Arrowhead Pharmaceuticals Inc.
08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:05
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Quarterly Report on Form 10-Q except for historical information may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "might," "will," "expect," "believe," "anticipate," "goal," "endeavor," "strive," "intend," "plan," "project," "could," "estimate," "target," "might," "forecast," "potential," or "continue" or the negative of these words or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements include, but are not limited to, statements about the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs, our expectations regarding regulatory approval for and commercial launch of plozasiran; our expectations regarding the potential benefits of the partnership, licensing and/or collaboration arrangements and other strategic arrangements and transactions we have entered into or may enter into in the future; our beliefs and expectations regarding the amount and timing of future milestone, royalty or other payments that could be due to or from third parties under existing agreements; and our estimates regarding future revenues, research and development expenses, capital requirements and payments to third parties.
The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately, and many of which are beyond our control. As such, our actual results or outcomes and timing of certain events may differ materially from those discussed, projected, anticipated or indicated in any forward-looking statements. Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and cash flows may differ materially. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part I and "Item 1A. Risk Factors" of Part II of this Quarterly Report on Form 10-Q as well as "Item 1. Business" and "Item 1A. Risk Factors" of Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part II of our most recent Annual Report on Form 10-K. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission (the "SEC"). In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Except as may be required by law, we disclaim any intent to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
OVERVIEW
The Company develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and efficient modes of delivery, the Company's therapies trigger the RNAi interference mechanism to induce rapid, deep and durable knockdown of target genes. RNAi is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. RNAi-based therapeutics may leverage this natural pathway of gene silencing to target and shut down specific disease-causing genes.
The Company believes that TRiMTMenabled therapeutics offer several potential advantages over prior generations and competing technologies, including: simplified manufacturing and reduced costs; multiple routes of administration including subcutaneous injection and inhaled administration; the ability to target multiple tissue types including liver, lung, central nervous system (CNS), muscle, and adipose tissue; and the potential for improved safety and reduced risk of intracellular buildup, because there are fewer metabolites from smaller, simpler molecules.
The Company's pipeline includes:
•Hypertriglyceridemia - plozasiran (formerly ARO-APOC3);
•Homozygous familial hypercholesterolemia (HoFH) - zodasiran (formerly ARO-ANG3);
•Cardiovascular disease - olpasiran (formerly AMG 890 or ARO-LPA, out-licensed to Amgen);
•Inflammatory pulmonary conditions - ARO-RAGE;
•Idiopathic pulmonary fibrosis - SRP-1002 (formerly ARO-MMP7, out-licensed to Sarepta);
•Metabolic-dysfunction associated steatohepatitis (MASH) - GSK-4532990 (formerly ARO-HSD, out
licensed to GSK);
licensed to GSK);
•Alpha-1 antitrypsin deficiency (AATD) - fazirsiran (formerly ARO-AAT, a collaboration with Takeda);
•Chronic Hepatitis B virus - daplusiran/tomligisiran - GSK5637608 (formerly JNJ-3989 and ARO-HBV, out-licensed to GSK);
•Complement mediated diseases - ARO-C3 and ARO-CFB;
•Metabolic-dysfunction associated steatohepatitis (MASH) - ARO-PNPLA3 (formerly JNJ-75220795 or ARO-JNJ1);
•Obesity - ARO-INHBE and ARO- ALK7
•Facioscapulohumeral muscular dystrophy - SRP-1001 (formerly ARO-DUX4, out-licensed to Sarepta);
•Myotonic Dystrophy Type 1 - SRP1003 (formerly ARO-DM1 out-licensed to Sarepta; and
•Spinocerebellar ataxia 2 - SRP-1004 (formerly ARO-ATXN2, out-licensed to Sarepta).
The Company operates lab facilities in California and Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place. The Company's principal executive offices are located in Pasadena, California.
The Company continues to develop other clinical candidates for future clinical trials. Clinical candidates are tested internally and through Good Laboratory Practice (GLP) toxicology studies at outside laboratories. Drug materials for such studies and clinical trials are either manufactured internally or contracted to third-party manufacturers. The Company engages third-party contract research organizations (CROs) to manage clinical trials and works cooperatively with such organizations on all aspects of clinical trial management, including plan design, patient recruiting, and follow up. These outside costs, including toxicology/efficacy testing and manufacturing costs, as well as the preparation for and administration of clinical trials, are referred to as "candidate costs." As clinical candidates progress through clinical development, candidate costs will increase.
The First Three Quarters of Fiscal 2025 Business Highlights
Key recent developments through the first three quarters of fiscal 2025 included the following:
•Triggered a $100.0 million milestone payment from Sarepta Therapeutics, Inc., which was triggered on July 27, 2025, when the Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1);
•Announced the signing of an asset purchase agreement between Sanofi and Visirna Therapeutics, a majority-owned subsidiary of the Company, created to develop and commercialize four of the Company's investigational cardiometabolic candidates in Greater China. Under the terms of the agreement, Sanofi will acquire rights to develop and commercialize investigational plozasiran, the Company's first-in-class RNAi therapeutic candidate designed to reduce production of apolipoprotein C-III (APOC3) as a potential treatment for familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (SHTG), in Greater China;
•Initiated and dosed the first subject in the YOSEMITE Phase 3 clinical trial of zodasiran, the Company's investigational RNAi therapeutic being developed as a potential treatment for homozygous familial hypercholesterolemia (HoFH), a rare genetic condition that leads to severely elevated LDL-cholesterol and early onset cardiovascular disease;
•Completed enrollment of SHASTA-3, SHASTA-4, and MUIR-3 Phase 3 clinical trials of plozasiran. The Company's global Phase 3 clinical studies are designed to support regulatory submissions for approval of investigational plozasiran in the treatment of severe hypertriglyceridemia. The Company previously submitted a New Drug Application to the U.S. Food and Drug Administration ("FDA") on November 16, 2024 for plozasiran based on positive Phase 3 PALISADE study results in patients with familial chylomicronemia syndrome, which the FDA accepted on January 17, 2025, with a Prescription Drug User Fee Act (PDUFA) action date of November 18, 2025, and indicated it is not currently planning to hold an advisory committee meeting;
•Initiated a Phase 1/2a clinical trial of ARO-ALK7 for the treatment of obesity. ARO-ALK7 is the first RNAi-based therapy designed to silence adipocyte expression of the ACVR1C gene to reduce the production of Activin receptor-like kinase 7 (ALK7), which acts as a receptor in a pathway that regulates energy homeostasis in adipose tissue;
•Announced Topline results from Part 2 of a Phase 1/2 clinical study of ARO-C3, the Company's investigational RNAi therapeutic designed to reduce liver production of complement component 3 (C3) as a potential therapy for various complement mediated diseases. ARO-C3 achieved reductions in alternative pathway complement activity and proteinuria;
•Entered into a global licensing and collaboration agreement with Sarepta on November 25, 2024, which closed on February 7, 2025. Closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. Upon closing, the Company received $325.0 million through the purchase of 11,926,301 shares of Company common stock by Sarepta, at a price per share of $27.25, and received $500.0 million as an upfront payment on February 24, 2025. The Company will also receive $250.0 million to be paid in equal installments over five years and is eligible to receive an additional $300.0 million in near-term payments. Additionally, the Company is eligible to receive royalties on commercial sales and up to approximately $10.0 billion in future potential milestone payments;
•GSK dosed its fifth patient in a Phase 2 trial in December 2024, triggering a $2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025;
•Announced that the Company dosed the first subjects in a Phase 1/2a clinical trial of ARO-INHBE; and
•Presented interim results from a Phase 1/2a clinical study of ARO-CFB at the 8th Complement-Based Drug Development Summit. The study resulted in multiple findings including: (1) ARO-CFB led to dose dependent reductions in circulating CFB protein by up to 90% with greater than 3 months duration, (2) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway activity based on Wieslab AP, and (3) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway hemolytic activity, measured by AH50.
Critical Accounting Estimates
There have been no significant changes to the Company's critical accounting estimates disclosed in the most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
RESULTS OF OPERATIONS
The following data summarizes the Company's results of operations for the following periods indicated:
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||||
| Revenue | $ | 27,767 | $ | - | $ | 572,976 | $ | 3,551 | ||||||||||||
| 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) | ||||||||||||
|
Net (loss) income per diluted share attributable to Arrowhead
|
$ | (1.26) | $ | (1.38) | $ | 0.17 | $ | (3.63) | ||||||||||||
Revenue
Total revenue for the three and nine months ended June 30, 2025 increased by $27.8 million and $569.4 million, respectively, from the same periods of 2024. The change was primarily driven by the revenue recognition associated with GSK and Sarepta license agreements as discussed below.
The Company has evaluated each agreement in accordance with FASB Topic 808-Collaborative Arrangementsand Topic 606-Revenue for Contracts from Customers. See Note 2 - Collaboration and License Agreements of the Notes to Consolidated Financial Statements of Part I, "Item 1. Financial Statements" for more information on revenue recognized under the collaboration and license agreements.
Takeda: In October 2020, Takeda and the Company entered into the Takeda License Agreement. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the fazirsiran license and the associated Takeda R&D Services. Revenue was recognized using the input method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies). The Phase 2 study visits for patients in the SEQUOIA and AROAAT2002 studies concluded by December 31, 2023, and the Company has substantially completed its performance obligation under the Takeda License Agreement. As such, all revenue has been fully recognized as of December 31, 2023. During the nine months ended June 30, 2024, the Company recorded $0.9 million revenue.
GSK: On December 11, 2023, the Company entered into the GSK-HBV Agreement pursuant to which GSK received a worldwide, exclusive license to develop and commercialize daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989), the Company's third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection.
Under the terms of the GSK-HBV Agreement, the Company received $2.7 million in December 2023, upon signing the GSK-HBV Agreement. Further, GSK dosed the fifth patient in a Phase 2 trial in December 2024, triggering a $2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025. During the nine months ended June 30, 2025, the Company recorded $2.6 million revenue.
Sarepta: On November 25, 2024, the Company entered into the Sarepta Collaboration Agreement and Stock Purchase Agreement with Sarepta for the development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs. During the nine months ended June 30, 2025, the Company recorded $570.3 million in revenue. As of June 30, 2025, no revenue was recorded for the milestone payments or royalties, as none had been achieved.
Operating Expenses
The analysis below details the operating expenses and discusses the expenditures of the Company within the major expense categories. For purposes of comparison, the amounts for the three and nine months ended June 30, 2025 and 2024 are shown in the tables below.
Research and Development ("R&D") Expenses
Research and development expenses are related to the Company's research and development discovery efforts and related candidate costs, which are comprised primarily of outsourced costs related to the manufacturing of clinical supplies, toxicity/efficacy studies and clinical trial expenses. Internal costs primarily relate to discovery operations at the Company's research facilities in California and Wisconsin, including facility costs and laboratory-related expenses. The Company does not separately track research and development expenses by individual research and development projects, or by individual drug candidates. The Company operates in a cross-functional manner across projects and does not separately allocate facilities-related costs, candidate costs, discovery costs, compensation expenses, depreciation and amortization expenses, and other expenses related to research and development activities.
The following tables provide details of research and development expenses for the periods indicated:
| (in thousands) |
Three Months Ended June 30, 2025 |
% of
Expense
Category
|
Three Months Ended June 30, 2024 |
% of
Expense
Category
|
Increase (Decrease) | ||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Candidate costs | $ | 95,007 | 58 | % | $ | 91,623 | 60 | % | $ | 3,384 | 4 | % | |||||||||||||||||||||||
| R&D discovery costs | 21,043 | 13 | % | 17,634 | 12 | % | 3,409 | 19 | % | ||||||||||||||||||||||||||
| Salaries | 26,531 | 16 | % | 24,532 | 16 | % | 1,999 | 8 | % | ||||||||||||||||||||||||||
| Facilities related | 6,457 | 4 | % | 7,132 | 4 | % | (675) | (9) | % | ||||||||||||||||||||||||||
| Total research and development expense, excluding non-cash expense | $ | 149,038 | 91 | % | $ | 140,921 | 92 | % | $ | 8,117 | 6 | % | |||||||||||||||||||||||
| Stock compensation | 7,612 | 5 | % | 7,241 | 5 | % | 371 | 5 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 5,718 | 4 | % | 4,269 | 3 | % | 1,449 | 34 | % | ||||||||||||||||||||||||||
| Total research and development expense | $ | 162,368 | 100 | % | $ | 152,431 | 100 | % | $ | 9,937 | 7 | % | |||||||||||||||||||||||
| (in thousands) |
Nine Months Ended June 30, 2025 |
% of
Expense
Category
|
Nine Months Ended June 30, 2024 |
% of
Expense
Category
|
Increase (Decrease) | ||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Candidate costs | $ | 243,094 | 56 | % | $ | 185,708 | 50 | % | $ | 57,386 | 31 | % | |||||||||||||||||||||||
| R&D discovery costs | 48,785 | 11 | % | 56,736 | 15 | % | (7,951) | (14) | % | ||||||||||||||||||||||||||
| Salaries | 80,583 | 19 | % | 72,048 | 19 | % | 8,535 | 12 | % | ||||||||||||||||||||||||||
| Facilities related | 20,944 | 5 | % | 19,597 | 7 | % | 1,347 | 7 | % | ||||||||||||||||||||||||||
| Total research and development expense, excluding non-cash expense | $ | 393,406 | 91 | % | $ | 334,089 | 91 | % | $ | 59,317 | 18 | % | |||||||||||||||||||||||
| Stock compensation | 23,049 | 5 | % | 23,735 | 6 | % | (686) | (3) | % | ||||||||||||||||||||||||||
|
Depreciation and amortization
|
16,017 | 4 | % | 12,220 | 3 | % | 3,797 | 31 | % | ||||||||||||||||||||||||||
| Total research and development expense | $ | 432,472 | 100 | % | $ | 370,044 | 100 | % | $ | 62,428 | 17 | % | |||||||||||||||||||||||
Candidate costs increased $3.4 million, or 4%, for the three months ended June 30, 2025 compared to the same period of 2024, and $57.4 million, or 31%, for the nine months ended June 30, 2025 compared to the same period of 2024. The increase for both periods was primarily due to the additional progression of the Company's pipeline of candidates into and through clinical trials, which resulted in higher manufacturing, outsourced clinical trial, and toxicity study costs.
R&D discovery costs increased $3.4 million, or 19%, for the three months ended June 30, 2025 compared to the same period of 2024, primarily driven by animal studies and system support costs. R&D discovery costs decreased $8.0 million, or 14%, for the nine months ended June 30, 2025 compared to the same period of 2024, primarily driven by strategic shifts toward clinical development and commercial launch. R&D discovery costs are influenced by the Company's ongoing discovery efforts, continued advancements into novel therapeutic areas and tissue types, and increasing costs related to CNS studies and lab supplies.
Salaries consist of salary, bonuses, payroll taxes, and related benefits for the Company's R&D personnel. Salaries
expense increased $2.0 million, or 8%, for the three months ended June 30, 2025 and $8.5 million, or 12%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The increase for both periods was primarily due to an increase in headcount that has occurred as the Company has expanded its pipeline of candidates, in addition to annual salary increases.
Facilities-related expense includes lease costs for the Company's research and development facilities in San Diego, California and in Madison and Verona, Wisconsin. These expenses decreased $0.7 million, or 9%, for the three months ended June 30, 2025 compared to the same period of 2024, due to refunds received related to the San Diego and Madison buildings. These expenses increased $1.3 million, or 7%, for the nine months ended June 30, 2025 compared to the same period of 2024, primarily due to property taxes charged to the laboratory and office facilities in Verona, Wisconsin, which completed their build out during the first quarter of fiscal 2024.
Stock compensation expense, a non-cash expense, is primarily based on the valuation of the restricted stock units granted to employees, which is based on the closing stock price on the grant date. Stock compensation expense increased $0.4 million, or 5%, for the three months ended June 30, 2025 compared to the same period of 2024, primarily due to an increase in headcount. Stock compensation decreased $0.7 million, or 3%, for the nine months ended June 30, 2025 compared to the same period of 2024, primarily due to the cancellation of awards upon the departure of employees.
Depreciation and amortization expense, a non-cash expense, relates to depreciation on buildings, lab equipment and leasehold improvements. These expenses increased $1.4 million, or 34% for the three months ended June 30, 2025 and $3.8 million, or 31%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The increase was primarily attributable to completion of the build out of facilities in Verona, Wisconsin, and the commencement of depreciation.
General & Administrative Expenses
The following tables provide details of general and administrative expenses for the periods indicated:
| (in thousands) |
Three Months Ended June 30, 2025 |
% of
Expense
Category
|
Three Months Ended June 30, 2024 |
% of
Expense
Category
|
Increase (Decrease) | ||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Salaries | $ | 7,964 | 26 | % | $ | 6,740 | 28 | % | $ | 1,224 | 18 | % | |||||||||||||||||||||||
| Professional, outside services, and other | 14,869 | 47 | % | 5,410 | 24 | % | 9,459 | 175 | % | ||||||||||||||||||||||||||
| Facilities related | 2,180 | 7 | % | 1,238 | 5 | % | 942 | 76 | % | ||||||||||||||||||||||||||
|
Total general & administrative expense, excluding non-cash expenses
|
$ | 25,013 | 80 | % | $ | 13,388 | 57 | % | $ | 11,625 | 87 | % | |||||||||||||||||||||||
| Stock compensation | 5,431 | 18 | % | 9,809 | 41 | % | (4,378) | (45) | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 505 | 2 | % | 513 | 2 | % | (8) | (2) | % | ||||||||||||||||||||||||||
|
Total general & administrative expenses
|
$ | 30,949 | 100 | % | $ | 23,710 | 100 | % | $ | 7,239 | 31 | % | |||||||||||||||||||||||
| (in thousands) |
Nine Months Ended June 30, 2025 |
% of Expense Category |
Nine Months Ended June 30, 2024 |
% of Expense Category |
Increase (Decrease) | ||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Salaries | $ | 23,152 | 27 | % | $ | 20,087 | 28 | % | $ | 3,065 | 15 | % | |||||||||||||||||||||||
| Professional, outside services, and other | 35,811 | 41 | % | 16,910 | 23 | % | 18,901 | 112 | % | ||||||||||||||||||||||||||
| Facilities related | 4,546 | 5 | % | 3,278 | 5 | % | 1,268 | 39 | % | ||||||||||||||||||||||||||
| Total general & administrative expense, excluding non-cash expense | $ | 63,509 | 73 | % | $ | 40,275 | 56 | % | $ | 23,234 | 58 | % | |||||||||||||||||||||||
| Stock compensation | 21,230 | 25 | % | 30,759 | 42 | % | (9,529) | (31) | % | ||||||||||||||||||||||||||
|
Depreciation and amortization
|
1,525 | 2 | % | 1,350 | 2 | % | 175 | 13 | % | ||||||||||||||||||||||||||
| Total general & administrative expense | $ | 86,264 | 100 | % | $ | 72,384 | 100 | % | $ | 13,880 | 19 | % | |||||||||||||||||||||||
Salaries expense increased $1.2 million, or 18%, for the three months ended June 30, 2025 and $3.1 million, or 15%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The increase was driven by the combination of annual salary increases and an increase in headcount required to support the Company's growth as the Company prepares for commercialization.
Professional, outside services, and other expenses include costs related to legal, audit, consulting, patent filings, business insurance, other external services, as well as travel, communication, and technology expenses. These expenses
increased $9.5 million, or 175%, for the three months ended June 30, 2025 and $18.9 million, or 112%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The increase for both periods were mainly due to professional services associated with commercialization and business development efforts as the Company prepares for a product launch, including costs for data analytics, marketing and commercial launch support.
Facilities related expense primarily includes rental costs and other facilities-related costs for the Company's corporate headquarters in Pasadena, California. These expenses increased $0.9 million, or 76%, for the three months ended June 30, 2025 and $1.3 million, or 39%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The increase was primarily driven by higher common area maintenance charges, increased staff amenities expenses, and an increase in headcount.
Stock compensation expense, a non-cash expense, is based on the valuation of the restricted stock units granted to employees, which is based on the closing stock price on the grant date. These expenses decreased $4.4 million, or 45%, for the three months ended June 30, 2025 and $9.5 million, or 31%, for the nine months ended June 30, 2025 compared to the same periods of 2024. The decrease was primarily due to lower compensation costs related to performance awards, as the timing of these expenses can vary based on the achievement of related performance targets.
Depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company's corporate headquarters.
Other (Expense) Income
Other (expense) income is primarily related to interest income and expense. Other expense increased $15.7 million and $38.0 million for the three and nine months ended June 30, 2025 compared to the same periods of 2024. The increase was primarily due to non-cash interest expense associated with the liability related to the sale of future royalties and the Credit Facility, partially offset by higher income from increased investment yields.
Net loss attributable to Arrowhead Pharmaceuticals, Inc. was $175.2 million and $170.8 million for the three months ended June 30, 2025 and 2024, respectively. Net income attributable to Arrowhead Pharmaceuticals, Inc. was $22.1 million for the nine months ended June 30, 2025 compared to a net loss attributable to Arrowhead Pharmaceuticals, Inc. of $429.0 million for the same period of 2024. Net loss per diluted share was $1.26 and $1.38 for the three months ended June 30, 2025 and 2024, respectively. Net income per diluted share was $0.17 for the nine months ended June 30, 2025 compared to net loss per diluted share of $3.63 for the same period of 2024.
The increase in net loss attributable to Arrowhead Pharmaceuticals, Inc. for the three months ended June 30, 2025 compared to the same period of 2024 was primarily due to higher research and development expenses as the Company's pipeline of candidates has expanded and progressed through clinical trial phases, as well as higher interest expense related to the Financing Agreement. The increase in net income for the nine months ended June 30, 2025 compared to the same period of 2024 was primarily due to an increase in revenue from the Sarepta Collaboration Agreement, partially offset by higher research and development expenses, which have continued to increase as the Company's pipeline of candidates has expanded and progressed through clinical trial phases.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through the sale of its equity securities, credit facility, revenue from its licensing and collaboration agreements, and the sale of certain future royalties. Research and development activities have required significant capital investment since the Company's inception and are expected to continue to require significant cash expenditure as the Company's pipeline continues to expand and matures into later stage clinical trials, including commercialization efforts.
The Company's cash, cash equivalents and restricted cash was $129.8 million as of June 30, 2025 compared to $102.7 million as of September 30, 2024. Cash invested in available-for-sale securities was $770.6 million as of June 30, 2025 compared to $578.3 million as of September 30, 2024.
On December 2, 2022, the Company entered into an open market sale agreement (the "Open Market Sale Agreement"), pursuant to which the Company may, from time to time, sell up to $250.0 million in shares of the Company's common stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering. As of June 30, 2025, no shares have been issued under the Open Market Sale Agreement.
In August 2024, the Company entered into the Credit Facility, which provides for a senior secured term loan facility of $500.0 million, which includes $400.0 million funded on the closing date with an additional $100.0 million at the Company's option during the seven-year term of the agreement. The Company received net proceeds of $388.9 million, after issuance costs as of September 30, 2024.
On November 25, 2024, the Company entered into a licensing and collaboration agreement with Sarepta. Upon closing, the Company received $325.0 million for the purchase of 11,926,301 shares of common stock, at a price per share of $27.25, and received $500.0 million as an upfront payment on February 24, 2025. The Company is eligible to receive additional milestones of up to $350.0 million over the 12 months from the date of this report. In the event of Sarepta's termination of the licensing and collaboration agreement for convenience, the Company would remain entitled to receive milestone payments totaling $300.0 million in the aggregate minus any milestone previously paid.
Based upon the Company's current cash and investment resources and operating plan, the Company expects to have sufficient liquidity to fund its operations through at least the next twelve months from the date of the issuance of these unaudited consolidated financial statements.
The following table presents a summary of cash flows:
| Nine Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Cash Flow from: | |||||||||||
| Operating activities | $ | 159,061 | $ | (325,635) | |||||||
| Investing activities | (201,913) | (197,149) | |||||||||
| Financing activities | 70,337 | 481,431 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 27,485 | $ | (41,353) | |||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 129,793 | $ | 69,399 | |||||||
During the nine months ended June 30, 2025, cash flow provided by operating activities was $159.1 million, which was primarily due to $500.0 million of cash received as part of the Sarepta agreement, partially offset by ongoing expenses related to the Company's research and development programs and general and administrative expenses. Cash used in investing activities amounted to $201.9 million, which was primarily attributable to capital expenditures of $15.2 million and investment purchases of $774.6 million, partially offset by proceeds from maturities of investments of $587.9 million. Cash provided by financing activities of $70.3 million was primarily related to cash received from the issuance of common stock in the Sarepta agreement and pre-funded warrants and stock option exercises (See Note 6 - Stockholders' Equity of Notes to Consolidated Financial Statements of Part I, "Item 1. Financial Statements").
During the nine months ended June 30, 2024, cash flow used in operating activities was $325.6 million, which was primarily due to the ongoing expenses related to the Company's research and development programs and general and administrative expenses. Cash used in investing activities was $197.1 million, which was primarily attributable to capital expenditures of $117.2 million and investment purchases of $428.6 million, partially offset by proceeds from sales and maturities of investments of $348.6 million. Cash provided by financing activities of $481.4 million was primarily related to cash received from the issuance of common stock as well as stock option exercises.
Contractual Obligations
The Company entered into an amendment to the Financing Agreement with Sixth Street Lending Partners on November 24, 2024 (see Note 12). There has been no other material change in the Company's contractual obligations from that described in Item 7 of its Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
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