Executive Summary / Key Takeaways

• Arrowhead Pharmaceuticals is transitioning from a platform development company to a commercial-stage entity, leveraging its validated RNAi technology to target intractable diseases, primarily focusing on a growing cardiometabolic franchise.
• The recent Sarepta collaboration and Sixth Street credit facility have significantly strengthened the balance sheet, providing a cash runway into 2028 and funding the critical bridge to potential substantial revenue from the severe hypertriglyceridemia (SHTG) market.
• Plozasiran, the lead candidate, is on track for a potential first commercial launch in familial chylomicronemia syndrome (FCS) in late 2025 (PDUFA date November 18, 2025) and is progressing rapidly in Phase 3 studies for the much larger SHTG population (enrollment completed June 2025, sNDA expected late 2026/early 2027).
• Arrowhead's differentiated TRiM™ platform, including emerging capabilities for adipose and CNS delivery, provides a competitive moat through potent, targeted gene silencing with potential for favorable dosing and safety profiles compared to alternative modalities.
• While significant R&D expenses continue to drive cash burn, particularly for late-stage plozasiran trials, the focused pipeline strategy, potential for future non-core asset partnerships, and anticipated commercial revenue underpin management's confidence in long-term financial stability and growth.

The Foundation: Building a Machine to Silence Disease

Arrowhead Pharmaceuticals was founded with a singular vision: to develop transformative medicines by silencing the genes that cause intractable diseases. At its core lies the RNA interference (RNAi) mechanism, a natural cellular pathway that inhibits gene expression. Over two decades, Arrowhead has dedicated substantial effort to building a scalable platform, the TRiM™ (Targeted RNAi Molecule) platform, designed to deliver small interfering RNAs (siRNAs) to specific tissues and cell types beyond the liver, including lung, adipose, central nervous system (CNS), skeletal muscle, and cardiomyocytes. This foundational work, including strategic acquisitions like the Novartis RNAi assets in 2015, has enabled the company to pursue an ambitious pipeline expansion, aiming for at least 20 clinical-stage or marketed products by 2025 under its "20 and 25 initiative."

The TRiM platform represents a significant technological differentiator. Unlike earlier RNAi delivery methods or alternative modalities like antisense oligonucleotides or traditional biologics, TRiM is designed for subcutaneous administration and targeted delivery, potentially leading to simplified manufacturing, reduced costs, and improved safety profiles by minimizing off-target effects and intracellular buildup. Management highlights the platform's ability to induce rapid, deep, and durable knockdown of target genes. For instance, clinical data with plozasiran has shown APOC3 knockdown exceeding 90%, translating into profound triglyceride reductions. Preclinical data with emerging TRiM variants targeting adipose tissue and the CNS via the blood-brain barrier demonstrate potent target engagement and desirable effects (e.g., visceral fat reduction while preserving lean mass in obesity models, or delivery to deep brain regions via subcutaneous injection), suggesting the platform's versatility and potential to address previously undruggable targets or tissues. These technological advancements are central to Arrowhead's competitive moat, promising potentially best-in-class profiles for its drug candidates and enabling entry into large, underserved markets.

Within the broader biotechnology landscape, Arrowhead operates alongside companies developing various genetic medicines, including other RNAi players like Alnylam Pharmaceuticals (ALNY) and Ionis Pharmaceuticals (IONS), mRNA specialists like Moderna (MRNA), and developers of traditional biologics like Regeneron Pharmaceuticals (REGN). While ALNY and IONS are direct competitors in the RNAi/antisense space, particularly for liver-targeted therapies and rare diseases, Arrowhead aims to differentiate through its expanding tissue targeting capabilities and potentially superior efficacy/dosing profiles demonstrated by its TRiM platform. For example, comparisons between plozasiran and Ionis's Olezarsen highlight differences in triglyceride reduction magnitude, pancreatitis risk reduction data, and dosing frequency, which Arrowhead believes position plozasiran favorably. In emerging areas like obesity, Arrowhead believes it is uniquely positioned with its adipose-targeted RNAi, distinct from incretin-based therapies like GLP-1s, potentially offering complementary benefits like muscle sparing. The company's strategy involves leveraging its technological edge to develop potentially best-in-class wholly-owned assets in focus areas like cardiometabolic disease, while partnering non-core assets to maximize value and fund internal development.

Strategic Evolution and Financial Fortification

Arrowhead's historical journey has been marked by strategic partnerships, providing crucial funding and leveraging external expertise. Collaborations with Amgen (AMGN), Takeda (TAK), GSK (GSK), and previously Janssen and Horizon, have been instrumental in advancing parts of the pipeline. However, the need for significant capital to fund a rapidly expanding pipeline and the transition to commercialization ahead of substantial product revenue has been a persistent challenge. This dynamic led to strategic financing efforts, culminating in two recent, transformative deals.

In August 2024, Arrowhead secured a $500 million senior secured credit facility with Sixth Street. This facility, with $400 million funded upfront, is structured as long-term, non-dilutive capital with a 7-year term and no scheduled cash coupon payments. Repayments are tied to a portion of future cash inflows from certain transactions, such as new partnerships or commercial revenue, providing financial flexibility during the pre-commercial phase. This was a critical step in strengthening the balance sheet and providing a financial bridge.

The most significant recent development was the global licensing and collaboration agreement with Sarepta Therapeutics (SRPT), announced in November 2024 and closed in February 2025. This deal provided a substantial immediate capital infusion of $500 million upfront cash and a $325 million equity investment by Sarepta at a premium. It also includes $250 million in committed payments over five years and potential future milestones, including up to $300 million in near-term payments related to the ARO-DM1 program. Management describes the Sarepta deal as "transformational," restoring "balance" to the business model by partnering several non-core assets (including muscle and CNS programs) to fund the development and commercialization of wholly-owned assets, primarily within the cardiometabolic space. This strategic focus allows Arrowhead to concentrate its resources and leverage its growing expertise in a key therapeutic area.

These financial maneuvers have materially strengthened Arrowhead's balance sheet. As of March 31, 2025, the company reported $185.7 million in cash, cash equivalents, and restricted cash, and $911.7 million in available-for-sale securities, totaling over $1.1 billion in cash and investments. This significant liquidity position, bolstered by the Sarepta inflows and Sixth Street facility, extends the company's cash runway into 2028. Management explicitly states that these resources are sufficient to fund operations for at least the next twelve months from the May 12, 2025 filing date.

Plozasiran: The Near-Term Value Driver

Plozasiran, targeting APOC3, stands as Arrowhead's lead program and primary near-term value driver. The company views plozasiran as a "pipeline within a single drug" due to its potential applicability across multiple patient populations with elevated triglycerides.

The initial focus for commercialization is familial chylomicronemia syndrome (FCS), a rare genetic disease characterized by extremely high triglycerides and a high risk of acute pancreatitis. The pivotal Phase 3 PALISADE study demonstrated compelling results, meeting its primary endpoint with median triglyceride reductions of approximately 80% at month 10 with the 25mg dose, compared to a 17% reduction for placebo. Crucially, the study also showed a statistically significant 83% reduction in the incidence of acute pancreatitis. These data formed the basis of Arrowhead's first New Drug Application (NDA) submission to the U.S. FDA in November 2024, which was accepted for filing in January 2025 with a Prescription Drug User Fee Act (PDUFA) action date of November 18, 2025. The FDA has indicated it is not currently planning to hold an advisory committee meeting. Arrowhead is also seeking regulatory approval in Europe (MAA submitted February 2025) and other geographies. The company is actively building its commercial infrastructure, including sales and market access teams, aiming to be ready for a potential launch in late 2025.

Beyond FCS, the company is aggressively pursuing label expansion for plozasiran into the much larger severe hypertriglyceridemia (SHTG) population (fasting triglycerides > 500 mg/dL), estimated to include 3-4 million people in the U.S. The Phase 3 program for SHTG includes the SHASTA-3 and SHASTA-4 pivotal studies and the MUIR-3 safety study. Enrollment for these studies was completed in June 2025, a key operational milestone. Final patient visits are expected in mid-2026, potentially enabling a supplemental NDA (sNDA) filing in late 2026 or early 2027. Management believes the SHTG market alone could support plozasiran as a $2 billion to $3 billion per year drug. Additionally, Arrowhead is initiating SHASTA-5, a Phase 3 study specifically designed to evaluate the reduction in acute pancreatitis risk in high-risk SHTG patients, primarily aimed at supporting market access and payer discussions.

The company also sees a significant opportunity in the mixed hyperlipidemia market for cardiovascular risk reduction, supported by genetic evidence linking triglyceride-rich lipoproteins to atherosclerotic cardiovascular disease (ASCVD). While plozasiran has shown promising results in Phase 2 (MUIR study), addressing this population would require a cardiovascular outcomes trial (CVOT), planned as the CAPITAN study. However, the company is currently waiting for better visibility on additional capital before initiating this large and expensive trial.

Expanding Horizons: Obesity, CNS, and Beyond

While plozasiran is the immediate focus, Arrowhead's pipeline includes several other promising programs, particularly within its focused cardiometabolic franchise and emerging CNS efforts.

In the obesity and metabolic disease space, Arrowhead is advancing two early-stage candidates, ARO-INHBE and ARO-ALK7. ARO-INHBE, a hepatocyte-targeted GalNAc-siRNA, and ARO-ALK7, utilizing a novel adipose-targeted TRiM platform, both target a pathway regulating fat storage. Preclinical data showed substantial reductions in fat mass while preserving lean mass in animal models, and both targets are supported by human genetics. ARO-INHBE began a Phase 1/2 study in December 2024, with initial data potentially available around the end of 2025. ARO-ALK7 initiated its Phase 1/2a study in June 2025, with initial data expected shortly after ARO-INHBE. These programs represent high-value opportunities that could fill gaps in the current obesity treatment paradigm, potentially complementing existing therapies like GLP-1s.

Arrowhead is also developing a new TRiM platform for subcutaneous delivery to the CNS, which has shown promising preclinical results in animal models, including delivery to deep brain regions. Initial candidates leveraging this platform include ARO-MAPT (targeting Tau for Alzheimer's), ARO-HTT (targeting Huntingtin for Huntington's, licensed to Sarepta), and ARO-SNCA (targeting alpha-synuclein for Parkinson's). CTAs for ARO-MAPT and ARO-HTT are anticipated toward the end of 2025, and for ARO-SNCA in early 2026. While ARO-HTT is partnered, Arrowhead is currently retaining ARO-MAPT and ARO-SNCA, viewing them as potentially high-value assets addressing devastating neurological conditions.

Other notable programs include zodasiran, targeting ANGPTL3, which is Phase 3 ready for homozygous familial hypercholesterolemia (HoFH) and expected to begin its Phase 3 study in Q3 calendar 2025. This is seen as a relatively low-cost expansion opportunity leveraging the planned plozasiran commercial infrastructure. The company is also developing its first dimer molecule, an APOC3/PCSK9 combination, with a CTA planned for 2025, aiming to combine triglyceride and LDL-C lowering.

Beyond these core areas, Arrowhead has several clinical-stage programs in areas like pulmonary (ARO-RAGE), complement-mediated diseases (ARO-C3, ARO-CFB), and liver disease (ARO-PNPLA3) that are considered non-core for internal commercialization and represent potential future partnering opportunities to generate additional non-dilutive capital. Partnered programs like fazirsiran (with Takeda) and olpasiran (with Amgen/Royalty Pharma (RPRX)) continue to advance in Phase 3, offering potential future milestones and royalties.

Financial Outlook and Key Risks

Arrowhead's financial outlook is significantly shaped by its recent capital raises and the increasing investment in its late-stage pipeline. Management projects a cash runway extending into 2028, supported by the Sarepta deal and Sixth Street facility. Expected total cash burn for fiscal 2025 is guided between $500 million and $550 million, with similar burn anticipated in fiscal 2026. These figures reflect the substantial R&D expenses associated with the large Phase 3 plozasiran studies, which are expected to be the largest cash expenditure in 2025 and 2026 before potentially decreasing in 2027.

Incorporating expected cash inflows (Sarepta payments, modest FCS revenue) and outflows (operating expenses, debt repayments tied to inflows), the company expects its cash balance to be approximately $1 billion at the end of calendar 2025 and between $600 million and $650 million at the end of 2026. This guidance conservatively excludes potential revenue from future business development deals, suggesting potential upside to these figures if additional partnerships are secured.

Despite the strengthened financial position, significant risks remain. The successful commercialization of plozasiran hinges on positive regulatory review and approval by the FDA and other agencies, which is never guaranteed. Clinical trials, particularly the large Phase 3 studies for SHTG and the planned CVOT, carry inherent risks of failure or delays, which could impact timelines and future revenue potential. Competition in the cardiometabolic, obesity, and CNS spaces is intense, and the success of Arrowhead's candidates will depend on demonstrating clear differentiation and achieving favorable market access compared to existing and emerging therapies. The need for additional capital to fund the CAPITAN CVOT represents a future financing requirement, although the timing and structure will depend on the company's financial position and market conditions at that time. Furthermore, the company's reliance on partnerships for non-core assets means that the value and timing of future milestone and royalty revenues are subject to partner development decisions and commercial success.

Conclusion

Arrowhead Pharmaceuticals stands at a pivotal juncture, poised to transition into a commercial-stage biotechnology company. Its core investment thesis is built upon a validated and expanding RNAi platform capable of delivering potent, targeted therapies across multiple tissues. The recent Sarepta collaboration and Sixth Street financing have provided the necessary financial strength to bridge the company through its most capital-intensive phase, funding the critical late-stage development of its lead asset, plozasiran, and advancing a focused cardiometabolic pipeline. Plozasiran's promising Phase 3 data in FCS and rapid progress in the large SHTG market represent significant near- and mid-term value drivers. While substantial R&D investment and competitive pressures persist, Arrowhead's technological differentiation, strategic focus, and strengthened balance sheet position it to potentially deliver multiple innovative medicines and generate significant value for shareholders in the coming years. Investors should closely monitor the plozasiran regulatory decision, the progress of the SHTA Phase 3 program, initial data readouts from the obesity and CNS pipelines, and the execution of the company's partnering strategy for non-core assets.