Arrowhead Pharmaceuticals (ARWR) 3Q 2022 Earnings Call

Ladies and gentlemen, welcome to Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference over to Vincent Angeloni, Vice President of Investor Relations for Arrowhead. Please go ahead.

Thank you, Justin. Good afternoon, everyone, and thank you for joining us today to discuss Arrowhead's results for its fiscal 2022 fiscal year ended September 30, 2022. With us today from management are our President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter; Dr. Javier San Martin, our Chief Medical Officer, who will provide an update on our mid- and later-stage clinical pipeline; Dr. James Hamilton, our Senior Vice President of Discovery and Translational Medicine, who will provide an update on our earlier-stage programs; and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. In addition, Tracy Oliver, our Chief Commercial Officer, and Patrick O'Brien, our Chief Operating Officer and General Counsel, will both be available during the Q&A portion of the call. 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. With that said, I'd like to turn the call over to Chris Anzalone, President and CEO of the company. Chris?

Thank you, Chris, and good afternoon, everyone. I want to give updates on two main areas of our late-stage development efforts: first, on our cardiometabolic pipeline, and second, on fazirsiran, formerly called ARO-AAT and TAK-999. Early this month, data was presented on all three of our cardiometabolic programs—ARO-APOC3, ARO-ANG3, and olpasiran—at the American Heart Association Scientific Sessions 2022 and another virtual analyst and investor event that we hosted a couple of days after the AHA. It was a very comprehensive review of the data and our plans for the programs, so if you want to hear more from us and from external key opinion leaders in the cardiometabolic space, you can listen to a replay of the webcast or view the presentation slides. Both are available on the Arrowhead website. Today, I want to give some context about why we performed an interim analysis, highlight some of the important results, and provide guidance on where we see the progress going in the future. Chris mentioned earlier that we are gaining clarity across multiple programs, and this is a key point, especially for the cardiometabolic programs. We now have more clarity on how each of the candidates perform in various patient populations and, importantly, where we should focus late-stage development. So let me start with context on the interim analysis that led to the American Heart Association presentation. Our wholly owned cardiometabolic candidates, ARO-APOC3, ARO-ANG3, and ARO-HSD, each target a different gene based on human genetic studies. For each clinical animal model, each affects lipid and lipoprotein levels in different ways. Remember that we have data from different patient populations in the completed Phase 1/2 studies and multiple additional clinical studies going on now for each program. For ARO-APOC3, we have the following studies: the SHASTA 2 Phase 2 study in patients with severe hypertriglyceridemia, the MUIR Phase 2 study in patients with mixed dyslipidemia, and the PALISADE Phase 3 in patients with familial chylomicronemia syndrome. For ARO-ANG3, we have the following studies: the ARCHES 2 Phase 2 study in patients with mixed dyslipidemia, and the WAYFARER Phase 2 in patients with homozygous familial hypercholesterolemia. We combined the Phase 1 data within these studies to give us a good picture of how the different candidates may affect lipid and lipoprotein levels and, thus, which patient populations we should focus on for each. Therefore, the interim analysis enables us to start the important work required to prepare for Phase 3 studies. This includes dose and interval, patient population selection, length of study, modeling to estimate event rates and effect size, registration paths, and Phase 3 design, and where and how to execute these studies. We essentially gave ourselves a six-month head start on all that work. This is critical since we plan on having multiple interactions and moving forward with multiple Phase 3 studies over the next 12 months. Next, I want to highlight some of the key results from the Phase 2 studies that we presented at the American Heart Association and our webcast event. ARO-APOC3, ARO-ANG3, and olpasiran were all highly active at silencing their respective gene targets, which resulted in encouraging changes in multiple relevant lipids and lipoprotein levels. In the SHASTA 2 study in patients with severe hypertriglyceridemia who had baseline triglycerides greater than 500 mg/dL, treatment with ARO-APOC3 at doses of 10 mg, 25 mg, and 50 mg all durably decreased APOC3 up to 87%, triglycerides up to 86%, non-HDL up to 45%, and increased HDL cholesterol up to 99% through the Week 16 time point. In the MUIR study in patients with mixed dyslipidemia who had baseline average triglycerides of 220 mg/dL, non-HDL of 165, LDL cholesterol of 110, APOB of 95, remnant cholesterol of 46, and HDL cholesterol of 42 mg/dL, treatment with ARO-APOC3 at doses of 10 mg, 25 mg, and 50 mg resulted in substantial reduction of APOC3 of 80%, triglycerides of 65%, non-HDL cholesterol of 25%, LDL cholesterol of 20%, APOB of 20%, remnant cholesterol decreased by 60%, and HDL cholesterol increased by 50%. We believe these changes all represent reductions in residual cardiovascular disease risk. In the ARCHES 2 study in patients with mixed dyslipidemia who had baseline median triglycerides of 226 mg/dL, treatment with ARO-ANG3 at doses of 50 mg, 100 mg, or 200 mg resulted in a substantial reduction of triglycerides up to 71% at Week 8, triglycerides up to 59% at Week 16, and LDL cholesterol up to 32%, of which 60% was achieved. ARO-ANG3 was also associated with a median relative reduction in liver fat fraction at Week 24 of 28% for the 100 and 200 mg doses, with no adverse events related to liver function test changes reported to date. ARO-ANG3 has been well-tolerated, with treatment-emergent adverse events reported to date consistent with those expected in this patient population and with associated underlying comorbidities. AHA also presented 18-month treatment data from its Phase 2 OCEAN(a)-Outcomes study of olpasiran in adults with elevated lipoprotein(a) levels of greater than 150 nanomoles per liter and a history of atherosclerotic cardiovascular disease. The data were also published in the New England Journal of Medicine. Placebo-adjusted mean percent reductions of Lp(a) were 70.5% for patients receiving 10 mg every 12 weeks, 97.4% for patients receiving 75 mg every 12 weeks, 101.1% for patients receiving 225 mg every 12 weeks, and 100.5% for patients receiving 225 mg every 24 weeks. The totality of this data demonstrates significant progress achieved in RNAi drug development, specifically, which is a potential future treatment paradigm where Arrowhead's proprietary TRiM technology may be prominently leveraged in preventive cardiology. So what do we do with ARO-APOC3 and ARO-ANG3? For ARO-ANG3, we're focusing on patients with hypercholesterolemia. ANGPTL3 is a key regulator of lipid and lipoprotein metabolism that inhibits lipoprotein lipase and endothelial lipase. ARO-ANG3 has a unique mechanism of action to address hypercholesterolemia distinct from other LDL cholesterol-lowering therapies. It may address unmet needs in patients with specific genetic mutations, for example, patients with dysfunctional LDL receptors. It may also be added to other LDL cholesterol-lowering therapies in patients not at goal. Patients with heterozygous familial hypercholesterolemia, or HeFH, typically have LDL cholesterol greater than 190 mg/dL and have increased rates of ASCVD. They are estimated to be around 1.4 million patients in the US with HeFH. Patients with homozygous familial hypercholesterolemia, or HoFH, typically have LDL cholesterol greater than 400 mg/dL. There are around 1,000 to 2,000 patients with HoFH in the US. These are the two indications that we're focusing on initially for ARO-ANG3. Our plan is to have an End-of-Phase 2 meeting in the first half of 2023 and then potentially begin Phase 3 studies in the second half of 2023. ARO-APOC3 has a potentially broader set of indications and patient populations where it might provide a benefit. It potentially addresses the risk of pancreatitis in severe hypertriglyceridemia, including FCS. ARO-APOC3 also modulates multiple lipids and lipoproteins that contribute to the residual risk of cardiovascular disease in patients with mixed dyslipidemia, which has the potential to translate into a decrease in atherosclerosis and coronary disease progression. APOC3 is a key regulator of lipid and lipoprotein metabolism that inhibits lipoprotein lipase and may be a hepatic uptake of remnant particles in the LPL-independent pathway. ARO-APOC3 improves multiple lipid parameters and may provide clinical benefits in a broad population with dyslipidemias. In clinical studies, it has reduced triglycerides in patients with severe hypertriglyceridemia, including FCS, which has the potential to decrease the risk of acute pancreatitis. It has also reduced multiple residual cardiovascular risk factors such as APOC3, LDL cholesterol, APOB, remnant cholesterol, and others in patients with ASCVD. We are already conducting the PALISADE Phase 3 study of ARO-APOC3 in patients with FCS, which is approximately 50% enrolled at this time. Our plan for the additional indications is to have regulatory interactions in the second half of 2023 and begin Phase 3 studies in the first half of 2024. These additional indications are SHTG, with a prevalence of around 4 million in the US, and patients at risk for ASCVD despite maximally tolerated statins, with a prevalence of around 12 million in the US. Now I want to move on to fazirsiran, our investigational RNAi therapeutic designed to reduce production of alpha-1 antitrypsin protein, called Z-AAT. It's a potential treatment for the rare genetic liver disease associated with alpha-1 antitrypsin deficiency. Z-AAT accumulation is believed to be the cause of progressive liver disease in patients with AAT deficiency. Reduction in production of the pro-inflammatory Z-AAT protein has the potential to halt the progression of liver disease and potentially allow the liver to regenerate and repair. Data from our open-label Phase 2 study were published earlier this year in the New England Journal of Medicine. Those data suggested fazirsiran was very effective at reducing the production of the Z-AAT protein and that livers of these patients were able to begin the process of healing. This includes breaking down and clearing the accumulated Z-AAT in the liver, decreasing the histology global burden, demonstrating histology improvement in inflammation, reducing biomarkers of liver injury, and ultimately decreasing fibrosis severity. These were very encouraging signs for the potential of fazirsiran to help patients with AATD liver disease. We now look to the ongoing Phase 2 placebo-controlled Sequoia study and to regulatory interactions on the Phase 3 study. The Sequoia data are mostly in now, and we're waiting to receive feedback, if any, from the FDA on the proposed design for the Phase 3 studies. These are expected soon, so we and our partner Takeda will together determine the best way to communicate this publicly. Takeda is still on schedule to begin the Phase 3 study in the first quarter of 2023, and we're confident that we can have an update publicly on Sequoia and guidance on the Phase 3 prior to that. I will now turn the call over to Dr. James Hamilton. James?

Thank you, Javier. I want to give updates on four of our earlier-stage programs that include three pulmonary candidates targeting RAGE, MUC5AC, and MMP7, and on our candidate targeting complement C3. Let's start with C3. ARO-C3 is an investigational RNAi therapeutic designed to reduce hepatocyte expression of complement component 3, or C3, as a potential therapy for various complement-mediated hematologic and renal diseases. We are conducting a Phase 1/2 clinical study now that includes two parts. Part 1 is placebo-controlled in healthy volunteers and includes single ascending dose, or SAD, cohorts and multiple ascending dose, or MAD, cohorts. All of the SAD and MAD cohorts are fully enrolled, and participants are being followed to assess safety and tolerability, dose response based on serum C3 levels, and duration of effect at various dose levels. We are confident that we will have sufficient data in the first half of 2023 to report interim results from Part 1 of this study. Part 2 is open-label in eligible subjects with paroxysmal nocturnal hemoglobinuria, or PNH, and complement-mediated renal diseases including IgA nephropathy and C3 glomerulopathy. Data from Part 1 will inform Part 2 dose selection, which we expect to happen in the coming months, and then the patient cohorts will be open for enrollment in the first half of 2023. We are very excited about this program and believe it has the potential to address multiple serious complement-mediated or complement-associated diseases with unmet need in the renal and hematologic spaces. We know that complement C5 inhibitors are disease-modifying in conditions such as PNH and believe that proximal C3 inhibition may confer advantages over C5 blockade. For example, C5 monoclonal antibodies only block the terminal complement pathway, and many of the proximal complement actions remain intact. In addition, clinical validation exists for C3 inhibitors, and we believe RNAi-based C3 inhibition could have clear dosing advantages over other mechanisms. Furthermore, alternative pathway inhibition is likely of key relevance for treatment of conditions such as IgA nephropathy, C3 glomerulopathy, and potentially other glomerular diseases. ARO-C3 is a subcutaneously administered candidate with an expected long dosing interval of once every three months or less frequent. We think this would be much more patient-friendly than current C3 inhibitors that require a high-volume infusion multiple times per week. I will now move on to our three pulmonary candidates, starting with ARO-MMP7. ARO-MMP7 is designed to reduce expression of matrix metalloproteinase 7, or MMP7, as a potential treatment for idiopathic pulmonary fibrosis, or IPF. MMP7 is thought to play multiple roles in IPF pathogenesis, including promoting inflammation and aberrant epithelial repair and fibrosis. Silencing MMP7 expression in a rat IPF model reduced inflammatory cell infiltration, limited lung fibrosis, and preserved pulmonary function. In August, we filed a CTA to begin a Phase 1/2 clinical study of ARO-MMP7. The Phase 1/2 study will be similar in design to our other first-in-human studies and includes a healthy volunteer portion followed by a patient portion. Now moving on to our two other pulmonary programs, ARO-MUC5AC and ARO-RAGE are investigational RNAi therapeutics designed to reduce production of mucin 5AC, or MUC5AC, and the receptor for advanced glycation end products, or RAGE, respectively, as potential treatments for various mucin-obstructive and inflammatory pulmonary diseases. These two programs are on largely parallel paths and at approximately the same stage. They are both in Phase 1/2 studies designed to assess safety and tolerability, pharmacokinetics, and pharmacodynamics in healthy volunteers first, and then in patients with asthma. For both programs, we are approaching full enrollment of the healthy volunteer SAD cohorts and are well into enrollment of the healthy volunteer MAD cohorts. In both the SAD and MAD, we have various methods to assess target engagement, including in induced sputum and bronchoalveolar lavage fluid, and for RAGE, we are also measuring serum sRAGE protein, a circulating biomarker for RAGE target engagement in the lung. We anticipate that we will be able to report interim results from Part 1 of these studies and begin Part 2 in patients with asthma in the first half of 2023. These are potentially important new medicines that address targets that have been difficult to drug with other modalities and are designed to treat mucin-obstructive and inflammatory lung diseases in fundamentally new ways. We are excited to see and share these results, and we are confident in the progress we've made on our pulmonary platform and these two generation two candidates. I will now turn the call over to Ken Myszkowski. Ken?

Thank you, James, and good afternoon, everyone. As we reported today, our net loss for fiscal 2022 was $176.1 million, or $1.67 per share, based on 105.4 million fully diluted weighted average shares outstanding. This compares to a net loss of $140.9 million, or $1.36 per share, based on 103.7 million fully diluted weighted average shares outstanding for 2021. Revenue for fiscal 2022 was $243.2 million compared to $138.3 million for 2021. Revenue in the current period primarily relates to our collaboration agreements with Takeda and Horizon. Revenue will be recognized as we complete our performance obligations, which includes managing the ongoing AAT Phase 2 clinical trials for Takeda and delivering a Phase 1-ready candidate to Horizon. There remains $128.4 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over the next two to three years, and there remains $6.7 million of revenue to be recognized for Horizon, which we anticipate will be recognized... All right, folks, we had a connection problem there. I'll continue about halfway through my prepared remarks. Net cash used by operating activities during fiscal 2022 was $136.1 million compared with net cash provided by operating activities of $171.2 million during 2021. The increase in cash used by operating activities is driven primarily by major development expenses. We expect our operating cash burn to be $70 to $90 million per quarter in fiscal 2023, and we expect capital expenditures up to $200 million as we near completion on our footprint expansion projects, including GMP manufacturing. Turning to our balance sheet, our cash and investments totaled $482.3 million at September 30, 2022, compared with $613.4 million at September 30, 2021. The decrease in our cash and investments was primarily due to cash used for operating activities. Our common shares outstanding on September 30, 2022, were 106.0 million. As Chris mentioned earlier, on November 9, 2022, the company and Royalty Pharma entered into a royalty purchase agreement pursuant to which Royalty Pharma agreed to pay up to $410 million in cash to the company in consideration for the company's future royalty interest in olpasiran, originally developed by the company and out-licensed to Amgen in 2016. Pursuant to the Royalty Pharma agreement, Royalty Pharma paid $250 million upfront and agreed to pay an additional up to $160 million contingent upon the achievement of certain clinical, regulatory, and sales milestones. The company retained rights to $400 million in development, regulatory, and sales milestone payments potentially due from Amgen from the same 2016 licensing agreement. Pro forma cash and investments at September 30, 2022, including the Royalty Pharma cash receipt, would be $732.3 million. I will now turn the call back to Chris.

And thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. And one moment for our first question. Our first question comes from Maury Raycroft from Jefferies. Your line is now open.

Hi, thanks for taking my questions. I'm going to ask one on AAT. I'm wondering if you or Takeda has shared the phase two biopsy data with FDA, and if their feedback will be based on the biopsy data or only the serum biomarker data?

The protocol design that was already discussed twice, and as Chris said, Takeda already incorporated most of the feedback. So this is more a procedure than anything else, and the Sequoia data is not part of this. The Sequoia data that was necessary to inform the phase three was already presented, and it's part of the discussion that we've been having with the agency over the last four or five months.

Got it, okay. And then for the AAT data that you have in hand, can you comment on what you're seeing and better set expectations for what you will disclose? And if you start the phase three in the first quarter of next year, do you think the update will happen in December or more likely around the JPMorgan meeting in early January?

Okay, sounds good. I'll hop back in the queue. Thanks for taking my questions.

And one moment for our next question. Our next question comes from Luca Izzi from RBC Capital. Your line is now open.

Oh, great. Thanks so much for taking my question. Congrats on the progress. I have a quick one on ARROW-A-103 versus ARROW-A-3. It looks like the company is prioritizing A-103 over A-3, especially for the larger mixed dyslipidemia population. Can you expand a little bit more on the rationale behind the decision? And is it fair to assume that you are looking for a partner for A-103 given that you need to run a cardiovascular outcomes trial? Thanks so much.

Yeah, so a couple of things. So first, the phase two data or the interim data that we presented at the American Heart Association really confirmed what we learned in the phase one/two studies. So it wasn't about prioritization, it was about really learning and confirming the specific therapeutic effect of these two molecules. And as we said before, A-3 seems to be a drug that is more focused on hypercholesterolemia, and that is how we see the opportunity now. That's a much more crowded space when you think about the general hypercholesterolemia population, but this drug has a very unique pathway and mechanical function that can address this specific, a smaller population, the real HeFH and the severe HeFH. So it's not about prioritization, but it's about where the profile of this drug fits in the context of clinical care, particularly when you fast forward a few years from now. So ARROW-A-103, as you saw, the data that we knew about the severe hypertriglyceridemia populations is confirmed, and it's very remarkable and is consistent. And as I always say, with these therapeutics, we have a 100% response with regard to hypertriglyceridemia. So our initial plan to go with the two severe hypertriglyceridemia syndromes, the FCS or the sHTG, continues to be the same. What we are learning, and I think that was a key feature of our analyst and investor day, is what is the medical need in cardiovascular with reduction in the next five to ten years. And we believe that the LDL cholesterol issue is probably well taken care of, and the rest of the risks come from different sources of lipid and lipoprotein, most of which are addressed with the A-103 positive molecules. So in conclusion, we see the opportunity where the unmet medical need is, and ARROW-A-103 fits very well those criteria. So it's not about prioritization, but it's really going to where the drugs have the biggest problems.

Great, I'll hop back in the queue. Thank you.

And one moment for our next question. Our next question comes from Ellie Merrill from UBS. Your line is now open.

Hey guys, thanks so much for taking the question. For the initial pulmonary readout in the first half of next year, I guess what are you looking to see in terms of the degree of protein knockdown based on the dose levels that you're studying in healthy volunteers? And I guess when you think about pulmonary delivery, what does proof of concept for the pulmonary platform look like from this readout, or if perhaps we need to wait for longer-term data? Thanks.

Great, thanks.

And one moment for our next question. Our next question comes from Joel Beatty from Baird. Your line is now open.

Thanks for the long programs, MUC5AC and RAGE. I think in prepared remarks you mentioned that both of these programs are going to be reaching the top dose on the side cohorts and also following multiple doses. How do you decide the peak dosing of those? Are they kind of preset, or are you looking at safety or biomarkers?

Great, thanks. Yes, and then for the cardio drugs, ARROW-A-103 and ARROW-A-3, do you see the market opportunity as more of displacing current drugs and being used in place of them, or as add-on therapies to the current set of drugs on the market?

Great, thank you.

And one moment for our next question. Our next question comes from Edward Tenthoff from Piper Sandler. Your line is now open.

Great, thank you very much. Two questions if I may. Just, what was the fourth quarter weighted average shares outstanding, if you have them to three decimal points? And for Chris, kind of a level question, you guys have been so successful at partnering different therapies. It's clear that cardiovascular is a key area of focus. How are you really looking at the pipeline going forward? Like, is pulmonary disease going to be an area of secondary focus? Are you going to look to partner some of those therapies? How should we be thinking about sort of where you guys are going to stay focused and specialized?

Yes, thanks. The weighted average shares for Q4 were 105.879 million.

Awesome, thank you. And then again, just in terms of higher level, obviously focus on cardiovascular disease, what else are you guys thinking about partnering, or what is going to be core?

All right, well, stay tuned. And just hats off on the royalty financing, that's a great deal.

And one moment for our next question. Our next question comes from Patrick Trucchio from HC Wainwright. Your line is now open.

Thanks, good evening. I'm just wondering, I have a follow-up just on the platform, and if you can discuss the relative advantages of the siRNA approach as it compares to others such as small molecules or gene editing, specifically in the area of alpha-1, but also more broadly across the pipeline. What is your level of confidence that siRNA will be the preferred mechanism in these various targets and indications in the programs currently underway, particularly as these other modalities advance in clinical development?

Yeah, that's helpful. And then earlier in the call, there was commentary around increased clarity on which programs and how large the pipeline could become in the next few years with the goal outlined through 2025. So I'm wondering if you can elaborate a bit more on this commentary, particularly regarding gating factors involved in deciding which targets or disease to pursue, such as the level of genetic or clinical validation required, and how many programs, either in terms of new INDs or some other metric, would you be expected to announce on an annual basis going forward as you expand the pipeline?

Thank you very much.

And one moment for our next question. Our next question comes from Madhu Kumar from Goldman Sachs. Your line is now open.

Well, hey, thanks for taking our questions. So we'll be following up on Ellie's question. What do you think is the dynamic range of RAGE and MUC5AC? Why, what level of knockdown would be predictive of clinical benefit in these obstructive pulmonary conditions?

Yeah, that's helpful. And maybe on AAT, I just kind of, how much different would you expect the Sequoia data to be from the phase two open label extension, given kind of like patient recruitment in Sequoia relative to the open label extension? Like, is there any reason it's going to be a significant difference in kind of the disease course in the Sequoia patients relative to the open label extension?

Okay, great, thank you very much.

And one moment for our next question. Our next question comes from Mayank Mamtani from B. Riley. Your line is now open.

Hi, good afternoon. Thanks for squeezing me in. I appreciate you putting out the 2025 campaign. So maybe on the SHPT, a quick follow-up on the, you know, two pancreatic events that you saw there, okay, you know, admittedly in a blinded manner, but is that what you would expect for a study of this size? And in general, like, what would be the event rate for a sHTG study? And maybe a second part, you know, as you think about validating triglycerides as an approvable endpoint for either sHTG or for larger mixed dyslipidemia indication, how are you sort of thinking about that next year?

Yeah, so with regards to the two cases of pancreatitis, are well within the expected event rate, which is about three to five percent per year in this patient population. So we saw two cases in about 200 patients, and by the time we, I mean, by now we have almost one year follow-up in most of those patients. So yes, the event rate is what we expected. And the second part, with regard to the phase three study, I think we commented on this before. The registration program for ARROW-A-103 in the severe hypertriglyceridemia indication does not need a pancreatitis endpoint for approval, but of course we would like to enrich the patient population as much as possible to provide information about pancreatitis risk reduction, which is the goal of therapy. And that would be very important for many other reasons, really to translate the clinical benefit, to define the value propositions, and so forth. So the approval path does not require pancreatitis, but we will do our best to have enough number of patients at high risk so we can see the risk reduction in pancreatitis as a consequence of normalizing triglyceride levels.

Thank you. And then just a quick one on AAT. Are you able to comment on how, you know, as you think about phase three, how are you thinking about placebo response? Because, you know, there have been studies recently put out, you know, independent of this program and also by Takeda, about how to sort of think about F2/F3 patients differently. So is there anything you could comment on that, on the placebo response for phase three, how you might be thinking about?

So we're going to use the totality of the data available to estimate the placebo rate, and that would be part of the equation for the effect size and the power for the study. So you will see that in detail whenever we can do this event with Takeda and present the Sequoia data and the phase three study design. So we of course use the totality of the data to plan for that study.

Thanks for taking our questions.

And one moment for our next question. Our next question comes from K. Nakai from Chardan. Your line is now open.

Oh, yes, thanks, Chris. One question on AAT. The phase three design, is it your expectation that the agency will or will not require liver biopsy data?

Yeah, so the biopsy data is likely to be the key endpoint. That's what we were thinking, that's what we studied, that's what the disease is defined by. So this is about fibrosis progression that ends in end-stage liver disease or cirrhosis. So the goal of therapy is to prevent fibrosis progression, to reduce fibrosis severity. So that seems to me a logical approval endpoint in a condition that is defined by fibrosis progression.

Okay, thanks.

And one moment for our next question. Our next question comes from Mani Foroohar from SVB. Your line is now open.

Hey guys, thanks for taking the question, and congrats on all the progress. I've got a couple of questions more about your own sort of rationale and strategy, given a lot of other analysts have dug into the details of this or that specific program. So I'll start with Sequoia. Did I hear right that your plan is to disclose the upcoming Sequoia data, including biopsy, alongside the phase three trial design? And if so, could you give me a sense of the rationale of why those two should come out at the same time? And then secondarily, there's been a few people who've asked about your strategy around running CVOTs, which assets to hold on to or not. Could you give me a sense of what your ballpark estimate around the size, costs, and the operational burden of a CVOT would be for you, and how you guys think about the number of studies of that scale that you could run for your assets simultaneously?

Hey, thanks guys. One quick follow-up on that second half of that question. For HeFH in particular, how do you think about the appropriate patient population to study? There are a number of approved therapies out there, PCSK9 inhibitors targeting and otherwise, but the universe of available therapies varies pretty wildly across geographies, not just in approvals, there's an actual availability to patients, even reimbursement, etc., and real-life barriers. So how do you think about the strategy between pursuing a study focused in areas where patients don't really have access to approved therapies versus a study as an add-on with approved therapies to allow you to access the U.S. and Western European market with more real-world relevant data? Like, how do you balance those two? Would you do two CVOTs? Would you do two HeFH studies? You know, someone to capture the two in one larger multi-arm study? Just tell me how you think about how you strategize and think about the likely outcomes for that path forward in that indication.

Thanks, guys.

And I'm showing no further questions. I would now like to turn the call back over to Vincent Angeloni for closing remarks.

Thanks everyone for joining us today. I hope everyone had a pleasant Thanksgiving holiday and have a nice holiday season. I apologize for the technical difficulties mid-call today, but we will talk to you soon. This concludes today's conference call. Thank you for participating. You may now disconnect.