Arrowhead Pharmaceuticals(ARWR) - 2025 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements for the quarterly period ended June 30, 2025, including Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, along with comprehensive notes on accounting policies, agreements, and debt Consolidated Balance Sheets Consolidated Balance Sheet Highlights | Account | June 30, 2025 (in thousands) | September 30, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash, cash equivalents and restricted cash | $129,793 | $102,685 | | Available-for-sale securities | $770,579 | $578,276 | | Total current assets | $946,923 | $695,471 | | Total Assets | $1,380,612 | $1,139,802 | | Liabilities & Equity | | | | Total current liabilities | $194,530 | $103,168 | | Total long-term liabilities | $666,276 | $845,571 | | Stockholders' equity | $522,313 | $185,444 | | Total Liabilities & Equity | $1,380,612 | $1,139,802 | Consolidated Statements of Operations and Comprehensive (Loss) Income Consolidated Statement of Operations | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Nine Months Ended June 30, 2025 (in thousands) | Nine Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $27,767 | $— | $572,976 | $3,551 | | Research and development | $162,368 | $152,431 | $432,472 | $370,044 | | General and administrative | $30,949 | $23,710 | $86,264 | $72,384 | | Operating (loss) income | $(165,550) | $(176,141) | $54,240 | $(438,877) | | Net (loss) income attributable to Arrowhead | $(175,241) | $(170,793) | $22,119 | $(428,957) | | Diluted (loss) income per share | $(1.26) | $(1.38) | $0.17 | $(3.63) | Consolidated Statements of Stockholders' Equity - Total stockholders' equity increased from $191.1 million at September 30, 2024, to $519.8 million at June 30, 2025, primarily driven by the issuance of common stock related to the Sarepta agreement ($241.4 million) and net income for the period, offset by net losses in certain quarters[14] Consolidated Statements of Cash Flows Consolidated Statement of Cash Flows | Cash Flow Activity | Nine Months Ended June 30, 2025 (in thousands) | Nine Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $159,061 | $(325,635) | | Net cash used in investing activities | $(201,913) | $(197,149) | | Net cash provided by financing activities | $70,337 | $481,431 | | Net increase (decrease) in cash | $27,485 | $(41,353) | | Cash at end of period | $129,793 | $69,399 | Notes to Consolidated Financial Statements - The company's pipeline includes multiple candidates in Phase 3 trials, such as plozasiran, zodasiran, olpasiran (Amgen), and fazirsiran (Takeda)[19] - A global licensing and collaboration agreement was signed with Sarepta Therapeutics on November 25, 2024, which closed on February 7, 2025, with Arrowhead receiving $325.0 million from a stock purchase and a $500.0 million upfront payment[23] - The FDA accepted the New Drug Application for plozasiran on January 17, 2025, with a PDUFA action date of November 18, 2025[23] - Subsequent to the quarter end, on August 1, 2025, the company's majority-owned subsidiary Visirna entered an agreement to sell its rights for plozasiran in Greater China to Sanofi for a $130.0 million upfront payment and potential milestones[130][132] - On July 27, 2025, the company triggered a $100.0 million milestone payment from Sarepta related to the ARO-DM1 clinical study[133] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial condition and results of operations, highlighting revenue drivers, expense analysis, and liquidity, with a focus on the Sarepta collaboration and commercialization preparations Results of Operations - Total revenue for the nine months ended June 30, 2025, increased by $569.4 million compared to the prior year period, primarily driven by revenue recognition from the Sarepta license agreement, which contributed $570.3 million[148][154] Research & Development Expense Breakdown (Nine Months Ended June 30) | Category | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Candidate costs | $243,094 | $185,708 | 31% | | R&D discovery costs | $48,785 | $56,736 | (14)% | | Salaries | $80,583 | $72,048 | 12% | | Total R&D Expense | $432,472 | $370,044 | 17% | - The 31% increase in candidate costs for the nine-month period was due to the progression of the company's pipeline into and through clinical trials, leading to higher manufacturing and clinical trial costs[158] General & Administrative Expense Breakdown (Nine Months Ended June 30) | Category | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Salaries | $23,152 | $20,087 | 15% | | Professional, outside services, and other | $35,811 | $16,910 | 112% | | Total G&A Expense | $86,264 | $72,384 | 19% | - Professional, outside services, and other G&A expenses increased by 112% for the nine-month period, mainly due to costs associated with commercialization and business development efforts as the company prepares for a product launch[167] Liquidity and Capital Resources Liquidity Position as of June 30, 2025 | Account | Amount (in millions) | | :--- | :--- | | Cash, cash equivalents and restricted cash | $129.8 | | Available-for-sale securities | $770.6 | - The company expects to have sufficient liquidity to fund its operations through at least the next twelve months from the issuance date of the financial statements, based on its current cash, investments, and operating plan[180] - During the nine months ended June 30, 2025, net cash provided by operating activities was $159.1 million, primarily due to the $500.0 million upfront payment from the Sarepta agreement, offset by operating expenses[180] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company states there have been no material changes in its exposure to market risk since its last Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - 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 fiscal year ended September 30, 2024[183] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective at a reasonable assurance level, 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 quarter[185] - There were no changes in the Company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[186] PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company reports no material developments in legal proceedings since its last Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - There have been no material developments in the legal proceedings that the Company disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024[188] ITEM 1A. RISK FACTORS The company states there have been no material changes to the risk factors identified in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - There have been no material changes from the risk factors identified in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024[189] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports that there were no unregistered sales of equity securities during the period - None[190] ITEM 5. OTHER INFORMATION The company reports that no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - During the quarter ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement[193] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, material agreements, and certifications by the CEO and CFO