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Business Update
Phase 1/2a Clinical Trials Underway for Pulmonary Disease Candidates
In July 2022, Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) announced the first subjects were dosed in two Phase 1/2a clinical trials of ARO-RAGE and ARO-MUC5AC, which are the company's investigational candidates designed as potential treatments for various muco-obstructive and inflammatory pulmonary diseases.
ARORAGE-1001 is a randomized, double blind, placebo controlled study in up to 64 normal healthy volunteers (NHVs) and up to 16 patients with mild-to-moderate asthma (NCT05276570). The single ascending dose portion of the study will include four sequentially enrolled NHV cohorts while the multiple ascending dose portion of the study will include four NHV cohorts and two asthma cohorts.
AROMUC5AC-1001 is a randomized, double blind, placebo controlled study in up to 42 NHVs and up to 16 patients with moderate-to-severe asthma (NCT05292950). The single ascending dose portion of the study will include three sequentially enrolled NHV cohorts while the multiple ascending dose portion of the study will include three NHV cohorts and two asthma patient cohorts.
In May 2022, Arrowhead held a pulmonary R&D day to provide additional information on the company's pulmonary targeted development candidates ARO-RAGE, ARO-MUC5A, and the previously undisclosed ARO-MMP7. A copy of the presentation can be accessed here.
ARO-RAGE: This targets the receptor for advanced glycation end-products (RAGE). Single nucleotide polymorphisms in the human gene for RAGE are associated with an increased incidence of asthma. RAGE is required for an allergic airway inflammatory response through release of IL-33 into the airway and it acts upstream of IL-5 and IL-13 (Oczypok et al., 2015). A soluble form of the protein (sRAGE) found in the serum can be utilized as an easily measured biomarker to monitor for target knockdown.
The following figure shows that a single inhaled 0.5 mg/kg inhaled dose of ARO-RAGE results in deep and sustained reduction in the expression of RAGE mRNA in the lung and sRAGE protein in the serum, which lasted at least through 60 days. In a rat model of allergic asthma, this sustained knockdown of RAGE expression resulted in a decrease in the inflammatory cytokines MIP1a, IL-13, and IP-10 along with decreased recruitment of eosinophils and neutrophils.
Similar results of decreased RAGE expression are seen in cynomolgus monkeys. The following figure shows the dose response between ARO-RAGE dose and RAGE protein expression. At the highest dose, there is an approximately 90% reduction in RAGE protein detected.
In addition to being administered through inhalation, ARO-RAGE can also be administered subcutaneously, which causes a similar deep and sustained reduction in RAGE expression. The following figures show that administering ARO-RAGE at two-week and four-week intervals subcutaneously results in decreased RAGE expression that is similar to decreases seen with inhaled ARO-RAGE. This flexibility in administration could be an important differentiator for Arrowhead's pulmonary products.
ARO-MUC5AC: This targets expression of MUC5AC in bronchial epithelium. MUC5AC is a mucin protein that is upregulated in the airway of asthmatic patients (Bonser et al., 2017). As shown in MUC5AC knockout mice, it is not required for normal mucociliary transport or anti-bacterial defense (Roy et al., 2014). The protein plays a role in asthma pathogenesis based on results from ovalbumin sensitization and challenge studies (Evans et al., 2015).
In a mouse model of allergic asthma, which utilizes house dust mites (HDM) and IL-13, exposure to allergens the mice have been sensitized to results in a large increase in MUC5AC expression, as shown in the following figure on the left. Animals treated with a MUC5AC reduction vector results in a reduction in MUC5AC mRNA expression by approximately 70-90% (similar results are seen in cynomolgus monkeys). The figure on the right shows the results of immunohistochemistry (IHC) in which MUC5AC protein is stained red. The decrease in MUC5AC mRNA expression results in a substantial decrease in MUC5AC protein expression.
In a sheep model of allergic asthma, the sheep are sensitized to a nematode allergen that results in a classical asthma attack when administered and includes bronchoconstriction, immune cell recruitment, and mucus hypersensitization. These animals also respond to all the standard-of-care therapies for asthma. The following figure shows results from an experiment that measures lung resistance four to eight hours after allergen exposure. Increased values correspond to an inflammatory response in the lungs. Treatment with ARO-MUC5AC results in a reduction in this inflammatory response, as shown by decreased lung resistance.
Beyond asthma, mucus hypersecretion underlies a number of other pulmonary diseases, including chronic obstructive pulmonary disease (COPD), non-cystic fibrosis bronchiectasis (NCFB), and cystic fibrosis (CF). The following figure shows average mucin concentrations for patients with these conditions. That graph clearly shows large increases in MUC5AC among patients with various pulmonary disorders, thus highlighting its central role in driving the pathophysiology of those diseases.
ARO-MMP7: Matrix metalloproteinase 7 (MMP7) is a secreted endopeptidase that is highly overexpressed in patients with idiopathic pulmonary fibrosis (IPF) (Bauer et al., 2017). It is useful as a biomarker due to its increased expression being correlated with disease progression. In addition, MMP7 knockout mice are protected from pulmonary fibrosis induced by intratracheal bleomycin (Zuo et al., 2002). Unfortunately, MMP7 is a difficult target for drug development as there is substantial domain homology with other MMPs, thus making gene silencing a potentially useful mechanism for downregulating MMP7 expression.
The rat bleomycin model of IPF causes MMP7 expression to dramatically increase following exposure of rats to bleomycin. The following image shows the robust induction of MMP7 expression following a dose of bleomycin. Dosing of the rats with an MMP7 silencing trigger a week prior to bleomycin exposure results in a marked decrease in MMP7 expression, thus serving as a proof-of-concept that MMP7 expression can be abrogated even under conditions where it is strongly induced.
ARO-MMP7, Arrowheads clinical candidate targeting MMP7, was tested in cynomolgus monkeys to determine its effect on MMP7 expression. The following image on the left shows that a single inhaled dose of ARO-MMP7 at 0.6 mg/kg or higher concentration results in a decrease in MMP7 mRNA expression in lung tissue. The following image on the right shows results from an in vitro study of cultured human lung cells exposed to different concentrations of ARO-MMP7. Expression of MMP7 was reduced in human lung tissue by ARO-MMP7, and this effect was shown to be target specific as a non-specific ligand was unable to block MMP7 expression. Arrowhead will be presenting additional nonclinical data for ARO-MMP7 at the European Respiratory Society meeting in September 2022.
Phase 2 Fazirsiran Results Published in The New England Journal of Medicine
In June 2022, Arrowhead and Takeda announced that results from the Phase 2 trial of fazirsiran (formerly ARO-AAT/TAK-999) for the treatment of liver disease associated with alpha-1-antitrypsin deficiency (AATD) were published in The New England Journal of Medicine and presented at The International Liver Congress 2022 – the annual meeting of the European Association for the Study of the Liver (EASL). A copy of the EASL presentation can be found here.
The Phase 2 AROAAT-2022 study of fazirsiran is an open label, multi-dose trial in 16 patients with AATD associated liver disease and baseline liver fibrosis (Strnad et al., 2022). Results from the trial showed that:
• All patients had reductions in accumulated total mutant AAT protein (Z-AAT) [median % change at week 24 or 48 = -88.3%; 95% CI -89.7% to -76.4%]
• Most patients had high histologic PAS-D globule burden at baseline (mean score 7.4; scores range from 0 to 9). Following treatment, all patients had a decreased globule burden (mean score 2.3 at week 24 or 48).
• Mean ALT concentrations at baseline were above the upper limit of normal (ULN) in all cohorts. After treatment, ALT concentrations decreased in all cohorts from week 16 to week 52.
• Fibrosis regression of ≥1 stage occurred in 7/12 patients in the 200 mg cohorts, including two patients with cirrhosis, and in 0/3 patients in the 100 mg cohort.
• Fazirsiran was generally well tolerated with no deaths, discontinuations due to treatment, or dose interruptions over a 1.5-year period. The most common adverse events were arthralgia and increased blood creatine kinase, although there were no apparent dose dependent increases in frequency or severity of adverse events.
In regards to the Phase 2 SEQUOIA trial of fazirsiran, the 12-month biopsy was recently collected from the last patient and that data is now being processed and analyzed. Arrowhead does not believe it will have the data available in time for a late breaker abstract at AASLD, which is due in September. However, by the fourth quarter of calendar 2022 the company should have a complete data set and at that time will decide how best to communicate those results.
Update on Cardiometabolic Programs
Arrowhead has two late-stage cardiometabolic programs, ARO-APOC3 and ARO-ANG3. ARO-APOC3 is targeted to apolipoprotein C-III (APOC3), a component of very low-density lipoprotein (VLDL) and an inhibitor of lipoprotein lipase. This program is currently focused on treating patients with severe hypertriglyceridemia and dyslipidemia. In support of targeting APOC3, an APOC3 loss-of-function mutation results in lower triglyceride (TG) levels (Jørgensen et al., 2014). Arrowhead is currently testing ARO-APOC3 in the following clinical trials as part of the SUMMIT program:
PALISADE: This is a Phase 3, double blind, placebo controlled trial in patients with familial chylomicronemia syndrome (FCS). These patients have fasting triglyceride levels >880 mg/dL. Approximately 72 patients are expected to be enrolled and assigned to one of four dose cohorts in a 2:1:2:1 manner (ARO-APOC3 25 mg, volume-matching placebo, ARO-APOC3 50 mg, volume-matching placebo). The primary endpoint of the trial is the percent change from baseline at month 10 in fasting triglycerides. Secondary and exploratory endpoints will include the change in lipid parameters, incidence of acute pancreatitis, and other measures. The goal is to have the trial fully enrolled by mid-2023 and complete it in 2024.
SHASTA-2: This is a Phase 2b, double blind, placebo controlled trial in patients with severe hypertriglyceridemia (SHTG; TG > 500 mg/dL). The primary endpoint of the trial is the safety and efficacy of ARO-APOC3 and to select a dosing regimen for later-stage patients in this population. We anticipate approximately 216 patients being enrolled. This trial is approximately 80% enrolled and full enrollment should be completed in the fourth quarter of 2022.
MUIR: This is a Phase 2b, double blind, placebo controlled trial in adults with mixed dyslipidemia, which is defined as having TG between 150 and 500 mg/dL and non-HDL cholesterol > 100 mg/dL or LDL cholesterol >70 mg/dL. The primary objective is to evaluate the safety and efficacy of ARO-APOC3 and to select a dosing regimen for later stage trials in this patient population. The total planned enrollment of 320 patients has been reached and we anticipate a data readout in 2023.
ARO-ANG3 is focused on treating patients with mixed dyslipidemia and potentially metabolic diseases through targeting angiopoietin like protein 3 (ANGPTL3). ANGPTL3 loss-of-function mutations lead to low levels of LDL, VLDL, HDL, and TG (Musunuru et al., 2010), with one study showing an ANGPTL3 loss of function associated with a 34% reduction in odds of coronary artery disease (CAD) (Stitziel et al., 2017). Arrowhead is currently testing ARO-APOC3 in the following clinical trials under the VISTA program:
ARCHES-2: This is a Phase 2b, double blind, placebo controlled trial in adults with mixed dyslipidemia (patients are defined just as those in the MUIR trial). The primary objective is to evaluate the safety and efficacy of ARO-ANG3 and to select a dosing regimen for later stage trials in this patient population. Three dose levels of ARO-ANG3 (50 mg, 100 mg, 200 mg) are being tested. Patients will receive a subcutaneous injection on day 1 and week 12. Following the 36-week end-of-study visit, patients will be eligible to continue in an open label extension period. Total planned enrollment of 204 patients is complete. The trial should complete before the end of 2022 and we anticipate a data readout in the first half of 2023.
GATEWAY: This is a Phase 2, open-label trial in patients with homozygous familial hypercholesterolemia (HoFH). Up to 16 patients will be randomized 1:1 to receive two doses of 200 or 300 mg ARO-ANG3 on Day 1 and Day 84 and they will be evaluated over a 36-week period. The company is hoping to have the study fully enrolled by the end of 2022 and data should be available in 2023.
Financial Update
On August 4, 2022, Arrowhead announced financial results for the third quarter of fiscal year 2022 that ended June 30, 2022. The company reported revenue of approximately $32.4 million for the third quarter of fiscal year 2022 compared to approximately $45.9 million for the third quarter of fiscal year 2021. This revenue consisted primarily from the recognition of the $120 million associated with the upfront payment from GSK from the GSK license agreement.
R&D expenses for the quarter ending June 30, 2022 were approximately $72.2 million compared to $59.3 million for the quarter ending June 30, 2021. The increase was primarily due to increased salaries, the progression of pipeline candidates into and through clinical trials, R&D discovery expenses, and non-cash stock-based compensation. G&A expenses for the third quarter of fiscal year 2022 were $33.1 million compared to $18.4 million for the third quarter of fiscal year 2021. The increase was primarily due to increased non-cash, stock-based compensation and increased salaries.
Arrowhead exited the third quarter of fiscal year 2022 with approximately $582.4 million in cash, cash equivalents, and investments. As of July 28, 2022, Arrowhead had approximately 105.8 million shares outstanding and, when factoring in stock options and restricted stock units, a fully diluted share count of approximately 113.2 million.
Conclusion
We're glad to see Arrowhead continue to put additional development candidates into the clinic with the start of the Phase 1/2a trials for ARO-RAGE and ARO-MUC5AC. The company learned a number of things from the ARO-ENaC program that should be transferrable to these new pulmonary programs, thus increasing the probability for a clinically successful outcome. While there haven't been too many data readouts recently, we anticipate 12 clinical readouts between now and the end of 2023 when including both wholly-owned and partnered assets. Thus, investors should expect a lot of news flow over the next 12-15 months. We have made no changes to our model and our valuation remains at $92 per share.
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