Ladies and gentlemen, welcome to the Arrowhead Research Fiscal 2014 First Quarter Financial Results Conference Call. Throughout today's recorded presentation all participants will be in listen-only mode. After the presentation there will be an opportunity to ask questions. I would now like to hand the conference over to Vincent Anzalone, Director of Finance and Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, Operator. Good afternoon, everyone. And thank you for joining us today to discuss Arrowhead’s results for its fiscal 2014 first quarter ended December 31, 2013. With us today from management are President and CEO, Dr. Christopher Anzalone; Chief Operating Officer and Head of R&D, Dr. Bruce Given; and Chief Financial Officer, Ken Myszkowski. Management will give a brief overview of the quarter and we’ll then open up the call to your questions. Before we begin I would like to remind you that comments made during today's call may 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 facts, including without limitation those with respect to Arrowhead’s goals, plans and strategies, are forward-looking statements. They represent management's current expectations and are inherently uncertain. Thus actual results may differ materially. Arrowhead undertakes no duty to update any of the forward-looking statements discussed on today’s call. You should refer to the discussions under Risk Factors in Arrowhead’s annual report on Form 10-K and the company’s quarterly reports on Form 10-Q for additional matters to be considered in this regard. With that said, I’d like to turn the call over to Dr. Christopher Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon, everyone and thank you for joining us today. During our last conference call in December, we discussed key 2013 milestones and how they de-risk our programs and help shape our current value proposition. That was less than seven weeks ago, so today we will be more forward-looking and focus on our plans for this calendar year. 2013 was indeed a great year for us. But we see even opportunities for value creation in 2014. We are entering a period of growth, marking out only by progress of ARC-520, our candidate against chronic hepatitis B infection, but also expansion of our clinical pipeline. This is the national progression for Arrowhead as a maturing company and set forward the fundamentally different risk profile then we had just a year ago. Let start with capital, today we filed a shelf registration statement for up to $200 million in Arrowhead equity securities, our existing shelf expires this year and we felt that prudent financial management to maintain an effective shelf registration statement. It also reflects our confidence in ARC-520 in the broader DPC platform. We have a tremendous amount of value yet to unlock and we believe the best way to maximize that value is to drive clinical development ourselves and not be dependant upon early partners. For instance, we are prepared to push ARC-520 all the way through registration. So that mean we are raising $200 million right now, no. We have a very strong balance sheet that gives us runway into 2016 and enables us to fully fund ARC-520 through Phase 2b, while pushing two additional candidates through clinical proof-of-concept. The new shelf gives us added flexibility to further strengthen our balance sheet at some point in the future and continue independent development beyond that. The ARC-520 clinical…

Thank you, Chris and good afternoon everyone. As we reported today, our net loss attributable to Arrowhead for the three months ended December 31, 2013 was $10.6 million, or $0.28 per share based on 37.7 million weighted average shares outstanding. This compares with a net loss attributable to Arrowhead of $4.6 million, or $0.33 per share based on 14.1 million weighted average shares outstanding for the three months ended December 31, 2012. Total operating expenses for the three months ended December 31, 2013 was $7.1 million, compared with $5 million for the three months ended December 31, 2012. Research and development related expenses were $4.5 million during the quarter and general and administrative expenses were $1.7 million. The increase in operating expenses compared to the year ago period are due to higher drug manufacturing costs related to ARC-520 in preparation for Phase 2 clinical trials. Higher clinical trial expense related to Phase 1 clinical trial, for ARC-520 and higher compensation expense, primarily due to increased headcount as compared to the prior year. Net cash used in operating activities for the first three months of fiscal 2014 was $7 million compared with $3.8 million in the prior year period. The change in cash used in operating activities is consistent with the change in operating expenses. Turning to our balance sheet, our cash balance was $59.7 million at December 31, 2013, including investments in fixed income securities, our cash and investments balance was $85.5 million at December 31, 2013, compared to $29.8 million at September 30, 2013. The increase reflects the $60 million offering closed in October. Additionally, the company received cash inflow of $2.8 million from the exercise of warrants and stock options. Our common shares outstanding at December 31, 2013 were $39 million, up $6.5 million from $32.5 million at September 30, 2013. Also at December 31, 2013, there were 51,291 shares of preferred stock outstanding. These preferred shares are convertible into 10.7 million shares of common stock. Common shares outstanding including the conversion of our preferred shares will be 49.7 million. With that overview, I will turn the call back to Chris.

Thanks, Ken. As I mentioned, 2013 was a big year for us, but we believe that 2014 offers even more opportunities for real and durable value creation. They include the following. This quarter, we expect to begin a Phase 2a study of ARC-520 in patients with chronic HBV in Hong Kong. Next quarter, we expect to complete dosing in a Phase 2a. At the end of the second quarter, we expect to have an Analyst Investor Day to disclose our next candidates. We will discuss the disease, target, pre-clinical data and clinical plan. In the third quarter, we expect to release topline results from the Phase 2a. In the fourth quarter, we expect to begin a multi-dose Phase 2b study for ARC-520. And also in the fourth quarter, we expect to file an IND for our next candidate. ARC-520 remains our top priority and primary value driver, but as we move through the Phase 2a, it will also serve as a powerful proof-of-concept for our broader platforms. I believe that this will represent an important inflection point as shareholder value may then be built simultaneously through the success of ARC-520 as a candidate and via new candidates that enter the clinic relatively de-risked. This becomes a story of leverage and speed. We have developed the machine capable of pushing new candidates into the clinic rapidly, that are all built on a validated delivery system. We have all the tools we need to build substantial shareholder value and create new therapies that could positively impact patients worldwide. I would now like to open the call to questions. Operator?

(Operator Instructions) And our first question comes from Ted Tenthoff of Piper Jaffray.

Great. Thank you very much for taking the question. Just a question on the upcoming Phase 2a, what still has to be done, what are we waiting for dosing and how quickly do you expect to be enrolling data? Are we going to do one cohort and then subsequently the second cohort, how do we expect that to roll out?

Thanks, Ted. Bruce, do you want to have that call? Back to your question.

Yeah. Sure. Good afternoon, Ted.

Hi, Bruce.

So, the -- all we are waiting for now is the approval, final approval from the Hong Kong authorities and we expect that fairly soon after completion of the Chinese New Year, but we of course don’t control that. But we are hopeful that that will come soon and then we will be ready to go. We will complete enrollment in the first cohort, of course, before we would start the second cohort.

Okay.

But we are not required by protocol to wait until the first cohort have all completed their follow-up. So once everybody has been enrolled and have had at least a relatively short brief period of follow-up for the last patients in, we'll be able to start the second cohort. And we are hoping that that will go fairly quickly.

Thanks. And it will be measuring viral load reductions as well but obviously the focus is on s-antigen, correct?

Well, we are going to be on the background of entecavir, so viral load should already be fairly fully suppressed or may be even undetectable. If there is virus present, we will be measuring the further decline, but many of these patients will not have a detectable DNA…

So the main…

If he was on s-antigen.

Awesome. Thank you very much and looking forward to hearing what the next program is to.

Thank you, Ted.

And the next question will come from Thomas Wei of Jefferies.

Thanks. I just wanted to understand in the chimp study, the chimp did received two doses of drug, but you talk about it as being given to so close together in time that is actually more like a single dose of drug as just like twice the dose exposure? Can you remind me how that dose compares to the doses that are being used in the Hong Kong study, I am sorry, I can’t remember that? And then also comparison of what surface antigen levels were in the chimp relative to what it might be in the s-antigen negative population in Asia?

Sure. Thanks very much, Thomas. The doses in the chimp were 2 mcg per kg and 3 mcg per kg. As you point out those were -- was really short exposure, those two doses were separated only by two weeks and that was not meant to imply that we believe the dosing schedule in humans in every two weeks rather we think its going to be closer to a month. We were just trying to find what an effective dose might be in the chimp in that study. So we are in the Phase 2a we are looking at 1 mcg per kg and 2 mcg per kg. We believe that those are both effective doses. Keep in mind that that chimp was extremely viremic and antigenemic, much more so than we expect to see in humans and so there is a much higher bar in that animal then we will see in human. And second that animal had an uniform of HBV there was a mismatch for one of our two sequences. Now it’s not clear what effective that is. It could have been that one of that -- part of our drug was less effective than the other. But for those reasons we believe that the 1 and 2 mcg per kg mix will be effective in people. Now regarding the s-antigen levels, Bruce do you want to comment on dose levels in the chimp?

Right. They were very high and our expectation, Thomas, would be that they will probably be in the orders of two to three logs levels in the patient and maybe some even lower than that. But it is a little bit hard to predict. We will see a considerable amount of variability in s-antigen levels in this patient population but we would expect and it would be quite a bit lower than they were in the chimp.

And just a follow up, when you include all of these various factors, the difference in the doses and the difference between the chimps and humans and the mismatch and as surface antigen baseline? What do you think is the reasonable expectation for what we could see out of the single dose study in terms of surface antigen effects?

What we are looking to get is about a log of knockdown that would last around a month. We believe we can get that in the 1 to 2 mcg per kg range, but if we can’t we believe that we could amend the protocol in the Hong Kong and go higher. The Phase 1 was quite clean and when we expected that should those data be reproduced in the Phase 2a that we could probably go higher, should we need to, but that sort of our bogie. Now it’s not clear that we need to be that good. For instance, you probably recall in the chimp. With s-antigen we got somewhere in the 85 or so percent knockdown, so less than a log. But that was sufficient to initiate this process that we believe was immune activation or immune reactivation. So that was -- even though we're going we would like to do a log in human that 85 or so percent at least in this one individual seem to be enough to start that cascade of events that under chronic dosing could lead to a functional cure.

Okay. Great. Thanks.

You are welcome.

(Operator Instructions) I apologize. We do have a question from Wei Li.

Yeah. Actually, I have a quick question about the mix target of the RNAi. I have two questions but first is I saw the Arrowhead did some research on Chimpanzee just for the genotype B and I know there is a lot of people or patients, with that genotype C and those are closely related with the liver cancer and more compatibility with the liver cancer. So I just wonder is there any data to support that genotype type C. This is the first question. A follow-up is for the genotype C and genotype B, there are two kind of mutations, is the precore, also basal core promoters. So is there any difference -- I mean, per your comments for those patients with basal core promoter mutation. Thank you.

Thank you very much, that’s a very astute question. We designed as you may know ARC-520 consists of two siRNA sequences. The reason we have two is to give us or the primary reason that to is the broader coverage across genotypes because we know the multiple major genotypes and hepatitis B as you mentioned B and C are two of them. The chimpanzee we studied happened to be a genotype B. We tested our two sequences or we screen our two sequences with gene bank which has something on the order of 25 or so hundred sequences in a depth of HBV. And among the two genotypes, among the two sequences, together we cover 99.6% or 99.9% of all those sequences. So we should cover, we believe, we cover all the primary genotypes with at least one of the two sequences. Now regarding mutations in B or C, again we got these two sequences and they are both designed and -- or they are both generated in a highly conserved regions so presumably we should cover the vast majority of individuals. Now that’s not to say that we will be equally efficacious in all genotypes. This is a very difficult virus as you know and it is certainly possible that this therapy could be more or less efficacious in certain genotypes. There is no theoretical reason for that right now but is certainly a possibility given that we don't know very much about the virus.

And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Well, thank you very much for your attention and for participating in the call today and I look forward to talking to you soon.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.