On December 14, 2016 Arrowhead Pharmaceuticals, Inc. (NASDAQ: ARWR) reported financial results for its fiscal 2016 fourth quarter and year ended September 30, 2016 (Press release, Arrowhead Research Corporation, DEC 14, 2016, View Source [SID1234517070]). The company is hosting a conference call at 4:30 p.m. EST to discuss results.

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Conference Call and Webcast Details

Investors may access a live audio webcast on the Company’s website at View Source For analysts that wish to participate in the conference call, please dial 855-215-6159 or 315-625-6887 and enter Conference ID 33791749.

A replay of the webcast will be available on the company’s website approximately two hours after the conclusion of the call and will remain available for 90 days. An audio replay will also be available approximately two hours after the conclusion of the call and will be available for 3 days. To access the audio replay, dial 404-537-3406 and enter Conference ID 33791749.

Selected Fiscal 2016 and Recent Events

Discontinued development of ARC-520, ARC-521, and ARC-AAT in November 2016
The Company announced that it would be discontinuing these clinical programs, which utilized the intravenously administered DPCivTM, or EX1, delivery vehicle, and redeploying its resources and focus toward utilizing the Company’s new proprietary subcutaneous and extra-hepatic delivery systems
The decision to discontinue development of EX1-containing programs was based primarily on two factors:
During ongoing discussions with regulatory agencies and outside experts, it became apparent that there would be substantial delays in all clinical programs that utilize EX1, while the Company further explored the cause of deaths in a non-clinical toxicology study in non-human primates exploring doses of EX1 higher than those planned to be used in humans
The Company has made substantial advances in RNA chemistry and targeting resulting in large potency gains for subcutaneous administered and extra-hepatic RNAi-based development programs
Because of the discontinuation of its existing clinical programs, the Company also reduced its workforce by approximately 30%, while maintaining resources necessary to support current and potential partner-based programs and the Company’s pipeline
Entered into two collaboration and license agreements with Amgen
Total deal value of up to $673.5 million
Arrowhead received $56.5 million upfront:
$35 million in upfront cash payments, $21.5 million equity investment
Up to low double-digit royalties for ARO-LPA and single-digit royalties for the undisclosed target, ARO- AMG1
Amgen receives:
Exclusive license to ARO-LPA program
Option for an additional candidate against an undisclosed target, ARO- AMG1
Amgen will be wholly responsible for funding and conducting all clinical development and commercialization
Continued progress on preclinical candidates including ARO-HBV, ARO-AAT, ARO-F12, ARO-LPA, and ARO-HIF2
Regarding ARO-F12 and ARO-LPA:
Presented preclinical data at the American Heart Association’s Scientific Sessions 2016 for two development programs using Arrowhead’s proprietary subcutaneous delivery platform:
RNAi triggers against Factor 12 (F12) showed dose dependent reductions in serum F12
A statistically significant reduction (p=0.002) in thrombus weight was observed at greater than 95% F12 knockdown in a rat arterio-venous shunt model
There was no increased bleeding risk in ARO- F12-treated mice, even with greater than 99% knockdown of F12 levels
RNAi triggers against Lipoprotein (a) [Lp(a)] led to greater than 98% maximum knockdown after a single 3 mg/kg SQ dose in Transgenic mice
In an atherosclerosis model, data suggest that RNAi triggers can be effectively delivered to a fatty liver using the subcutaneous delivery platform
Regarding ARO-HIF2
Presented preclinical data showing that ARO-HIF2 inhibited renal cell carcinoma growth and promoted tumor cell death in its preclinical studies
Strengthened the Company’s balance sheet with August 2016 private offering and Amgen agreement upfront payments
In August 2016, the Company sold 7.6 million shares of Common Stock to certain institutional investors and received net proceeds of approximately $43.2 million
As part of the collaboration and license agreements as well as a Common Stock Purchase Agreement with Amgen, $14 million of the total $56.5 million upfront cash payments and equity investments were received in September 2016, and the remaining $42.5 million was received in November 2016
Continued progress on former drug candidates prior to the discontinuations
Presented preclinical and clinical data on former drug candidate ARC-AAT at the Liver Meeting
In a first-in-human clinical study, ARC-AAT was well tolerated and induced deep and durable reduction of the target AAT protein
The preclinical data suggest a possible improvement of liver health and arrest of further damage from treatment with ARC-AAT
Advanced former drug candidate ARC-521 into a Phase 1/2 study
Conducted multiple dose and combination studies of former drug candidate ARC-520
Selected Fiscal 2016 Year End Financial Results

ARROWHEAD PHARMACEUTICALS, INC.
CONSOLIDATED FINANCIAL INFORMATION

Year Ended September 30
OPERATING SUMMARY
2016 2015

REVENUE $ 158,333 $ 382,000
OPERATING EXPENSES
Research and development 41,454,452 47,267,361
Acquired in-process research and development - 10,142,786
Salaries and payroll-related costs 19,461,656 16,554,008
General and administrative expenses 9,940,737 7,931,184
Stock-based compensation 11,595,816 10,232,897
Depreciation and amortization 3,260,045 2,336,207
Impairment expense 2,050,817 -
Contingent consideration – fair value adjustments (5,862,464 ) 1,891,533
TOTAL OPERATING EXPENSES 81,901,059 96,355,976
OPERATING LOSS (81,742,726 ) (95,973,976 )
OTHER INCOME/(EXPENSE), PROVISION FOR INCOME TAXES 19,724 4,033,094
NET LOSS $ (81,723,002 ) $ (91,940,882 )

EARNINGS PER SHARE (BASIC AND DILUTED): $ (1.34 ) $ (1.60 )
WEIGHTED AVERAGE SHARES OUTSTANDING 61,050,880 57,358,442

FINANCIAL POSITION SUMMARY
September 30,
2016 2015
CASH AND CASH EQUIVALENTS 85,366,448 81,214,354
SHORT-TERM INVESTMENTS - 17,539,902
TOTAL CASH RESOURCES (CASH, CASH EQUIVALENTS AND INVESTMENTS) 85,366,448 98,754,256
OTHER ASSETS 42,810,057 33,513,658
TOTAL ASSETS 128,176,505 132,267,914
TOTAL LIABILITIES 33,152,246 22,646,280
TOTAL STOCKHOLDERS’ EQUITY 95,024,259 109,621,634
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 128,176,505 132,267,914

SHARES OUTSTANDING 69,746,685 59,544,677
PROFORMA SHARES OUTSTANDING (INCLUDING CONVERSION OF PREFERRED SHARES) 72,417,675 62,215,667