Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. [Operator Instructions] I will now hand the conference over to Vince Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, Victor. Good afternoon, and thank you for joining us today to discuss Arrowhead's results for its fiscal 2026 first quarter ended December 31, 2025. With us today from management are President and CEO, Dr. Chris Anzalone, who will provide an overview; Andy Davis, Senior Vice President and Head of the Global Cardiometabolic Franchise, who will provide an update on commercialization activities; Dr. James Hamilton, Chief Medical Officer and Head of R&D, who will discuss our development programs; and Dan Apel, Chief Financial Officer, who will give a review of the financials. Following management's prepared remarks, we will open the call to questions. Before we begin, I would like to remind you that comments made during today's call 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 fact are forward-looking statements and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. I'd now like to turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. We had another quarter of strong execution across all areas of our business, and we are well positioned to build on this progress throughout 2026 and beyond. In fact, the recent months have included some of the more significant achievements in Arrowhead's history. Let's talk about some of these. First, on November 18, 2025, Arrowhead received its first regulatory approval and began the next phase of growth as a commercial company marketing its own medicines. The FDA approved REDEMPLO as an adjunct to diet to reduce triglycerides in adults with familial chylomicronemia syndrome, or FCS. FCS is a severe rare disease with an estimated 6,500 people in the U.S. living with genetic or clinical FCS, characterized by TG levels that can be 10 to 100x higher than normal, leading to a substantially higher risk of developing acute recurrent and potentially fatal pancreatitis. This approval was supported by clinical data from the Phase III PALISADE study in adults with either clinically diagnosed or genetically confirmed FCS. The PALISADE study demonstrated deep and durable reductions in TGs with a median reduction of 80% from baseline and a lower numerical incidence of acute pancreatitis events compared to placebo. Arrowhead launched REDEMPLO independently in the U.S. with the One-REDEMPLO pricing model that creates one consistent price across current and potential future indications. This is important. We're committed to sustainable innovation, and this requires a rational drug pricing according to the value a medicine offers to patients and health care systems. REDEMPLO is a pancreatitis drug. And when we think about pricing, we look to those patient populations at greatest risk of acute TG-related pancreatitis. We've only had drug in channel for about 10 weeks, which included Thanksgiving, Christmas and New Year's holidays.…

Thank you, Chris, and good afternoon, everyone. It has been just over 2 months since the approval of REDEMPLO on November 18, 2025, and we are very pleased with the progress we are seeing. I'd like to share some early insights across health care provider engagement, patient dynamics and payer developments. I'll start with health care provider engagement. As a reminder, we are targeting approximately 5,000 health care professionals through personal promotions, complemented by a much broader omnichannel effort. Early prescribing has been led by preventive cardiologists and endocrinologists, who together account for approximately 70% of total prescriptions, with the remainder coming from internal medicine physicians focused on lipid disorders. In addition, advanced practice providers, including nurse practitioners and physician associates working within multidisciplinary care teams; are playing a meaningful role in patient identification and treatment decisions. Turning to patient dynamics. As Chris mentioned, over 100 prescriptions for REDEMPLO have been received to date. We see this as a very strong start that exceeded our expectations for the early months of the launch. We are also seeing geographically balanced uptake across the United States. Early patient starts fall into 3 categories: patients transitioning from our expanded access program, patients naive to the APOC3 class and patients switching from olezarsen. Class-naive patients represent the overwhelming majority of starts with expanded access and switch patients contributing evenly to the remainder. Patients receiving REDEMPLO include both clinically diagnosed and genetically confirmed FCS, with the majority not required to submit genetic testing to gain access. Importantly, a high proportion of patients are enrolling in the rely on REDEMPLO patient support program. And in the fiscal first quarter, patients eligible for co-pay assistance paid $0 out of pocket. Next, I'll touch on payer developments. While it is still early, we remain encouraged by positive payer…

Thank you, Andy. I'd like to start with a review of the REDEMPLO FDA approval and information in the label and contained in the package insert. REDEMPLO is approved as an adjunct to diet to reduce triglycerides in adults with FCS. The recommended dose of REDEMPLO is 25 milligrams, and it can be self-administered at home by subcutaneous injection once every 3 months. REDEMPLO has no contraindications, warnings or precautions in the U.S. FDA-approved label. The most common adverse reaction includes hyperglycemia, headache, nausea and injection site reactions. REDEMPLO was studied in patients with both genetic FCS and clinically diagnosed FCS in the Phase III PALISADE study. Patients achieved deep and durable reductions in median triglycerides of around 80% from baseline with reductions largely maintained below the guideline directed threshold of 500 milligrams per deciliter throughout the year of treatment. Importantly, patients with genetic FCS versus clinical FCS showed similar reductions from baseline. We see the clinical FCS population as having the same high unmet need as the genetic FCS group. And as such, we think it's crucial to have shown that both patient populations showed similar large reduction from baseline in triglycerides. In PALISADE, treated patients also had a reduced rate of adjudicated acute pancreatitis events, a very welcome finding for FCS patients and their caregivers and an important validation that reduction in triglycerides can, in fact, lead to reductions in pancreatitis. In addition to FCS, we are also investigating plozasiran in patients with severe hypertriglyceridemia or SHTG. We announced last quarter that the FDA granted breakthrough therapy designation to investigational plozasiran as an adjunct to diet to reduce triglycerides in adults with SHTG. Breakthrough therapy designation is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and where…

Thank you, James, and good afternoon, everyone. I'll provide a brief outline of our financial picture. As we reported today, net income for the quarter ended December 31, 2025, was $30.8 million or an income of $0.22 per share based on 140.7 million fully diluted weighted average shares outstanding. This compares to a net loss of $173.1 million or a loss of $1.39 per share for the quarter ended December 31, 2024, based on 124.8 million fully diluted weighted average shares outstanding at that time. Revenue for the quarter totaled $264 million, driven primarily by our license and collaboration agreements with Sarepta and Novartis. Of this amount, approximately $229 million related to the Sarepta collaboration, and this included $181 million from the achievement of the second DM1 milestone, $32 million from the ongoing recognition of the initial Sarepta consideration and $17 million related to reimbursement of incurred collaboration program costs. In addition, we recognized $34 million of the $200 million upfront payment we received from Novartis under our global licensing and collaboration agreement with them. The remainder of that $200 million will be deferred over time as we fulfill our preclinical collaboration obligations. Finally, on revenue, we also recorded our first commercial sale of plozasiran in FCS. As both Chris and Andy have mentioned, we are very encouraged with the feedback and uptake we are seeing with patients and providers. For now, we are not disclosing specific sales numbers until such time as they become a meaningful driver to our financials. Turning to expenses. Total operating expenses for the quarter were approximately $223 million compared to $164 million in the prior year quarter, representing an increase of $59 million year-over-year. This increase was driven by $40 million of higher R&D expenses and $19 million of higher SG&A expenses. To break…

Thanks, Dan. This is indeed an exciting time to be at Arrowhead or an Arrowhead shareholder. We're coming off a historic period for the company where we executed extremely well and all the hard work of the last several years is starting to pay off. While 2025 is productive, we look to the remainder of 2026 and the years ahead to be even more transformational. Let's look at some key 2026 events that we anticipate could be important value-creating events for the company and our shareholders. Commercial sales progress for REDEMPLO, Q3 2026 readout of Phase III SHASTA-3 and SHASTA-4 studies of plozasiran in patients with SHTG, which we believe has the potential to be a $3 billion to $4 billion commercial opportunity; second half 2026 readout for ARO-DIMER-PA targeting PCSK9 and APOC3 for LDL and TG lowering, which may address mixed hyperlipidemia, a population of potentially 20 million patients in the U.S.; additional ARO-INHBE and ARO-ALK7 data presented in 2026 that may build on the already encouraging early data for this novel non-incretin strategy; and early ARO-MAPT data in 2026, potentially providing validation for this drug candidate and our emerging CNS pipeline with systemic delivery via subcutaneous administration. These are just a few potentially important events in 2026 alone. If you fast forward 1 to 3 years, we expect many more opportunities in our pipeline to build value and potential commercial launches, both independently and with partners. Thank you for joining us today. And I would now like to open the call to your questions. Operator?

[Operator Instructions] Our first question will come from the line of Mike Ulz from Morgan Stanley.

Maybe just one on REDEMPLO. Can you just give a little bit more color on the breakdown between the different categories of patients transitioning from expanded access, naive and switch? And then maybe on the latter in terms of switch, just any key reasons you're seeing a switch? And does it have anything to do with coverage and pricing?

Thanks, Mike. This is Andy. Yes, I can comment that the vast majority of patient origination is from APOC3-naive segment, with the remaining balance split roughly 50-50 between those that are coming from switch and those that are transitioning off of the expanded access program. As it relates to switch, we're seeing switch patients that are coming both from efficacy, but also from safety as the two principal drivers for why physicians might be considering REDEMPLO as an alternative. I hope that helps.

Our next question comes from the line of Maury Raycroft from Jefferies.

Congrats on the progress. I'll ask one on obesity. Just wondering if you've had discussions with FDA about the development path or when would it make sense to do this? And what could timelines for your Phase II start look like? And do you need to have all the data, including combo data in hand, before you can determine next steps for the development path?

Yes, sure, Maury. I can take that. This is James. Probably middle of the year, we would be having some of those discussions with FDA. I don't think we need all of the data from all of the cohorts. As I mentioned in the prepared remarks, we expanded some of these cohorts, so they'll be going on some of them for a longer period of time. So FDA conversations probably middle of -- around middle of the year, and then we'll be looking to file an IND shortly thereafter.

Our next question will come from the line of Andrea Newkirk from Goldman Sachs.

Maybe I can ask you one here on the ARO-DIMER-PA asset. Just as we think about the data set that are -- that's coming later this year, just curious if you might be willing to speculate or share what you are looking for or how you've defined a TPP, what level of reduction in LDL-C and you're hoping to see? And then how that might inform a go/no-go decision for advancing the asset forward? And what extent of reduction would give you confidence that you could then see that translation to a benefit on MACE?

Yes, sure. We'll see. I think we probably don't have to reach the level of reduction in terms of APOC3 and triglycerides that we're seeing with plozasiran, for example. Something less than that with the combination of the LDL cholesterol reductions would probably be sufficient. So I think if you look at some of the monkey data that we presented in the dyslipidemic monkeys, we were seeing reductions in LDL and in triglycerides of around 40%, 50%. So I think something like that, if you could do both of those, that would be really encouraging. But we'll see what the data show later this year.

Our next question comes from the line of Luca Issi from RBC Capital Markets.

This is Cathy on for Luca. Congrats on strong REDEMPLO launch and progresses. My question also on INHBE and ALK7 since we just talked about the regulatory path. Andy, I appreciate early days, but how are you thinking about potential pricing for INHBE and ALK7? I mean Lilly now offers Zepbound via LillyDirect at $300 a month and the compounders announced today that you can get oral Wegovy basically at the same monthly price as YouTube TV. So what is your latest thinking on pricing? And how should we think about COGS for INHBE and ALK7?

It is -- as you expected, it's way too early for us to think about that. We're inherently in the biology here to see how these drug candidates could potentially work in various patient populations. Until we have a better understanding of that, it's really too early to speculate on potential pricing.

Our next question comes from the line of Prakhar Agrawal from Cantor.

Congrats on the quarter and the progress. So I think, James, you mentioned that about the Pancreatitis event rates in the ongoing Phase III SHASTA-3, 4 trials. Maybe if you can talk about the blinded AP events that you're seeing in those trials and whether it's in the same ballpark of what Ionis saw? And just a follow-up to that, would you expect the placebo event rate on AP reduction to perform similarly to olezarsen core trials, given the population looks similar? Or are there any nuances that we should be aware of?

Yes. So on the first one, we're not going to give any additional details on event rates or the number of events that we've seen other than to say that we are seeing events. On the second question, I mean, I think it's rational to look at the CORE and CORE2 placebo rate that the population was similar to ours. So they are obviously different studies, but the population was similar.

Our next question comes from the line of Jason Gerberry from Bank of America.

You mentioned payer feedback for REDEMPLO. I believe that was in the context of FCS. But I'm curious if in those discussions, SHTG came up at all and whether that price point that you guys have for FCS is appropriate for a market the size of SHTG and the likely benefits that APOC3 would provide. It seemed pretty derisked at this point, but just kind of curious if those discussions came up and how the view was on the $60,000 price point.

Thanks, Jason. This is Andy. I appreciate the question. I won't get into the details of any specific payer discussions, only to say that our team is laser-focused on ensuring we can gain coverage and access for those patients that have FCS, either genetically confirmed or clinically diagnosed. I would just add that the payers with whom we're discussing represent over 90% of U.S. lives and both the clinical teams and the economic teams recognize the clinical value and the economic value of REDEMPLO at the One-REDEMPLO price that we've previously announced.

And you mentioned the size of the SHTG market. We think there are somewhere around 3.5 million people with triglycerides above 500. But that market is not all created equal. When we look at our -- at least initial target market there and we look at how we price REDEMPLO, it is really focused on those very high-risk individuals, those maybe 750,000 to maybe 1 million people who are -- who have triglycerides above 880 or history of pancreatitis. That's -- at least initially, that is the real core market that those are the patients who really need this new medicine. So again, don't get lost in the 3 million to 4 million people with trigs above 500 really focus on that high risk group. That's what we're focusing on at least initially.

Our next question will come from the line of Patrick Trucchio from H.C. Wainwright.

My question is on ARO-MAPT. I'm just curious, with the interim data from the healthy volunteer portion and then with the patient data to follow, I'm wondering, what specific elements of the healthy volunteer data, safety, CSF tauopathies knockdown or downstream biomarkers would most likely increase your confidence in this program and as well the data we should look for in patients to follow? And if you could also just talk about just the confidence this would give in the CNS targeting and platform overall and how we should expect the CNS platform to develop from here?

Yes, I can take that, Patrick. This is James. So maybe I'll take the second question first. We don't have any data in the clinic yet, any data in humans, but we do have data using the platform with multiple different targets in multiple different monkey studies, and they're pretty consistent in terms of the drug concentration that we get in various CNS regions and the knockdown we're able to achieve in the deep brain. So that is helpful and certainly enhances our confidence. But of course, the large leap in confidence will come once we see the clinical data. And to your first question, I think the key data that we anticipate being confidence building, of course, safety and then the CSF knockdown will be key in the healthy volunteers. There's not a lot of other downstream biomarkers to measure in the healthy volunteers. But then going forward into the patient cohorts, we can measure some of the [ phospho ] tauopathies varieties in the blood, also in the CSF. And then, of course, we can look at tau PET, although those readouts will take a while to see the tau PET signals in the patients. I think seeing a reduction in tau PET signal will be really very encouraging.

The next question will come from the line of Edward Tenthoff from Piper Sandler.

So thanks for all the detail. Really exciting to see the pipeline advancing. I'm wondering when it comes to the recognition of revenues, at this point, are you guys anticipating breaking out a cost-of-goods-sold line? I'm sure a lot of the manufacturing expense has already been expensed to R&D. But I'm just trying to think about how you're planning on reporting COGS going forward? And will you break out REDEMPLO product sales in the future?

Yes. Thanks, Ted. Thanks for the question. Yes. As you pointed out, the cost of goods sold prior to launch are going to be in the R&D, and that's the majority of what we're going to see in the short term. We said in the prepared remarks, we're not going to disclose this actively until such time as they are meaningful drivers. So we will, at some point, I'm not going to hazard a guess as to when that will be. But then you would -- at that point, you would normally see then sort of the traditional product revenue and product sales.

Our next question comes from the line of Joseph Thome from TD Cowen.

Maybe just based on the differential biology of Activin E/ALK7, can you talk a little bit about your expectation to see monotherapy weight loss in obese nondiabetic patients with the ALK7 program? And a point of clarification, when you talk about the expansions of the studies in terms of including that monotherapy diabetic population and expand the overall size, was that for the Activin E/ALK7 programs already, both of them?

Yes. I think -- well, we don't really have expectations in terms of monotherapy weight loss. We'll see what happens. I think we've said a few times that we view these studies as hypothesis generating. So we'd like to see if there's an early signal and then potentially expand cohorts to confirm that signal. So I can't really predict ahead of time what we're going to see. Then on your second question, the addition of the monotherapy cohort, we did add that in the INHBE study. We will likely have that in the ALK7 study as well.

Our next question comes from the line of Mani Foroohar from Leerink Partners.

I know earlier, so I'm not sure this was asked earlier, but could you give us a breakdown of the EAP versus non-EAP patients out of the 100-plus prescriptions? And how should we think about the total pool of EAP patients rolling on to commercial drug? Is that -- is there a tail of that remaining? And I have a follow-up question.

Thanks for your question, Mani. This is Andy. At this time, we're not going to provide any further details aside from the previous remarks, which the vast majority of patients are APOC3 naive. It gives us a lot of optimism about our ability to identify and diagnose both genetically confirmed and clinically diagnosed FCS patients. And again, with respect to the balance, we do see that fairly evenly split between those patients transitioning off of the expanded access program and those that are coming via switch.

Okay. That's helpful. And a separate question, what are the expectations we should have over the next 12 to 18 months around potential data sets admittedly perhaps early on novel tissue types and further expansion of the platform?

That's a good question, Mani. We've not given any guidance to that at this point. I think we have enough exciting stuff with more ALK7 data, with initial MAPT data, with initial [ Zimer ] data, with SHASTA-3 and 4 reading out with sales that we feel pretty good about those things. But you know us, Mani. We are always developing the platform, and we are always expanding to the sites. And so I can't -- it's possible that you may hear something about where we're going with the platform as well as maybe new candidates within the existing platform. I just can't give you any guidance on when that might be, I apologize.

Our next question will come from the line of Madison El-Saadi from B. Riley.

On the 100 prescriptions you mentioned, I'm curious how many of those do you expect to be converted to paid drug? And how long does it take to get from prescription to drug [ and ] body? And then relatedly, how should we think about the pace of both patient onboarding and competitive switching? Is this kind of a leading indicator for SHTG dynamic?

Thanks, Madison. Happy to comment. What we're seeing are really high-quality prescriptions in the sense that we believe these prescriptions truly represent either genetically confirmed or clinically diagnosed FCS patients. So we do have high confidence that a significant proportion of those prescriptions will, in time, translate into drug shipments and drug in patients. As far as the time it takes from prescription to drug shipment, again, that does vary by patient, by insurance and by prior authorization. But I would say, in general, we're able to do that within just a couple of weeks from prescription to patient receiving drug. So I've been incredibly pleased with the patient identification including both genetic and clinically diagnosed and incredibly pleased with the operational execution from the team in converting prescriptions to shipped medicine.

And also just broadly be careful about reading too much into where we are right now. We've only been actively in market for 10 weeks now. And so we're still working with payers. We're still working with physicians to get comfortable prescribing this. We're still informing and educating patients and prescribers about the medicine. So we have a long way to go. Let's see where we are more towards the end of the year. We have a pretty small sample set at this point.

I'm not showing any further questions in the queue. I would now like to turn it back over to Chris for any closing remarks.

Thanks, everyone, for joining us today, and we look forward to speaking with you next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.