What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-07 · 117 added, 83 removed, 202 unchanged (50% of the section changed)

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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.

Without limiting the generality of the foregoing, words such as “may,” “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 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 expectations regarding the timing and 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, including our pending acquisition of a rare pediatric disease priority review voucher;

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;

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The Company develops medicines that treat intractable diseases by silencing the genes that cause them.

Using a broad portfolio of RNA chemistries and modes of delivery, the Company’s therapies trigger the RNAi interference mechanism to induce rapid, deep and durable knockdown of target genes.

Using a broad portfolio of RNA chemistries and modes of delivery, the Company’s therapies trigger the RNA 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.

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The Company's products:

• REDEMPLO ® (Greater China rights out-licensed to Sanofi), indicated as an adjunct to diet to reduce triglycerides in adults with Familial Chylomicronemia Syndrome (FCS), which has received regulatory approvals

in the United States, Canada, and China.

The following table presents the Company’s current pipeline:

• REDEMPLO ® , indicated as an adjunct to diet to reduce triglycerides in adults with Familial Chylomicronemia Syndrome (FCS), which has received regulatory approvals in the United States, European

Union, Canada, Australia and China (Greater China rights out-licensed to Sanofi).

The following table presents selected programs from the Company’s pipeline:

Therapeutic Area Name Stage Product Rights

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GSK4532990 Phase 2b GSK

ARO-PNPLA3 Phase 1 Arrowhead

ARO-PNPLA3 Phase 1 Madrigal

ARO-INHBE Phase 1/2a Arrowhead

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ARO-DIMER-PA Phase 1/2a Arrowhead (1)

Pulmonary ARO-RAGE Phase 1/2a Arrowhead

Pulmonary ARO-RAGE Phase 2 Arrowhead

SRP-1002 (ARO-MMP7) Phase 1/2a Sarepta

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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 Half Quarter of Fiscal 2026 Business Highlights

The bullets below highlight key developments in our business during the first half of fiscal year 2026:

The First Three Quarters of Fiscal 2026 Business Highlights

The bullets below highlight key developments in our business during the first three quarters of fiscal year 2026:

• Announced an exclusive worldwide license agreement with Madrigal Pharmaceuticals for ARO-PNPLA3, Arrowhead’s clinical stage RNA interference (RNAi) therapeutic designed to reduce liver expression of patatin-like phospholipase domain containing 3 (PNPLA3) as a potential treatment for patients with metabolic dysfunction-associated steatohepatitis (MASH):

◦ Under the terms of the agreement, Madrigal made a $25 million upfront payment to Arrowhead.

Arrowhead is also eligible to receive development, regulatory, and sales milestone payments of up to $975 million.

Arrowhead is further eligible to receive tiered royalties on commercial sales ranging from high-single digits to the mid-teens.

◦ In a Phase 1 single-ascending dose clinical study, ARO-PNPLA3 achieved encouraging results,

including a dose-dependent mean reduction in liver fat of up to 40% in patients homozygous for the I148M mutation, no apparent treatment emergent increases in triglycerides or LDL-cholesterol, and a positive safety and tolerability profile at all doses studied.

• Announced that the Australian Therapeutic Goods Administration (TGA) has approved REDEMPLO® (plozasiran) as an adjunct to diet to reduce triglyceride levels for adult patients with familial chylomicronaemia syndrome (FCS) in Australia.

• Announced that the European Commission (EC) formally granted marketing authorization for REDEMPLO, a small interfering RNA (siRNA) medicine, as an adjunct to diet to reduce triglyceride levels in adult patients with familial chylomicronemia syndrome (FCS).

REDEMPLO is the first and only siRNA medicine authorized by the EC for adults with FCS diagnosed either by the presence of clinical criteria or genetic testing.

• Presented interim results from a Phase 1/2a clinical trial of ARO-INHBE, the Company’s investigational RNA interference (RNAi) therapeutic being developed as a potential treatment for obesity and metabolic dysfunction-associated steatohepatitis (MASH).

◦ The data presented at the European Association for the Study of the Liver Congress (EASL 2026) demonstrate that ARO-INHBE treatment led to clinically meaningful reductions in liver fat as a monotherapy and in combination with low-dose tirzepatide, a GLP-1/GIP receptor co-agonist, in adults with obesity.

• Presented new positive clinical data for plozasiran supporting its use in patients with moderate-to-severe renal impairment or moderate hepatic impairment without the need for dose adjustment, and a case report suggesting that preconception exposure to plozasiran may be associated with sustained lowering of fasting triglyceride (TG) levels through the term of a pregnancy.

◦ The data were presented in two oral presentations at the 94th European Atherosclerosis Society (EAS) Congress.

• Presented new long-term efficacy and safety data for plozasiran across a spectrum of hypertriglyceridemia at the American College of Cardiology’s 75th Annual Scientific Session and Expo.

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◦ No adjudicated acute pancreatitis events occurred in any patient receiving plozasiran during the 2-year Phase 2b Open-Label Expansion (OLE) Study.

◦ Favorable and durable improvements in atherogenic lipoproteins, including remnant cholesterol, non-high-density lipoprotein (HDL) cholesterol, and Apolipoprotein B (ApoB), were observed, with

a safety profile consistent with earlier trials.

◦ Favorable and durable improvements in atherogenic lipoproteins, including remnant cholesterol, non-high-density lipoprotein (HDL) cholesterol, and Apolipoprotein B (ApoB), were observed, with a safety profile consistent with earlier trials.

• Initiated and dosed the first subjects in a Phase 1/2a clinical trial of ARO-DIMER-PA, the Company’s investigational RNAi therapeutic being developed as a potential treatment for atherosclerotic cardiovascular disease (ASCVD) due to mixed hyperlipidemia.

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◦ REDEMPLO will be marketed in Greater China by Sanofi under an agreement between Sanofi and Arrowhead.

• Announced interim results from two Phase 1/2a clinical trials of ARO-INHBE and ARO-ALK7, the Company’s investigational RNAi therapeutics being developed as potential treatments for obesity, showing for patients enrolled in the study that:

• Announced interim results from two Phase 1/2a clinical trials of ARO-INHBE and ARO-ALK7, the

Company’s investigational RNAi therapeutics being developed as potential treatments for obesity and metabolic dysfunction-associated steatohepatitis (MASH), showing for patients enrolled in the study that:

◦ ARO-INHBE in combination with tirzepatide, a GLP-1/GIP receptor co-agonist, nearly doubled weight loss at week 16 and roughly tripled reductions in visceral fat, total fat, and liver fat versus tirzepatide alone in obese patients with type 2 diabetes mellitus at those same endpoints at week 12.

◦ ARO-ALK7, the first RNAi-therapeutic to show adipocyte gene target silencing in a clinical trial, achieved dose dependent reductions in adipose ALK7 messenger (mRNA) with a mean reduction of -88% at the 200 mg dose at week 8 with a maximum reduction of -94%.

◦ ARO-INHBE monotherapy at 200mg or greater reduced liver fat content (LFC) by 44% compared to placebo in subjects with obesity and baseline liver fat content greater than 8%.

• Announced that Health Canada has issued a Notice of Compliance (NOC) authorizing REDEMPLO™ (plozasiran) as an adjunct to diet to reduce triglycerides in adults with familial chylomicronemia syndrome (FCS) for whom standard triglyceride lowering therapies have been inadequate.

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The PALISADE study met its primary endpoint and all multiplicity-controlled key secondary endpoints, including demonstrating significant reductions in triglycerides and APOC3.

In PALISADE, 25 mg REDEMPLO achieved deep and durable reductions in

triglycerides, with a median change from baseline of -80% versus -17% in the pooled placebo group, and a lower numerical incidence of acute pancreatitis compared with placebo.

In PALISADE, 25 mg REDEMPLO achieved deep and durable reductions in triglycerides, with a median change from baseline of -80% versus -17% in the pooled placebo group, and a lower numerical incidence of acute pancreatitis compared with placebo.

• Entered into a global licensing and collaboration agreement with Novartis Pharma AG ("Novartis") on August 29, 2025, which closed on October 17, 2025.

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Additionally, the Company is eligible to receive up to $2.0 billion in potential milestone payments plus royalties on commercial sales.

The bullets below highlight other key developments in our business subsequent to the second quarter of fiscal year 2026:

• Received positive CHMP opinion recommending approval of REDEMPLO (plozasiran) to reduce triglycerides in adults with familial chylomicronemia syndrome (FCS) in Europe.

◦ The European Commission is expected to issue a decision on REDEMPLO’s Marketing Authorization in the second quarter of 2026.

• Announced that the Australian Therapeutic Goods Administration (TGA) has approved REDEMPLO (plozasiran), as an adjunct to diet to reduce triglyceride levels for adult patients with familial chylomicronaemia syndrome (FCS) in Australia.

◦ Under the terms of the agreement, Madrigal will make a $25 million upfront payment to Arrowhead.

Arrowhead is also eligible to receive development, regulatory, and sales milestone payments of up to $975 million.

Arrowhead is further eligible to receive tiered royalties on commercial sales ranging from high-single digits to the mid-teens.

◦ In a Phase 1 single-ascending dose clinical study, ARO-PNPLA3 achieved encouraging results, including a dose-dependent mean reduction in liver fat of up to 40% in patients homozygous for the I148M mutation, no apparent treatment emergent increases in triglycerides or LDL-cholesterol, and a positive safety and tolerability profile at all doses studied.

The bullets below highlight other key developments in our business subsequent to the third quarter of fiscal year 2026:

• Announced topline results for the global Phase 3 SHASTA-3 and SHASTA-4 clinical studies of plozasiran in patients with severe hypertriglyceridemia (sHTG).

◦ SHASTA-3 and SHASTA-4 successfully met the primary endpoint of triglyceride reduction versus placebo and met all prespecified secondary endpoints in both studies.

◦ Deep, durable, and consistent median triglyceride reductions of 79% and 81% from baseline in SHASTA-3 and SHASTA-4, respectively.

◦ Statistically significant 78% reduction in acute pancreatitis events versus placebo across the entire

sHTG study population, with an unprecedented 100% event reduction in patients with triglycerides above 880 mg/dL and a prior medical history of AP, widely considered to be at the highest risk for acute pancreatitis.

◦ Continued and consistent safety and tolerability profile with no new safety signals and a favorable liver safety profile.

◦ Detailed results will be presented as a HOT LINE Late Breaker at the European Society of Cardiology (ESC) Congress on August 30, 2026

• Announced that the Company completed enrollment in the global Phase 3 YOSEMITE 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 low-density lipoprotein cholesterol (LDL-C) and early-onset cardiovascular disease.

◦ The Company anticipates that YOSEMITE will be completed in mid-2027 and, pending successful clinical results, intends to seek regulatory approval in multiple geographies thereafter.

◦ The YOSEMITE Phase 3 study was initially designed to enroll 60 participants with HoFH;

however, strong global HoFH patient and physician interest led to an increased total of 70 patients enrolled.

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, 2025.

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The following data summarizes the Company’s results of operations for the following periods indicated:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2026 2025 2026 2025

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Net (loss) income per diluted share attributable to Arrowhead $ (1.36) $ (1.26) $ (2.10) $ 0.17

Total revenue for the three and six months ended March 31, 2026 decreased by $469.0 million and $207.4 million, respectively, from the same periods of 2025.

The change was primarily driven by lower Sarepta revenue, partially offset by increased revenue from Novartis and Sanofi, reflecting the timing and progress of the Company’s respective collaboration and license agreements.

The Company has evaluated each agreement in accordance with FASB Topic 808– Collaborative Arrangements and

Topic 606- Revenue for Contracts from Customers .

Total revenue for the three and nine months ended June 30, 2026 increased by $47.5 million and decreased by $160.0 million, respectively, as compared to the same periods of 2025.

The change was primarily driven by revenue recognition associated with the Sarepta, Novartis, Madrigal and Sanofi collaboration and license agreements, and partially driven by commercial revenue from REDEMPLO.

The following table provides a summary of revenue recognized from our collaboration and license agreements:

Three Months Ended June 30, Nine Months Ended June 30,

2026 2025 2026 2025

(in thousands)

GSK $ — $ 143 $ — $ 2,646

Sarepta 26,395 27,624 297,594 570,330

Novartis 20,232 — 74,945 —

Sanofi 1,241 — 11,983 —

Madrigal 25,000 — 25,000 —

Total $ 72,868 $ 27,767 $ 409,522 $ 572,976

The Company has evaluated each agreement in accordance with FASB Topic 808– Collaborative Arrangements and 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.

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On December 16, 2025, the Company entered into the Sarepta Clinical Supply Agreement, whereby the Company is responsible for manufacturing and supplying certain materials to Sarepta for specified activities.

During the six months ended March 31, 2026, the Company recorded $271.2 million in revenue.

During the three and nine months ended June 30, 2026, the Company recorded $26.4 million and $297.6 million in revenue associated with these Sarepta agreements, respectively.

On August 29, 2025, the Company entered into the Novartis Collaboration Agreement with Novartis for the development and commercialization of multiple preclinical programs in rare, genetic diseases of the central nervous system.

During the six months ended March 31, 2026, the Company recorded $54.7 million in revenue.

During the three and nine months ended June 30, 2026, the Company recorded $20.2 million and $74.9 million in revenue associated with this transaction, respectively.

Visirna and Sanofi :

On August 1, 2025, Visirna HK, a wholly owned subsidiary of Visirna Therapeutics, Inc, a majority owned subsidiary of the Company, entered into an Asset Purchase Agreement with Sanofi, pursuant to which Visirna HK sold all of its assets and rights in investigational plozasiran to Sanofi, which included an assignment of Visirna HK’s rights (as successor by assignment from Visirna) to develop and commercialize investigational plozasiran in Greater China pursuant to that certain License Agreement by and between the Company and Visirna dated, April 25, 2022 (the “Visirna License Agreement”).

During the six months ended March 31, 2026, the Company recorded $10.7 million in revenue associated with this transaction.

During the three and nine months ended June 30, 2026, the Company recorded $1.2 million and $12.0 million in revenue associated with this transaction, respectively.

On May 4, 2026, the Company entered into the Madrigal Licensing Agreement with Madrigal.

Under the terms of the agreement, Madrigal received an exclusive global license to develop, manufacture, and commercialize ARO-PNPLA3, a clinical stage program.

During the three and nine months ended June 30, 2026, the Company recorded $25.0 million and $25.0 million in revenue associated with this transaction, respectively.

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 six months ended March 31, 2026 and 2025 are shown in the tables below.

For purposes of comparison, the amounts for the three and nine months ended June 30, 2026 and 2025 are shown in the tables below.

Research and Development (“R&D”) Expenses

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(in thousands) Three Months Ended

March 31, 2026 % of

June 30, 2026 % of

Three Months Ended

March 31, 2025 % of

June 30, 2025 % of

Increase (Decrease)

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Total research and development expense $ 198,223 100 % $ 162,368 100 % $ 35,855 22 %

(in thousands) Six Months Ended

March 31, 2026 % of

Six Months Ended

March 31, 2025 % of

(in thousands) Nine Months Ended

June 30, 2026 % of

Nine Months Ended

June 30, 2025 % of

Increase (Decrease)

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Total research and development expense $ 548,679 100 % $ 432,472 100 % $ 116,207 27 %

Candidate costs increased $28.3 million, or 40%, for the three months ended March 31, 2026 and $56.4 million, or 38%, for the six months ended March 31, 2026 compared to the same periods of 2025.

The increase was primarily due to the additional progression of the Company’s pipeline of candidates into and through clinical trials, which resulted in higher outsourced clinical trial costs, manufacturing, and toxicity study costs.

Discovery costs increased $3.7 million, or 25%, for the three months ended March 31, 2026 and $12.6 million, or 45%, for the six months ended March 31, 2026 compared to the same periods of 2025, primarily driven by higher R&D discovery activity associated with ongoing discovery efforts and expansion into novel therapeutic areas and tissue types, partially offset by lower partnership cost.

Candidate costs increased $31.6 million, or 33%, for the three months ended June 30, 2026 and $87.9 million, or 36%, for the nine months ended June 30, 2026 compared to the same periods of 2025.

Discovery costs decreased $2.7 million, or 13%, for the three months ended June 30, 2026 compared to the same period of 2025, primarily driven by timing of R&D discovery activity associated with ongoing discovery efforts.

Discovery costs increased $9.9 million, or 20%, for the nine months ended June 30, 2026 compared to the same period of 2025, primarily driven by increased R&D discovery activity associated with ongoing discovery efforts and expansion into novel therapeutic areas and tissue types.

Salaries consist of salary, bonuses, payroll taxes, and related benefits for the Company’s R&D personnel.

Salaries expense increased $6.6 million, or 25%, for the three months ended March 31, 2026 and $9.5 million, or 18%, for the six months ended March 31, 2026 compared to the same periods of 2025.

The increase was primarily due to an increase in

headcount that has occurred as the Company has expanded its pipeline of candidates and worked to prepare for the manufacture of commercial material at the Verona facility, as well as annual salary increases.

Salaries expense increased $5.4 million, or 21%, for the three months ended June 30, 2026 and $15.0 million, or 19%, for the nine

months ended June 30, 2026 compared to the same periods of 2025.

The increase was primarily due to an increase in headcount that has occurred as the Company has expanded its pipeline of candidates and worked to prepare for the manufacture of commercial material at the Verona facility, as well as annual salary increases.

Facilities-related expense includes lease costs for the Company’s research and development facilities in San Diego, California and in Madison, Wisconsin.

These expenses increased $0.9 million, or 13%, for the three months ended March 31, 2026 and $1.2 million or 8%, for the six months ended March 31, 2026 compared to the same period of 2025.

This increase was primarily due to expenses, such as utilities and repair and maintenance charges, associated with the expanded manufacturing facilities in Verona, Wisconsin to support manufacturing operations.

These expenses increased $0.6 million, or 9%, for the three months ended June 30, 2026 and $1.8 million or 8%, for the nine months ended June 30, 2026 compared to the same period of 2025.

The increase was primarily due to expenses, such as utilities, repair and maintenance charges, associated with the expanded manufacturing facilities in Verona, Wisconsin to support manufacturing operations.

Stock compensation expense, a non-cash expense, is primarily based on the valuation of 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 March 31, 2026 compared to the same period of 2025, primarily driven by the annual issuance of RSU grants to employees in January 2026.

Stock compensation expense decreased $0.8 million, or 5% for the six months ended March 31, 2026 compared to the same period of 2025, primarily driven by stock options award expense incurred in the second fiscal quarter 2025 related to Visirna, our variable interest entity, that did not repeat in the second fiscal quarter 2026.

Stock compensation expense increased $0.5 million, or 7%, for the three months ended June 30, 2026 compared to the same period of 2025, primarily driven by the annual issuance of RSU grants to employees in January 2026.

Stock compensation expense decreased $0.2 million, or 1% for the nine months ended June 30, 2026 compared to the same period of 2025, primarily driven by stock options award expense incurred in the second fiscal quarter 2025 related to Visirna, our variable interest entity, that did not repeat in the second fiscal quarter 2026.

Depreciation and amortization expense, a non-cash expense, relates to depreciation on buildings, lab equipment and leasehold improvements.

These expenses increased $0.3 million, or 5%, for the three months ended March 31, 2026 and $1.5 million, or 14% for the six months ended March 31, 2026 compared to the same periods of 2025.

These expenses increased $0.4 million, or 8%, for the three months ended June 30, 2026 and $1.9 million, or 12%, for the nine months ended June 30, 2026 compared to the same periods of 2025.

The increase was primarily attributable to the transfer of additional manufacturing equipment following the completion of certification, qualification and validation to support manufacturing operations.

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(in thousands) Three Months Ended

March 31, 2026 % of

June 30, 2026 % of

Three Months Ended

March 31, 2025 % of

June 30, 2025 % of

Increase (Decrease)

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$ 47,123 100 % $ 30,949 100 % $ 16,174 52 %

(in thousands) Six Months Ended

March 31, 2026 % of

Category Six Months Ended

March 31, 2025 % of

(in thousands) Nine Months Ended

June 30, 2026 % of

Category Nine Months Ended

June 30, 2025 % of

Category Increase (Decrease)

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$ 134,888 100 % $ 86,264 100 % $ 48,624 56 %

Salaries expense increased $4.6 million, or 58%, for the three months ended March 31, 2026 and $9.2 million, or 60% for the six months ended March 31, 2026 compared to the same periods of 2025.

The increase was driven by higher headcount required to support the Company’s growth as the Company prepared for commercialization, as well as of annual salary increases.

Salaries expense increased $6.1 million, or 77%, for the three months ended June 30, 2026 and $15.3 million, or 66% for the nine months ended June 30, 2026 compared to the same periods of 2025.

The increase was driven by higher headcount required to support the Company’s commercialization of REDEMPLO, as well as annual salary increases.

Professional, outside services, and other expenses include costs related to commercial activities, legal, consulting, patent filings, business insurance, other external services, as well as travel, communication, and technology expenses.

These expenses increased $8.1 million, or 75%, for the three months ended March 31, 2026 and $16.9 million, or 81% for

the six months ended March 31, 2026 compared to the same periods of 2025.

These expenses increased $8.4 million, or 57%, for the three months ended June 30, 2026 and $25.3 million, or 71%, for

the nine months ended June 30, 2026 compared to the same periods of 2025.

The increase was mainly due to commercialization expense associated with the Company’s launch of REDEMPLO, including costs for 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 $0.4 million, or 38%, for the three months ended March 31, 2026 and $0.8 million, or 33% for the six months ended March 31, 2026 compared to the same periods of 2025.

These expenses increased $0.4 million, or 17%, for the three months ended June 30, 2026 and $1.2 million, or 26%, for the nine months ended June 30, 2026 compared to the same periods of 2025.

The increase was primarily driven by higher staff amenities expenses driven by higher headcount.

Stock compensation expense, a non-cash expense, is based on the valuation of restricted stock units granted to employees, which is based on the closing stock price on the grant date.

These expenses increased $0.2 million, or 3%, for the three months ended March 31, 2026 and $5.6 million, or 35% for the six months ended March 31, 2026 compared to the same periods of 2025.

The increase was primarily due to recognition of compensation expense related to a performance-based restricted stock unit award following the achievement of a pre-specified performance milestone.

These expenses increased $1.3 million, or 24%, for the three months ended June 30, 2026 and $6.9 million, or 32%, for the nine months ended June 30, 2026 compared to the same periods of 2025.

The increase was primarily due to recognition of compensation expense related to a performance-based restricted stock unit award following the achievement of a pre-specified performance milestone, as well as new grants issued to new employees.

Depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company’s corporate headquarters.

Other Income (Expense)

Other income (expense) is primarily related to interest income and expense, and to gain on VIE'S sale of IPR&D assets.

Other income increased $15.3 million and $16.4 million for the three and six months ended March 31, 2026 compared to the same periods of 2025.

The increase was primarily due to a gain on VIE'S sale of IPR&D assets related to the transfer of research and development assets from Visirna to Bisirna in January 2026.

Other expense is primarily related to interest income and expense, loss on equity method investment in Bisirna, and gain on VIE’s sale of IPR&D assets.

Other expense decreased $4.7 million and $21.2 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods of 2025.

The decrease for the nine months ended June 30, 2026 was primarily due to a gain on VIE’s sale of IPR&D assets related to the transfer of research and development assets from Visirna to Bisirna in January 2026, as well as an increased interest income on the Company’s available-for-sale securities.

The decrease for the three months ended June 30, 2026 was primarily due to increased interest income on the Company's available-for-sale securities.

On January 15, 2026, Visirna closed on an Asset Transfer Agreement with Bisirna to sell and transfer certain assets and rights associated with R&D technology.

The purchase price was $19.0 million, payable as (i) $9.0 million in paid-in-full warrants (exercise price of $0.18 per share) issued by Bisirna at the closing of the asset transfer, and (ii) $10.0 million of Bisirna Series A preferred shares, which were issued upon the closing of Bisirna’s Series A equity financing on January 15, 2026.

As the performance obligation associated with the asset transfer was fully satisfied at closing, the Company recognized $19.0 million of gain in other income for the quarter ended March 31, 2026.

As the performance obligation associated with the asset transfer was fully satisfied at closing, the Company recognized $19.0 million of gain in other income during the second fiscal quarter of 2026.

Net (Loss) Income

Net loss attributable to Arrowhead Pharmaceuticals, Inc.

was $132.7 million and $101.9 million for the three and six months ended March 31, 2026, compared to a net income attributable to Arrowhead Pharmaceuticals, Inc.

of $370.4 million and $197.4 million for the three and six months ended March 31, 2025.

Net loss per diluted share was $0.93 and $0.73 for the three and six months ended March 31, 2026, compared to a net income per diluted share of $2.75 and $1.52 for the three and six months ended March 31, 2025.

The decrease in net income attributable to Arrowhead Pharmaceuticals, Inc.

for the three and six months ended March 31, 2026 compared to the same periods of 2025 was primarily due to a decrease in revenue from the Sarepta Collaboration Agreement, combined with higher commercial costs as well as research and development expenses, associated with the expansion of the Company's pipeline and progression through clinical trial phases.

was $194.3 million and $296.2 million for the three and nine months ended June 30, 2026, respectively, compared to a net loss attributable to Arrowhead Pharmaceuticals, Inc.

of $175.2 million and a net income attributable to Arrowhead Pharmaceuticals, Inc.

of $22.1 million for the three and nine months ended June 30, 2025, respectively.

Net loss per diluted share was $1.36 and $2.10 for the three and nine months ended June 30, 2026, respectively, compared to a net loss per diluted share of $1.26 and a net income per diluted share of $0.17 for the three and nine months ended June 30, 2025, respectively.

The increase in net loss attributable to Arrowhead Pharmaceuticals, Inc.

and decrease in net income attributable to Arrowhead Pharmaceuticals, Inc.

for the three and nine months ended June 30, 2026 compared to the same periods of 2025, respectively, was primarily due to a decrease in revenue from the Sarepta Collaboration Agreement, combined with higher commercial costs as well as research and development expenses, associated with the expansion of the Company’s pipeline and progression through clinical trial phases.

LIQUIDITY AND CAPITAL RESOURCES

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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 $188.5 million as of March 31, 2026 compared to $226.5 million as of September 30, 2025.

Cash invested in available-for-sale securities was $1,595.6 million as of March 31, 2026 compared to $692.8 million as of September 30, 2025.

The Company’s cash, cash equivalents and restricted cash was $54.8 million as of June 30, 2026 compared to $226.5 million as of September 30, 2025.

Cash invested in available-for-sale securities was $1,547.2 million as of June 30, 2026 compared to $692.8 million as of September 30, 2025.

On November 25, 2024, the Company entered into a licensing and collaboration agreement with Sarepta.

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During the second quarter of fiscal 2026, the Company received $200.0 million of the second DM1 milestone payment and a $50.0 million payment for the first installment of the annual fee.

The Company is eligible to receive the second installment of the annual fee of up to $50.0 million over the 12 months from March 31, 2026,

The Company is eligible to receive the second installment of the annual fee of up to $50.0 million over the 12 months from June 30, 2026.

On August 29, 2025, the Company entered into a licensing and collaboration agreement with Novartis.

Upon closing in October 2025, the Company received $200.0 million as an upfront payment.

On May 4, 2026, the Company entered into a licensing agreement with Madrigal.

Upon closing in June 2026, the Company received $25.0 million as an upfront payment.

On December 10, 2025, the Company entered into the Amended and Restated Sale Agreement with Jefferies LLC, acting as sales agent and/or principal, which amended and restated the Company’s prior open market sale agreement in its entirety.

Pursuant to the Amended and Restated Sale Agreement, the Company may, from time to time, sell shares of the Company’s common stock through Jefferies LLC in an at-the-market offering, up to the maximum program amount permitted under the Company’s effective shelf registration statement.

As of March 31, 2026, the Company had sold approximately 689,000 shares of common stock under the Amended and Restated Sale Agreement, generating gross proceeds of $48.2 million and net proceeds of $46.8 million, after deducting commissions and offering costs.

As of June 30, 2026, the Company had sold approximately 1,056,000 shares of common stock under the Amended and Restated Sale Agreement, generating gross proceeds of $76.1 million and net proceeds of $74.1 million, after deducting commissions and offering costs.

On January 7, 2026, the Company entered into an underwriting agreement with Jefferies and J.P.

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The following table presents a summary of cash flows:

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands)

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Net decrease (increase) in cash, cash equivalents and restricted cash $ (173,369) $ 27,485

$ (39,134) $ 83,494

Cash, cash equivalents and restricted cash at end of period $ 54,759 $ 129,793

During the six months ended March 31, 2026, cash flow provided by operating activities was $97.9 million, which was primarily due to $200.0 million of cash received as part of the Novartis agreement, $200.0 million of the second DM1 milestone payment and a $50.0 million payment for the first installment of the annual fee received as part of the Sarepta agreement, partially offset by increase in ongoing expenses related to the Company's research and development programs and selling, general and administrative expenses.

During the nine months ended June 30, 2026, cash flow used in operating activities was $79.5 million, which was primarily due to increase in ongoing expenses related to the Company’s research and development programs and selling, general and administrative expenses, partially offset by $200.0 million of cash received as part of the Novartis agreement, $200.0 million of the second DM1 milestone payment, $50.0 million payment for the first installment of the annual fee received as part of the Sarepta agreement, and $25.0 million of cash received as part of the Madrigal agreement.

Cash used in investing activities amounted to $874.3 million, which was primarily attributable to investment purchases of $1,138.7 million, and capital expenditures of $8.6 million, partially offset by proceeds from maturities of investments of $224.2 million and proceeds from sales of investments of $48.8 million.

Cash provided by financing activities of $781.0 million was primarily due to $681.3 million net proceeds from the issuance of convertible note, $116.6 million in net proceeds from a follow-on common stock offering, $46.8 million in net proceeds from the issuance of common stock under the Company's at-the-market equity offering program, $100.0 million proceeds from issuance of pre-funded warrants and $10.1 million proceeds from the exercise of stock options, partially offset by partial repayment of the credit facility of $84.5 million, purchase of the Capped Calls of $47.9 million, and dividends paid to noncontrolling shareholders of $41.5 million (See Note 6 — Stockholders’ Equity of Notes to Consolidated Financial Statements of Part I, “Item 1.

Cash provided by financing activities of $780.5 million was primarily due to $681.3 million net proceeds from the issuance of convertible note, $116.6 million in net proceeds from a follow-on common stock offering, $74.1 million in net proceeds from the issuance of common stock under the Company's at-the-market equity offering program, $100.0 million proceeds from issuance of pre-funded warrants and $12.8 million proceeds from the exercise of stock options, partially offset by partial repayment of the credit facility (inclusive of MOIC Payments) of $117.9 million, purchase of the Capped Calls of $47.9 million, and dividends paid to noncontrolling shareholders of $38.4 million (See Note 6 — Stockholders’ Equity of Notes to Consolidated Financial Statements of Part I, “Item 1.

Financial Statements”).

During the six months ended March 31, 2025, cash flow provided by operating activities was $313.8 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 selling, general and administrative expenses.

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 selling, general and administrative expenses.

Cash used in investing activities was $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 sales and maturities of investments of $587.9 million.

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Contractual Obligations

The Company entered into a global licensing and collaboration agreement with Novartis on August 29, 2025, which closed on October 17, 2025 (see Note 2).

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, 2025.

The Company entered into a global licensing and collaboration agreement with Madrigal on May 4, 2026, which closed on June 2, 2026 (see Note 2).

The Company entered into a Pasadena Lease Amendment for its office lease located in Pasadena, California on April 27, 2026 (see Note 9).

There has been no other material change during the three months ended June 30, 2026 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, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis