The depth and versatility of the Company’s RNAi technologies enables the Company to potentially address conditions in virtually any therapeutic area and pursue disease targets that are not otherwise addressable by small molecules and biologic.
Arrowhead is further eligible to receive tiered royalties on net product sales in a range of mid-teens to twenty percent. ARO-HSD ARO-HSD is designed to reduce production of HSD17B13, a hydroxysteroid dehydrogenase involved in the metabolism of hormones, fatty acids and bile acids.
The Company is further eligible to receive tiered royalties on net product sales in a range of mid-teens to twenty percent. GSK-4532990 GSK-4532990 (formerly ARO-HSD) is designed to reduce production of HSD17B13, a hydroxysteroid dehydrogenase involved in the metabolism of hormones, fatty acids and bile acids.
Under the Janssen License Agreement, Janssen has received a worldwide, exclusive license to Arrowhead’s JNJ-3989 (ARO-HBV) program, Arrowhead’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential 7 therapy for patients with chronic hepatitis B virus infection.
Under the Janssen License Agreement, Janssen received a worldwide, exclusive license to the Company’s JNJ-3989 (formerly ARO-HBV) program, the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection.
Research and Development Facilities Arrowhead operates lab facilities in Madison, Wisconsin and San Diego, California where its research and development activities, including the development of RNAi therapeutics, take place. Arrowhead’s principal executive offices are located in Pasadena, California.
Research and Development Facilities The Company operates lab facilities in San Diego, California and Madison, Wisconsin where its research and development activities, including the development of RNAi therapeutics, take place. The Company’s principal executive offices are located in Pasadena, California.
Accelerated assessment might be granted by the CHMP in exceptional cases when a pharmaceutical product is of major interest from the point of view of public health and in particular from the viewpoint of therapeutic innovation. On request, the CHMP can reduce the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment.
Accelerated assessment might be granted by the CHMP in exceptional cases when a pharmaceutical product is expected to be of major public health interest, particularly from the point of therapeutic innovation. On request, the CHMP can reduce the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment.
Fazirsiran (formerly TAK-999 and ARO-AAT) Fazirsiran is a subcutaneously administered RNAi therapeutic being developed as a treatment for liver disease associated with alpha-1 antitrypsin deficiency (AATD), which is a rare genetic disorder that severely damages the liver and lungs of affected individuals.
Fazirsiran Fazirsiran is a subcutaneously administered RNAi therapeutic being developed as a treatment for liver disease associated with alpha-1 antitrypsin deficiency (AATD), which is a rare genetic disorder that severely damages the liver and lungs of affected individuals.
ANGPTL3 inhibition has been shown to lower serum LDL, serum and liver triglyceride and has genetic validation as a novel target for cardiovascular disease. Arrowhead is currently investigating ARO-ANG3 in two Phase 2b clinical trials. Dyslipidemia and Hypertriglyceridemia: Dyslipidemia and hypertriglyceridemia are risk factors for atherosclerotic coronary heart disease and cardiovascular events.
ANGPTL3 inhibition has been shown to lower serum LDL, serum and liver triglyceride and has genetic validation as a novel target for cardiovascular disease. The Company is currently investigating zodasiran in two Phase 2b clinical trials. Dyslipidemia and Hypertriglyceridemia: Dyslipidemia and hypertriglyceridemia are risk factors for atherosclerotic coronary heart disease and cardiovascular events.
Actual bonus payout is based on performance. A significant portion of Arrowhead’s employees have obtained advanced degrees in their professions. Arrowhead supports its employees’ further development with individualized development plans, mentoring, coaching, group training, conference attendance and financial support including tuition reimbursement.
Actual bonus payout is based on performance. 31 A significant portion of the Company’s employees have obtained advanced degrees in their professions. The Company supports its employees’ further development with individualized development plans, mentoring, coaching, group training, conference attendance and financial support including tuition reimbursement.
(“Janssen”) On October 3, 2018, Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson, and Arrowhead entered into a License Agreement (the “Janssen License Agreement”) and a Research Collaboration and Option Agreement (the “Janssen Collaboration Agreement”). Arrowhead also entered into a stock purchase agreement with JJDC, Inc. (“JJDC”), Johnson & Johnson's venture capital arm (“JJDC Stock Purchase Agreement”).
(“Janssen”) On October 3, 2018, Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson, and the Company entered into a License Agreement (the “Janssen License Agreement”). The Company also entered into a stock purchase agreement with JJDC, Inc. (“JJDC”), Johnson & Johnson’s venture capital arm (the “JJDC Stock Purchase Agreement”).
Additionally, following the UK’s withdrawal from the EU and the EEA, companies have to comply also with the UK’s data protection laws (including the GDPR as incorporated into UK national law), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.
Additionally, following the UK’s withdrawal from the EEA, companies also have to comply with the UK’s data protection laws (including the GDPR as incorporated into UK national law), the latter regime having the ability to impose fines up to the greater of £17.5 million or 4% of global turnover.
Human Capital Management As of September 30, 2022, Arrowhead employed 397 full time employees based at three facilities in the United States, including Pasadena and San Diego, California, and Madison, Wisconsin. The following table presents total number of employees as of September 30 by location.
Human Capital Management As of September 30, 2023, the Company employed 525 full time employees based at three facilities in the United States, including Pasadena and San Diego, California, and Madison, Wisconsin. The following table presents total number of employees as of September 30 by location.
On February 2, 2022, the UK Secretary of State laid before the UK Parliament the international data transfer agreement (IDTA), the international data transfer addendum to the European Commission’s standard contractual clauses for international data transfers (Addendum) and a document setting out transitional provisions.
These UK international transfer rules broadly mirror the EU GDPR rules. On February 2, 2022, the UK Secretary of State laid before the UK Parliament the international data transfer agreement (IDTA) and the international data transfer addendum to the European Commission’s standard contractual clauses for international data transfers (Addendum) and a document setting out transitional provisions.
These SEC reports can be accessed through the “Investors” section of Arrowhead's website. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding Arrowhead and other issuers that file electronically with the SEC. The SEC’s Internet website address is http://www.sec.gov . 31
These SEC reports can be accessed through the “Investors” section of the Company’s website. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding the Company and other issuers that file electronically with the SEC. The SEC’s Internet website address is http://www.sec.gov . 32
Arrowhead is focused on bringing the promise of RNAi to address diseases outside of the liver, and its pipeline now includes disease targets in the liver, lung, muscle and other undisclosed tissue types. 3 ARO-APOC3 ARO-APOC3 is designed to reduce production of Apolipoprotein C-III (apoC-III), a component of triglyceride rich lipoproteins (TRLs) including Very Low Density Lipoprotein (VLDL) and chylomicrons and a key regulator of triglyceride metabolism.
The Company is focused on bringing the promise of RNAi to address diseases outside of the liver, and its pipeline now includes disease targets in the liver, lung, muscle and CNS. 3 Plozasiran (ARO-APOC3) Plozasiran (formerly ARO-APOC3) is designed to reduce production of Apolipoprotein C-III (apoC-III), a component of triglyceride rich lipoproteins (TRLs) including Very Low Density Lipoprotein (VLDL) and chylomicrons and a key regulator of triglyceride metabolism.
Arrowhead scientists have discovered ways to progressively “TRiM” away extraneous features and chemistries and retain optimal pharmacologic activity.
The Company’s scientists have discovered ways to progressively “TRiM” away extraneous features and chemistries and retain optimal pharmacologic activity.
The European Commission proposed to repeal and replace Directive 89/105/EEC, but this proposal was withdrawn in 2015. • Directive 2003/94/EC, laying down the principles of good manufacturing practice in respect of medicinal products and investigational medicinal products for human use (the “GMP Directive”). • Directive 2005/28/EC of April 8, 2005, laying down principles and detailed guidelines for good clinical practice as regards investigational medicinal products for human use, as well as the requirements for authorization of the manufacturing or importation of such products (the “GCP Directive”). • Directives 2004/9/EC and 2004/10/EC laying down principles of good laboratory practices (“GLP”) including on the organizational process under which non-clinical health and safety studies are performed. • Directive 2010/84/EU and Regulation (EU) 1235/2010 on pharmacovigilance laying down procedures for the authorization and supervision of medicinal products for human and veterinary use. • Directive 2006/114/EC concerning misleading and comparative advertising. • Directive 2005/29/EC regulating unfair business-to-consumer commercial practices that occur before, during and after a business-to-consumer transaction. • Regulation (EC) 1223/2009 on Cosmetic Products, setting mandatory requirements for cosmetics which are available on the market within the EU. • Regulation (EC) 1901/2006 on Pediatric Use, laying down rules to ensure that medicines for use in children are researched, developed and authorized appropriately. • Directive (2004/109/EC) on Transparency laying down rules to improves the harmonization of information duties of issuers, whose securities are listed at a regulated market at a stock exchange within the EU.
The European Commission proposed to repeal and replace Directive 89/105/EEC, but this proposal was withdrawn in 2015. • Directive 2003/94/EC, laying down the principles of good manufacturing practice in respect of medicinal products and investigational medicinal products for human use (the “GMP Directive”); repealed by Directive 2017/1572 on January 31, 2022; this directive also lays out standards and principles for manufacturing practices of medicinal products for human use and investigational medicinal products for human use. • Directive 2005/28/EC of April 8, 2005, laying down principles and detailed guidelines for good clinical practice as regards investigational medicinal products for human use, as well as the requirements for authorization of the manufacturing or importation of such products (the “GCP Directive”). • Directives 2004/9/EC and 2004/10/EC laying down principles of GLP including on the organizational process under which non-clinical health and safety studies are performed. • Directive 2010/84/EU and Regulation (EU) 1235/2010 on pharmacovigilance laying down procedures for the authorization and supervision of medicinal products for human and veterinary use. • Directive 2006/114/EC concerning misleading and comparative advertising. • Directive 2005/29/EC regulating unfair business-to-consumer commercial practices that occur before, during and after a business-to-consumer transaction. 28 • Regulation (EC) 1223/2009 on Cosmetic Products, setting mandatory requirements for cosmetics which are available on the market within the EU. • Regulation (EC) 1901/2006 on Pediatric Use, laying down rules to ensure that medicines for use in children are researched, developed and authorized appropriately. • Directive (2004/109/EC) on Transparency laying down rules to improves the harmonization of information duties of issuers, whose securities are listed at a regulated market at a stock exchange within the EU; amended by Directive (EU) 2022/2464 with effect from May 1, 2023 as regards corporate sustainability reporting.
The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, risk sharing, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, risk sharing, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. Recently, the U.S. government passed the Inflation Reduction Act (“IRA”) , which authorizes the U.S.
The FDA has continued to issue guidance focused on implementing the Cures Act requirements. 19 Review and Approval of Drug Products in the European Union and United Kingdom In order to market any pharmaceutical product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions governing, among other things, research and development, testing, manufacturing, quality control, safety, efficacy, labeling, clinical trials, marketing authorization, packaging, storage, record keeping, reporting, export and import, advertising, marketing and other promotional practices involving pharmaceutical products, as well as commercial sales, distribution, authorization, approval and post-approval monitoring and reporting of its products.
Review and Approval of Drugs in the European Union and United Kingdom In order to market any pharmaceutical product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions governing, among other things, research and development, testing, manufacturing, quality control, safety, efficacy, labeling, clinical trials, marketing authorization, packaging, storage, record keeping, reporting, export and import, advertising, marketing and other promotional practices involving pharmaceutical products, as well as commercial sales, distribution, authorization, approval and post-approval monitoring and reporting of its products.
JNJ-3989 (also referred to as JNJ-73763989 and formerly referred to as ARO-HBV) JNJ-3989 is being developed in collaboration with Janssen as a potential therapy for patients with chronic hepatitis B infection, when used in combination with other therapeutic modalities.
JNJ-3989 (also referred to as JNJ-73763989) JNJ-3989 is being developed by Janssen as a potential therapy for patients with chronic hepatitis B infection, when used in combination with other therapeutic modalities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere can be no assurance that our product candidates will obtain regulatory approval, which is necessary before they can be commercialized. • Our clinical trials may not yield successful results for the product candidates that we may identify and pursue for their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization. • Our clinical trials may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates. • Clinical trials of our product candidates may not uncover all possible adverse events that patients may experience. • Topline data may not accurately reflect the complete results of a particular study or trial. • Results of earlier studies or clinical trials may not be predictive of future clinical trial results, and initial studies or clinical trials may not establish an adequate safety or efficacy profile for our product candidates to justify proceeding to advanced clinical trials or an application for regulatory approval. • It may take us longer than we project to complete clinical trials, and we may not be able to complete them at all. • We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization. • The successful commercialization of our product candidates, if approved, will depend in part on the extent to which government authorities and health insurers establish adequate reimbursement levels and pricing policies. • We may not enjoy the market exclusivity benefits of our orphan drug designations. • Our success depends on the attraction and retention of senior management and scientists with relevant expertise.
Biggest changeThere can be no assurance that our product candidates will obtain regulatory approval, which is necessary before they can be commercialized. • Our clinical trials may not yield successful results for the product candidates that we may identify and pursue for their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization. • Our clinical trials may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates. • Results of earlier studies or clinical trials may not be predictive of future clinical trial results, and initial studies or clinical trials may not establish an adequate safety or efficacy profile for our product candidates to justify proceeding to advanced clinical trials or an application for regulatory approval. • We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization. • The successful commercialization of our product candidates, if approved, will depend in part on the extent to which government authorities and health insurers establish adequate reimbursement levels and pricing policies.
There are risks inherent in pharmaceutical manufacturing that could affect the ability of our contract manufacturers to meet our delivery time requirements or provide adequate amounts of material to meet our needs.
There are risks inherent in pharmaceutical manufacturing that could affect the ability of our or our contract manufacturers to meet our delivery time requirements or provide adequate amounts of material to meet our needs.
Furthermore, our operating results may fluctuate due to a variety of other factors, may of which are outside of our control and may be difficult to predict, including the following: • the timing and cost of, and level of investment in, research and development activities relating to our current and any future product candidates, which will change from time to time; • our ability to enroll patients in clinical trials and the timing of enrollment; • the cost of manufacturing our current and any future product candidates, which may vary depending on FDA guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers; • expenditures that we will or may incur to acquire or develop additional product candidates and technologies; • the timing and outcomes of clinical trials for product candidates; • the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated; • competition from existing and potential future products that compete with any of our product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • any delays in regulatory review or approval of any of our product candidates; • the level of demand for any of our product candidates, if approved, which may fluctuate significantly and be difficult to predict; • the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future products that compete with our product candidates; • our ability to commercialize any of our product candidates, if approved, inside and outside of the United States, either independently or working with third parties; • our ability to establish and maintain collaborations, licensing or other arrangements; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic environment.
Furthermore, our operating results may fluctuate due to a variety of other factors, may of which are outside of our control and may be difficult to predict, including the following: • the timing and cost of, and level of investment in, research and development activities relating to our current and any future product candidates, which will change from time to time; • our ability to enroll patients in clinical trials and the timing of enrollment; • the cost of manufacturing our current and any future product candidates, which may vary depending on FDA guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers and other suppliers; • expenditures that we will or may incur to acquire or develop additional product candidates and technologies; • the timing and outcomes of clinical trials for product candidates; • the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated; • competition from existing and potential future products that compete with any of our product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • any delays in regulatory review or approval of any of our product candidates; • the level of demand for any of our product candidates, if approved, which may fluctuate significantly and be difficult to predict; • the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future products that compete with our product candidates; • our ability to commercialize any of our product candidates, if approved, inside and outside of the United States, either independently or working with third parties; • our ability to establish and maintain collaborations, licensing or other arrangements; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic environment.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any products, including the following: • the results of preclinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; 35 • safety and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials; • after reviewing test results, we may abandon projects that we might previously have believed to be promising; • we or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and • our product candidates may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any products, including the following: • the results of preclinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; • safety and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials; • after reviewing test results, we may abandon projects that we might previously have believed to be promising; • we or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and • our product candidates may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved.
Although to date our current drug candidates have generally evidenced an acceptable safety profile in clinical trials, patients treated with our products, if approved, may experience previously unreported adverse reactions or minor incidences of adverse reactions may manifest with greater frequency in subsequent larger trials, and it is possible that the FDA or other regulatory authorities may ask for additional safety data as a condition of, or in connection with, our efforts 36 to obtain approval of our product candidates.
Although to date our current drug candidates have generally evidenced an acceptable safety profile in clinical trials, patients treated with our products, if approved, may experience previously unreported adverse reactions or minor incidences of adverse reactions may manifest with greater frequency in subsequent larger trials, and it is possible that the FDA or other regulatory authorities may ask for additional safety data as a condition of, or in connection with, our efforts to obtain approval of our product candidates.
In addition, under Section 382 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percent change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
In addition, under Section 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percent change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
Therefore, it is possible that our development plans will have to be slowed down or stopped completely at times due to our inability to obtain required raw materials, components, and 43 outsourced processes at an acceptable cost, if at all, or to get a timely response from vendors, particularly as a result of recent labor market and global supply chain constraints.
Therefore, it is possible that our development plans will have to be slowed down or stopped completely at times due to our inability to obtain required raw materials, components, and outsourced processes at an acceptable cost, if at all, or to get a timely response from vendors, particularly as a result of recent labor market and global supply chain constraints.
In addition, the information we may publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or our business.
In addition, the information we may publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material 37 or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or our business.
If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of 39 our business plan, and which may result in product candidates that we may develop not receiving approval or clearance for commercialization in the applicable jurisdiction.
If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in product candidates that we may develop not receiving approval or clearance for commercialization in the applicable jurisdiction.
Drug development takes years of study in human clinical trials prior to regulatory approval, and, even if we are successful, it may not be on a timely basis. During our drug development period, superior competitive technologies may be introduced which could diminish or extinguish the potential commercial uses for our drug candidates.
Drug development takes years of study in human clinical trials prior to regulatory approval, and, even if we are successful in getting regulatory approval of our drug candidates, it may not be on a timely basis. During our drug development period, superior competitive technologies may be introduced which could diminish or extinguish the potential commercial uses for our drug candidates.
As our organization grows, so does the risk of 41 unauthorized disclosure of confidential information. In addition, while we undertake efforts to protect our trade secrets and other confidential information from disclosure, others may independently discover trade secrets and proprietary information, and in such cases, we may not be able to assert any trade secret rights against such party.
As our organization grows, so does the risk of unauthorized disclosure of confidential information. In addition, while we undertake efforts to protect our trade secrets and other confidential information from disclosure, others may independently discover trade secrets and proprietary information, and in such cases, we may not be able to assert any trade secret rights against such party.
Any NOLs arising on or after January 1, 2021, cannot be carried back, can generally be carried forward indefinitely and can offset up to 80% of future taxable income. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law.
Any NOLs arising on or after January 1, 2021, cannot be carried back, but can generally be carried forward indefinitely and can offset up to 80% of future taxable income. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law.
Currently, coverage of our Company by industry and securities analysts is limited. 49 Investors have many investment opportunities and may limit their investments to companies that receive greater coverage from analysts. If additional industry or securities analysts do not commence coverage of the Company, the trading price of our stock could be negatively impacted.
Currently, coverage of our Company by industry and securities analysts is limited. Investors have many investment opportunities and may limit their investments to companies that receive greater coverage from analysts. If additional industry or securities analysts do not commence coverage of the Company, the trading price of our stock could be negatively impacted.
Under the CARES Act and 2017 Tax Act, federal NOLs incurred in 2018, 2019 and 2020 can generally be carried back five years, carried forward indefinitely and can offset 100% of future taxable income for tax years before January 1, 2021 and up to 80% of future 48 taxable income for tax years after December 31, 2020.
Under the CARES Act and 2017 Tax Act, federal NOLs incurred in 2018, 2019 and 2020 can generally be carried back five years, carried forward indefinitely and can offset 100% of future taxable income for tax years before January 1, 2021 and up to 80% of future taxable income for tax years after December 31, 2020.
Such operations and facilities are also subject to the risk of interruption by fire, drought, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks, labor disputes, public health crises (including the COVID-19 pandemic), and other events beyond the Company’s control.
Such operations and facilities are also subject to the risk of interruption by drought, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks, labor disputes, public health crises (including the COVID-19 pandemic), and other events beyond the Company’s control.
Without limiting the foregoing, we have experienced and/or may in the future experience: • delays in receiving authorization from regulatory authorities to initiate any planned clinical trials, inspections, reviews and approvals of products; • delays or difficulties enrolling patients in our clinical trials; • delays in or disruptions to the conduct of preclinical programs and clinical trials; 51 • constraints on the movement of products and supplies through the supply chain, which can disrupt our ability to conduct clinical trials and develop our products; • price increases in raw materials and capital equipment, as well as increasing price competition in our markets; • adverse impacts on our workforce and/or key employees; and • increased risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations.
Without limiting the foregoing, we have experienced and/or may in the future experience: 54 • delays in receiving authorization from regulatory authorities to initiate any planned clinical trials, inspections, reviews and approvals of products; • delays or difficulties enrolling patients in our clinical trials; • delays in or disruptions to the conduct of preclinical programs and clinical trials; • constraints on the movement of products and supplies through the supply chain, which can disrupt our ability to conduct clinical trials and develop our products; • price increases in raw materials and capital equipment, as well as increasing price competition in our markets; • adverse impacts on our workforce and/or key employees; and • increased risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations.
The claims may require us to initiate or defend protracted and costly litigation on behalf of customers, licensees, and other parties regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of those parties or may be required to obtain licenses for the products they use.
The claims may require us to initiate or defend protracted and costly litigation on behalf of customers, licensees, and other 42 parties regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of those parties or may be required to obtain licenses for the products they use.
As such, there can be no assurance that regulatory standards that are appropriate at the outset of a clinical trial program will not become more rigorous during the regulatory approval process and could potentially result in a delayed approval or denial of marketing authorization.
As such, there can be no assurance that regulatory standards that are appropriate at the outset of a clinical trial program will not become more rigorous during the regulatory approval process and could potentially result in a delayed approval or denial of marketing authorization. 55
Further, the cost for conducting clinical trials is significant and if our cash resources become limited we may not be able to commence, continue 37 and/or complete our clinical trials. We may not commence or complete clinical trials involving any of our product candidates as projected or may not conduct them successfully.
Further, the cost for conducting clinical trials is significant and if our cash resources become limited we may not be able to commence, continue and/or complete our clinical trials. We may not commence or complete clinical trials involving any of our product candidates as projected or may not conduct them successfully.
Our success will depend in part on the ability of our licensors to obtain, maintain and enforce patent protection for our licensed intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we are licensed.
Our success may depend in part on the ability of our licensors to obtain, maintain and enforce patent protection for our licensed intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we are licensed.
In addition, we measure compensation cost for stock-based awards made to employees at the grant date of the award, based on the fair value of the award, and recognize the cost as an expense over the employee’s requisite service 47 period.
In addition, we measure compensation cost for stock-based awards made to employees at the grant date of the award, based on the fair value of the award, and recognize the cost as an expense over the employee’s requisite service period.
The acceptance by the FDA or comparable foreign regulatory authority of study data from clinical trials conducted outside the United States or another jurisdiction may be subject to certain conditions or may not be accepted at all.
The acceptance by the FDA or comparable foreign regulatory authority of study data from clinical trials conducted outside the United States or another 40 jurisdiction may be subject to certain conditions or may not be accepted at all.
In addition, the laws of some foreign countries in which we do business, including through our joint ventures, do not protect intellectual property rights to the same extent or in the same manner as the laws of the United 40 States.
In addition, the laws of some foreign countries in which we do business, including through our joint ventures, do not protect intellectual property rights to the same extent or in the same manner as the laws of the United States.
The risk of a cyber-security breach or other informational technology disruption, particularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a cyber-security breach or other informational technology disruption, 47 particularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses, the amounts of charges accrued by us and related disclosure of contingent assets and liabilities.
The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses, the amounts of 49 charges accrued by us and related disclosure of contingent assets and liabilities.
We will require substantial additional funds to complete our research and development activities. 46 Our business currently does not generate the cash that is necessary to finance our operations.
We will require substantial additional funds to complete our research and development activities. Our business currently does not generate the cash that is necessary to finance our operations.
Additionally, our operations and facilities, as well as operations of our suppliers and manufacturers, may be located in areas that are prone to earthquakes and other natural disasters.
Additionally, our operations and facilities, as well as operations of our suppliers and manufacturers, may be located in areas that are prone to earthquakes, wildfires and other natural disasters.
Even if we are able to find collaborative partners, the overall success of the development and commercialization of product candidates in those programs will depend largely on the efforts of other parties and will be beyond our control, particularly as partnered programs progress and our licensees may elect to 42 assume greater control over these programs.
Even if we are able to find collaborative partners, the overall success 44 of the development and commercialization of product candidates in those programs will depend largely on the efforts of other parties and will be beyond our control, particularly as partnered programs progress and our licensees may elect to assume greater control over these programs.
Over the past several years we have entered into license and collaboration agreements with Takeda, Janssen, Amgen, Horizon, GSK and Visirna. Our business strategy includes obtaining additional collaborations with other pharmaceutical and biotech companies to support the development of our RNAi therapeutics and other drug candidates.
Over the past several years we have entered into license and collaboration agreements with Takeda, Janssen, Amgen, Horizon, GSK and Visirna. Our business strategy includes securing additional collaborations with other pharmaceutical and biotech companies to support the development of our RNAi therapeutics and other drug candidates.
We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value-added taxes against us.
Additionally, we may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value-added taxes against us.
If we are unable to find, hire and retain qualified individuals, we will have difficulty implementing our business plan in a timely manner, or at all. Risks Related to Regulatory Review and Approval of Our Product Candidates Breakthrough Therapy designation for ARO-AAT may not lead to a faster development or review process.
If 39 we are unable to find, hire and retain qualified individuals, we will have difficulty implementing our business plan in a timely manner, or at all. Risks Related to Regulatory Review and Approval of Our Product Candidates Breakthrough Therapy designation for Fazirsiran (formerly ARO-AAT) may not lead to a faster development or review process.
Under the Internal Revenue Code of 1986, as amended (the “Code”), a corporation is generally allowed a deduction for net operating losses (NOLs) carried forward from a prior taxable year. Under that provision, we can carryforward our NOLs to offset our future taxable income, if any, until such NOLs are used or expire.
We have historically incurred net losses. Under the Internal Revenue Code of 1986, as amended (the “Code”), a corporation is generally allowed a deduction for net operating losses (NOLs) carried forward from a prior taxable year. Under that provision, we can carryforward our NOLs to offset our future taxable income, if any, until such NOLs are used or expire.
It is also unknown at this time what changes in the liver may be required to gain regulatory approval and/or favorable reimbursement for a drug that reduces the production of mutant alpha-1 antitrypsin in the liver. Similar uncertainties and risks exist that are specific to each of our development programs.
With respect to fazirsiran, it is also unknown at this time what changes in the liver may be required to gain regulatory approval and/or favorable reimbursement for a drug that reduces the production of mutant alpha-1 antitrypsin in the liver. Similar uncertainties and risks exist that are specific to each of our development programs.
Our clinical trials may not yield successful results for the product candidates that we may identify and pursue for their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization. We must demonstrate our product candidates’ safety and efficacy in humans for each target indication through extensive clinical testing.
Our clinical trials may not yield successful results for the product candidates that we may i dentify and pursue for their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization. We must demonstrate our product candidates’ safety and efficacy in humans for each target indication through extensive clinical testing.
Despite receiving Breakthrough Therapy designation, ARO-AAT may not actually benefit from faster clinical development or regulatory review or approval any sooner than other product candidates that do not have such designation, or at all. Furthermore, such a designation does not increase the likelihood that ARO-AAT will receive marketing approval in the United States.
Despite receiving Breakthrough Therapy designation, fazirsiran may not actually benefit from faster clinical development or regulatory review or approval any sooner than other product candidates that do not have such designation, or at all. Furthermore, such a designation does not increase the likelihood that fazirsiran will receive marketing approval in the United States.
Additionally, the ongoing conflict between Russia and Ukraine has impacted our business decisions with respect to potential clinical trial sites in Europe. For example, a number of our clinical trial sites we had previously planned to use in Russia, Ukraine and Belarus were shut down and we have sought alternatives in other geographies.
Additionally, the ongoing conflict between Russia and Ukraine has impacted our business decisions with respect to potential clinical trial sites in Europe. For example, a number of our clinical trial sites we had previously planned to use in Russia, Ukraine and Belarus were shut down and we had to seek alternatives in other geographies.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any future collaborator.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any collaborator or licensee.
Accordingly, there is a limited amount of information about us upon which you can evaluate our business and prospects. • We may need to establish additional relationships with strategic and development partners to fully develop our drug candidates and market any approved products. • Our ability to generate milestone and royalty payments under our current and potential future licensing and collaboration agreements is substantially controlled by our partners, and as such, we will likely need other sources of financing to continue to develop our internal drug candidates. • We may lose a considerable amount of control over our intellectual property and may not receive anticipated revenues in strategic transactions, particularly where the consideration is contingent on the achievement of development or sales milestones. • We will need to achieve commercial acceptance of our drug candidates to generate revenues and achieve profitability . • We rely on outside sources for various components and processes for our products. • We have limited manufacturing capability and must rely on third-party manufacturers to manufacture our clinical supplies and commercial products, if and when approved, and if they fail to meet their obligations, the development and commercialization of our products could be adversely affected. • We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, the development of our products may be adversely affected. • We face competition from various entities including large pharmaceutical companies, small biotech companies, private companies, and research institutions. • We may have difficulty expanding our operations successfully as we evolve our pipeline and move toward commercializing drugs. • Our business and operations could suffer in the event of information technology system failures. • Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. • Litigation claims may result in financial losses or harm our reputation and may divert management resources. • Our operations, including our relationships with healthcare providers, physicians and third-party payers, are subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which, in the event of a violation, exposes us to liability for criminal sanctions, civil penalties, and contractual damages, and reputational harm and diminished profits and future earnings.
Accordingly, there is a limited amount of information about us upon which you can evaluate our business and prospects. • We may need to establish additional relationships with strategic and development partners to fully develop our drug candidates and market any approved products. • Our ability to generate milestone and royalty payments under our current and potential future licensing and collaboration agreements is substantially controlled by our partners, and as such, we will likely need other sources of financing to continue to develop our internal drug candidates. • We may lose a considerable amount of control over our intellectual property and may not receive anticipated revenues in strategic transactions, particularly where the consideration is contingent on the achievement of development or sales milestones. • We will need to achieve commercial acceptance of our drug candidates to generate revenues and achieve profitability . • We have limited manufacturing capability and must rely on third-party manufacturers to manufacture our clinical supplies and commercial products, if and when approved, and if they fail to meet their obligations, the development and commercialization of our products could be adversely affected. • We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, the development of our products may be adversely affected. • We face competition from various entities including large pharmaceutical companies, small biotech companies, private companies, and research institutions. • We may have difficulty expanding our operations successfully as we evolve our pipeline and move toward commercializing drugs. • Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. • Our operations, including our relationships with healthcare providers, physicians and third-party payers, are subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which, in the event of a violation, exposes us to liability for criminal sanctions, civil penalties, and contractual damages, and reputational harm and diminished profits and future earnings.
In addition, many venture capital firms and other institutional investors, as well as other pharmaceutical and biotech companies, invest in companies seeking to commercialize various types of emerging technologies. Many of these companies have greater financial, scientific and commercial resources than us. Therefore, we may not be able to secure the technologies we desire.
In addition, many venture capital firms and other institutional investors, as well as other pharmaceutical and biotech companies, invest in companies seeking to commercialize various types of emerging technologies. Many of these companies have greater financial, scientific and commercial resources than us. Therefore, we may not be able to secure the technologies we desire or to otherwise effectively compete.
The success of developing and commercializing our product candidates will depend on several factors, including the following: • obtaining positive data that supports demonstration of efficacy, safety and tolerability profiles and durability of effect for our product candidates that are satisfactory to the FDA or any comparable foreign regulatory authority for marketing approval; • successful and timely enrollment of appropriate patients for the indications included in our current and future clinical trials; • potential variability of patient outcomes; • our ability to address any potential delays resulting from factors related to the COVID-19 pandemic; • the extent of any required post-marketing approval commitments to applicable regulatory authorities; • the maintenance of existing or the establishment of new supply arrangements with third-party drug product suppliers and manufacturers for clinical development and, if approved, commercialization of our product candidates; • the maintenance of existing or the establishment of new scaled production arrangements with third-party manufacturers to obtain finished products that are appropriately packaged for sale; • obtain and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; • protection of our rights in our intellectual property portfolio, including our licensed intellectual property; • establishing sales, marketing and distribution capabilities and the successful launch of commercial sales of our product candidates if and when approved for marketing, whether alone or in collaboration with others; • a continued acceptable safety profile following any marketing approval; • commercial acceptance by patients, the medical community and third-party payors; and 34 • our ability to compete with other therapies.
The success of developing and commercializing our product candidates will depend on several factors, including the following: • obtaining positive data that supports demonstration of efficacy, safety and tolerability profiles and durability of effect for our product candidates that are satisfactory to the FDA or any comparable foreign regulatory authority for marketing approval; • successful and timely enrollment of appropriate patients for the indications included in our current and future clinical trials; • potential variability of patient outcomes; • the extent of any required post-marketing approval commitments to applicable regulatory authorities; • the establishment of and maintenance of sufficient internal manufacturing capabilities; • the maintenance of existing or the establishment of new supply arrangements with third-party drug product suppliers and manufacturers for clinical development and, if approved, commercialization of our product candidates; • the maintenance of existing or the establishment of new scaled production arrangements with third-party manufacturers to obtain finished products that are appropriately packaged for sale; • obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; • protecting our rights in our intellectual property portfolio, including our licensed intellectual property; • establishing sales, marketing and distribution capabilities and the successful launch of commercial sales of our product candidates if and when approved for marketing, whether alone or in collaboration with others; • a continued acceptable safety profile following any marketing approval; • commercial acceptance by patients, the medical community and third-party payors; and • our ability to compete with other therapies.
Food and Drug Administration; • Announcements regarding developments in the RNA interference or biotechnology fields in general; • Announcements regarding clinical trial results with our products or competitors’ products; • Market perception and/or announcements regarding other companies developing products in the field of biotechnology generally or specifically RNA interference; • The issuance of competitive patents or disallowance or loss of our patent rights; • The addition or departure of key executives; and • Variations in our operating results.
Food and Drug Administration; • Announcements regarding developments in the RNA interference, antisense technologies, gene editing technologies or biotechnology fields in general; • Announcements regarding clinical trial results with our products or competitors’ products; • Market perception and/or announcements regarding other companies developing products in the field of biotechnology generally or specifically RNA interference; 52 • The issuance of competitive patents or disallowance or loss of our patent rights; • The addition or departure of key executives; and • Variations in our operating results.
In the past three years, the COVID-19 pandemic has had, and likely will continue to have, an adverse impact on the global economy, including as a result of impacts associated with protective health measures that we, other businesses and governments are taking or might have to take again in the future to manage the pandemic.
In the past four years, the COVID-19 pandemic has had an adverse impact on the global economy, including as a result of impacts associated with protective health measures that we, other businesses and governments are taking or might have to take again in the future to manage the pandemic.
Further, military conflicts or wars (such as the ongoing conflict between Russia and Ukraine) can cause exacerbated volatility and disruptions to various aspects of the global economy.
Further, military conflicts or wars (such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine ) can cause exacerbated volatility and disruptions to various aspects of the global economy.
We have been granted a Breakthrough Therapy designation for ARO-AAT in the United States for the treatment of liver disease associated with AATD.
We have been granted a Breakthrough Therapy designation for fazirsiran in the United States for the treatment of liver disease associated with AATD.
For example, the Inflation Reduction Act of 2022 (“IRA”) includes several measures intended to lower the cost of prescription drugs and related healthcare reforms, including limits on price increases and subjecting an escalating number of drugs to annual price negotiations with CMS (The Centers for Medicare & Medicaid Services).
For example, the IRA includes several measures intended to lower the cost of prescription drugs and related healthcare reforms, including limits on price increases and subjecting an escalating number of drugs to annual price negotiations with CMS (The Centers for Medicare & Medicaid Services).
Risks Related to Regulatory Review and Approval of Our Candidates • Breakthrough Therapy designation for ARO-AAT may not lead to a faster development or review process. • We and our licensees conduct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. • Even if we obtain FDA approval for products in the United States, we may never obtain approval to commercialize any product candidates outside of the United States, which would limit our ability to realize their full market potential. • Even if our product candidates are approved for commercialization, failure to comply with regulatory requirements or unanticipated problems with our products may result in various adverse actions such as the suspension or withdrawal of one or more of our products, closure of a facility or enforcement of substantial penalties or fines.
Risks Related to Regulatory Review and Approval of Our Candidates • A Fast Track product designation may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval. • We and our licensees conduct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. • Even if we obtain FDA approval for products in the United States, we may never obtain approval to commercialize any product candidates outside of the United States, which would limit our ability to realize their full market potential. • Even if our product candidates are approved for commercialization, failure to comply with regulatory requirements or unanticipated problems with our products may result in various adverse actions such as the suspension or withdrawal of one or more of our products, closure of a facility or enforcement of substantial penalties or fines.
Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact the Company’s operations and supply chain. These geopolitical risks could also adversely affect our joint venture in China.
Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact the Company’s operations and supply chain. These geopolitical risks could also adversely affect Visirna.
Risks Related to Our Financial Condition • We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability. • We will require substantial additional funds to complete our research and development activities. • If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements prove inaccurate, our actual results may vary from those reflected in our accruals. • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance. • The investment of our cash, cash equivalents and fixed income marketable securities is subject to risks which may cause losses and affect the liquidity of these investments. 33 • Our ability to utilize net operating loss carryforwards and other tax benefits may be limited. • Our business is subject to changing regulations for corporate governance and public disclosure that has increased both our costs and the risk of noncompliance. • We could be subject to additional tax liabilities.
Risks Related to Our Financial Condition • We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability. • We will require substantial additional funds to complete our research and development activities. • If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements prove inaccurate, our actual results may vary from those reflected in our accruals. • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance. • The investment of our cash, cash equivalents and fixed income securities is subject to risks which may cause losses and affect the liquidity of these investments. • Our ability to utilize net operating loss carryforwards and other tax benefits may be limited.
Patent prosecution and maintenance is expensive, and we may be forced to curtail prosecution or maintenance if our cash resources are limited. Thus, the patents held by or licensed to us may not afford us any meaningful competitive advantage.
Our technology may prove to infringe upon patents or rights owned by others. Patent prosecution and maintenance is expensive, and we may be forced to curtail prosecution or maintenance if our cash resources are limited. Thus, the patents held by or licensed to us may not afford us any meaningful competitive advantage.
Product candidates that appear promising in the early phases of development, such as in animal and early human clinical trials, often fail to reach the market for a number of reasons, such as: • Clinical trial results may be unacceptable, even though preclinical trial results were promising; • Inefficacy and/or harmful side effects in humans or animals; • The necessary regulatory bodies, such as the U.S.
Product candidates that appear promising in the early phases of development, such as in animal and early human clinical trials, often fail to reach the market for a number of reasons, such as: • Clinical trial results may be unacceptable, even though preclinical trial results were promising; • Inefficacy and/or harmful side effects in humans or animals; • The necessary regulatory bodies, such as the FDA, may not approve our potential product for the intended use, or at all; and/or • Manufacturing and distribution may be uneconomical.
Such restrictions or penalties may include, among other things: • restrictions on the marketing or manufacturing of the product, the withdrawal of the product from the market or product recalls; • warning letters or holds on clinical trials; • refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals; • product seizure or detention, or refusal to permit the import or export of our product candidates; and • closure of the facility, enforcement of substantial fines, injunctions, or the imposition of civil or criminal penalties.
Such restrictions or penalties may include, among other things: • restrictions on the marketing or manufacturing of the product, the withdrawal of the product from the market or product recalls; • warning letters or holds on clinical trials; • refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals; • product seizure or detention, or refusal to permit the import or export of our product candidates; and • closure of the facility, enforcement of substantial fines, injunctions, or the imposition of civil or criminal penalties. 41 Risks Related to Our Intellectual Property Our ability to protect our patents and other proprietary rights is uncertain, exposing us to the possible loss of competitive advantage.
Manufacturers of our approved products, if any, must comply with cGMP requirements relating to methods, facilities and controls used in the manufacturing, processing and packaging of the product, which are intended to ensure that drug products are safe and that they consistently meet applicable requirements and specifications.
If any of our drug candidates is approved by a regulatory authority, manufacturers of our approved products (including us, if we chose to internally manufacture) must comply with cGMP requirements relating to methods, facilities and controls used in the manufacturing, processing and packaging of the product, which are intended to ensure that drug products are safe and that they consistently meet applicable requirements and specifications.
Our future success is substantially dependent on the ability of our company and our licensees to timely complete clinical trials and obtain marketing approval for, and then successfully commercialize our clinical-stage product candidates.
If we and our licensees are unable to obtain approval for and commercialize these product candidates, our business could be materially harmed. Our future success is substantially dependent on the ability of our company and our licensees to timely complete clinical trials and obtain marketing approval for, and then successfully commercialize our clinical-stage product candidates.
During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain.
Significant judgment is required in evaluating our tax positions. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain.
Throughout the world and particularly in the United States, the healthcare system is under significant financial pressure to reduce costs.
The healthcare system is under significant financial pressure to reduce costs, which could reduce payment and reimbursement rates for drugs. Throughout the world and particularly in the United States, the healthcare system is under significant financial pressure to reduce costs.
Our future success may require that we acquire patent rights and know-how to new or complimentary technologies. However, we compete with a substantial number of other companies that may also compete for technologies we desire.
Our future success may require that we acquire patent rights and know-how to new or complimentary technologies. However, we also compete with a substantial number of other companies that are working to develop novel drugs using technology that compete directly with us.
Risks Related to Investment and Securities Our Board of Directors has the authority to issue shares of “blank check” preferred stock, which may make an acquisition of the Company by another company more difficult.
Any such action could adversely affect our financial results and the market price of our common stock. 51 Risks Related to Investment and Securities Our Board of Directors has the authority to issue shares of “blank check” preferred stock, which may make an acquisition of the Company by another company more difficult.
These programs may be also found to be unsafe in humans, particularly at higher doses needed to achieve the desired levels of efficacy. Also, the positive safety results from single dose human clinical studies may not be replicated in other human studies, including multiple dose studies.
For example, any positive preclinical results in animals may not be replicated in human clinical studies. These programs may be also found to be unsafe in humans, particularly at higher doses needed to achieve the desired levels of efficacy.
Risks Related to Our Intellectual Property • Our ability to protect our patents and other proprietary rights is uncertain, exposing us to the possible loss of competitive advantage. 32 • We are party to technology license agreements with third parties that require us to satisfy obligations to keep them effective and, if these agreements are terminated, our technology and our business could be seriously and adversely affected. • We may be subject to patent infringement claims, which could result in substantial costs and liability and prevent us from commercializing our potential products. • We license patent rights from third-party owners and we rely on such owners to obtain, maintain and enforce the patents underlying such licenses. • Our technology licensed from various third parties may be subject to retained rights. • Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. • We may not be able to effectively secure first-tier technologies when competing against other companies or investors.
Risks Related to Our Intellectual Property • Our ability to protect our patents and other proprietary rights is uncertain, exposing us to the possible loss of competitive advantage. • We are party to technology license agreements with third parties that require us to satisfy obligations to keep them effective and, if these agreements are terminated, our technology and our business could be seriously and adversely affected. • We may be subject to patent infringement claims, which could result in substantial costs and liability and prevent us from commercializing our potential products. • We may not be able to effectively secure first-tier technologies when competing against other companies or investors. 33 Risks Related to Our Business Model • Our business model assumes we will generate revenue by, among other activities, marketing or out-licensing the products we develop.
Risks Related to Investment and Securities • Our Board of Directors has the authority to issue shares of “blank check” preferred stock, which may make an acquisition of the Company by another company more difficult. • We do not intend to declare cash dividends on our common stock. • If securities or industry analysts do not publish research reports about our business or if they make adverse recommendations regarding an investment in our stock, our stock price and trading volume may decline. • The market for purchases and sales of our common stock may be limited, and the sale of a limited number of shares could cause the price to fall sharply. • Our common stock price has fluctuated significantly over the last several years and may continue to do so in the future, without regard to our results of operations and prospects. • Stockholder equity interest may be substantially diluted in any additional equity issuances.
Risks Related to Investment and Securities • If securities or industry analysts do not publish research reports about our business or if they make adverse recommendations regarding an investment in our stock, our stock price and trading volume may decline. • The market for purchases and sales of our common stock may be limited, and the sale of a limited number of shares could cause the price to fall sharply. • Our common stock price has fluctuated significantly over the last several years and may continue to do so in the future, without regard to our results of operations and prospects.
As o f September 30, 2022, we had federal and state NOL carryforwards of approximately $504.8 million and $626.5 million, resp ectively.
As o f September 30, 2023 , we had federal and state NOL carryforwards of approximately $134.3 million and $491.5 million, resp ectively.
If the safety of any quantities supplied is compromised due to a manufacturer’s failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, which would seriously harm our business.
If the safety of any quantities supplied is compromised due to a manufacturer’s failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, which would seriously harm our business. 46 We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, the development of our products may be adversely affected.
If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. 48 Risks Related to Our Financial Condition We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability.
Such patent applications may not be available for licensing or may not be economically feasible to license. Certain of our patents may not be granted or may not contain claims of the necessary breadth because, for example, prior patents exist. If a particular patent is not granted, the value of the invention described in the patent would be diminished.
Certain of our patents may not be granted or may not contain claims of the necessary breadth because, for example, prior patents exist. If a particular patent is not granted, the value of the invention described in the patent would be diminished. Further, even if these patents are granted, they may be difficult to enforce.
Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. 45 Our research, development and manufacturing activities involve the use of potentially harmful biological materials as well as materials, chemicals and various radioactive compounds that could be hazardous to human health and safety or the environment.
Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
We have limited manufacturing capabilities and experience and we rely, and expect to continue to rely, on third-party manufacturers for the production of some of our product candidates for clinical trials and potential future commercialization.
Although we are currently in the process of further developing our own internal manufacturing capabilities, we hav e limited internal manufacturing capabilities and we rely, and expect to continue to rely, on third-party manufacturers for the production of some of our product candidates for clinical trials and potential future commercialization.
Although we depend 44 heavily on these parties, we do not control them and therefore we cannot be assured that these third parties will adequately perform all of their contractual obligations to us.
We rely on these parties to carry out our clinical trials in compliance with GCP and other relevant requirements. Although we depend heavily on these parties, we do not control them and therefore we cannot be assured that these third parties will adequately perform all of their contractual obligations to us.
Our business is sensitive to global economic conditions, which can be adversely affected by public health crises (including the COVID-19 pandemic) and epidemics, political and military conflict, trade and other international disputes, significant natural disasters (including as a result of climate change) or other events that disrupt macroeconomic conditions. 50 Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy or government budget dynamics (particularly in the pharmaceutical and biotech areas), tighter credit, higher interest rates, volatility in financial markets, high unemployment, labor availability constraints, currency fluctuations and other challenges in the global economy have in the past adversely affected, and may in the future adversely affect, us and our business partners and suppliers.
Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy or government budget dynamics (particularly in the pharmaceutical and biotech areas), tighter credit, higher interest rates, volatility in financial markets, high unemployment, labor availability constraints, currency fluctuations and other challenges in the global economy have in the past adversely affected, and may in the future adversely affect, us and our business partners and suppliers.
The market risks associated with our investment portfolio may have an adverse effect on our results of operations, liquidity and financial condition. Our ability to utilize net operating loss carryforwards and other tax benefits may be limited. We have historically incurred net losses.
In addition, should our investments cease paying or reduce the amount of interest paid to us, our interest income would suffer. The market risks associated with our investment portfolio may have an adverse effect on our results of operations, liquidity and financial condition. Our ability to utilize net operating loss carryforwards and other tax benefits may be limited.
Our clinical trials may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
Even if regulatory approval is secured for a product candidate, the terms of such approval may limit the scope and use of the specific product candidate, which may also limit its commercial potential. 36 Our clinical trials may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
We are party to technology license agreements with third parties that require us to satisfy obligations to keep them effective and, if these agreements are terminated, our technology and our business could be seriously and adversely affected. We are party to license agreements to incorporate third-party proprietary technologies into our drug products under development.
Uncertainty, arising from changing laws, can impact our ability to protect our patents and other proprietary rights. We are party to technology license agreements with third parties that require us to satisfy obligations to keep them effective and, if these agreements are terminated, our technology and our business could be seriously and adversely affected.
The FDA has stated that drugs can be the “same” even when they are not identical but has not provided guidance with respect to how 38 it will determine “sameness” for RNAi drugs.
Under the Orphan Drug Act, the first product with an orphan designation receives market exclusivity, which prohibits the FDA from approving the “same” drug for the same indication. The FDA has stated that drugs can be the “same” even when they are not identical but has not provided guidance with respect to how it will determine “sameness” for RNAi drugs.
The FDA may also rescind Breakthrough Therapy designation if it determines that ARO-AAT no longer meets the relevant criteria. We and our licensees conduct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. We and our licensees currently conduct clinical trials outside the United States.
We and our licensees con duct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. We and our licensees currently conduct clinical trials outside the United States.
Further, even if these patents are granted, they may be difficult to enforce. Even if ultimately successful, efforts to enforce our patent rights could be expensive, distracting for management, cause our patents to be invalidated or held unenforceable, and thus frustrate commercialization of products.
Even if ultimately successful, efforts to enforce our patent rights could be expensive, distracting for management, cause our patents to be invalidated or held unenforceable, and thus frustrate commercialization of products. Even if patents are issued and are enforceable, others may develop similar, superior or parallel technologies to any technology developed by us and not infringe on our patents.
We contract with certain third-parties to provide certain services, including site selection, enrollment, monitoring and data management services. We rely on these parties to carry out our clinical trials in compliance with GCP and other relevant requirements.
We rely on independent clinical investigators, contract research organizations and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our clinical trials. We contract with certain third-parties to provide certain services, including site selection, enrollment, monitoring and data management services.
Further, there can be no assurance that product candidates employing a new technology will be shown to be safe and effective in clinical trials or receive applicable regulatory approvals. If we fail to obtain regulatory approvals for any or all of our products, we will not be able to market such product and our operations may be adversely affected.
If we fail to obtain regulatory approvals for any or all of our products, we will not be able to market such product and our operations may be adversely affected.
In order to develop products, apply for regulatory approvals, and commercialize our products, we will need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities. Our internal GMP manufacturing capabilities are limited to small-scale production of material. There are a limited number of manufacturers that supply synthetic oligonucleotides.
In order to develop products, apply for regulatory approvals, and commercialize our products, we will need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities.
Economic and Industry Risks • Unfavorable global economic conditions, whether brought about by material global crises, health epidemics, military conflicts and war, geopolitical and trade disputes or other factors, may adversely affect our business and financial results. • Drug development is time consuming, expensive and risky. • The healthcare system is under significant financial pressure to reduce costs, which could reduce payment and reimbursement rates for drugs. • Regulatory standards are subject to change over time, making it difficult to accurately predict the likelihood of marketing approval even when clinical trials meet their endpoints.
Economic and Industry Risks • Drug development is time consuming, expensive and risky. • The healthcare system is under significant financial pressure to reduce costs, which could reduce payment and reimbursement rates for drugs. • Regulatory standards are subject to change over time, making it difficult to accurately predict the likelihood of marketing approval even when clinical trials meet their endpoints. 34 Risks Related to Our Discovery, Development, and Commercialization of Medicines Our prospects substantially depend on the success of our clinical-stage product candidates.
As a result, we can experience significant delays in completing clinical studies, which can increase the cost of developing a drug candidate and shorten the time that an approved product may be protected by patents. If our drug candidates are not successful in human clinical trials, we may be forced to curtail or abandon certain development programs.
Clinical trials can take many years to complete, including the process of study design, clinical site selection and the recruitment of patients. As a result, we can experience significant delays in completing clinical studies, which can increase the cost of developing a drug candidate and shorten the time that an approved product may be protected by patents.
There may be a disruption or delay in the performance of our third-party contractors, suppliers or collaborators which is beyond our control. If such third parties are unable to satisfy their commitments to us, the development of our products would be adversely affected.
If such third parties are unable to satisfy their commitments to us, the development of our products would be adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeOffice Space (sq.ft) Monthly Expenses Primary Use Lease Expiration Lease Term (year) Pasadena, California 49,000 $ 157,490 Corporate Headquarters April 2027 7.5 Madison, Wisconsin 111,000 $ 168,371 Research Facility September 2031 15.0 San Diego, California 21,000 $ 61,821 Research Facility January 2023 2.3 San Diego, California 10,000 $ 33,379 Office Space March 2023 1.2
Biggest changeApproximate Square Footage Primary Use Lease Expiration Remaining Lease Term (year) Pasadena, California 49,000 Corporate Headquarters April 2027 3.6 Madison, Wisconsin 115,000 Research Facility September 2031 7.9 San Diego, California 144,000 Research and Office Facility April 2038 14.6
Additionally, the Company entered into a lease agreement for a new 144,000 square foot laboratory and office facility in San Diego, California to support discovery activities, which it currently anticipates to be available starting around April 2023. The following table summarizes the Company’s leased facilities as of September 30, 2022.
Additionally, the Company entered into a lease agreement for a new 144,000 square foot laboratory and office facility in San Diego, California to support discovery activities; the rent commencement date was April 19, 2023. The following table summarizes the Company’s leased facilities as of September 30, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−1 removed3 unchanged
Biggest changeThe comparison of total return on investment, defined as the change in year-end stock price plus reinvested dividends, for each of the periods assumes that $100 was invested on September 30, 2017, in each of the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index, with investment weighted on the basis of market capitalization. 54 The comparisons in the following graph are based on historical data and are not intended to forecast the possible future performance of the Company’s common stock. $100 investment in stock or index Ticker 2017 2018 2019 2020 2021 2022 Arrowhead Pharmaceuticals, Inc.
Biggest changeThe comparison of total return on investment, defined as the change in year-end stock price plus reinvested dividends, for each of the periods assumes that $100 was invested on September 30, 2018, in each of the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index, with investment weighted on the basis of market capitalization. 57 The comparisons in the following graph are based on historical data and are not intended to forecast the possible future performance of the Company’s common stock. $100 investment in stock or index Ticker 2018 2019 2020 2021 2022 2023 Arrowhead Pharmaceuticals, Inc.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Shares of the Company’s common stock are traded on The Nasdaq Global Select Market under the symbol “ARWR.” There were approximately 100 holders of record of the Company’s common stock as of November 16, 2022.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Shares of the Company’s common stock are traded on The Nasdaq Global Select Market under the symbol “ARWR.” There were 97 holders of record of the Company’s common stock as of November 20, 2023.
Removed
ARWR $ 100.00 $ 442.73 $ 650.81 $ 994.46 $ 1,441.80 $ 763.28 NASDAQ Biotechnology Index ^NBI $ 100.00 $ 109.80 $ 89.54 $ 121.87 $ 145.58 $ 107.86 NASDAQ Composite Index ^IXIC $ 100.00 $ 123.87 $ 123.14 $ 171.91 $ 222.42 $ 162.80
Added
ARWR $ 100.00 $ 147.00 $ 224.62 $ 325.67 $ 172.40 $ 140.17 NASDAQ Biotechnology Index ^NBI $ 100.00 $ 81.55 $ 110.98 $ 132.58 $ 98.23 $ 103.08 NASDAQ Composite Index ^IXIC $ 100.00 $ 99.42 $ 138.79 $ 179.57 $ 131.43 $ 164.29

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+20 added−33 removed32 unchanged
Biggest changeThe Company’s pipeline includes: • Hypertriglyceridemia - ARO-APOC3 • Dyslipidemia - ARO-ANG3 • Facioscapulohumeral muscular dystrophy - ARO-DUX4 • Complement mediated diseases - ARO-C3 • Muco-obstructive or inflammatory pulmonary conditions - ARO-RAGE and ARO-MUC5AC • Idiopathic pulmonary fibrosis - ARO-MMP7 • Liver disease - ARO-HSD (out-licensed to GSK) • Uncontrolled gout - ARO-XDH (out-licensed to Horizon) • Non-alcoholic steatohepatitis (NASH) - NJ-75220795 (ARO-JNJ1, out-licensed to Janssen) • Liver disease associated with alpha-1 antitrypsin deficiency (“AATD”) - Fazirsiran (ARO-AAT, a collaboration with Takeda) • Chronic hepatitis B virus - JNJ-3989 (ARO-HBV, out-licensed to Janssen) • Cardiovascular disease - Olpasiran (AMG 890 or ARO-LPA, out-licensed to Amgen) The Company operates lab facilities in San Diego, California and Madison, Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place.
Biggest changeThe Company’s pipeline includes: • Hypertriglyceridemia - Plozasiran (formerly ARO-APOC3) • Dyslipidemia - Zodasiran (formerly ARO-ANG3) • Cardiovascular disease - olpasiran (formerly AMG 890 or ARO-LPA, out-licensed to Amgen) • Muco-obstructive or inflammatory pulmonary conditions - ARO-MUC5AC and ARO-RAGE • Idiopathic pulmonary fibrosis - ARO-MMP7 • Non-alcoholic steatohepatitis (NASH) - GSK-4532990 (formerly ARO-HSD, out-licensed to GSK) • Alpha-1 antitrypsin deficiency (AATD) - fazirsiran (formerly ARO-AAT, a collaboration with Takeda) • Chronic hepatitis B virus - JNJ-3989 (formerly ARO-HBV, out-licensed to Janssen (1) ) • Uncontrolled gout - HZN-457 (formerly ARO-XDH, out-licensed to Horizon (2) ) • Complement mediated diseases - ARO-C3 • Non-alcoholic steatohepatitis (NASH) - ARO-PNPLA3 (formerly JNJ-75220795 or ARO-JNJ1) • Facioscapulohumeral muscular dystrophy - ARO-DUX4 • Amyotrophic lateral sclerosis “ALS” (CNS) - ARO-SOD1 (1) On October 30, 2023, the Company entered into an Assignment and Consent Agreement with Janssen, whereby, the Company consented to the assignment of the Janssen License Agreement to GSK, which assignment shall be effective upon the receipt of certain anti-trust approvals.
Research and Development Expenses R&D expenses are related to the Company’s research and development discovery efforts and related candidate costs, which are comprised primarily of outsourced costs related to the manufacturing of clinical supplies, toxicity/efficacy studies and clinical trial expenses.
Research and Development (R&D) Expenses R&D expenses are related to the Company’s research and development discovery efforts and related candidate costs, which are comprised primarily of outsourced costs related to the manufacturing of clinical supplies, toxicity/efficacy studies and clinical trial expenses.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company 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, the Company’s therapies trigger the RNAi mechanism to induce rapid, deep and durable knockdown of target genes.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company 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, the Company’s therapies trigger the RNAi interference mechanism to induce rapid, deep and durable knockdown of target genes.
The Company has not yet achieved commercial sales of its drug candidates to date, however, this standard is applicable to its ongoing licensing and collaboration agreements. This is discussed further in Note 2, Collaboration and License Agreements of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15.
The Company has not yet achieved commercial sales of its drug candidates to date, however, this standard is applicable to its licensing and collaboration agreements. This is discussed further in Note 2, Collaboration and License Agreements of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15.
On an 57 ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense.
On an ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense.
Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or preclinical program. Milestones or royalties achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved.
Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or preclinical program. Milestones or royalties achieved after the Company’s 62 performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved.
The Company engages third-party contract research organizations (“CROs”) to manage clinical trials and works cooperatively with such organizations on all aspects of clinical trial management, including plan design, patient recruiting, and follow up.
The Company engages third-party contract research organizations to manage clinical trials and works cooperatively with such organizations on all aspects of clinical trial management, including plan design, patient recruiting, and follow up.
The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a Clinical Trial Application or a NDA in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas.
The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a CTA or a NDA in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas.
The Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study and to ensure certain manufacturing of ARO-AAT drug product is completed and delivered to Takeda (the “Takeda R&D Services”).
The Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study and to ensure certain manufacturing of fazirsiran drug product is completed and delivered to Takeda (the “Takeda R&D Services”).
Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized.
Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using the input method.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2021 for a discussion of cash flows from the year ended Sep 30, 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2022 for a discussion of cash flows from the year ended September 30, 2021.
As part of this acquisition, the Company entered into a development agreement 65 with the City of Verona to construct certain infrastructure improvements within the tax incremental district and expects to be reimbursed up to $16.0 million by the City of Verona by future tax increment revenue generated from the developed property.
As part of this land acquisition, the Company entered into a development agreement with the City of Verona to construct certain infrastructure improvements within the tax increment district and will be reimbursed up to $16.0 million by the City of Verona by future tax increment revenue generated from the developed property.
These outside costs, relating to the preparation for and administration of clinical trials, are referred to as “candidate costs.” If the clinical candidates progress through human testing, candidate costs will increase. 2022 Business Highlights During fiscal year 2022, the Company continued to develop and advance its pipeline and partnered candidates and expanded its facilities to support its growing programs.
These outside costs, relating to the preparation for and administration of clinical trials, are referred to as “candidate costs.” As clinical candidates progress through clinical development, candidate costs will increase. 2023 Business Highlights During fiscal year 2023, the Company continued to develop and advance its pipeline and partnered candidates and expanded its facilities to support its growing programs.
The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of ARO-XDH (the “Horizon R&D Services”).
The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of HZN-457 (the “Horizon R&D Services”).
The total amount of funding that City of Verona is expected to pay under the Tax Incremental Financing program is not guaranteed and will depend on future tax revenues generated from the developed property.
The total amount of funding that City of Verona will pay under the Tax Increment Financing program is not guaranteed and will depend on future tax revenues generated from the developed property .
TRiM TM enabled therapeutics offer several potential advantages over prior generation and competing technologies, including: simplified manufacturing and reduced costs; multiple routes of administration including subcutaneous injection and inhaled administration; the ability to target multiple tissue types including liver, lung, muscle and others; and the potential for improved safety and reduced risk of intracellular buildup, because there are less metabolites from smaller, simpler molecules.
The Company believes that TRiM TM enabled therapeutics offer several potential advantages over prior generation and competing technologies, including: simplified manufacturing and reduced costs; multiple routes of administration including subcutaneous injection and inhaled administration; the ability to target multiple tissue types including liver, lung, CNS, muscle, and adipose tissue; and the potential for improved safety and reduced risk of intracellular buildup, because there are fewer metabolites from smaller, simpler molecules.
The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment.
The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment. Additionally, future royalty payments are not substantially within the control of the Company or the customer.
The Company’s principal executive offices are located in Pasadena, California. The Company continues to develop other clinical candidates for future clinical trials. Clinical candidates are tested internally and through GLP toxicology studies at outside laboratories. Drug materials for such studies and clinical trials are either manufactured internally or contracted to third-party manufacturers.
The Company continues to develop other clinical candidates for future clinical trials. Clinical candidates are tested internally and through GLP toxicology studies at outside laboratories. Drug materials for such studies and clinical trials are either manufactured internally or contracted to third-party manufacturers.
The Company has excluded any future milestones or royalties from this transaction price to date. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the ARO-AAT license and the associated Takeda R&D Services.
The Company has excluded any future estimated milestones or royalties from this transaction price to date. The Company has allocated the total $120.0 million initial transaction price to its one distinct performance obligation for the GSK-4532990 license and the associated GSK R&D Services.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2021 for a discussion of changes in its results of operations from the year ended September 30, 2020 to the year ended September 30, 2021. 64 LIQUIDITY AND CAPITAL RESOURCES The Company has historically financed its operations through the sale of its common stock and revenue from its licensing and collaboration agreements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2022 for a discussion of changes in its results of operations from the year ended September 30, 2022 to the year ended September 30, 2021. 67 LIQUIDITY AND CAPITAL RESOURCES The Company has historically financed its operations through the sale of its equity securities, revenue from its licensing and collaboration agreements, and the sale of certain future royalties.
Net loss per share – diluted was $1.67 for the year ended September 30, 2022 as compared to net loss per share – diluted of $1.36 for the year ended September 30, 2021.
Net loss per share – diluted was $1.92 for the year ended September 30, 2023 as compared to $1.67 for the year ended September 30, 2022.
Exhibits and Financial Statement Schedules.” Commitments related to the Company’s clinical, manufacturing and business operation related agreements are $229.6 million as of the year ended September 30, 2022, but many of these agreements are cancellable.
Exhibits and Financial Statement Schedules.” Commitments related to the Company’s clinical, manufacturing and business operation related agreements are $579.7 million as of September 30, 2023, but many of these agreements are cancellable.
The Company determined the initial transaction price totaled $40.0 million, including the upfront payment. The Company has excluded any future estimated milestones or royalties from this transaction price to date. The Company allocates the total $40.0 million initial transaction price to its one distinct performance obligation for the ARO-XDH license and the associated Horizon R&D Services.
The Company has excluded any future estimated milestones or royalties from this transaction price to date. The Company allocated the total $40.0 million initial transaction price to its one distinct performance obligation for the HZN-457 license and the associated Horizon R&D Services.
Additionally, future royalty payments are not substantially within the control of the Company or the customer. 58 The revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.
The revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.
The Company considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of account within Topic 808, and as such, these co-funding amounts are recorded as research and development expenses or general and administrative expenses, as appropriate. The Company determined the initial transaction price totaled $300.0 million, which includes the upfront payment.
The Company considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of account within Topic 808, and as such, these co-funding amounts are recorded as research and development expenses or general and administrative expenses, as appropriate.
Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred. 59 RESULTS OF OPERATIONS The following data summarizes the Company’s results of operations for the following periods indicated: Year Ended September 30, 2022 2021 2020 (in thousands, except per share amounts) Revenue $ 243,231 $ 138,287 $ 87,992 Operating loss $ (178,507) $ (149,036) $ (93,159) Net loss $ (176,063) $ (140,848) $ (84,553) Net loss per share-diluted $ (1.67) $ (1.36) $ (0.84) Year Ended September 30, 2022 Compared to Year Ended September 30, 2021 Revenue Total revenue for the year ended September 30, 2022 increased to $243.2 million, 75.9% from the same period of 2021.
Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred. 63 RESULTS OF OPERATIONS The following data summarizes the Company’s results of operations for the following periods indicated: Year Ended September 30, 2023 2022 2021 (in thousands, except per share amounts) Revenue $ 240,735 $ 243,231 $ 138,287 Operating loss $ (205,002) $ (178,507) $ (149,036) Net loss attributable to Arrowhead Pharmaceuticals, Inc. $ (205,275) $ (176,063) $ (140,848) Net loss per share (diluted) attributable to Arrowhead Pharmaceuticals, Inc. $ (1.92) $ (1.67) $ (1.36) Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Revenue Total revenue for the year ended September 30, 2023 decreased slightly to $240.7 million, 1.0% from the same period of 2022.
The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment.
As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment. The Company records expense to recognize fixed lease payments on a straight-line basis over the expected lease term.
The Company has also performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for GSK pursuant to the GSK License Agreement, for which the Company has been reimbursed for its costs. The Company recognized $4.8 million in connection with these efforts for the year ended September 30, 2022.
The Company has also performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for GSK pursuant to the GSK License Agreement, for which the Company has been reimbursed for its costs.
The increase was driven by the combination of annual increases, performance bonuses and increased headcount needed as the Company has grown. Professional, outside services, and others expense includes legal, consulting, patent expenses, business insurance expenses, other outside services, travel, and communication and technology expenses.
The increase was driven by the combination of annual salary increases and increased headcount required to support the Company’s growth. Professional, outside services, and other expense includes legal, consulting, patent expenses, business insurance expenses, other outside services, travel, and communication and technology expenses.
Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure as the Company’s pipeline continues to expand and matures into later stage clinical trials.
Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure as the Company’s pipeline continues to expand and matures into later stage clinical trials. Additionally, the Company expanded its facilities in Verona, Wisconsin and commenced the lease agreement for additional facilities in San Diego, California.
In August 2020, the Company entered into an Open Market Sale Agreement (the “ATM” agreement), pursuant to which the Company may, from time to time, sell up to $250.0 million in shares of the Company’s common stock through Jefferies LLC. As of the year ended September 30, 2022, no shares have been issued under the ATM agreement.
Financial Statements”), pursuant to which the Company may, from time to time, sell up to $250.0 million in shares of the Company’s common stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering. As of September 30, 2023, no shares have been issued under the Open Market Sale Agreement.
Salaries and stock compensation expense consist of salary, bonuses, payroll taxes, related benefits and stock compensation for the Company’s R&D personnel. The increases in salaries and stock comp expenses were primarily due to an increase in R&D headcount that has occurred as the Company has expanded its pipeline of candidates, in addition to annual increases and performance bonuses.
The increases in salaries and stock comp expenses for 2023 were primarily due to an increase in R&D headcount that has occurred as the Company has expanded its pipeline of candidates, in addition to annual salary increases. Stock compensation expense was based upon the valuation of stock options and restricted stock units granted to employees.
The Company also expects receive up to $2.5 million of refundable Wisconsin state income tax credits from the Wisconsin Economic Development Corporation (WEDC) as incentives to invest in the local community and create new jobs. See “Item 7.
The Company also became eligible to receive up to $2.5 million in refundable Wisconsin state income tax credits from the Wisconsin Economic Development Corporation (WEDC) as incentives for investing in the local community and creating new job opportunities. As of September 30, 2023, the Company has collected $1.5 million of these credits. See “Item 7.
The following table presents a summary of cash flows: Year Ended September 30, 2022 2021 2020 (in thousands) Cash Flow from: Operating activities $ (136,131) $ 171,312 $ (95,801) Investing activities (5,417) (141,678) (240,778) Financing activities 65,186 11,305 257,948 Net (decrease) increase in cash and cash equivalents $ (76,362) $ 40,939 $ (78,631) Cash and cash equivalents at end of period $ 108,005 $ 184,434 $ 143,583 During the year ended September 30, 2022, cash flow used by operating activities was $136.1 million, which was primarily due to the ongoing expenses related to the Company’s research and development programs and general and administrative expenses, partially offset by the receipt of the $120.0 million upfront payment from GSK.
The following table presents a summary of cash flows: Year Ended September 30, 2023 2022 2021 (in thousands) Cash Flow from: Operating activities $ (153,890) $ (136,131) $ 171,312 Investing activities (96,155) (5,417) (141,678) Financing activities 253,053 65,186 11,305 Net increase (decrease) in cash, cash equivalents and restricted cash $ 3,008 $ (76,362) $ 40,939 Cash, cash equivalents and restricted cash at end of period $ 110,891 $ 108,005 $ 184,434 During the year ended September 30, 2023, cash flow used by operating activities was $153.9 million, which was primarily due to the ongoing expenses related to the Company’s research and development programs and general and administrative expenses, partially offset by the receipt of the $110.0 million from collaboration and license agreements (See Note 2 — Collaboration and License Agreements of Notes to Consolidated Financial Statements of Part IV, “Item 15.
The increase in depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company’s corporate headquarters. The Company anticipates these general & administrative expenses to continue to increase as its pipeline of candidates grows and progresses to later phase clinical trials, in addition to inflationary pressure on goods/services and the labor market.
The Company anticipates these R&D expenses to continue to increase as its pipeline of candidates grows and progresses to later phase clinical trials, in addition to inflationary pressure on goods and services and the labor market.
The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study (the “GSK R&D Services”).
Exhibits and Financial Statement Schedules.” GSK At the inception of the GSK License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study (the “GSK R&D Services”).
Cash used in investing activities was $5.4 million, which was primarily related to the purchase of property and equipment of $52.8 million, offset by net sales of investments of $47.4 million. Cash provided by financing activities of $$65.2 million was primarily related to the formation of the joint venture, Visirna, as well as cash received from stock option exercises.
Cash used in investing activities was $5.4 million, which was primarily related to the purchase of property and equipment of $52.8 million, offset by net proceeds from maturities of investments of $47.4 million.
For further information, see Note 1, Organization and Significant Accounting Policies of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15.
For further information, see Note 1, Organization and Significant Accounting Policies of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15. Exhibits and Financial Statement Schedules.” Revenue Recognition —The Company has adopted Financial Accounting Standards Board (“FASB”) Topic 606 – Revenue for Contracts from Customers.
Due to the specialized and unique nature of these Janssen R&D Services and their direct relationship with the license, the Company determined that these deliverables represent one distinct bundle and, thus, one performance obligation.
Due to the specialized and unique nature of the GSK R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. The Company determined the initial transaction price totaled $120.0 million, including the upfront payment, which was collected in January 2022.
Exhibits and Financial Statement Schedules.” During the year ended September 30, 2021, the Company generated $171.3 million in cash from operating activities, which was primarily related to the Takeda license agreement’s $300.0 million upfront payment, partially offset by the ongoing expenses of the Company’s research and development programs and general and administrative expenses.
During the year ended September 30, 2022, cash flow used by operating activities was $136.1 million, which was primarily due to the ongoing expenses related to the Company’s research and development programs and general and administrative expenses, partially offset by the receipt of the $120.0 million upfront payment from GSK.
Other Income Other income is primarily related to interest income and realized and unrealized gain/loss on investments. Other income decreased $2.4 million to $5.8 million for the year ended September 30, 2022 compared to $8.2 million for the year ended September 30, 2021.
Other Income (Expense) Other income (expense) is primarily related to interest income and expense. Other expense was $1.5 million for the year ended September 30, 2023 compared to other income of $5.8 million for the year ended September 30, 2022.
Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on the Company’s consolidated balance sheets.
If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on the Company’s consolidated balance sheets.
The Company has allocated the total $120.0 million initial transaction price to its one distinct performance obligation for the ARO-HSD license and the associated GSK R&D Services. As the Company has completed its performance obligation related to this agreement, the upfront payment of $120.0 million was fully recognized as of September 30, 2022.
As the Company has completed its performance obligation related to this agreement, the upfront payment of $120.0 million was fully recognized in the year ended September 30, 2022.
The following table provides details of research and development expenses: (in thousands) Twelve Months Ended September 30, 2022 % of Expense Category Twelve Months Ended September 30, 2021 % of Expense Category Increase (Decrease) $ % Candidate costs $ 136,904 46 % $ 92,628 45 % $ 44,276 48 % R&D discovery costs 54,346 18 % 32,734 16 % 21,612 66 % Salaries 51,931 18 % 40,179 19 % 11,752 29 % Facilities related 12,948 4 % 7,694 4 % 5,254 68 % Total research and development expense, excluding non-cash expense $ 256,129 86 % $ 173,235 84 % $ 82,894 48 % Stock compensation 32,371 11 % 25,742 12 % 6,629 26 % Depreciation and amortization 8,807 3 % 7,365 4 % 1,442 20 % Total research and development expense $ 297,307 100 % $ 206,342 100 % $ 90,965 44 % Candidate costs increased $44.3 million to $136.9 million for the year ended September 30, 2022 compared to $92.6 million for the year ended September 30, 2021.
The following table provides details of research and development expenses: (in thousands) Twelve Months Ended September 30, 2023 % of Expense Category Twelve Months Ended September 30, 2022 % of Expense Category Increase (Decrease) $ % Candidate costs $ 141,436 40 % $ 136,904 46 % $ 4,532 3 % R&D discovery costs 76,609 22 % 54,346 18 % 22,263 41 % Salaries 73,668 21 % 51,931 17 % 21,737 42 % Facilities related 16,267 5 % 12,948 4 % 3,319 26 % Total research and development expense, excluding non-cash expense $ 307,980 87 % $ 256,129 86 % $ 51,851 20 % Stock compensation 34,332 10 % 32,371 11 % 1,961 6 % Depreciation and amortization 10,876 3 % 8,807 3 % 2,069 23 % Total research and development expense $ 353,188 100 % $ 297,307 100 % $ 55,881 19 % Candidate costs increased $4.5 million, or 3%, for the year ended September 30, 2023 compared to the same period of 2022.
The increase of depreciation and amortization expense, a non-cash expense, relates to depreciation on lab equipment and leasehold improvements at the facilities.
This increase was mainly due to the additional lease expense as the Company expands discovery efforts to identify new drug candidates. Depreciation and amortization expense, a non-cash expense, relates to depreciation on lab equipment and leasehold improvements at the facilities.
The increase was primarily driven by the revenue recognition associated with GSK, Horizon and Takeda license agreements, as discussed below. The Company has evaluated each agreement in accordance with FASB Topic 808– Collaborative Arrangements and Topic 606- Revenue for Contracts from Customers . GSK At the inception of the GSK License Agreement, the Company identified one distinct performance obligation.
The revenue is mainly associated with GSK, Horizon, Takeda and Amgen license agreements, as discussed below. The Company has evaluated each agreement in accordance with FASB Topic 808– Collaborative Arrangements and Topic 606- Revenue for Contracts from Customers . See Note 2 — Collaboration and License Agreements of the Notes to Consolidated Financial Statements of Part IV, “Item 15.
This expense increased $1.6 million to $14.7 million for the year ended September 30, 2022 compared to $13.1 million for the year ended September 30, 2021. The increase was mainly due to software implementation and additional recruiting and administrative expenses in support of additional headcount. Facilities related expense primarily includes rental costs for the Company’s corporate headquarters in Pasadena, California.
This expense increased $6.0 million, or 41%, for the year ended September 30, 2023 compared to the same period of 2022. The increase was mainly due to the cost associated with consulting services focused on the preparation of commercialization activities. Facilities related expense primarily includes rental costs and other facilities-related costs for the Company’s corporate headquarters in Pasadena, California.
Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. Beyond the Horizon R&D Services, which are the responsibility of the Company, Horizon will be responsible for managing future clinical development and commercialization of ARO-XDH.
Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. The Company determined the initial transaction price totaled $40.0 million, including the upfront payment, which was collected in July 2021.
This increase was primarily due to the progression of the Company’s pipeline of candidates into and through clinical trials, which resulted in higher outsourced clinical trials, toxicity study and manufacturing costs. For example, the Company’s cardiometabolic candidates, ARO-ANG3 and ARO-APOC3, have advanced into Phase 2 and Phase 3 clinical trials.
This increase was primarily due to the additional progression of the Company’s pipeline of candidates into and through clinical trials, which resulted in higher outsourced clinical trial, toxicity study and manufacturing costs. R&D discovery costs increased $22.3 million, or 41%, for the year ended September 30, 2023 compared to the same period of 2022.
There were $0 in contract assets 60 recorded as accounts receivable and $6.7 million in contract liabilities recorded as deferred revenue as of September 30, 2022. In addition, the Company has performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for Horizon pursuant to the Horizon License Agreement.
The Company has performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for Horizon pursuant to the Horizon License Agreement. The Company recognized $1.5 million and $2.5 million in connection with these efforts for the years ended September 30, 2023 and 2022, respectively.
The increase in net losses for the year ended September 30, 2022 was due to an increase in research and development and general and administrative expenses as the Company’s pipeline of candidates has expanded and progressed through clinical trial phases, partially offset by an increase in revenue from its license and collaboration agreements, primarily from the License Agreements with GSK, Horizon and Takeda.
The change in net loss for the 61 year ended September 30, 2023 reflected an increase in research and development expenses, which have continued to increase as the Company’s pipeline of candidates has expanded and progressed through clinical trial phases.
Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term minus the present value of any incentives, rebates or abatement expected to be received from the lessor. The Company did not include the extension option in the lease term.
Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable.
For purposes of comparison, the amounts for the years ended September 30, 2022 and 2021 are shown in the tables below.
Exhibits and Financial Statement Schedules.” 65 Operating Expenses The analysis below details the operating expenses and discusses the expenditures of the Company within the major expense categories. For purposes of comparison, the amounts for the years ended September 30, 2023 and 2022 are shown in the tables below.
There were $4.8 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue as of September 30, 2022. Horizon At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation.
The Company recognized $0.3 million and $4.8 million in connection with these efforts for the years ended September 30, 2023 and 2022, respectively. Horizon At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation.
Amgen Under the Olpasiran Agreement and the ARO-AMG1 Agreement, the Company has received $35.0 million in upfront payments, $21.5 million in the form of an equity investment by Amgen in the Company’s common stock, and $30.0 million in milestone payments, and may receive up to an additional $400.0 million in remaining development, regulatory and sales milestone payments.
The effect of these changes in estimates resulted in accelerated revenue by $70.5 million, or $0.66 per share (diluted) for the year ended September 30, 2023. Amgen Under the Olpasiran Agreement, the Company has received $35.0 million in upfront payments and $21.5 million in the form of an equity investment by Amgen in the Company’s common stock.
The Company had $108.0 million of cash and cash equivalents, $268.4 million in short-term investments, $105.9 million of long-term investments and $691.9 million of total assets as of September 30, 2022, as compared to $184.4 million of cash and cash equivalents, $126.7 million of marketable securities, $56.6 million in short-term investments, $245.6 million of long-term investments and $710.1 million of total assets as of September 30, 2021.
The Company had $110.9 million of cash, cash equivalents and restricted cash, $292.7 million in available-for-sale securities and $765.6 million of total assets as of September 30, 2023, as compared to $108.0 million of cash, cash equivalents and restricted cash, $374.3 million in held-to-maturities debt securities, and $691.9 million of total assets as of September 30, 2022.
Cash used in investing activities was $141.7 million, which was primarily related to the purchase of investments of $240.7 million and purchase of property and equipment of $23.6 million, partially offset by maturities of fixed-income securities of $122.6 million. Cash provided by financing activities of $11.3 million was due to cash received from stock option exercises.
Exhibits and Financial Statement Schedules.”). Cash used in investing activities was $96.2 million, which was primarily related to the purchase of property and equipment of $176.7 million, offset by net proceeds of $80.6 million from maturities of securities.
The Company anticipates these R&D expenses to continue to increase as its pipeline of candidates grows and progresses to later phase clinical trials, in addition to inflationary pressure on goods/services and the labor market. 63 General & Administrative Expenses The following table provides details of the Company’s general and administrative expenses: (in thousands) Twelve Months Ended September 30, 2022 % of Expense Category Twelve Months Ended September 30, 2021 % of Expense Category Increase (Decrease) $ % Salaries $ 16,646 14 % $ 13,681 17 % $ 2,965 22 % Professional, outside services, and others 14,738 12 % 13,124 17 % 1,614 12 % Facilities related 2,912 2 % 2,344 2 % 568 24 % Total general & administrative expense, excluding non-cash expense $ 34,296 28 % $ 29,149 36 % $ 5,147 18 % Stock compensation 88,521 71 % 50,931 63 % 37,590 74 % Depreciation/amortization 1,614 1 % 901 1 % 713 79 % Total general & administrative expense $ 124,431 100 % $ 80,981 100 % $ 43,450 54 % Salaries expense increased $3.0 million to $16.6 million for the year ended September 30, 2022 compared to $13.7 million for the year ended September 30, 2021.
General & Administrative Expenses The following table provides details of general and administrative expenses: 66 (in thousands) Twelve Months Ended September 30, 2023 % of Expense Category Twelve Months Ended September 30, 2022 % of Expense Category Increase (Decrease) $ % Salaries $ 22,999 25 % $ 16,646 13 % $ 6,353 38 % Professional, outside services, and other 20,720 22 % 14,738 12 % 5,982 41 % Facilities related 3,415 4 % 2,912 2 % 503 17 % Total general & administrative expense, excluding non-cash expense $ 47,134 51 % $ 34,296 28 % $ 12,838 37 % Stock compensation 43,798 47 % 88,521 71 % (44,723) (51) % Depreciation/amortization 1,617 2 % 1,614 1 % 3 — % Total general & administrative expense $ 92,549 100 % $ 124,431 100 % $ (31,882) (26) % Salaries expense increased $6.4 million, or 38%, for the year ended September 30, 2023 compared to the same period of 2022.
R&D discovery costs increased $21.6 million to $54.3 million for the year ended September 30, 2022 compared to $32.7 million for the year ended September 30, 2021. This increase was due to the growth of the Company’s discovery efforts and continued advancement into novel therapeutic areas and tissue types.
This increase was due to the growth of the Company’s discovery efforts and continued advancement into novel therapeutic areas and tissue types. Salaries and stock compensation expense consist of salary, bonuses, payroll taxes, related benefits and stock compensation for the Company’s R&D personnel.
The increase in the current period was due to a performance award that was achieved earlier than anticipated, as well as a modification of certain performance awards to include market conditions. The fair value of market condition-based awards was expensed ratably over the service period and was not adjusted for actual achievement.
The fair value of market condition-based awards was expensed ratably over the service period and was not adjusted for actual achievement. Depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company’s corporate headquarters.
Revenue is recognized using a proportional performance method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies). The Company recognized $85.8 million and $90.8 million in connection with these efforts for the years ended September 30, 2022 and 2021, respectively.
The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the fazirsiran license and the associated Takeda R&D Services. Revenue is recognized using the input method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies).
The Company is further eligible to receive up to low double-digit royalties for sales of products under the Olpasiran Agreement. The Company has substantially completed its performance obligations under the Olpasiran Agreement and the ARO-AMG1 Agreement.
The Company has substantially completed its performance obligations under the Olpasiran Agreement. In November 2022, Royalty Pharma and the Company entered into the Royalty Pharma Agreement. In consideration for the payments under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement.
The decrease was due to lower yields on more recently purchased bonds and a realized loss on the sale of marketable securities, offset by various credits the Company received during 2022. Year Ended September 30, 2021 Compared to Year Ended September 30, 2020 See “Item 7.
The change was primarily due to the interest expense on the liability related to the sale of future royalties, partially offset by higher yields on investments due to increased interest rates. Year Ended September 30, 2022 Compared to Year Ended September 30, 2021 See “Item 7.
The Company’s cash and cash equivalents decreased to $108.0 million at September 30, 2022 compared to $184.4 million at September 30, 2021. Cash invested in short-term fixed income securities was $268.4 million at September 30, 2022 compared to $56.6 million at September 30, 2021.
The Company’s cash, cash equivalents and restricted cash slightly increased to $110.9 million at September 30, 2023 compared to $108.0 million at September 30, 2022. Cash invested in available-for-sale debt securities was $292.7 million at September 30, 2023 compared to held-to-maturity debt securities of $374.3 million at September 30, 2022.
Stock compensation expense was based upon the valuation of stock options and restricted stock units granted to employees, directors and certain consultants. Facilities-related expense included lease costs for the Company’s research and development facilities in San Diego, California and Madison, Wisconsin.
Facilities-related expense primarily includes lease costs for the Company’s research and development facilities in San Diego, California and Madison, Wisconsin. Facilities-related costs increased $3.3 million, or 26%, for the year ended September 30, 2023 compared to the same period of 2022.
Cash invested in long-term fixed income securities was $105.9 million at September 30, 2022, compared to $245.6 million at September 30, 2021. In April 2022, the Company sold all of its marketable securities for $122.3 million.
In April 2022, the Company sold all of its investments in mutual funds for $122.3 million. On September 30, 2023, the Company changed the classification of its investment securities from held-to-maturity to available-for-sale.
Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Labor hours, costs incurred or patient visits in clinical trials are typically used as the measure of performance.
Labor hours, costs incurred or patient visits in clinical trials are typically used as the measure of performance. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations.
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The bullets below highlight some of those key developments; however, it is not all-inclusive and is meant to be read in conjunction with the entirety of management’s discussion and analysis, the Company’s Consolidated Financial Statements and notes thereto, and all other items contained within this Annual Report on Form 10-K. • dosed the first patients in its PALISADE study, a Phase 3 clinical study to evaluate the safety and efficacy of ARO-APOC3 in adults with familial chylomicronemia syndrome (FCS); • filed for regulatory clearance to begin a Phase 1/2a study of ARO-C3 and subsequently dosed the first subjects in AROC3-1001, a Phase 1/2 clinical study of ARO-C3, the Company’s investigational RNA interference (RNAi) therapeutic designed to reduce production of complement component 3 (C3) as a potential therapy for various complement mediated diseases; • presented additional interim clinical data from AROHSD1001, AROAAT2002, and AROAPOC31001; 56 • completed enrollment in Phase 2b ARCHES-2 study of investigational ARO-ANG3 for patients with mixed dyslipidemia; • filed for regulatory clearance to initiate Phase 1/2a study of ARO-RAGE and subsequently dosed first subjects for treatment of Asthma; • filed for regulatory clearance to initiate Phase 1/2a study of ARO-MUC5AC and subsequently dosed first subjects for treatment of muco-obstructive lung disease; • filed for regulatory clearance to initiate Phase 1/2a study of ARO-MMP7 for treatment of idiopathic pulmonary fibrosis (IPF); • initiated and dosed the first patients in the Phase 2 GATEWAY clinical study of investigational ARO-ANG3 for the treatment of patients with homozygous familial hypercholersterolemia; • entered into definitive agreements to form a joint venture, Visirna Therapeutics, Inc. with Vivo Capital through which the Company and Vivo Capital intend to expand the reach of innovative medicines in Greater China; • hosted a pulmonary research & development (R&D) day to discuss the Company’s emerging pipeline of pulmonary targeted RNA interference (RNAi) therapeutic candidates that leverage its proprietary Targeted RNAi Molecule (TRiM TM ) platform, including an announcement of its previously undisclosed candidate designed to reduce expression of matrix metalloproteinase 7 (MMP7) as a potential treatment for idiopathic pulmonary fibrosis (IPF); • Entered into an exclusive license agreement with GSK for ARO-HSD; • Janssen presented clinical data from REEF-1, a Phase 2b study of different combination regimens, including JNJ-73763989 (JNJ-3989), formerly called ARO-HBV, and/or JNJ-56136379 (JNJ-6379), and a nucleos(t)ide analog (NA) for the treatment of chronic hepatitis B virus infection (CHB); • in conjunction with Takeda, announced results from a Phase 2 clinical study (AROAAT-2002) of investigational fazirsiran (TAK-999/ARO-AAT) for the treatment of liver disease associated with alpha-1 antitrypsin deficiency (AATD), and was recently published in the New England Journal of Medicine (NEJM) and presented in an oral presentation at The International Liver Congress™ 2022 - The Annual Meeting of the European Association for the Study of the Liver (EASL); and • completed the purchase of 13 acres of land in the Verona Technology Park in Verona, Wisconsin and held a groundbreaking ceremony on the site.
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(2) On October 6, 2023, Amgen announced that it has completed its acquisition of Horizon. The Company operates lab facilities in San Diego, California and Madison, Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place. The Company’s principal executive offices are located in Pasadena, California.
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The site is being developed into an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility which will support the Company’s process development and analytical activities.
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The bullets below highlight some of these key developments; however, this list is not all-inclusive and is meant to be read in conjunction with the entirety of management’s discussion and analysis, the Company’s Consolidated Financial Statements and notes thereto, and all other items contained within this Annual Report on Form 10-K. • presented data on Company’s pulmonary pipeline at the European Respiratory Society (ERS) International Congress 2023 in Milan, Italy in September 2023, which included: 59 ◦ in an ongoing Phase 1/2 clinical trial, ARO-RAGE achieved mean target gene knockdown of up to 90% with a maximum of 95% after a single inhaled administration; ◦ the TRiM™ platform can achieve compelling results across multiple additional gene targets in the lung, including MUC5AC, MMP7, and the Company’s newest program against thymic stromal lymphopoietin (TSLP), a clinically well validated target; • filed an application for clearance to initiate a Phase 1/2 clinical trial of ARO-DUX4 in July 2023, which is being developed as a potential treatment for patients with facioscapulohumeral muscular dystrophy (FSHD); • hosted a Research & Development (“R&D”) Day on June 1, 2023 to discuss progress of the Company’s pipeline of RNAi Therapeutics, at which the following updates were discussed: ◦ ARO-RAGE showed continued dose response with single inhaled dose of 184 mg achieving mean knockdown of 90% and max of 95%; ◦ adipose delivery platform achieved single dose target gene silencing of greater than 90% with six months of duration in non-human primates; ◦ improved hepatic dimer platform achieved equivalent or better knockdown of two target genes with longer duration than monomer mixture in non-human primates; ◦ TRiM™ platform now has potential to address multiple cell types including liver, solid tumors, lung, central nervous system, skeletal muscle, and adipose; ◦ announced progress towards the Company's “20 in 25” goal to grow its pipeline of RNAi therapeutics that leverage the proprietary Targeted RNAi Molecule (TRiM™) platform to a total of 20 clinical stage or marketed products in the year 2025; • presented updated data from the Phase 2 SEQUOIA study of investigational RNAi therapy fazirsiran in patients with alpha-1 antitrypsin deficiency liver disease which included: ◦ fazirsiran reduced serum Z-AAT concentration in a dose-dependent manner; ◦ fazirsiran significantly reduced liver Z-AAT; median reductions of 94% of Z-AAT accumulation in the liver; ◦ fazirsiran consistently reduced hepatic globule burden; mean reductions of 68% in histologic globule burden were observed; ◦ fazirsiran treatment reduced histological signs of hepatic inflammation; ◦ 50% of the pooled fazirsiran treated patients showed at least a one-point improvement in METAVIR liver fibrosis versus 38% in the placebo group; ◦ fazirsiran has been well tolerated to date; treatment emergent adverse events were generally well balanced between fazirsiran and placebo group; ◦ pulmonary function test results (FEV1 and DLCO) for both fazirsiran and placebo were stable over time with no apparent dose-dependent effects; ◦ updated Phase 2 clinical data were presented at the European Association for the Study of the Liver (EASL) Congress 2023 in an oral presentation titled, “Fazirsiran reduces liver Z-alpha-1 antitrypsin synthesis, decreases globule burden and improves histological measures of liver disease in adults with alpha-1 antitrypsin deficiency: a randomized placebo-controlled phase 2 study”; ◦ results were consistent with AROAAT-2002 open-label study previously published in The New England Journal of Medicine; • presented interim data from the ongoing Phase 2 GATEWAY clinical study of ARO-ANG3 which included: ◦ mean reduction in LDL-C of 48.1% (200mg) and 44.0% (300mg); ◦ ANPTL3 inhibition with ARO-ANG3 also reduced HDL-C, non-HDL-C, and triglycerides, consistent with published human genetic data; ◦ safety and tolerability; • completed enrollment of the Phase 3 PALISADE clinical trial evaluating ARO-APOC3 for treatment of familial chylomicronemia syndrome; • announced interim results from ARO-RAGE administration in Part 1 of the ongoing Phase 1/2 study in normal healthy volunteers which included: ◦ reductions in soluble RAGE (sRAGE) as measured in serum after two doses on Day 1 and Day 29; 60 ◦ duration of pharmacologic effect persisted for at least 6 weeks after the second administration of the 92 mg does with further follow up ongoing; ◦ reduction in sRAGE as measured in bronchoalveolar lavage fluid (BALF) at Day 31 after a single dose; ◦ reduction in in serum sRAGE was observed after a single dose; ◦ the pooled placebo groups experienced a mean sRAGE increase of 8% in BALF and a mean decrease of 1% serum; ◦ safety and tolerability; • expanded TRiM TM platform to include an optimized intrathecal administration for CNS delivery with distribution throughout the brain and in all relevant brain cell types.
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Additionally, the Company entered into a lease agreement for a new 144,000 square foot laboratory and office facility in San Diego, California to support discovery activities, which it currently anticipates to be available in April 2023. 2022 Financial Performance Summary Net loss was $176.1 million for the year ended September 30, 2022 as compared to net loss of $140.8 million for the year ended September 30, 2021.
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The first development candidate to utilize this new delivery platform is ARO-SOD1. In June 2023, the Company filed a CTA for approval to initiate a Phase 1 clinical study.
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For further information, see Part I, “Item 1. Business” and “Results of Operations - Revenue” below.
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In preclinical studies, ARO-SOD1 achieved 95% spinal cord tissue mRNA knockdown after a single intrathecal dose in human SOD1 transgenic rats and maintained greater than 80% spinal cord tissue mRNA knockdown three months after a single intrathecal dose in non-human primates; • dosed the first patient in Takeda’s Phase 3 REDWOOD clinical study of fazirsiran for the treatment of alpha-1 antitrypsin deficiency associated liver diseases, triggering a $40.0 million milestone payment to the Company which was paid in the third quarter of fiscal 2023; • dosed the first patient in GSK’s Phase 2b trial of GSK4532990, an investigational RNAi therapeutic for the treatment of patients with non-alcoholic steatohepatitis (NASH), triggering a $30.0 million milestone payment to the Company which was paid in the third quarter of fiscal 2023; • announced that the FDA has granted Fast Track designation to ARO-APOC3 for reducing triglycerides in adult patients with familial chylomicronemia syndrome (FCS).
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Exhibits and Financial Statement Schedules.” Revenue Recognition —The Company adopted Financial Accounting Standards Board (“FASB”) Topic 606 – Revenue for Contracts from Customers which amended revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries.
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ARO-APOC3 was previously granted Orphan Drug designation by the FDA and the European Union; • announced interim results from Part 1 of AROC3-1001, an ongoing Phase 1/2 clinical study of ARO-C3, which included: ◦ a dose-dependent reduction in serum C3, with 88% mean reduction at highest dose tested; ◦ a dose-dependent reduction in AH50, a marker of alternative complement pathway hemolytic activity, with 91% mean reduction at highest dose tested; ◦ duration of pharmacologic effect supportive of quarterly or less frequent subcutaneous dose administration; ◦ safety and tolerability; • initiated dosing in ARO-MMP7-1001 (NCT05537025), a Phase 1/2a single ascending dose and multiple ascending dose clinical study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of ARO-MMP7, an investigational RNAi therapeutic designed to reduce expression of matrix metalloproteinase 7 (MMP7) as a potential treatment for idiopathic pulmonary fibrosis (IPF), in up to 56 healthy volunteers and in up to 21 patients with IPF; • enrolled the first subject in a Phase 1 randomized, placebo-controlled trial to assess the safety tolerability, pharmacokinetics and pharmacodynamics of a development-stage medicine, HZN-457, which is out-licensed to Horizon, triggering a $15.0 million milestone payment to the Company which was paid in the second quarter of fiscal 2023; • enrolled the first subject in Amgen’s Phase 3 trial of olpasiran, which triggered a $25.0 million milestone payment to the Company, which was paid in the second quarter of fiscal 2023; • entered into the Royalty Pharma Agreement on November 9, 2022, pursuant to which Royalty Pharma paid $250.0 million upfront (See Note 11 — Liability Related to the Sale of Future Royalties of Notes to Consolidated Financial Statements of Part I, “Item 1.
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Contingent Consideration —The consideration for the Company’s acquisitions may include future payments that are contingent upon the occurrence of a particular event. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates.
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Financial Statements.”) 2023 Financial Performance Summary Net loss attributable to Arrowhead Pharmaceuticals, Inc. was $205.3 million for the year ended September 30, 2023 as compared to $176.1 million for the year ended September 30, 2022.
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These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt times, the Company has invested its cash reserves in corporate bonds typically with maturities of less than 3 years and historically classified these investments as held-to-maturity. The Company has also invested in mutual funds that invest in marketable debt securities such as U.S. government bonds, U.S. government agency bonds, corporate bonds, and other asset backed debt securities.
Biggest changeThe Company has invested its cash reserves in corporate bonds typically with maturities of less than 3 years and historically classified these investments as held-to-maturity. On September 30, 2023, the Company changed the classification of its investment securities from held-to-maturity to available-for-sale.
The Company does not hold any instruments for trading purposes and investment criteria are governed by its Investment Policy. As of September 30, 2022 and 2021, the Company had cash and cash equivalents of $108.0 million and $184.4 million, respectively, and short-term and long-term investments and marketable securities of $374.3 million and $429.0 million, respectively.
The Company does not hold any instruments for trading purposes and investment criteria are governed by its Investment Policy. As of September 30, 2023 and 2022, the Company had cash, cash equivalents, and restricted cash of $110.9 million and $108.0 million, respectively, and investments of $292.7 million and $374.3 million, respectively.
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This change enables the Company to sell securities to diversify its portfolio, reduce exposure to market risks, and provide flexibility to meet cash flow needs and new investment opportunities.

Other ARWR 10-K year-over-year comparisons