Q3 2023 Arrowhead Pharmaceuticals Inc Earnings Call
Participants
Christopher R. Anzalone; CEO, President & Director; Arrowhead Pharmaceuticals, Inc.
James C. Hamilton; Chief of Discovery & Translational Medicine; Arrowhead Pharmaceuticals, Inc.
Javier San Martin; Chief Medical Officer; Arrowhead Pharmaceuticals, Inc.
Kenneth A. Myszkowski; CFO; Arrowhead Pharmaceuticals, Inc.
Vincent Anzalone; Head of IR & VP; Arrowhead Pharmaceuticals, Inc.
Brendan Smith
Edward Andrew Tenthoff; MD & Senior Research Analyst; Piper Sandler & Co., Research Division
Eliana Rachel Merle; Analyst; UBS Investment Bank, Research Division
Keay Thomas Nakae; Senior Research Analyst of Therapeutics, Devices and Diagnostics; Chardan Capital Markets, LLC, Research Division
Luca Issi; Research Analyst; RBC Capital Markets, Research Division
Mani Foroohar; Senior MD of Genetic Medicines and Senior Research Analyst; Leerink Partners LLC, Research Division
Maurice Thomas Raycroft; Equity Analyst; Jefferies LLC, Research Division
Mayank Mamtani; MD, Senior Biotech Research Analyst & Group Head of Healthcare; B. Riley Securities, Inc., Research Division
Michael Eric Ulz; Equity Analyst; Morgan Stanley, Research Division
Patrick Ralph Trucchio; MD of Equity Research & Senior Healthcare Analyst; H.C. Wainwright & Co, LLC, Research Division
William Pickering; Research Analyst; Sanford C. Bernstein & Co., LLC., Research Division
Presentation
Operator
Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. (Operator Instructions)
I will now hand the conference over to Vince Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.
Vincent Anzalone
Thank you, Stephen. Good afternoon, and thank you for joining us today to discuss Arrowhead's results for its fiscal 2023 third quarter ended June 30, 2023.
With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview of the quarter; Dr. Javier San Martin, our Chief Medical Officer, who will provide an update on our mid and later-stage clinical pipeline; Dr. James Hamilton, our Chief, Discovery & Translational Medicine, who will provide an update on our earlier stage programs; and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials.
In addition, Tracy Oliver, our Chief Commercial Officer and Patrick O’Brien, our Chief Operating Officer and General Counsel, will both 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 27A of the Securities Act of 1933 and Section 21E 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 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 R. Anzalone
Thanks, Vince. Good afternoon, everyone and thank you for joining us today. Our industry is built on promise. Sometimes this promise can be stunning and carry with it the possibility of saving the lives of some and drastically improving life for others. Arrowhead's mission is to bring important new medicines to the people who need them, and save lives and alleviate suffering where we can. While this is our guiding principle and focusing on this promise has given us purpose and the motivation to, I believe, innovate at industry-leading levels and operate at speeds not seen before, it is not the only important focus for us.
Another is risk. Our industry swims in a sea of risk. We recognize that in order to succeed, we need to appreciate the great promise in front of us, but focus on all the risks between the idea and the medicine ultimately given to a patient. We are idealists, but we are not naive. One of our most important jobs is to mitigate and decrease risk where we can. We have made great progress on this broad front since our last call, and this is how I would like to frame our discussion today.
Let's begin with pulmonary. We believe we've taken an important step toward further de-risking the entire pulmonary franchise with the first chronic GLP toxicology results starting to come in.
For ARO-MMP7, the NOAEL, or no-observed-adverse-effect level, was the highest dose we tested in our chronic rat study. In other words, even at the highest dose tested, we are not seeing anything that is deemed adverse. The highest dose represents what we believe would be substantially greater exposure than would be applied to humans. We are waiting for final rat data from the ARO-RAGE chronic GLP tox study, but that also is looking like the NOAEL will be the highest dose we tested.
We are still waiting for the 9-month monkey data in both candidates, but our experience with ARO- ENAC leads us to believe that the rat is the more sensitive species for these pulmonary tox studies. So it is very encouraging to us that the rodent studies look so positive. This is potentially a big step forward for the platform.
As you may recall, we saw lung inflammation in some of the chronic GLP tox doses for ARO- ENAC in 2021. Based on our analysis of those results, we concluded that we needed to increase the potency of our pulmonary candidates, and we clearly did that with ARO-MMB7, ARO-RAGE, and ARO-MUC5AC. We were optimistic that these improvements would translate into better chronic tox results, but of course, we couldn't know until the data came in.
As we are now seeing preliminary data from those studies come in, we are increasingly confident that ARO-MMB7 and likely ARO-RAGE may have substantially wider tox windows than ARO-ENAC did. And I believe this represents a significant de-risking event for the pulmonary franchise.
We look forward to having a complete rat and monkey chronic GLP tox data for ARO-RAGE and ARO-MMB7 in coming months and expect to have chronic GLP tox data for ARO-MUC5AC next year.
Encouraging preliminary chronic GLP tox data follow prior de-risking events in the pulmonary franchise over the past quarter. Specifically, I believe the ARO-RAGE clinical data indicate 3 important things; first, the safety and tolerability reports to-date have been good and nothing surprising has emerged. This is always a critical first step for a new platform and every new drug.
Second, the activity data we have seen thus far have been impressive and showed continued dose response through the top dose level. After a single inhaled dose of 184 milligrams of ARO-RAGE, we saw up to 95% knockdown with a mean of 90% in that cohort.
Not only is this a high level of target gene knockdown that was extraordinarily consistent across participants in the cohort. Each subject had a good response. This is in the same ballpark as what we now expect with optimized liver-targeted programs, and this is an important point.
I think it is generally accepted that RNAi is a reliable modality to safely reduce expression of a target gene and that when Arrowhead introduces a new liver program, there is high expectation both internally and externally, that the drug candidate will reduce expression of the target protein as designed.
I am hopeful that each new data set we are approaching with -- I'm sorry, I am hopeful that with each new data set that we are approaching this expectation in pulmonary. That is a giant leap forward and an important value inflection point.
Lastly, we think the data also shows that the duration of effect with ARO-RAGE supports a dosing interval of 2 months or more. This is an important de-risking event because it limits accumulated drug exposure, increasing our confidence that the good safety profile seen thus far may continue during chronic treatment. It would also be a very patient-friendly dosing regimen.
De-risking the pulmonary platform is important for its own sake. As we have said in the past, we see many potential drugs coming out of the franchise that could address a number of unmet medical needs, and we appear to be the only company able to effectively use RNAi in the lungs.
The pulmonary franchise alone could be the basis of a large company. But it is also important as an example of how we seek to de-risk our broader business. From our perspective, a 1 or 2 drug company is a bet, not a business. From the beginning, we have sought to create a broadly diversified business to increase the number of patients we serve, but also, importantly, as a hedge against the unpredictability of biology.
In our industry, the risk of failure is substantial, and our mitigation strategy has been part innovation and part brute force. We have sought to create a technological platform that works reliably and then move as fast as we can to create as many well-thought-out drug candidates as possible. We built and continue to refine and expand the reach of our TRiM platform. This is a modular, structurally simple system to, 1, address multiple cell types, which allows our therapies to go where a disease is in a way that other RNA companies do not; 2, move rapidly from idea to the clinic, and then efficiently through mid- and late-stage clinical studies; and 3, provide platform continuity and competence, which gives us an enhanced expectation of success for new candidates that we believe far exceeds that of biotech broadly.
Lessons learned developing each candidate informs the development of future candidates, so our expectation of success grows stronger over time. We believe this translates to the potential for more candidates to become approved therapies than industry average.
Our 20 in 2025 initiative follows this platform development and represents, to some extent, the brute force component of our broader risk mitigation strategy. We have platforms that appear to work well, so we have the responsibility to our patients and stakeholders to build as many new drugs as fast as we can. It is our goal to have 20 clinical stage or marketed products by the year 2025.
Somewhat paradoxically, building such a large pipeline is part of our strategy to mitigate balance sheet risk. We are in a very expensive business, and one could argue that the best way to ensure we are properly capitalized to bring drugs to market is to have a small, focused pipeline. We reject that. Rather, we believe that well-thought-out drug candidates with greater than industry average chances of success can always find homes in partner companies' pipelines.
As we mentioned at our Analyst Day in June, we have brought in nearly $1 billion in partnering capital over the past 6 years and have not raised equity capital for over 3.5 years. In fact, GSK recently initiated a Phase 2b study of GSK4532990, formerly called ARO-HSD, for the treatment of NASH, which earned us a $30 million milestone payment.
In addition, Takeda initiated the Phase 3 Redwood study of Fazirsiran, being developed as a potential treatment for alpha-1 antitrypsin deficiency liver disease, which earned Arrowhead a $40 million milestone payment. We believe that partnering is a good cornerstone of a broader financing strategy and one that our platforms are uniquely suited for because of the quality of the candidates coming out of them and the scarcity of the companies that are skilled at generating RNAi-based therapeutics.
Our partnering strategy includes existing partnerships that are maturing, and therefore, eliciting higher payments, new potential partnerships that could combine our platforms with a partner's target or set of targets, and new partnerships on existing programs in our pipeline.
Regarding the latter on our last earnings call, I discussed that at the time we had paused the CTA filing, because of some inbound interest in partnering ARO-DUX4. We continue to explore those options. However, we decided to move forward with the ARO-DUX4 CTA filing ourselves.
Partnering discussions can take time, and we don't ultimately know if they will translate into license agreements. We felt it did not make sense to further delay the CTA filing in the Phase 1 study. While partnering continues to be a cornerstone of our financing model, we are certainly cognizant of the risk of over partnering. We believe the best way to build a lot of value quickly is to retain some wholly-owned candidates and drive toward commercialization.
Of course, there is substantial risk with this course, but over the past quarter, we believe we have taken some off the table. We completed enrollment in the Phase 3 PALISADE study of ARO-APOC3 in patients with familial chylomicronemia syndrome, or FCS. This is an important milestone for Arrowhead, because it will likely be the first candidate and indication that we will seek regulatory approval for. The final study visit for the last patient in is scheduled for Q2 of 2024, so we expect to start the NDA process next year.
In addition to FCS, we are currently working on the Phase 3 plans for severe hypertriglyceridemia and mixed dyslipidemia, which we will be discussing with regulators this year. Shortly after those discussions, we plan to start Phase 3 studies for those larger indications.
Our other wholly-owned cardiometabolic candidates, ARO-ANG3 also had an important milestone during the quarter. We presented data at the European Atherosclerosis Society Congress demonstrating that ARO-ANG3 achieved LDL-C reductions of 44% to 48% when added to existing standard of care treatments. These results are similar to results seen in studies of an approved monoclonal antibody targeting ANGPTL3 in patients with HoFH. These are important derisking data, as we move toward 1 or more Phase 3 programs, which we are currently designing.
We are actively working on go-to-market strategies for multiple candidates. We expect to have 4 drug candidates in Phase 3 studies by the end of the year. Two of these are currently wholly-owned, ARO-APOC3 and ARO-ANG3; and third, fazirsiran, is partnered with a 50-50 profit share in the U.S., so we have retained substantial economics.
As I mentioned, we will have our first Phase 3 registrational study readout mid next year for our APOC3 -- our ARO-APOC3 program in FCS and expect an NDA soon thereafter. As we look at our pipeline, we expect additional NDA filing opportunities on a very regular basis going forward.
Moving to our earlier-stage pipeline. We filed 2 CTAs for 2 new programs targeting gene expression in 2 different tissue types. I already mentioned ARO-DUX4 and skeletal muscle for the treatment of FSHD, and the other is ARO-SOD1 in the central nervous system for the treatment of ALS. We expect additional CTAs over the next few quarters using both the CNS and skeletal muscle platforms.
Of course, these are early, but they represent important derisking events for potential CNS and skeletal muscle franchises. As with our advances in pulmonary, these are also illustrative of our desire to expand the reach of our technology and decrease the overall risk of our business by creating value across many different channels.
Lastly, before I hand the all over to Javier, I want to highlight the R&D Day that we hosted in June. During that presentation, which is still available to view on our website, we gave updates and had external KOLs, talk about some existing clinical programs in cardiometabolic and pulmonary disease and discuss what's next for us in CNS tissue, including potentially systemic delivery and delivery to adipose tissue. The R&D Day had a lot of detail. We are constantly pushing our technology forward and expanding its reach.
With that overview, I'd now like to turn the call over to Dr. Javier San Martin. Javier?
Javier San Martin
Thank you, Chris, and good afternoon, everyone. The design, planning and preparation of the late-stage studies of our cardiometabolic candidates, ARO-APOC3 and ARO-ANG3 is well underway, while making good progress towards our goal of conducting multiple and a Phase 2 meeting with regulators this year and initiated multiple Phase 3 studies late this year and early next year.
We also intend to present final Phase 2 data at the American Higher Association meeting in November, pending acceptance for multiple studies for both ARO-APOC3 and ARO-ANG3.
Let's take a moment to review the various studies we have conducted, and then I will provide our current thinking around the Phase 3 studies, may -- how the Phase 3 study may look like for each clinical indication.
I will start with ARO-APOC3. Our investigational RNAi therapeutic being developed as a treatment for patients with mixed dyslipidemia, severe hypertriglyceridemia and familial chylomicronemia syndrome. ARO-APOC3 is designed to reduce production of apolipoprotein C-III, or APOC3, a component of triglyceride rich lipoproteins, including very low-density lipoproteins, or VLDL and chylomicrons and is a key regulator of triglycerides metabolism. Knocking down the hepatic production of APOC3 by RNAi results in reduced VLDL synthesis and assembly, enhanced breakdown of triglyceride-rich lipoproteins, and better clearance of VLDL and chylomicron remnants via LDL dependent and independent pathways.
We view ARO-APOC3 as having the potential to address many patients population with various lipid disorders that can lead to different clinical complications and FeNO types. Familial Chylomicronemia Syndrome, or FCS is characterized by extremely high TG levels typically over 1,000 milligrams per deciliter and as high as 5,000 milligrams per deciliter, leading the high rates of acute pancreatitis that usually requires hospitalization and can be fatal.
Patients with FCS may also experience chronic abdominal pain, and they have to adhere to a very strict diet with very low fat content, leading to impair their quality of life. FCS is a severe and ultra rare genetic disease that affects hundreds to a few thousand patients in the U.S.
Severe hypertriglyceridemia, or SHTG is characterized by marked elevation in TG levels, typically over 500 milligrams per deciliter, which can lead to increased risk of acute pancreatitis, as well as an increased risk of cardiovascular disease. This condition is estimated to affect several million patients in the U.S.
Lastly, mixed dyslipidemia is defined as the presence of high LDL cholesterol combined with TGs remnant cholesterol and low HDL. The lipid profile is a major component of the risk factor for atherosclerosis cardiovascular. There are likely tens of millions of patients in the U.S. with mixed dyslipidemia who are not adequately control with current standard of care.
The studies of ARO-APOC3 that we have conducted or are planning to conduct for each population are as follows. For FCS, we are conducting the PALISADE study, which is a Phase 3 placebo-controlled study to evaluate the efficacy and safety of ARO-APOC3 in adults with FCS. The primary endpoint for this study is percent change from baseline in fasting TG at month 10. This study was fully enclosed in May with a total of 75 subjects distributed across 39 different sites in 18 countries who were randomized to receive 25 milligrams of ARO-APOC3, 50 milligrams of ARO-APOC3, or matching placebo once every 3 months.
This puts us on schedule for study completion in Q2 of 2024, a data readout shortly thereafter, and then NDA preparation for regulatory filings. Participants who completed randomized portion of PALISADE are also eligible to continue in an extension period, where all participants will receive ARO-APOC3.
For SHTG, we are conducting the SHASTA-2 Phase 2 study in 229 patients randomized 3:1 to receive 10, 25 or 50 milligrams of ARO-APOC3, all placebo on day 1 and week 12. Patients with FCS were excluded from this study. The primary endpoint is percent change from baseline fasting TG at week 24. SHASTA-2 was the study that enabled us to begin planning and design for our Phase 3 plan in SHTG patients. The data strongly support advancement into Phase 3, and we plan to present results at the American Heart Association in November. The current Phase 3 plan for SHTG includes 2 separate studies, which will be called SHASTA-3 and SHASTA-4. The idea behind the 2 studies is to have, first, a faster path to regulatory submission with the SHASTA-3 study, a double-blind, 12-month randomized control study of approximately 600 patients with TGs greater than 500 million per deciliter.
We believe this study plus the large safety database from our Phase 1 and 2 study will be an appropriate package for an initial filing the SHTG indication. The second study, SHTG-4 is decided to investigate the effect of ARO-APOC3 in a more severe population at high risk of developing pancreatitis.
SHASTA-4 will include patients with TG greater than 880 milligrams per deciliter and recent history of pancreatitis. The duration of the double-blind portion of the study will be 2 years, and it will be powered to detect difference in the incidence of pancreatitis. This data could enable label expansion to include the indication statement of pancreatitis risk reduction, a key clinical outcome relevant to patients and reimbursement authorities.
We have made a lot of progress on the planning and design of these studies and intend to have discussion with regulators this year and move forward rapidly with studies initiation. We will provide more details on the study when they begin.
In the broader mixed dyslipidemia population, we're conducting the new Phase 2 study in 653 patients randomized 3:1 to receive 10, 25, or 50 milligrams of ARO-APOC3 or placebo on day 1 and at week 12. We included an additional cohort of participants receiving 50 milligrams on day 1 and week 24. The primary endpoint is prevention from baseline in fasting TG at week 24, with additional assessment of the changes in various lipid parameters such as LDL cholesterol, non-HDL-C, HDL, ApoA-V, and VLDL, and other biomarkers.
Similar to the SHTG study results, we believe the Phase 2 data from the newer studies strongly support advancement into a Phase 3 study, and we also plan to present these results at the American Heart. The Phase 3 program for this population will be a cardiovascular outcome trial called CASCADE. ARO-APOC3 has demonstrated positive effect on several lipid parameters that represent residual risk factors for arteriosclerosis cardiovascular disease even after LDL is well controlled.
The CASCADE study will select the patient population with high risk driven by the high TGs, remnant cholesterol, and low HDL, all of which are effectively addressed by ARO-APOC3.
The study will be designed in collaboration with an Academic Research Organization, or ARO, we’re working on all aspects of the study design, including selection of the patient population, understanding and modeling background events rates, the potential effect size, and with that information we'll define the sample size and duration of exposure to be able to detect a clinically meaningful reduction in cardiovascular events.
We’re finalizing agreement with the selected CRO and ARO to help us conduct this important study. We are scheduled to engage with regulators later this year and plan to initiate the CASCADE study in 2024. Our strategy for ARO-APOC3 is to progressively study in larger and longer studies to potentially bring it to very high prevalence disease population that currently do not have adequate treatment options.
Our strategy for ARO-ANG3 is more focused on smaller well-defined population, ARO-ANG3 is being developed as a treatment for homozygous familial hypercholesterolemia or HoFH, and potentially in the future success of heterozygous familial hypercholesterolemia, or HeFH.
Phase 2 program for ARO-ANG3 involved 2 studies, the ARCHES-2 Phase 2 study in 204 patients with mixed dyslipidemia and the GATEWAY study in 18 patients with HoFH. Interim data from the GATEWAY study was presented at the 91st European Atherosclerosis Society Congress in May of 2023.
At study week 20, administration of 200 milligrams, or 300 milligrams ARO-ANG3 on day 1 and day 8, 4 led to mean reductions in LDL cholesterol of 48.1% and 44%, respectively. These reductions were achieved on top of continuous standard of care, including statins, ezetimibe, PCSK9 inhibitors, and apheresis.
These results were on par with an approval monoclonal antibody that also target ANGPTL3, ARO-ANG3 has a much more convenient and patient-friendly dosing regimen of one subcutaneous injection every 3 months versus the antibody, which requires an intravenous infusion once a month. We're currently working on the Phase 3 study design and plan for ARO-ANG3 in HoFH and assessing potential other population for future studies.
I spoke in a bit more detail on both ARO-APOC3 and ARO-ANG3 during our R&D day in June. I recommend you view the archived webcast, or presentation slides on our website, if you want more background on the biology of the target, some of the clinical data, the rationale for our belief in their potential and more specific information about our plans for clinical development.
The other late-stage program we're working on with our partner, Takeda, is fazirsiran for the treatment of AATD liver disease. In June, update the Phase 2 clinical data from the SEQUOIA study were presented at EASL Congress 2023 in an oral presentation. The clinical results from the Phase 2 SEQUOIA study of fazirsiran were clear and compelling. Fazirsiran treatment demonstrated substantial effect on several key marker of liver disease.
Takeda has taken the lead in conducting the e Phase 3 REDWOOD clinical study. It is designed to enroll 160 adult patients with F2 to F4 fibrosis. The primary endpoint of the study is to decrease from baseline of at least 1 stage at week 106 in patients with F2 and F3 fibrosis.
Takeda is doing an outstanding job at bringing global sites online for the REDWOOD study and enrolling patients efficiency. Additional information on the REDWOOD study can be found at theredwoodliverstudy.com.
I will now turn the call over to Dr. James Hamilton, James?
James C. Hamilton
Thank you, Javier. Our pipeline of early-stage clinical candidates now includes 8 programs addressing various diseases with gene expression in 4 tissue types, including liver, lung and now muscle and CNS.
Of these 8 programs, most are wholly-owned and in our core areas of focus; they are in pulmonary, ARO-RAGE, ARO-MUC5AC, ARO-MMP7, in cardiometabolic ARO-PNPLA3, in neuromuscular ARO-DUX4 and ARO-SOD1, and we also have ARO-C3 for complement-mediated diseases and HZN-457 partnered with Horizon for Gout.
In addition, we have many undisclosed preclinical programs that should continue to feed our pipeline for years to come. We are increasingly looking for opportunities to focus around core areas, and we are fortunate that our platform provides us with so many opportunities.
Our discovery and clinical development teams continue to be highly productive and efficient. One main benefit of drug development based on a proprietary technology platform is that it allows us to apply learnings from prior programs to each new program. This makes us faster, more precise, and I believe, yields drug candidates with a higher probability of success.
The TRiM platform has given us that advantage for liver-directed programs for a few years now. We believe we are now in a period where those same advantages exist for lung-directed programs and we have the potential to get there over the next couple of years for muscle and CNS.
We held a very comprehensive R&D Day during the quarter, so I'm not going to review all of Arrowhead's discovery and early development programs. I'd like to focus on some important potentially derisking data from our ARO-RAGE program.
ARO-RAGE is our RNAi therapeutic candidate designed to reduce expression of the receptor for advanced glycation end products, or RAGE, as a potential treatment for inflammatory pulmonary diseases such as asthma.
We are currently conducting a Phase 1/2a clinical trial in normal healthy volunteers and in patients with mild to moderate asthma. We have also recently filed an amendment to add a cohort of asthma patients with high baseline levels of fractional exhaled nitric oxide, or FeNO, which is a biomarker for the degree of IL-13-driven type 2 inflammation in the lung.
Let's talk briefly about what data we generated and reported at the R&D Day. First, with respect to safety and tolerability, to-date, there have been no reported serious or severe adverse events, no study withdraws or drug discontinuations due to adverse events, and safety labs have shown no pattern of adverse changes. There have also been no change -- have also been no change in the pattern of airway immune cells and all chest x-rays have been read as normal. These encouraging results have also been generally consistent in the ARO-MMP7 and ARO-MUC5AC programs.
With respect to activity, the results to-date, especially, at the highest dose level, have exceeded our estimates and really represent a best case scenario for target engagement. We are measuring soluble RAGE protein or sRAGE, in serum after multiple doses in both healthy volunteers and in patients and in BALF after a single dose in healthy volunteers and after multi doses -- multiple doses at the top dose level.
The mean maximum reduction in sRAGE at the 92 milligram dose level after 2 doses on days 1 and 29 was 80% with a maximum reduction of 90%, with a long duration of effect that supports every other month dosing. At the highest dose of 184 milligrams, we achieved a similar result after just a single dose, with mean sRAGE reduction of up to 76% and maximal reduction of 91%.
We also observed a continued dose response in BALF with a single inhaled dose of 184 milligrams, achieving mean reduction up 90% and maximal reduction of 95%. We are still collecting data that we intend to report on later this year, including presentations at the European Respiratory Society International Congress in September.
We believe this is the first compelling clinical evidence of gene target silencing in the lung using sRNA. We also believe that these clinical results have a good chance of being predictive of clinical results in other pulmonary programs, including ARO-MUC5AC and ARO-MMP7 and additional undisclosed preclinical programs.
And lastly, on RAGE, what data are we generating over the coming months? We will have the chronic monkey GLP toxicology results before the end of the year, which will be needed prior to Phase 2 initiation. We will be getting additional longer-term follow-up and multiple dose data at the highest doses in healthy volunteers and in patients later this year and into next year.
Lastly, we will be getting data from the high FeNO cohorts, which is designed to assess if RAGE knockdown leads to an IL-13 specific anti-inflammatory effect. This study is not long enough or large enough to expect an efficacy signal, but signals of inflammatory pathway inhibition after short course of exposure would be a welcome result. We expect these data in 2024.
I also want to provide an update on our earliest clinical candidates. During the last quarter, we filed CTAs for our first muscle and CNS candidates, ARO-DUX4 and ARO-SOD1, respectively. ARO-DUX4 is the first clinical candidate utilizing the TRiM platform to target disease-associated genes in skeletal muscle. ARO-DUX4 is an investigational RNAi therapeutic designed to reduce expression of the gene that encodes the human double homeobox 4 or DUX4 protein as a potential treatment for facioscapulohumeral muscular dystrophy, or FSHD.
Pending regulatory clearance, we intend to proceed with a Phase 1/2a dose-escalating study to evaluate ARO-DUX4 in adult patients with FSHD type 1. The study is designed to enroll up to 52 patients.
The other CTA filed during the quarter was for ARO-SOD1, the first therapeutic candidate designed for delivery to the CNS, again, leveraging the TRiM platform. ARO-SOD1 is designed to reduce expression of superoxide dismutase 1, or SOD1 in CNS as a potential treatment for patients with amyotrophic lateral sclerosis, or ALS caused by SOD1 mutations.
Pending regulatory clearance, we intend to proceed with a Phase 1 dose escalating study to evaluate ARO-SOD1 in adult patients with ALS harboring a SOD1 mutation, which is considered to be causative of ALS. The study is designed to enroll up to 24 patients.
I will now turn the call over to Ken Myszkowski. Ken?
Kenneth A. Myszkowski
Thank you, James, and good afternoon, everyone. As we reported today our net loss for the quarter ended June 30, 2023, was $102.9 million, or $0.96 per share based on 107 million fully diluted weighted average shares outstanding. This compares with a net loss of $72 million, or $0.68 per share based on 105.8 million fully diluted weighted average shares outstanding for the quarter ended June 30, 2022.
Revenue for the quarter ended June 30, 2023, was $15.8 million, compared to $32.4 million for the quarter ended June 30, 2022. Revenue in the current period primarily relates to our collaboration agreement with Takeda. Revenue is recognized as we complete our performance obligations, which include managing the ongoing AAT Phase 2 clinical trials for Takeda. There remains $17 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over the next year.
Total operating expenses for the quarter ended June 30, 2023, were $118.5 million compared with $105.3 million for the quarter ended June 30, 2022. The key drivers of this change were increased candidate costs, partially offset by lower stock compensation expense. The increased candidate costs were primarily due to the progression of the company's pipeline of candidates into the -- into and through clinical trials, which resulted in higher outsourced clinical trial, toxicity study and manufacturing costs.
Net cash used in operating activities during the 3 months ended June 30, 2023, was $21.4 million, compared with net cash used in operating activities of $68.9 million for the 3 months ended June 30, 2022. We expect our operating cash burn to be $80 million to $90 million next quarter. We expect to spend between $160 million and $180 million over the next 3 quarters to complete our GMP manufacturing facility and related laboratories in Verona, Wisconsin.
Turning to our balance sheet. Our cash and investments totaled $494.5 million at June 30, 2023, compared to $482.3 million at September 30, 2022. The increase in our cash and investments was primarily related to the $250 million payment from the royalty -- from Royalty Pharma as well as other licensing cash inflows offset by our operating cash burn, along with continuing capital projects. Our common shares outstanding at June 30, 2023, were 107.1 million.
With that brief overview, I will now turn the call back to Chris.
Christopher R. Anzalone
Thanks, Ken. We are well on our way to reaching our 2025 goal to grow our pipeline of RNAi therapeutics to a total of 20 clinical stage, or marketed product from the year 2025. However, pipeline expansion is just a means to an end. The ultimate goal and the reason we continue to invest in expanding our platform, discovering new candidates, advancing our clinical programs, and streamlining the drug manufacturing process is that it allows us to get important new medicines to patients in need as quickly and efficiently as possible.
Doing this will also create a sustainable business and provide a steady stream of commercial revenue, which we now have a better line of sight on and a plan that we are executing to get there.
Thank you for joining us today, and I would now like to open the call to your questions. Operator?
Question and Answer Session
Operator
Our first question comes from Luca Issi of RBC Capital.
Luca Issi
Just a quick one here. I'm wondering if you can comment on what was your reaction to the Roche and Alnylam's deal. I guess 2 questions there. Is AGT a target that you may be willing to pursue? And 2, how should we think about read-through for your cardiovascular franchise?
And then maybe a super quick one for Javier for severe hypertriglyceridemia. I was under the impression that you were planning a single pivotal trial with triglycerides as a primary endpoint and pancreatitis as a secondary point. However, it sounds today like you're planning 2 separate studies, so I'm wondering what drove that change?
Christopher R. Anzalone
Sure. So, I don't know that we have really a position on the Alnylam-Roche deal, good for them. We are not working on that target. It didn't fit into where we see opportunities in the space. And I don't think it reads through to our cardiometabolic assets. I think those are really orthogonal to each other. Javier, do you want to address?
Javier San Martin
Yes. I think when we presented the clinical program for ARO-APOC3 at the R&D Day, I think I mentioned that we are doing 2 studies. The first one, which is the one that would be the primary source of registration is the SHASTA-3, which is 600 patients approximately with TG higher than 500.
But we will start in parallel the study SHASTA-4 in patients with higher TG levels and recent past history of pancreatitis. That study would be approximately 200 patients, and that will not be part of the initial filing, but it will be a subsequent interaction with the agency, hopefully, to get pancreatitis risk reduction in that study and eventually add that to the label. So, it was planned, but there is a sequence here. First, SHASTA-3 registration and second SHASTA-4 label expansion.
Operator
Our next question comes from Maury Raycroft of Jefferies.
Maurice Thomas Raycroft
For your pulmonary platform, you've got the late-breaker title for your RAGE program at ERS next month. How much asthma patient data can we expect in this update? Or will it be longer-term follow-up from this SAD and MAD healthy volunteer part of the study?
And then separately, I wanted to clarify for the preclin tox studies, are those 6 months or 12 months? And it sounds like you're somewhat beyond where you were with ENaC on safety, can you just elaborate more on that as it relates to the preclinical and clinical data that you've got so far?
James C. Hamilton
Yes. Sure. I can take the first part of the question. The data that will be presented at European Respiratory is primarily an update on the healthy volunteer SAD and MAD duration. We may have a little bit more duration data from the first patient cohort, the asthmatic patient cohort, but we won't have additional patient data at that time.
And then regarding the tox studies, the -- this is the 6-month rat tox study that Chris was referring to for both RAGE and MMP7.
Christopher R. Anzalone
Yes. So, we're still waiting on the 9-month monkey tox and you mentioned that it sounds like we are beyond where we were with ARO-ENaC and I think that is true. We are using substantially less material in all of these candidates in the chronic tox studies, and that appears to be bearing fruit for us.
Operator
Our next question comes from Patrick Trucchio of H.C. Wainwright & Company.
Patrick Ralph Trucchio
Just a few follow-up questions. The first one is just around the ARO-RAGE chronic tox data. Can you just clarify, is this data, would it be expected in the third quarter or fourth quarter of calendar 2023? And how would you expect it to differ for that, which was reported from ARO-ENAC, just in terms of how are the doses for these compounds compared to ENAC in these studies specifically?
And then separately, just also regarding the pulmonary programs in clinical development, there are several, 3 programs in clinical development, at least 1 in preclinical development. Can you give us an idea of what targets you could include for your pulmonary platform as it expands, and to what degree would you be looking at targets with genetic or clinical validation as you look to build out this pulmonary pipeline going forward?
Christopher R. Anzalone
I'll take the second and James can take the first. I've got the easy one. The answer is, we can't give you too much guidance on undisclosed targets. We are, I get your point, that of course we will be looking at genetically validated targets and clinically validated targets. And that is always our preference. Our -- you've heard us say before, our goal here is to, is to take as little target risk as we can. And one way to do that is to, is to work on the most validated targets that we can. And so we will -- we will certainly be doing that. Will we expand beyond that into -- into some targets that have less validation? Probably. But my hope is that we will - is that in the near to midterm, at least the targets we're focusing on will be well validated. James, you want to address the talks?
James C. Hamilton
Yes, sure. Patrick, thanks for the question. Regarding talks, so the doses are across the board. Lower for -- for the new pulmonary programs. Lower in terms of exposure. I think most importantly, less frequent. If you recall, we used a, a day, 1, 2, 3, every 2 week dosing regimen for ENAC. And then for our current programs, the -- the dose frequency is spread out much, much less frequent. We're dosing either monthly or every 2 months in the chronic tox studies.
Christopher R. Anzalone
And if you look, if you compare the exposure, I want to say it, it, it spans from -- from ENAC being 4x times to ENAC being 20x the amount of material compared to the various newer compounds. We're working on. And that is entirely a testament to -- to how much more potent these follow on compounds are.
Operator
Next question is from Keay Nakae of Chardan.
Keay Thomas Nakae
Question about partnering specific -- specifically for the CV assets, you're going to go, go it alone. Initially with some of these Phase 3s, but you do have an outcome study out there planned. If you see success going in alone, does that make it more or less likely that you'll want to partner to do an outcome study?
Christopher R. Anzalone
So -- so we are, we are planning on doing the -- doing the outcome study for ARO-APOC3 by ourselves. We see that as a very interesting asset and the data have been -- have been very compelling. So we are happy to take that on ourselves. It doesn't mean that we're not going to partner that at some point geographically, potentially. Who knows, but we are happy to take on the CVOT risk ourselves. And so that's our plan right now.
Operator
Our next question comes from Edward Tenthoff Of Piper Sandler.
Edward Andrew Tenthoff
Great. Summer is going on and excited about the progress. As we look at the pipeline, what should we be expecting from C3? I know, that we're in these patient cohorts now of C3 glomerulopathy and maybe IgA nephropathy. When could we get data from those, and what would be your ultimate view for advancing ARO-C3further?
Christopher R. Anzalone
James?
James C. Hamilton
Yes. In terms of when we should get data, we're probably looking at end of next year, so end of 2024. And what was the other part of the question?
Edward Andrew Tenthoff
Just how would you anticipate progressing from there?
James C. Hamilton
Yes. I mean, I think it depends on what the data show us. I think there are several other examples out there of Phase 3 programs that are ongoing for IgA nephropathy and C3 glomerulopathy with biomarkers as primary endpoints. So I think our late-stage programs would probably look something similar to those.
Operator
Our next question comes from Mani Foroohar of Leerink Partners.
Mani Foroohar
A quick 1 around how you think about building the CV side of the franchise. Could you lay out what your estimation is for what that CVOT should cost? I'm probably cascaded now. Given that you plan to go it alone, I would assume that you've got a reasonable budget estimate for what that might cost. And can you walk us through sort of how we should think about sort of expansion and OpEx as you build out the infrastructure to support what will be a larger study than you guys have ever done stand-alone before?
Christopher R. Anzalone
Sure. So we can't give you -- yes, we are putting together estimates about what that's going to cost. However, we still haven't had our end of Phase 2 meeting with the FDA. We are putting together our proposal. And so I expect that. we'll be speaking with them this year. Until we have that conversation, until we have feedback from them, it's going to be very difficult for us to give you good numbers just because, because we want better clarity. We will be happy to give you some estimates, some guidance, once we have those discussions. But at this point, it's a bit premature.
Mani Foroohar
Okay. So we should expect some -- like we should expect numerical guidance around that. Post the end of Phase 2 meeting, is that a reasonable expectation for us to have?
Christopher R. Anzalone
Yes. I think that is reasonable. We need to have feedback from the FDA. We need to incorporate that into our plans and then have that filtered out into our budget. So sometime, you know, sometime over the next couple of quarters, we should have a good estimate for you and then we will be happy to chat about it at that point.
Operator
One moment for our next question. Next question comes from Mike Ulz of Morgan Stanley.
Michael Eric Ulz
Maybe just a follow-up on the pulmonary program, specifically to the MMP7 program. Can you just remind us when we might see the initial clinical data there? And should the focus be just on target knockdown, or are there other data points that we should be focused on as well?
Christopher R. Anzalone
Yes. I think, so the -- as we had stated at the Analyst Day meeting, we really think the focus there should be on the patients, since those are the population that has up regulated MMP7 in the valve and in the serum. So that's what we'll be focusing on. We're still in the healthy volunteer component of the study. And so, we don't know how the patient cohorts will enroll just yet. Depending on enrollment, it's conceivable we could have some data by end of next year.
Operator
Our next question is from Mayank Mamtani of B. Riley Securities.
Mayank Mamtani
So maybe just on the FeNO high asthma patient cohorts that, you're just starting to enroll, could you clarify the dose levels being looked at and sort of what initial number of patients you -- intend to have before you may look to disclose something externally? And if you could comment, how this could be same or different relative to, your execution on the mild to moderate asthma MAD patient cohort. And then I have a quick follow-up.
Christopher R. Anzalone
Sure. So there are the 2 highest dose levels as what we're looking at in the FeNO cohorts. So that's the 92 milligram and the 184 milligram at dose levels that we studied in the healthy volunteers. We'll investigate those doses in the FeNO cohorts as well. And we're doing a 16 per cohort. I don't, in terms of how many we'd have to have enrolled before we disclose data, I can't really give you a clear answer to that.
James C. Hamilton
Yes. So let's just assume that we'll disclose those once -- once those cohorts are, are complete. It wouldn't make much sense for us to, to feed that out, drips and draps. I think we'll wait until that study's over.
Mayank Mamtani
Got it. And in terms of your asthma cohort data before the end of the year, could you just clarify that would you also include some valve bronchoscopy data also in addition to serum data on the higher dose levels? Could you just clarify that?
James C. Hamilton
The asthma patients actually don't undergo bronchoscopy, so we don't have a valve data from the asthma patients. It's only the only sRAGE measure we get is from the serum in the asthma patients.
Mayank Mamtani
Got it. And just lastly, on the financials, the 2 milestones earned from GSK and the data could you just clarify how they will be sort of modeled on your P&L in terms of recorded revenue amortization schedule?
Christopher R. Anzalone
So, those milestones have already been recorded in revenue. They are not amortized over time. We actually recorded those -- the quarter before last, we received the cash in this past quarter.
Operator
Next question comes from Ellie Merle of UBS.
Eliana Rachel Merle
Just a follow-up on the pulmonary patient cohort timing, I guess for RAGE, just where are you in the enrollment of those high-FeNO cohorts? I think you just mentioned you had 16 per cohort. And then for MUC5AC, I guess, where are you in enrollment of the asthma patient cohorts? And have you started enrolling in the COPD cohort? And then just for MUC5AC, what should we expect in terms of the timing of potential patient data there?
Christopher R. Anzalone
So on the FeNO-cohorts, those -- the amendments to add those cohorts, I think, are just -- they've been filed and so they're working their way through the various regulatory bodies and ethics committees. And we haven't enrolled any FeNO patients just yet. And then the MUC5AC patient cohorts were enrolling into the -- actually, all the cohorts are open. So that all of the asthma patient cohorts are currently open from MUC5AC. And we'd be looking, assuming enrollment goes well, probably having data mid to late next year as well.
And then your last question, I believe, was on the COPD cohorts from MUC5AC, that's a similar situation to the FeNO cohorts we've got the amendments filed and so those are working their way through to get ethics and regulatory approval. So we'd expect to have those being enrolled later this year, aiming to have data maybe end of next year.
Operator
Next question is from William Pickering of Bernstein.
William Pickering
So on Adipose, you gave a really interesting update at the R&D Day, but you didn't disclose the target. I was wondering what the next steps on that program are and when we might learn more about it?
Christopher R. Anzalone
Yes. We have not disclosed targets. We are still in the early days a bit with Adipose. We are -- we have we have some ideas for our targets, but we are not prepared to show any more data there quite yet. My hope is that, you'll start to hear more about the clinical plan for Adipose in 2024.
William Pickering
Got it. And then on HeFH, it sounds like you've become less definitive on the path forward for ANG3 in that indication versus last year. I was wondering, if you could just talk about sort of what aspects of your thinking have evolved? And how sure you are that you will, in fact, take it forward to Phase 3?
Javier San Martin
Yes. So I think the issue here is whether we can develop the indication of HeFH without a full cardiovascular outcome trial. And there is some presidents support there and some other ones. So we are working our way to understand if there is a subpopulation of HeFH that can be pushed forward into a regulatory path without the requirement of the cardiovascular outcome trial. So that's kind of where we are right now.
Operator
Next question is from Luca Issi from RBC Capital.
Luca Issi
And again, maybe circling back on RAGE, James or Javier, what are you hoping to see for the initial readout for FeNO? I understand, the follow-up will be short, but what levels do you anticipate at baseline? And what kind of reduction are you hoping to see there? Again, just trying to understand what the ability for initial success there?
And then maybe, Ken, if I may. I think your prior 10-Q suggested that the bill the facility in Verona, Wisconsin was going to cost $200 million to $260 million. However, the 10-Q today suggested that number has gone up to $260 million, $280 million. One, is that correct? And if 2, what drove that change? Thanks so much.
Christopher R. Anzalone
Ken, do you want to start that?
Kenneth A. Myszkowski
So we have seen certain cost increases as well as about a quarter of a delay in that project. So you will see that, that total cost comes in a bit higher than we had originally estimated. That's really it.
Javier San Martin
Yes. So Luca, we do have a good point of reference for the FeNO therapeutics effect and that's the dupilumab and tezepelumab programs in which they saw somewhere between 40% and 48% reduction, I think it's either going to call which one, but that's the RAGE that I think we believe will be convincing that the RAGE inhibition, it does work through the IL-13. So that's the range that we're seeing. I think the baseline is 20 and --
Christopher R. Anzalone
Greater than
Javier San Martin
Greater than 20 FeNO, and people with FeNO greater than 200. So it's the same population very much of those point of reference, if you will, studies, and we expect to see something similar.
Operator
Next question is from Brendan Smith of TD Cowen.
Brendan Smith
Maybe a couple of quick ones from us. First, I just wanted to ask actually about some of the CNS programs that you alluded to that you're going to kind of announce and bring it to the clinic over the next couple of years. Really, I guess, how are you kind of thinking about which indications to move there? Are you really thinking to focus more on final indications, given that the tissue is a little bit easier to get to or really what is kind of your strategy and deciding where to go there? Kind of just trying to understand, where you think is especially right for RNAi?
And then if I could, just really quickly, I wanted to ask a little bit more about kind of your financing plan. Obviously, you have a decent balance sheet for now. But I mean, to your point, you haven't raised equity in a few years, but you have a fair number of important readouts coming up and a lot of studies going on. So as we're kind of just looking at cash burn over the next few years, what really is kind of your strategy for the next 18, 24 months?
Christopher R. Anzalone
Sure. I'll take that, and then I'll let Javier and James take a prior one. So look, as I mentioned in the prepared remarks, partnering is really a cornerstone of our financing strategy. And so we are exploring a number of different options really as we speak that are important for us. There are also other avenues. We are also exploring the possibility of doing some specific product financing for APOC3. We know that's going to be a CVOT. We know that's going to be expensive. And we are exploring the cost of capital for financing that in return for some royalties on that product for some period of time, things of that nature. And I think that we can get a long way to our financing needs through those levers and we are looking to pull those levers certainly in the near to mid-term, I think it's important for us.
James C. Hamilton
And then in regards to the CNS targets, we're interested in targets that may involve the spinal cord, as you mentioned, but also targets in the cortex, we can get good knockdown in various parts of the cortex and we're looking at some targets in the deeper brain, although that can be a little bit more challenging to achieve the same level of knockdown.
And then we like -- as we do for other tissue types targets with a degree of genetic validation that are either genetically defined or have some level of genetic validation behind them and preferably a degree of clinical validation with other modalities that are out there that have shown success that we could follow-on.
Operator
I'm showing no further questions at this time. I would now like to turn the conference back to Chris Anzalone for closing remarks.
Christopher R. Anzalone
Thanks everyone for joining us today, and I hope you have an enjoyable summer, and we look forward to talking to you soon.
Operator
All right. This concludes today's conference call. Thank you for participating. You may now disconnect.
