Q1 2024 Arrowhead Pharmaceuticals Inc Earnings Call
Participants
Vince Anzalone; Vice President, Head of Investor Relations; Arrowhead Pharmaceuticals, Inc
Christopher Anzalone; President and Chief Executive Officer; Arrowhead Pharmaceuticals, Inc
Bruce Given; Chief Operating Officer; Arrowhead Pharmaceuticals, Inc
James Hamilton; Chief Discovery and Translational Medicine; Arrowhead Pharmaceuticals, Inc
Ken Myszkowski; Chief Financial Officer; Arrowhead Pharmaceuticals, Inc
Luca Issi; Analyst; RBC Capital Markets
Ted Tenthoff; Analyst; Piper Sandler
Mayank Mamtani; Analyst; B. Riley Securities
Jason Gerberry; Analyst; Bank of America Merrill Lynch
Patrick R. Trucchio; Analyst; H.C. Wainwright
Brendan Smith; Analyst; TD Cowen
Mike Olson; Analyst; Morgan Stanley
Ellie Merle; Analyst; UBS
Maury Raycroft; Analyst; Jefferies
Prakhar Agrawal; Analyst; Cantor Fitzgerald
David Lebovitz; Analyst; Citigroup
William Green; Analyst; Bernstein
Presentation
Operator
Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. (Operator instructions) I will now hand the conference call over to Vince Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
Vince Anzalone
Thank you, Amy, and good afternoon, everyone, and thank you for joining us today to discuss Arrowhead's results for fiscal 2024 first quarter ended December 31, 2023. With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview of the quarter. We also welcome back Dr. Bruce Given who previously served as Arrowhead's Chief Operating Officer and Head of R&D and who has rejoined the company on an interim basis as chief medical scientist. Bruce will provide an update on our cardiometabolic pipeline, Dr. James Hamilton, our Chief of discovery and translational medicine will provide an update on our earlier-stage programs, and Ken Myszkowski, our Chief Financial Officer, will give a review of the financials. In addition, Patrick O'Brien, our Chief Operating Officer and General Counsel will be available during the Q&A portion of the call.
Before we begin, I would like to remind you that comments made during today's call contain certain forward-looking statements within the meaning of Section 27 A. of the Securities Act of 1933 and Section 21 E. of the Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking statements and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements.
For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10 K on Form 10 K and our quarterly reports on Form 10 Q.
I'd now like to turn the call over to Chris Anzalone, President and CEO of the Company.
Chris?
Christopher Anzalone
Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Everyone has made a name for itself as a company capable of rapid innovation and development that is building a broad-based, diverse business. This is exemplified by our 2025 initiative where we expect to grow our pipeline of RNA therapeutics to at least 20 clinical stage or marketed products by the year 2025.
This commitment to creating a large number of new medicines as quickly as we can speak to our dual mandate to maximize number of patients we can help and to maximize our ability to create durable value for our shareholders. These mandates can be entirely aligned during early development. We decreased biology risk by focusing on well-validated targets in our proven delivery product and our proven delivery platforms. At this stage the cost of discovery and early development are relatively low, particularly when considering the potential value we can create with novel medicines. In short, we can do many things at this stage without spending too much money and without building large teams with a deep therapeutic area expertise. However, as our pipeline grows and we enter later-stage expensive and complex clinical studies requiring significant capital, deeper domain expertise and ultimately commercial infrastructure. We need to prioritize what we do internally. That is where we are now. And we are currently building out late-stage development and commercial infrastructure to serve the cardio-metabolic vertical. This is the primary engine of our near-term value proposition. We expect to follow that up and add a pulmonary vertical as our lung targeted platform candidates mature, and we have the data we need to make commitments to build out specialized commercial infrastructure. So does this mean that we will slow down or stop early development outside our focus areas. It does not we will continue to develop new candidates outside these verticals because, A., we have confidence in our ability to find appropriate partners to continue development and commercialized programs that are non-core for us. And B, we anticipate adding new verticals in the future. Think of this part of our business of generating capital to support our internal programs and as a farm system to create additional focus areas that could create long-term value as platforms and candidates mature.
Let's start with our cardiometabolic vertical. Our lead program is pedestrian which targets a liver protein C three or APOC. three. This is potentially a big year for pedestrian and for the cardiometabolic vertical, broadly PALISADE Phase three study of patisiran in patients with genetically or clinically confirmed familial chylomicronaemia syndrome or FCS is on schedule for the last patient to have their last study visit in the second quarter of this year. This will be the first complete Phase three dataset for Arrowhead that potentially would allow us to file our first NDA and launch our first commercial product. Fcs is a severe disease in which patients have extraordinarily high triglyceride levels, often in the thousands of milligrams per decilitre. For many of these patients experienced painful and recurrent bouts of severe abdominal pain, pancreatitis and hospitalization. These patients at these patients have inadequate treatment options and we believe the pause after and could represent a significant leap forward. We see the data from the Phase two studies is compelling for Astra and has been generally well-tolerated and consistently did what it was designed to do. We have a high degree of confidence that this will be a powerful drug for this patient population with very high unmet medical needs, we believe pedestrian could also help a broader population of patients. Therefore, we plan to initiate Phase three studies in patients with severe hypertriglyceridemia or SHTG.
These studies will likely begin next quarter and are aimed at addressing a larger patient population that we believe totals 3 million to 4 million in the US alone. As with the FCS population, our Shaft two study gives us confidence that those assets are in will do exactly what it is designed to do we believe it will be a powerful and welcome to leap forward for patients. Bruce will discuss study designs for SHTG. in a moment. We are still considering whether we also wanted to study with us or in the broader atherosclerotic cardiovascular disease or ASCVD population but have not yet made a final decision on that. We will be completing our analysis this quarter and we'll communicate our plans after they are finalized. And we have had some regulatory interactions if our cardiometabolic vertical represents the foundation of our value proposition for vascular and is the bedrock of that foundation for the following reasons.
The target APOC3 is well validated across a variety of genetic studies. Our data across hundreds of human subjects indicates consistent target engagement with deep and durable APOC3 silencing triglyceride levels were deeply reduced in patients and healthy volunteers treated with progesterone. We know that elevated triglyceride levels in certain patient populations can lead to severe abdominal pain, acute pancreatitis, hospitalizations and other difficult downstream effects. And even in rare cases death, there is currently no FDA approved therapy that lowers triglycerides by more than 20% or 30% and with Astra and has been generally well tolerated in prior studies together, these set up an attractive opportunity we just need to get to market. We expect to launch with Astra and as early as next year in FCS., we would hope to follow that relatively quickly by launching into larger SHTG. markets and we will see if we follow that with even larger ASCBD. markets, this brings me next to Zone ASRN., which targets angiopoietin-like protein three or HPTL. three.
As we've discussed, we are assessing both with Aster and amplify faster and to determine which may be better suited for investment in a cardiovascular outcome study. In patients with ASCVD, the data we presented at AHA in November on the data and the ability to reduce remnant cholesterol, which is believed to be a major contributor to the residual risk of ASCBD. after LDL-cholesterol is well-controlled was very encouraging. In fact, we have not seen any other therapy capable of the type of reductions seen after that after end treatment in the Phase two study, just as available drugs have shown only modest lowering of triglycerides available therapies have similarly produced only modest reductions in remnant cholesterol. So Darren has also shown promising results in a Phase two study in patients with homozygous familial hypercholesterolemia or HOFH. We are currently preparing materials for an end-of-Phase two meeting with the FDA and intend to begin a Phase three study in HOFH. After we have regulatory feedback on our plans, we could also expand into the much larger heterozygous or HGFH. population.
If we decide to conduct a Phase three study of that Astra and in a C CBD, the commercial plan will likely follow a similar path as pedestrian. That plan is to launch in a rare population and continued to build our commercial infrastructure and capabilities support larger patient populations. While the additional Phase three studies are being conducted pursuant to out there. And that could mean addressing the small HOFH. population relatively quickly than expanding into a TFH. And ultimately, the very large ASCBD. market as we get each approval. This path makes a lot of sense for us as an emerging commercial company and would allow us to grow in a measured stepwise fashion. We believe that pimavanserin and ends at Asurion clearly Ward's investment into cardiometabolic infrastructure I'm sorry, Cardiome of all commercial infrastructure. Those outlays become increasingly cost efficient as we increase the number of drugs that infrastructure managers. Therefore, it makes sense to expand the cardiometabolic vertical to include additional complementary medicines in the portfolio. And we have several in mind.
One is based on our adipose targeting TRiM platform, which has shown impressive preclinical data, we have seen target gene silencing with this platform in excess of 90% after a single dose in animal models with the activity that lasted over six months. Adipose tissue is the largest endocrine organ in the body, and there are multiple attractive metabolic targets that may be amenable to an R&I based knockdown strategy. We are not prepared to disclose the first gene target we are addressing, but it is in the metabolic space.
Another program we are adding to the cardiometabolic vertical is aero INHBE. This utilizes deliver targeted TRiM platform and targets. The INHB. gene, which encodes inhibitor subunit beta E James will talk about the target in a moment. But the intention is to study this in an obesity and metabolic disease population, both programs but well in our cardiometabolic vertical and are on schedule for CTA filings as early as the end of this year. It is difficult to overstate the importance of our cardiometabolic vertical in driving our value proposition. We have near term commercial opportunities in pedestrian ends at Asurion, a high expectation of success surrounding the programs and longer term opportunities with future drug candidates.
The next vertical we expect to invest in late-stage clinical studies and commercialization is pulmonary there only about 16,000 pulmonologists United States, and we believe it's an attractive prospect to build a specialized commercial sales organization to support a growing pipeline of medicines that addresses various respiratory diseases. We currently have three programs in clinical studies that collectively address three major components of chronic lung disease, inflammation, NewCo obstruction and interstitial lung disease. We also see the pulmonary space as a target-rich environment where we believe we can advance and ultimately bring to market a number of different drugs for various diseases treated by a relatively small number of physicians. We like the leverage. This creates the current program. The current programs in clinical studies are aero rage, Mach five, AC and aero, and then P. seven we expect to have multiple clinical readouts for these programs this year and intend to start at least one Phase two study in two or in 2024. We also expect additional targets potentially this year. Cardiometabolic and pulmonary are where we are focusing a lot of our attention and will represent quite a bit of our spend moving forward.
So what does that mean for the rest of our existing and future pipeline. As I mentioned, we are not slowing down our discovery organization and will not limit growth in our early-stage pipeline for example, in 2023, we nominated nine new clinical candidates and filed four new CTAs. These are promising programs. So the question is where do they fit strategically and what role does each play in our business, I think of three primary categories that the new programs can slot into one new candidates, the fit into existing verticals, Aero INHBE. is a good example of this. It fits neatly into the cardio-metabolic vertical two new candidates that pending clinical proof of concept could warrant an expansion into a new vertical. Our work in CNS is very early. But given the vast unmet medical needs in the broad target-rich environment, this could be an area we build out should clinical data supported and three new candidates that are interesting for our medical and commercial standpoint but may not fit into one of our verticals. This is an important category for us and can serve as a substantial source of capital to fund the other two categories. We brought in close to $1 billion in partnering capital over the past seven years, and we anticipate this will be increasingly important piece of our financing plan going forward as existing partnerships mature and we continue to do new deals, our partnerships with and our partnership with Amgen on old Pastor and formerly of AROLTA. is a good example of what we can do after even a modest investment in discovery in late 2016 when we partnered with Amgen aero LPA was still an early preclinical program. Since then, we have received around $362 million in cash and are still eligible to receive another $535 million in potential payments as certain clinical and commercial milestones are achieved. In fact, we are eligible to receive $50 million when they'll pass or in Phase three study is fully enrolled, which Amgen recently publicly guided could be in the first half of this year.
Business development is an important source of capital, but of course, not the only source we will rely on last month, we announced a $450 million equity financing the first such deal we have done in approximately four years. That transaction was confidentially marketed to just a handful of funds, and we were pleased with the results were substantially oversubscribed and saw terrific participation from high-quality investors. We viewed that as the first step in substantially increasing our balance sheet. We expect the second step to be a structured finance transaction that could be based around taking capital in return for royalties on one of our future products that is capped at some return. This could also have a debt component to it. We anticipate executing such a transaction in the coming months. We expect the third step to be one or more partnership transactions. And while we cannot control the exact timing of these, our goal is to do one or more economically meaningful deals this year together, we expect these multiple steps to provide a strong financial base on which we may continue to invest in our core programs and new innovations. There's also cost management side to creating a strong financial base. As I discussed, we have reached the point where we need to be more strategic about the particular drug candidates we take into late-stage studies and ultimately to commercialization. It is simply not economically feasible to do everything on our own past a certain stage of development. That means looking more vigorously for partners and potentially pausing or even calling some programs that are outside our chosen verticals. To that end, we've recently conducted a portfolio review. We are moving forward with clinical studies for our complement programs, AROC. three and aero CFP and our muscle targeted programs, Aero ducks for an arrow DM1. We're continuing to assess clinical the clinical path and designing Phase Ib IIa studies for our NASH candidate, Aero P. and PLA. three, the GalXC candidate, HZN. four five seven, which was returned to us by Amgen after its Horizon acquisition is being terminated and will not move forward. In addition, Aero SOD1, our CNS candidate against SOD1 ALS, will not move forward. We are continuing to work on additional CNS programs and expect a new candidate against a different target to begin clinical studies later this year. It is more commercially attractive and Arrow side one, while still serving as a good proof of concept for the CNS platform.
Our portfolio review also affected some undisclosed preclinical programs. We have revised our budget to reflect an anticipated reduction in growth of our spend over this fiscal year and beyond. Ken will talk about specifics in a moment, but we are reducing our guidance on fiscal year operating burn by approximately $100 million. We are achieving these estimates while importantly, continuing to fully fund our core pulmonary and cardiometabolic verticals and innovative new technologies and programs continuously assessing our anticipated uses and sources of capital and ensuring they lie that they align with the overall goals of the business is, of course, a critical exercise. I think our revised budget puts us in a stronger position strategically as well as financially.
With that overview, I'd now like to turn the call over to Dr. Bruce Given.
Bruce.
Bruce Given
Thank you, Chris, and good afternoon, everyone. It's great to be back, helping Arrowhead move forward in the most effective and efficient way possible. I've been doing a good amount of work, getting up to speed with the cardiometabolic clinical development teams, which are operating at a very high level. We are doing important design and analysis work to assure our studies a world-class shortly. We will beginning centers initiated two additional Phase three studies can get up and running rapidly. Chris mentioned that we are in the middle of a process to assess which program was asked around or so DAS Rand, we want to take forward into an ASCBD. population, and we have nothing new to update on that front today. So I will focus my time today on where we are with please ask around and the progress we've made to review put plus after and is designed to reduce production of APOC3, a component of triglyceride rich lipoproteins or TRL.s and a key regulator of triglyceride metabolism. APOC. three increases plasma triglyceride levels by inhibiting breakdown of TRL.s by lipoprotein light base and uptake of TRL remnants by hepatic receptors in the liver. We have study possess ran in multiple clinical studies in different patient populations. With several hundred patients having been dosed, we have been consistently encouraged by safety and tolerability results with treatment emergent adverse treatment emergent adverse events reported to date that generally reflect the co-morbidities and underlying conditions of each study population. This is encouraging and consistent with our expectations of a properly designed R&I therapeutic that leverages our proprietary TRiM platform in addition, plus Astra and has demonstrated a high level of pharmacodynamic activity with a mean maximal reduction in APOC3 of around 90%, give or take regardless of the patient population studied. This is also consistent with our expectations and speaks to the consistency of the RNA mechanism. This was a hallmark of Arrowhead candidates in our earlier days in the HPB. and AT. space and continues to be the case as we have developed new candidates targeting diverse genes.
So where is pedestrian going and what has changed over the last couple of months first and most critically in the short term, we are making some changes to the proposed design of the suite of Phase three shaft studies for patients with SHTG. Our goal with these changes, which I will discuss in a moment is twofold. First, we want to accelerate enrolment and enable regulatory filings in the US and other key markets as quickly as possible. And second, we want to maximize the probability to show an effect on severe abdominal pain and acute pancreatitis, which could be a significant differentiator from other triglyceride lowering therapies and could aid in value and access discussions with payers.
So what are we doing towards events? Our plan was to conduct two similar Phase three studies Shafts three and Chester four and approximately 700 patients with triglycerides greater than 500 milligrams per decilitre across the two studies, combined with a primary endpoint of lowering triglycerides after one year of treatment. This general design remains largely unchanged, but we have streamlined several features of the study to potentially speed up time to NDA submission in Europe in the US. We also intended to include a predefined number of patients. It's higher risk of severe abdominal pain and acute pancreatitis events with the goal potentially characterizing an expected reduction in risk of these events in HSHTG. patients treated with patisiran. This remains an important goal, but we believe the best way to assure ourselves have adequate power to show this effect is to run a separate study designed specifically for that purpose. This separate study will be called chest of five, and we'll provide more details in the design sizing and inclusion criteria when we initiate the study, this separate study strategy could potentially do two things. It gives us the best chance of showing a reduction in events versus placebo in second removing the predefined number of high-risk patients and shafts to three adjusted for is expected to further speed enrolment for these studies. Between these changes and a handful of others, we estimate that we can get to full enrolment for shifts to three shifts to four more rapidly and potentially get to an NDA six to 10 months faster than the original plan. This is a significant advance. If our predictions are correct, we were actively working on getting these studies ready to go. We asked we estimate adjusted three-inch after four and will begin next quarter at Shafter five shortly thereafter, plus Astra and has demonstrated best-in-class data at each prior step of the clinical development process. So we're eager to move more rapidly through these Phase three studies.
The next important event for us around is the completion and readout of the Phase three PALISADE study. This is in patients with genetically confirmed or clinically diagnosed familial chylomicronaemia syndrome or FCS. This is a severe disease of extremely high triglyceride levels that puts patients at high risk of episodes of severe abdominal pain, acute pancreatitis, hospitalization, and it can be fatal. There are no adequate treatment operating options for these patients. Palisade is a one-year study with a primary endpoint of triglyceride lowering versus placebo. We have enrolled 75 patients globally. And the last patient is in is scheduled to have their last visit in May. After that visit, we will work quickly to complete sample analysis and data collection preparation and analyse the data. We intend to report top line results from this study in the third quarter and begin work towards.
Finally, there are its first NDA that will likely be at the end of the year or into the first quarter of 2025. This is an exciting time. I'm thrilled to be back and to be part of this next big milestone for Arrowhead.
I'll now turn the call over to Dr. James Hamilton. Jacques?
James Hamilton
Thank you, Bruce. As you know, we have a very robust pipeline of early clinical stage programs and even more even more robust pipeline of discovery stage programs, most of which we haven't disclosed yet. I want to talk about a few of the newer programs and give an update on where we are with some of the clinical programs that are approaching readouts. First, Chris mentioned two programs that we are. We've added to our Cardio-Metabolic pipeline. One utilizes our new adipose delivery platform and the other utilizes our liver-targeted platform. We intend to talk more about the adipose platform program later in the year. So I will focus on the liver targeted program. This new liver-targeted program is called aero inhibitor. E. inhibitor E. is a gene that codes for a serum measurable protein activity, which is primarily synthesized by the hepatocytes, increased circulating activity levels signal adipose tissue to store excess nutrients as fat inhibit the expression is increased in obesity and inhibit any loss of function variants identified in human genetic databases are protective of type two diabetes and are associated with reduced visceral fat and are reduced waste to hit ratio. We have conducted studies in mouse obesity models where inhibiting silencing with SIRNA. reduced weight gain by over 20% compared to controls. Importantly, the difference in weight gain was primarily due to changes in fat mass with no difference seen in lean mass. We hope that inhibiting therapeutic silencing could be an interesting adjunct to GLP-1 agonists. We think the potential benefits of combination therapy could include the ability to use a lower dose of the GLP-1 agonist, which might result in reduced lean mass loss, reduce gastrointestinal side effects and prevention or slowing of weight regain post cessation of GLP-1 agonist therapy. We have selected a clinical lead and are on schedule to file a CTA by the end of 2024.
Moving on to our two muscle targeted programs, Aero ducks for patients with fascias, Capula humeral muscular dystrophy or FSHD and Arrow DM one for patients with Type one myotonic dystrophy or DM one. Both of these programs are in Phase one to a dose escalating studies to evaluate the safety, tolerability and PK and PD profiles of single and multiple ascending doses. Both studies have ethics and regulatory clearance to initiate, and we expect first patient in for both in Q1 or Q2 of this year to review Arrow ducks for is designed to target the gene that encodes human double holmium box for docs for protein as a potential treatment for patients with FSHD at this HD. is an autosomal dominant disease associated with the failure to maintain complete epigenetic suppression of docs for expression in differentiated skeletal muscle over expression of ducks for is my a toxic and can lead to muscle degeneration. Arrow DM one is designed to reduce expression of the dystrophy and myotonic of protein kinase or DMPKG. DM1 is the most common adult-onset muscular dystrophy, and there is currently no approved disease-modifying therapy.
I also want to give a status update on our two complement programs. At the end of last year, we filed a CTA to begin a Phase one two study of AROCFP. for the treatment of various complement mediated diseases and possibly geographic atrophy or GA. ROCFP. is designed to reduce hepatic expression of complement Factor B, which has been identified as a promising therapeutic target. Our preclinical studies have demonstrated that AROCFB. can achieve deep and durable reductions in liver protein. Liver production of complement Factor B, which plays a key role in the activation of the alternative complement pathway involved in the pathogenesis of renal diseases such as IGA nephropathy as well as other conditions like at GA, we anticipate that first patient in for the Phase one two study will occur in Q2 of this year. Our more advanced complement program is AROC. three. As you may recall, AROC. three is designed to reduce production of complement component three or C. three as a potential therapy for various complement mediated diseases. We previously presented data from our Part one from part one of the study in healthy volunteers, an ongoing Phase one two study that demonstrated the following promising results, a dose-dependent reduction in serum C3 with 88% mean reduction at the highest dose, tested a dose-dependent reduction in age 50, a marker of alternative complement pathway hemolytic activity with 91% mean reduction at the highest dose tested and duration of pharmacologic effect supportive of quarterly or less frequent subcutaneous dose administration. These results make us confident to move on to part two in patients with IgA nephropathy and C3 glomerulopathy. We are currently enrolling that part of the study and intend to present patient data around year end 2024.
Lastly, the three clinical stage pulmonary programs continue to progress efficiently and are all on schedule for clinical readouts this year. These pulmonary programs are as follows a rage which is designed to reduce expression of the receptor for advanced application and products or rage as a potential treatment for inflammatory pulmonary diseases. For the Phase one two study, we have fully enrolled and dosed all healthy volunteer cohorts and the mild to moderate asthma patient cohorts as well. We should have additional PD. data by the end of the first quarter. For both of these, we are also in the process of enrolling three cohorts of asthma patients with high baseline levels of fractional exhaled nitric oxide or FeNO, which is a biomarker for IL-13 driven type two, inflammation and alone. We believe we will have initial results from these high FeNO cohorts in the third quarter of this year, the biology of rage and where it sits in the inflammatory cascade as well as our own preclinical studies have suggested that rage inhibition may provide potent anti-inflammatory effects that impacts with impacts on an array of cytokines, including IL-13, IL-5 TSLPIL. 18 IL. 33 IL. one B. and IL-6. In addition to FeNO, we are assessing other potential biomarkers of anti-inflammatory effect, including sputum and blood cytokine in the asthma patient cohorts.
Next two programs, our April month five AC, which is designed to reduce production of nuisance five AC. or month five AC as a potential treatment for NewCo obstructive pulmonary diseases and Arrow MMP. seven, which is designed to reduce expression of Matrix metallic protein is seven or MMP. seven as a potential treatment for idiopathic pulmonary fibrosis or IPF in both programs. We are conducting Phase one two studies in healthy volunteers. And then in patients, both programs require patient data to assess PD. unlike Arrow rage, which has the benefit of a readily available and measurable PD biomarker in healthy volunteers. Both Aramark five AC. and OMMP. seven have already enrolled and dosed healthy volunteers, and we anticipate that patient cohorts will be enrolled and dosed in time to enable initial clinical readouts in the second half of the year.
I will now turn the call over to Ken Myszkowski can.
Ken Myszkowski
Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the quarter ended December 31, 2023, was $132.9 million or $1.24 per share based on 107.4 million fully diluted weighted average shares outstanding.
This compares with a net loss of $41.3 million or $0.39 per share based on 106 million fully diluted weighted average shares outstanding for the quarter ended December 31, 2022. Revenue for the quarter ended December 31, 2023, was $3.6 million compared to $62.5 million for the quarter ended December 31, 2022 to revenue in the current period primarily relates to our collaboration agreements with GSK on revenue in the prior period, primarily related to recognition of revenue from our license and collaboration agreements with Takeda and Amgen. All upfront payments from existing agreements have now been fully recognized.
Total operating expenses for the quarter ended December 31, 2023, were $140.1 million compared to $104.7 million for the quarter ended December 31, 2022. The key drivers of this change were increased candidate costs and salaries as the Company's pipeline of clinical candidates has both increased and advanced into later stages of development.
Net cash used by operating activities during the quarter ended December 31, 2023, was $117.8 million compared with $75.5 million for the quarter ended December 31, 2022. The increase in cash used by operating activities is driven primarily by higher research and development expenses and lower cash revenue in the period. We have reviewed our cash forecast, and we'd like to provide additional guidance on our expected cash burn for the next several quarters. We expect operating burn to be $80 million to $100 million per quarter.
Our footprint expansion is mostly complete with the final payments to be made over the next several months, totalling about $70 million, after which we expect capital expenditures to be nominal breaking the operating burn a bit further, our cash burn related to G&A has been about 10% of costs. So think of that as about $10 million of G&A each quarter, which is expected to grow slowly going forward as we continue to advance commercial commercialization efforts, we expect quarterly R&D expenditures to be about $80 million this year, increasing modestly next year as our registrational studies advance.
Turning to our balance sheet, our cash and investments totalled $220.3 million at December 31, 2023 pro forma cash and investments accounting for the recent capital raise would be approximately $649 million.
Our common shares outstanding at December 31, 2023 were $107.5 million and pro forma shares outstanding account accounting for the capital raise would be $123.8 million for that overview. I will now turn the call back to Chris.
Christopher Anzalone
Thanks, Ken. This is an important year for Arrowhead in five primary areas. First, we expect a lot of activity within our cardiometabolic vertical, we will have our first Phase three readout for pimavanserin in and plan to file our first NDA. We plan to initiate several additional Phase three studies in patient populations, including HOFHAGFHSHTG. and potentially ASCBD. across two different drug candidates for Vascular and Endovascular. And we also intend to expand the cardiometabolic vertical to include two additional candidates, Aero INHBE., and then in an undisclosed adipose targeted candidate.
Second, we plan to have multiple clinical readouts in our pulmonary vertical across three different drug candidates and initiate at least one Phase two study.
Third, we intend to continue to strengthen our balance sheet with a structured finance transaction and one or more business development transactions.
Fourth, our other clinical programs continue to move forward. These include continuing enrollment of the disease or end Phase three study with Takeda Amgen potentially completing enrollment of its Phase three study of all pasts ran progress in Phase two studies in HBV with GSK progress in Phase two studies of GSK. four five three two nine and zero in NASH planning for Phase two studies in PNPLA. and aero PMP only three progress in Phase one studies for our neuromuscular candidates, Aero ducks for an arrow DM. one and progress in Phase one studies of our complement-based candidates, AROC. three and Arrow CFP. And fifth, we are not done innovating. As I mentioned, we expect to bring our first adipose targeted candidate to the clinic and initiate clinical studies for an undisclosed CNS candidate this year. thanks for joining us today, and I would now like to open the call to your questions. Operator?
Question and Answer Session
Operator
(Operator instructions)
Luca Issi, RBC Capital. Your line is open.
Luca Issi
All right. Thanks so much for taking my question. A quick one here, maybe James, first on FeNO. I know the data for the high FeNO cohort is in U.S. The third quarter on, however, I was under the impression that you were planning to show us the FeNO data from the mild to moderate patients potentially ahead of that. Is that no longer to plan? And if so, what drove that decision? And then maybe second, either Chris or Ken, on the I think it's the first time I'm hearing you directly talk to you about potentially using debt and given the broader macroeconomic environment and where the rates are. Why do you think that adding debt is the right strategic decision at this point? Thanks so much.
James Hamilton
Sure, Luca.
Thanks for the question. I'll take the first one at in the mild to moderate asthma patient cohorts. We didn't have a FeNO cutoff. So it was sort of an all-comers asthma, a series of cohorts. And we just don't have the numbers. I think in the top dose cohort, we have one patient with high FeNO. So it's just not enough to make a call based on or present data based on that's why we're waiting for the high FeNO cohorts.
Christopher Anzalone
Yes.
So even though while interest rates are higher than they have been historically, the cost of debt is certainly lower than our cost of equity capital. And it's a, we think, an important part of nondilutive financing. So that's why we're looking at that possibility.
Ken Myszkowski
And I think that we're at stage the stage of this company where we can consider that we are close to commercialization that it makes sense, I think, to start exploring those options.
Luca Issi
Got it.
Thanks so much.
Operator
One moment for our next question.
Ted Tenthoff , Piper Sandler. Your line is open.
Ted Tenthoff
Great. Thank you very much and thanks for the thorough uptake and really exciting year, you know, as you're getting ready for PALISADE data and again, fingers crossed, assuming success based on the mechanism and the integration in the past, how do you start to think about the commercial build out for that indication, you know, especially in the U.S. Obviously I know it's not a huge indication, but it would be the company's first commercial build-out and then you discuss partnerships. Is it something where you would envision us seeking distribution partners overseas? Are what's sort of the thinking on OUS?
Christopher Anzalone
Thanks a ton.
I think Ken?
Yes, we're really excited to make this transition. We're excited about seeing those data, the Phase two data we're compelling. And so we are optimistic that those data are going to continue to look to look good look, but we like the way the way this this transition into a commercial company is panning out. It's we are not a commercial company right now. And so it can be jarring. One could imagine going from zero to into a very large market that could be a bit diffused. And so we get to take a baby step, if you will, in FCS either way, I the way I sort of segregate the triglyceride market is, is there those genetically defined FCS patients, those patients are known and physicians who treat them know where they are. They are relatively easy to address. You take one step down, if you will. I'd say patients who are not genetically FCS but have triglycerides over eight, 80 and history of pancreatitis. Again, those patients are relatively well known and relatively easy to address it as it is or it is those populations that we will be addressing initially, I mean, so it's a nice entry, if you will, into commercial as we as we grow and as we continue the other phase study of the other Phase three studies, and it will be increasing our ability to go after those harder to find patients, those that tracked and untracked with right side, those patients who have triglycerides above 500 and who may not have history of pancreatitis. And that's a very large number, we believe. But we'll take some education of the market and we'll take some digging, of course. And so we've got extra time to work to develop our ability to do that. So that's domestically internationally. And we feel like we can handle the FCS market in certain ex U.S. markets. And so we intend to do that longer term, I would expect for us to find good local partners for SHTG., we'll see where we are with ASCVD. with AGFH. and the like, but at least for SHTG., it would probably make some sense for us to find the right local partners in other countries.
Ted Tenthoff
Great.
Thanks for the update.
Christopher Anzalone
You're welcome.
Operator
One moment for our next question.
Mayank Mamtani, B. Riley Securities. Your line is open.
Mayank Mamtani
Hey, Tim, thanks for taking my questions and good to have Bruce back on the call. So on the an outcome trial consideration and deliberation.
So that ran Bruce, could you point to any on meta-analysis informing correlation of TRL some percent reduction or cumulative lowering that informs the event rate with outcomes, I believe you and possibly another peer might be doing a similar exercise in coming months. And like you said, there might be additional external partners. And Rod, as you look to I do a structured financing process, and I would love to hear your thoughts.
And I have a quick follow-up after that.
Bruce Given
Well, you there's a lot of interest in the remnant cholesterol field concept, a lot of Mendelian randomization, data and other data pointing to these remnant cholesterol as being highly atherogenic in some of these analyses are even more atherogenic than April B and your LDL on a milligram per milligram basis. It's as yet, you know, some improvement in clinical trials because frankly, there just haven't been good enough drugs for treating these. And so it has been on testable, they were waiting for the good drug to come along that you could you could test this remnant cholesterol hypothesis and both So DAS are in place after and are really incredibly good drugs in yield from a pharmacologic perspective. So they offer that opportunity. And it's not actually an easy choice between the two because they're both equivalent in a lot of ways with respect to their ability to address that particular question. So I think it's, you know, it's there's plenty of room plenty of paper out there, plenty of no genetic studies that point us this way that give us reason to be hopeful as a field but alone as a company. But ultimately we have to we have to prove it. We have to do the old-fashioned thing. We have to actually do the clinical trials, improve it.
Mayank Mamtani
Got it. And then on the Pheno HyCO, James, I hope scrutiny of that biomarker data will also be part of the 3Q analysis.
Could you just maybe talk to the significance of that and broadly in your preliminary pipeline for Mach five and other patient cohorts on IU. also assessing that? And what's the relevance of that as we look to make some go, no-go decisions this year.
Thanks for taking the questions.
James Hamilton
Sure. Rates of the had the additional biomarker data, specifically the cytokine, as I mentioned, I mean, I think that those are an important piece of the readouts, but that will have this year. And in addition to FeNO, we are not assessing those in the level of detail and that we're doing in the rage cohorts with the other pulmonary programs like Block five AC. or MMP. seven just yet and not as relevant. We do measure cell counts on Bell for all the pulmonary programs, just to give indication of if we're seeing any kind of pro-inflammatory effect. And we've not seen such an effect to date in the belt for any of those three programs.
Mayank Mamtani
Got it.Thanks for taking the question.
Operator
One moment for our next question.
Jason Gerberry, Bank of America. Your line is open.
Jason Gerberry
You guys thanks for take my question on a one for me on RAGE.
Can you just remind us on what your cutoff is for high FeNO And will there be placebo patients that you're actually comparing against with that data update in 3Q?
And what I'm trying to get at is thinking about your confidence you can derive from about 25 patients of data here and with respect to like FeNO variability as a measure? And just lastly, do you think there's a chance that aero rage could achieve even higher than this 30% to 40% bogey set by biologics on the Pheno measure, just given it targets multiple interleukins involved in the type two inflammatory pathway? Thanks.
Christopher Anzalone
Sure.
Yes, I can't really comment on the magnitude question of that and what we expect or if we think we can have a higher FeNO reduction compared to the biologics, the FeNO cutoff is 35. And there are, I think 38 total patients across the high FeNO cohort. So we should have a pretty good number and that includes placebo patients. So as you know, we'll be able to compare the active treatment arm two to a placebo group.
Jason Gerberry
Got it. Okay.
Thank you.
Operator
One moment for our next question.
Patrick R. Trucchio, H.C. Wainwright. Your line is open.
Patrick R. Trucchio
I think some have a couple of follow-up questions. The first is just on the CMO role. If you can maybe discuss the reasoning behind the de-central sizing the Chief Medical Officer function and what impact this is expected to have as well as potential advantages of this decentralized approach?
And then secondly, just on the CNS platform, can you talk a bit more about what went wrong with Arrow SOD one more specifically, was it a decision based on market potential or with the SRA. or something else? And maybe just give us an idea of how you expect this that's planning on the build-out going forward?
Christopher Anzalone
Sure.
So it's so with the with the slight restructuring of R&D, but we just thought that we would need it good, good. It leaders with deep expertise in our chosen verticals. So far that's can be cardiometabolic. We expect pulmonary to be to be the next vertical. We just need a deep expertise there. We expect those not to be the last verticals that we're going to create. We're probably going to have several others going forward. And they just needed their own leaders and so made. So for us, it made sense to restructure on towards that guarding side one, look, there's nothing there's nothing within Aerostat one that pushed us off it, to be honest, and we liked it. We liked aero side one, we'd like that would be the opportunity because it gave us a good chance to interrogate on the platform. It was it was going to give us a good. I think we thought proof of concept of the platform is working or not working the problem was solved with unwanted. That is that it was becoming it was appearing to be increasingly commercially unviable. So the good news is we could seem to work in the bad news is it didn't make economic sense to develop that drug. We thought and we and we had a fast follower at least one on that that we think, you know, at once gives us the ability to interrogate the platform. It gives us good proof-of-concept platform, but also will be a more commercially viable drug. So it just made sense to allocate resources to get into others. So it was less of a SOD one failing then and then a lack of confidence in the SOD1 ALS market.
Patrick R. Trucchio
Got it. That's helpful.
Operator
Thank you very much to welcome one on their phone question.
Mani Foroohar, Leerink Partners
Your line is open associated with questions of a couple of quick ones.
Patrick R. Trucchio
You talk about $100 million step down in operating expenses, which obviously buys a lot of wiggle room for the Company and it allows you to maximize your HR investments. Could you give us any sort of color on the tempo at which we'll see that flow into OpEx over the course of this year, just for our modelling and then I've got a couple of quick pipeline questions to follow.
James Hamilton
So I think you should expect those results immediately. If you look at what our burn was in the current quarter, it was it was high compared to previous quarters, but we think it will go back to a on normalized spend, like I had mentioned before, of about $80 million to $100 million and you could expect that beginning with the second fiscal quarter.
Patrick R. Trucchio
Okay.
And hopping over to the pipeline for Aero IHPE. or in heavy, how we're going to pronounce it. That's a that's a target for which we've seen some of it, some evidence in broad margin and population studies, et cetera, for a change in adipose phenotype into the distribution to the hip to waste ratio even after what accounts for BMI. So should we be thinking of that as a place where we're going to eventually see data that thing that targets, weight loss, adipose distribution, what are the endpoints we should be thinking of in humans? And then what are the endpoints we should be thinking about from earlier stage studies as we sort of as this Asic, it's progressively derisked.
James Hamilton
Yes, sure.
Christopher Anzalone
I think about all of the above for at least in terms of our initial clinical study, we'll look at all of that and investigate not just changes in body weight loss, but will evaluate body composition, loss of lean mass distribution of adipose tissue is the visceral fat stores shrinking. What happens to lean mass. And we're also interested in what happens to measures of climate control like A1c or oral glucose tolerance testing. So I think and there are quite a few endpoints that we can study in even a Phase one study and learn a lot about our drug is about that particular target.
Vince Anzalone
And then as a follow-up, is there is there an opportunity in the initial human data set to see this to see this asset tested in both in patients who are on and off grip on GLP-1, given how broadly they're taken amongst the population of the US and other places where you guys have done clinical trials?
Patrick R. Trucchio
Yes, I think so.
Christopher Anzalone
I think that would be we're still a little ways away from the clinic. But I would anticipate a study design that first starts in obese patients that are not on those drugs and then also investigates the combination of the GLP-1 agonist with inhibiting knockdown and see how the combination plays out.
Patrick R. Trucchio
Great.
I'm going to I'm going to hop off.
I know Elliot, a couple of others are still waiting on the queue.
Thanks.
Operator
Guys One moment for our next question.
Brendan Smith, TD Cowen.
Brendan Smith
Hi, this is Gina on for Brendan. Thanks for taking our question. I just want to ask which, again, on pork, ischemic muscle adipose tissue cancer in development, commercialization partnership would be the highest priority.
Christopher Anzalone
Yes, sorry, sorry, you're breaking up.
Can you repeat that your non-core pipeline programs.
Brendan Smith
would you consider for a development commercialization partnership and which of these would be the highest priority for you?
Christopher Anzalone
Yes. So unfortunately, we don't do that entirely, we need a counterparty that's going to be interested as well. But look, there are we would we would certainly I'd be happy to talk about C. three, for instance, and we'd be happy to talk about the muscle assets. We think those are We think those are all good assets, but at least right now, don't fit neatly into a plan vertical one would think that the muscle now gives will be a natural vertical for us and it could morph into that. But right now, we are happy to talk and to the right partner about it's about one or both of those assets on PMP three potentially could be something that would that we are interested in NASH is it is a bit in flux right now. And but that's something that we will consider discussing as we as a partner in HSD. to GSK. We could talk about that as well. And that's sort of that's sort of what feels like right now in our existing clinical pipeline.
Operator
I welcome One moment for our next question.
Mike Olson, Morgan Stanley.
Mike Olson
Your line is open for, Joe. Thanks for taking the question. And maybe just a quick follow-up here. In terms of Beauty Club, you mentioned maybe one or two potential deals this year. Could they potentially include the core areas like cardio, metabolic and pulmonary or those are going to be excluded from potential royalty deals?
Ken Myszkowski
Thanks.
Let's deal with those separately. So cardiometabolic and we are we are full speed ahead with that answer and input after end of right now. And so we are not actively looking to partner those on the on the pulmonary side, we are not actively seeking partners for our three clinical assets. We could be we would be happy to discuss with a potential partner a platform partnership whereby somebody would bring in a target that we would we may not be working on for us to together build a drug candidates, but at least right now, we are not looking at partnering those existing clinical assets.
Mike Olson
That's helpful.
Thank you.
Ken Myszkowski
So welcome.
Operator
One moment for our next question.
Ellie Merle, UBS. Your line is open.
Ellie Merle
Yes, thanks for squeezing me in. And does in the past on rate, you had mentioned your program, I guess just what's the latest on the status and timelines there and just the focus of that program.
And then just on a related note, as you think about planning on a larger Phase two study in asthma and what are the considerations and the design and what you're looking to see in the high dose cohort later this year?
And just what everything from the subdue program perhaps plan to some of the considerations in the design phase, certainly the onset of the subdue program, we said we are seeing not within reach knockout, and that's the good news. And we just weren't seen as deeper knockdown as we've seen with the inhaled time. And so we are really focusing our future development on the inhaled. But again, but he did work it just it just was not U.S. as strong as the as the inhaled version.
I James, you want to.
James Hamilton
I don't have anything to add to that.
I don't think it will play into our Phase two plans, though, and we'll answer was the second question about again, what can you repeat the oh nine theatrical comments relative to our Amazon consideration, unlike what you're looking to see from a high FeNO cohort and how that might inform some of the design competition?
Ellie Merle
Thanks.
Yes.
Christopher Anzalone
So we're talking around and thinking about a lot of different designs right now, I think the design win would certainly want to be able to study both a high Type two in the non Type two patients in a single design. And I think that the FeNO readout Q. three may inform on the which patient population we want to favor one more than the other, but I think we'll want to plan to study both.
Yes.
And keep in mind with the FeNO data, you look, we're looking forward to seeing that, of course. But it really only reflects moving a single pathway, as James mentioned, in his prepared remarks, rage, we expect rates to move a number of different, a different cytokine. And FeNO is only really detecting movement of one of those. And so while it's helpful. It's certainly not the only important data point.
Ellie Merle
Yes.
Operator
Okay, thanks. That's helpful. One moment for our next question.
Maury Raycroft , Jefferies Your line is open.
Maury Raycroft
Hi.
Thanks for taking my questions.
I was going to ask one about RAGE to so for the higher dose PD asthma patient data that you're collecting, can you clarify if you'll do a public update on that at the end of this quarter on those data?
Vince Anzalone
And will that only include knockdown or will that include cytokine and other PD. biomarkers as well.
And so it will include knock-down of for sure in and I'm not sure if there's if there's going to be a have a good venue in the near term to report those. I can tell you that what we've seen so far and it's still an incomplete dataset. What we've seen so far is consistent with what we said in the past, which is what we're seeing and knockdown in patients is really mapping on top of what we what we have seen the knockdown profile in healthy volunteers. And so that that continues on once we have a full dataset. And given that again, I expect that to continue. I don't know that we'll rush out and have a press release based on that. I think we'll probably have that as part of a some presentation at a conference or what have you. But to be honest, we really haven't put much thought into how we're going to disseminate those data because again, we expect those to be we expect that the knockdown in patients to be quite similar just to healthy volunteers that we've seen so far, Jim did anything else know that.
Maury Raycroft
Got it.
Okay. That's helpful. And then maybe one follow up just for docs for ARM or DM. one, could you potentially have data updates from either of those programs this year?
Christopher Anzalone
Yes.
I think that depending on how enrollment goes, we could have some early data by end of the year. But very enrollment contingent.
Maury Raycroft
Got it. Okay.
Thanks for taking my questions.
Operator
Bright One moment for our next question.
Prakhar Agrawal, Cantor Fitzgerald
Your line is open.
Prakhar Agrawal
Hi.
Thanks for taking my questions. Are number one on 11 E preclinically, how out of your candidate profile differs versus some of our competitors or myeloma and wave in terms of the level of knockdown you're seeing, you mentioned 20% weight loss in the IO model. So maybe if you can compare and contrast that and then I had a follow-up.
Sure. Yes.
Christopher Anzalone
I think that that that level of differential in weight gain between the control animals and the animals receiving drug is similar to what others have reported in that study we were seeing and 90 plus, I think 96% knockdown in that, that obesity mouse model, which is, I believe, more than what others have reported. And I think that's probably the best I can tell you.
Prakhar Agrawal
Got it.
And on the CV side of one of the key questions, do you need answers from the FDA to make a decision on which CV asset to move forward into the outcomes trial for the broader population? Or is it just mostly an internal decision at this point?
Vince Anzalone
Yes.
I mean, we haven't gone to the spruce given to get we haven't gone to the FDA at this point on that. At some point, we will of course, go to the FDA would start a trial like that without their input. But we're not at the point yet that we've engaged them in the discussion.
Prakhar Agrawal
Again, thank you for taking the questions.
Operator
Short One moment for our next question.
And our next question comes from David Lebovitz, Citi . Your line is open. David Liebowitz, your line is open.
David Lebovitz
Hello?
Hi, Jim.
I guess we can't.
Yes.
Hi. How does the bank on for David.
Thanks for taking our question. We so maybe regarding the FTS. readout of that transaction, you mentioned that the last patient is scheduled for the visit in second quarter. We were wondering if you could give us a little more color in terms of the data readout timing and maybe what data points can we expect to see the readout?
Vince Anzalone
Well, I think you know, we would again be looking to present, I would think in a meeting I actually haven't spoken with Chris on this or maybe we would top line in some way once we did that, but we'd want to do that in such a way. It's to not presented a fulsome presentation at a at an academic meeting at some point, and I think it's kind of the same sort of question the same answer we had before at this point, it's hard to predict what meeting that would be and when that would occur. But yes, I suspect we would, in some way, give some top line information, but most of the fulsome data would come out later.
I would expect.
David Lebovitz
Okay, thank you. And just one follow-up. Assuming that Lowe's asset and an Olive Garden are both approved, how do you think clinicians would choose between the two therapies?
Vince Anzalone
It's hard to answer that question in a setting where actually we don't have the comparative results of the of the two agents at this point on either efficacy or safety in the FCS population. So it's would it be wildly spec speculative at this point? Just trying to make a call on that?
Yes, I don't I don't think we I don't think that we've seen triglyceride levels and from that Phase three, yet when we when we look at it of the available data from the pit from their Phase twos versus our Phase twos we are we are comfortable that our dosing interval will be longer, and it appears at least according to the Phase two data appears that our APOC3 knockdown is greater in our triglyceride lowering is greater. But again, as Bruce says, we don't know what the Phase three looks like, I'm on their side or on our side, frankly.
David Lebovitz
Thank you. That's helpful.
Operator
Your question comes from the line of William Green with Bernstein. Your line is open for.
William Green
Good evening. Thank you for taking my question. You've estimated the addressable FCS population at 70 to 100,000, which sounds like you have pretty large population to get approved based on a single 75 person study. So can you just remind us of your agreement with the FDA on the exact definition of that FCS population for which they agreed to accept just a single trial. Thank you.
James Hamilton
In that in that Phase three study, we are studying people with genetically confirmed FCS and those patients with the with clinical FCS, if you will, which is patients with triglycerides above 80 and history of pancreatitis, that population in our study Thank you, Rocco.
And I would now like to turn the conference back to Chris Anzalone for closing remarks.
Operator
Thanks very much for tuning in today, and we look forward to speaking with you over the next quarter and those of you who are in Southern California, I hope you stay dry.
This concludes today's conference call. Thank you for participating. You may now.
