Arrowhead Pharmaceuticals(US:ARWR)2025-05-12 20:07Part I Financial Statements The unaudited consolidated financial statements show significant asset growth and a shift to net income, primarily due to the Sarepta collaboration Consolidated Financial Statements (Tables) Key financial statements reveal a substantial increase in total assets, a shift to net income, and positive operating cash flow, largely driven by the Sarepta agreement Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $185,709 | $102,685 | | Available-for-sale securities | $911,700 | $578,276 | | Total Assets | $1,573,498 | $1,139,802 | | Total current liabilities | $220,541 | $103,168 | | Total long-term liabilities | $668,732 | $845,571 | | Total Liabilities | $889,273 | $948,739 | | Total Stockholders' Equity | $683,321 | $185,444 | Consolidated Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenue | $545,209 | $3,551 | | Total operating expenses | $325,419 | $266,287 | | Operating income (loss) | $219,790 | $(262,736) | | Net income (loss) attributable to Arrowhead | $197,360 | $(258,164) | | Diluted net income (loss) per share | $1.52 | $(2.24) | Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $313,781 | $(210,217) | | Net cash used in investing activities | $(343,303) | $(204,098) | | Net cash provided by financing activities | $113,016 | $431,044 | Notes to Consolidated Financial Statements Notes detail significant financial events including the Sarepta collaboration revenue, debt prepayment, facility completion, and clinical pipeline advancements - The company's drug development pipeline includes multiple candidates, with plozasiran, olpasiran (Amgen), and fazirsiran (Takeda) in Phase 3 trials20 - A global licensing and collaboration agreement with Sarepta resulted in a $500 million upfront payment and a $325 million equity investment, with eligibility for up to approximately $10.0 billion in future potential milestone payments2654 - An NDA was submitted to the FDA and accepted for filing, with a PDUFA action date of November 18, 202526 - The company recognized $542.7 million in revenue from the Sarepta agreement, with the total transaction price estimated at $904.9 million, including an $83.6 million equity premium6066 - The build-out of the manufacturing facility in Verona, Wisconsin was completed, reclassifying $172.9 million from construction in progress to buildings68 - The company made prepayments of $151.6 million on its credit facility during the second quarter of fiscal 2025, following funds from the Sarepta agreement119123 Management's Discussion and Analysis (MD&A) Management discusses the shift to profitability driven by Sarepta revenue, increased R&D and G&A expenses, and strong liquidity Results of Operations Results of operations show a significant revenue surge and shift to operating income, driven by the Sarepta agreement, alongside increased R&D and G&A expenses Financial Results Comparison (in thousands) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenue | $545,209 | $3,551 | | R&D Expense | $270,104 | $217,613 | | G&A Expense | $55,315 | $48,674 | | Operating Income (Loss) | $219,790 | $(262,736) | | Net Income (Loss) Attributable to Arrowhead | $197,360 | $(258,164) | - R&D candidate costs increased by $54.0 million (57%) due to pipeline progression into and through clinical trials157 - G&A professional and outside services expenses increased by $9.4 million (82%), primarily due to commercialization and business development efforts165166 Liquidity and Capital Resources The company maintains a robust liquidity position, primarily bolstered by the Sarepta agreement, deemed sufficient to fund operations for at least the next twelve months - As of March 31, 2025, the company held $185.7 million in cash, cash equivalents, and restricted cash, and $911.7 million in available-for-sale securities173 - The company received a $500 million upfront payment and $325 million from a stock purchase under the Sarepta agreement, which closed in February 2025176 - Cash flow from operating activities was $313.8 million, a significant turnaround from a $210.2 million use of cash in the prior-year period, primarily due to the Sarepta payment177 - The company believes its current financial resources are sufficient to fund operations for at least the next twelve months177 Market Risk Disclosures There have been no material changes in the company's exposure to market risk since the last Annual Report on Form 10-K - There has been no material change in the Company's exposure to market risk from that described in its Annual Report on Form 10-K for the year ended September 30, 2024180 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the quarter182 - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls183 Part II Legal Proceedings & Risk Factors No material developments in legal proceedings or changes to risk factors have occurred since the last Annual Report on Form 10-K - There have been no material developments in legal proceedings since the last annual report186 - There have been no material changes from the risk factors identified in the Company's Annual Report on Form 10-K for the year ended September 30, 2024187 Other Information The company entered into new executive severance agreements and established a transition plan for the retiring CFO - In May 2025, the company entered into Severance and Change of Control Agreements with executives Christopher Anzalone, Daniel Apel, Patrick O'Brien, and James Hamilton191 - A transition agreement was signed with retiring CFO Ken Myszkowski, effective May 13, 2025, who will remain an employee through January 31, 2026, to assist with the transition194