17 unchanged sentences
Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2024.
−Removed: Rose, Snyder and Jacobs LLP, the independent registered public accounting firm that audited the Consolidated Financial Statements included in this 2023 Annual Report on Form 10-K, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023 , which is included herein.
+Added: KPMG LLP, the independent registered public accounting firm that audited the Consolidated Financial Statements included in this 2024 Annual Report on Form 10-K, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024 , which is included herein.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
−Removed: The Company’s process for evaluating controls and procedures is continuous and encompasses consistent improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.
+Added: The Company regularly evaluates its controls and procedures and makes improvements in the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.
OTHER INFORMATION
+Added: (a) License and Collaboration Agreement
+Added: On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Collaboration Agreement”) with Sarepta Therapeutics, Inc.
+Added: (“Sarepta”) for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and the lungs.
+Added: Under the Collaboration Agreement, Sarepta has received an exclusive worldwide license to the Company’s ARO-DUX4, ARO-DM1, ARO-MMP7, and ARO-ATXN2 clinical stage programs.
+Added: Sarepta has also received an exclusive sublicensable worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs.
+Added: Pursuant to the Collaboration Agreement, Sarepta will be able to select up to six new targets for which the Company will perform discovery, optimization and preclinical development.
+Added: Upon completion of the Company’s preclinical activities, Sarepta will receive an exclusive license to the Company’s product-specific intellectual property rights covering those compounds and be wholly responsible for clinical development and commercialization of each compound.
+Added: Under the terms of the Collaboration Agreement, the Company expects to receive $500.0 million as an upfront payment and $250.0 million to be paid in annual installments of $50.0 million over 5 years.
+Added: The Company is also eligible to receive $300.0 million in near-term payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study, which the Company is on track to achieve.
+Added: Further, for each of the 13 programs, the Company is eligible to receive development milestone payments between $110.0 million and $180.0 million per program and sales milestone payments between $500.0 million and $700.0 million per program.
+Added: The Company is also eligible to receive tiered royalties on net sales of licensed products of up to the low double digits.
+Added: Closing of the Collaboration Agreement is subject to clearance under the Hart-Scott Rodino Antitrust Improvements Act.
+Added: The foregoing description of the Collaboration Agreement does not purport to be complete and is qualified in its entirety by reference to the Collaboration Agreement, a copy of which will be filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2024.
+Added: Stock Purchase Agreement
+Added: In connection with the Collaboration Agreement, on November 25, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with an affiliate of Sarepta (the “Purchaser”) for a private placement of shares of common stock of the Company (the “Private Placement”).
+Added: Pursuant to the Stock Purchase Agreement, the Company sold 11,926,301 shares of common stock (the “Shares”), at a price per Share of $27.2507, for an aggregate value of approximately $325.0 million.
+Added: The Private Placement is expected to close concurrently with the Collaboration Agreement (the “Closing”).
+Added: The Stock Purchase Agreement contains customary representations and warranties of the Company, on the one hand, and the Purchaser, on the other hand, and customary conditions to closing.
+Added: The Stock Purchase Agreement provides that at any time following the Closing, the Purchaser may elect to exchange any or all of its Shares for pre-funded warrants to purchase shares of common stock of the Company, substantially in the form attached to the Stock Purchase Agreement.
+Added: At the Closing, the Company will enter into an Investor Rights Agreement (the “Investor Rights Agreement”) with the Purchaser, which provides that the Company will appoint Doug Ingram to the board of directors of the Company effective as of the Closing.
+Added: In addition, the Company will register the resale of the Shares pursuant to the Investor Rights Agreement.
+Added: The Company is required to prepare and file a registration statement with the Securities and Exchange Commission no later than 30 days following the Closing.
+Added: The Company has also agreed to, among other things, indemnify the Purchaser, their officers, directors, members, employees, partners, managers, stockholders, affiliates, investment advisors and agents under the registration statement
+Added: from certain liabilities and pay certain fees and expenses incident to the Company’s obligations under the Investor Rights Agreement.
+Added: The securities to be issued and sold to Purchaser under the Stock Purchase Agreement will not be registered under the Securities Act of 1933, as amended (the Securities Act) in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder, or under any state securities laws.
+Added: The Company relied on this exemption from registration based in part on representations made by the Purchaser.
+Added: The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
+Added: This Annual Report on Form 10-K is not an offer to sell or the solicitation of an offer to buy the securities described herein.
+Added: The foregoing descriptions of the Stock Purchase Agreement and the form of Investor Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the Stock Purchase Agreement and the form of Investor Rights Agreement, copies of which are filed as Exhibits 10.48 and 4.6 to this Annual Report on Form 10-K, respectively, and are incorporated by reference herein.
+Added: Amendment to Credit Facility
+Added: Also on November 26, 2024, the Company entered into an amendment to the Credit Facility (the “Amendment”) to modify, subject to certain conditions, amongst other things, the requirements to make prepayments of the loans under the Credit Facility with respect to the transactions contemplated by the Collaboration Agreement and the Stock Purchase Agreement.
+Added: The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which will be filed with the Company’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2024.
+Added: Securities Purchase Agreement
+Added: On November 25, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional and accredited investor (the “Warrant Purchaser”) for a private placement of pre-funded warrants to purchase shares of common stock with an exercise price of $0.001 per share.
+Added: Pursuant to the Securities Purchase Agreement, the Company sold pre-funded warrants to purchase up to 917,441 shares of common stock at a purchase price of $27.2497 per pre-funded warrant, for an aggregate value of approximately $25.0 million.
+Added: The transaction is expected to close on or about November 27, 2024 (the “Warrant Closing”).
+Added: The Securities Purchase Agreement contains customary representations and warranties of the Company, on the one hand, and the Purchasers, on the other hand, and customary conditions to closing.
+Added: At the Warrant Closing, the Company will enter into a Registration Rights Agreement (the Registration Rights Agreement) with the Warrant Purchaser, which provides that the Company will register the resale of the shares of common stock underlying the pre-funded warrants pursuant to the Registration Rights Agreement.
+Added: The Company is required to prepare and file a registration statement with the Securities and Exchange Commission no later than 30 days following the Warrant Closing.
+Added: The Company has also agreed to, among other things, indemnify the Purchaser, their officers, directors, members, employees, partners, managers, stockholders, affiliates, investment advisors and agents under the registration statement from certain liabilities and pay certain fees and expenses incident to the Company’s obligations under the Registration Rights Agreement.
+Added: The securities to be issued and sold to Warrant Purchaser under the Securities Purchase Agreement will not be registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder, or under any state securities laws.
+Added: The Company relied on this exemption from registration based in part on representations made by the Warrant Purchaser.
+Added: The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
+Added: This Annual Report on Form 10-K is not an offer to sell or the solicitation of an offer to buy the securities described herein.
+Added: The foregoing descriptions of the Securities Purchase Agreement, the form of Registration Rights Agreement and the form of Pre-Funded Warrant do not purport to be complete and are qualified in their entirety by reference to the Securities Purchase Agreement, the form of Registration Rights Agreement and the form of Pre-Funded Warrant, copies of which are filed as Exhibits 10.49, 4.7 and 4.8 to this Annual Report on Form 10-K, respectively, and are incorporated by reference herein.
(b) Trading Plans
−Removed: During the quarter ended September 30, 2023, the following directors and officers (as defined in Exchange Act Rule 16a-1(f)) adopted certain trading plans intended to satisfy Rule 10b5-1(c):
−Removed: Name Title Adoption or Termination Date
−Removed: Plan Start Date Plan End Date Shares Vesting and Subject to Sell-To-Cover (1)
+Added: During the fiscal quarter ended September 30, 2024, the following directors and officers (as defined in Exchange Act Rule 16a-1(f)) adopted certain trading plans intended to satisfy Rule 10b5-1(c):
+Added: Name Title Adoption or Termination Date Plan Start Date Plan End Date Shares Vesting and Subject to Sell-To-Cover (1)
Other Shares Being Sold (Subject to Certain Conditions)
−Removed: Mauro Ferrari Board Member 09/28/2023 01/11/2024 01/31/2024 n/a 3,147
+Added: Adeoye Olukotun Board Member 09/24/2024 12/24/2024 06/24/2025 n/a 5,465
+Added: Christopher Anzalone President and Chief Executive Officer 08/16/2024 03/03/2025 12/31/2025 n/a 351,726
+Added: Christopher Anzalone President and Chief Executive Officer 08/22/2024 12/04/2024 12/31/2026 2,082,892 n/a
+Added: Christopher Anzalone President and Chief Executive Officer 09/16/2024 01/02/2025 12/31/2026 96,566 n/a
Douglass Given Board Member 09/12/2024 12/16/2024 12/31/2024 n/a 5,547
−Removed: James Hamilton (2)
−Removed: Chief Discovery and Translational Medicine 08/15/2023 01/03/2024 01/31/2024 52,500 n/a
−Removed: James Hamilton Chief Discovery and Translational Medicine 08/22/2023 12/01/2023 11/29/2024 n/a 35,000
−Removed: Ken Myszkowski Chief Financial Officer 09/07/2023 01/05/2024 01/31/2024 30,000 n/a
−Removed: Patrick O ’ Brien
−Removed: Chief Operating Officer and General Counsel 09/03/2023 01/03/2024 01/05/2024 n/a 4,000
−Removed: Tracie Oliver Chief Commercial Officer 08/28/2023 01/05/2024 07/31/2024 17,625 n/a
−Removed: Victoria Vakiener Board Member 09/28/2023 01/11/2024 05/31/2024 n/a 6,519
−Removed: William Waddill Board Member 08/29/2023 01/11/2024 01/31/2024 n/a 3,934
+Added: James Hamilton Chief of Discovery and Translational Medicine 08/19/2024 12/04/2024 11/28/2025 n/a 30,000
(1) This column indicates the total number of shares vesting, but the 10b5-1 Plan provides for the sale of only those shares necessary to satisfy payment of applicable withholding taxes.
−Removed: (2) Termination of a trading plan that was intended to satisfy Rule 10b5-1(c).
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
1 unchanged sentence
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
−Removed: The information called for by this Item will be incorporated by reference from the Company’s Definitive Proxy Statement, under the headings Proposal One — Election of Directors, Equity Compensation Plan Information, Corporate Governance, Environmental and Social Commitment, and, if applicable, Delinquent Section 16(a) Reports, to be filed for the Company’s 2024 Annual Meeting of Stockholders, which proxy statement will be filed no later than January 26, 2024 (the “Definitive Proxy Statement”).
+Added: The information called for by this Item will be incorporated by reference from the Company’s Definitive Proxy Statement, under the headings Proposal One — Election of Directors, Equity Compensation Plan Information, Corporate Governance, Environmental and Social Commitment, Executive Compensation, and, if applicable, Delinquent Section 16(a) Reports — to be filed for the Company’s 2025 Annual Meeting of Stockholders (the “Definitive Proxy Statement”).
EXECUTIVE COMPENSATION
42 unchanged sentences
Quarterly Report on Form 10-Q, as Exhibit 10.4 February 7, 2019
+Added: Form of Investor Rights Agreement by and between Company and Sarepta Therapeutics Investments, Inc.
+Added: (included as Exhibit A in Exhibit 10.4 8 )
Incorporated by Reference Herein
Number Description Form Date
+Added: Form of Registration Rights Agreement by and between Company and Avoro Life Sciences Fund LLC (included as Exhibit B in Exhibit 10.49)
+Added: Form of Pre-Funded Warrant for Avoro Life Sciences Fund LLC
10.1** Arrowhead Research Corporation 2004 Equity Incentive Plan, as amended
8 unchanged sentences
2021 Incentive Plan
−Removed: Schedule 14A, Exhibit A January 28, 2021
+Added: Schedule 14A, as Exhibit A
+Added: January 28, 2021
10.6** Form of RSU Agreement for Officers and Certain Other Employees (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan- Inducement Award)
−Removed: Registration Statement on Form S-8, Exhibit 99.1 December 22, 2021
+Added: Registration Statement on Form S-8, as Exhibit 99.1
+Added: December 22, 2021
Form of RSU Agreement for Officers and Certain Other Employees (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan)
+Added: Registration Statement on Form S-8, as Exhibit 99.1
+Added: February 28, 2024
10.8** Form of RSU Agreement for Employees (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan - Inducement Award)
−Removed: Registration Statement on Form S-8, Exhibit 99.2 December 22, 2021
+Added: Registration Statement on Form S-8, as Exhibit 99.2
+Added: December 22, 2021
Form of RSU Agreement for Employees (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan)
+Added: Registration Statement on Form S-8, as Exhibit 99.2
+Added: February 28, 2024
10.10** Form of Stock Option Grant (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan- Inducement Award)
−Removed: Registration Statement on Form S-8, Exhibit 99.3 December 22, 2021
+Added: Registration Statement on Form S-8, as Exhibit 99.3
+Added: December 22, 2021
Form of Stock Option Grant (Arrowhead Pharmaceuticals, Inc.
2021 Incentive Plan)
+Added: Annual Report on Form 10-K, as Exhibit 10.11
+Added: November 29, 2023
10.12** Executive Incentive Plan, adopted December 12, 2006
Annual Report on Form 10-K, as Exhibit 10.11 December 14, 2006
+Added: A rrowhead Pharmaceuticals, Inc.
+Added: Inducement Plan
+Added: Quarterly Report on Form 10-Q, as Exhibit 10.1 May 9, 2024
Employment Agreement between Arrowhead and Dr.
14 unchanged sentences
Annual Report on Form 10-K, as Exhibit 10.19 December 14, 2016
+Added: Incorporated by Reference Herein
+Added: Number Description Form Date
10.20 Common Stock Purchase Agreement between the Company and Amgen Inc., dated September 28, 2016
4 unchanged sentences
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 7, 2019
−Removed: Incorporated by Reference Herein
−Removed: Number Description Form Date
Amendment No.
6 unchanged sentences
Annual Report on Form 10-K, as Exhibit 10.20 November 25, 2019
+Added: Amended and Restated License Agreement by an d between Arrowhead Pharmaceuticals, Inc.
+Added: and GlaxoSmithKline Intellectual Property ( No.
+Added: 3) Limited, dated December 11, 2023
+Added: Quarterly Report on Form 10-Q, as Exhibit 10.1
+Added: August 8, 2024
10.25 Stock Purchase Agreement by and between Johnson & Johnson Innovation-JJDC, Inc.
20 unchanged sentences
10.32 Amendment No.
−Removed: 1 to Lease Agreement between Arrowhead Pharmaceuticals, Inc.
+Added: 1 to Lease Agreement between Arrowhead Madison , Inc.
and University Research Park, Incorporated, dated October 22, 2018
1 unchanged sentence
10.33 Amendment No.
−Removed: 2 to Lease Agreement between Arrowhead Pharmaceuticals, Inc.
+Added: 2 to Lease Agreement between Arrowhead Madison, Inc.
and University Research Park, Incorporated, dated January 10, 2019
1 unchanged sentence
10.34 Amendment No.
−Removed: 3 to Lease Agreement between Arrowhead Pharmaceuticals, Inc.
+Added: 3 to Lease Agreement between Arrowhead Madison, Inc.
and University Research Park, Incorporated, dated January 11, 2019
1 unchanged sentence
10.35 Amendment No.
−Removed: 4 to Lease Agreement between Arrowhead Pharmaceuticals, Inc.
+Added: 4 to Lease Agreement between Arrowhead Madison, Inc.
and University Research Park, Incorporated, dated September 19, 2019
−Removed: Annual report on Form 10-K, as Exhibit 10.26 November 23, 2020
+Added: Annual Report on Form 10-K, as Exhibit 10.26
+Added: November 23, 2020
10.36 Amendment No.
−Removed: 5 to Lease Agreement between Arrowhead Pharmaceuticals, Inc.
+Added: 5 to Lease Agreement between Arrowhead Madison, Inc.
and University Research Park, Incorporated, dated May 14, 2020
−Removed: Annual report on Form 10-K, as Exhibit 10.27 November 23, 2020
+Added: Annual Report on Form 10-K, as Exhibit 10.27
+Added: November 23, 2020
10.37 Amendment No.
−Removed: 6 to Lease Agreement by and between Arrowhead Pharmaceuticals, Inc.
+Added: 6 to Lease Agreement by and between Arrowhead Madison , Inc.
and University Research Park, dated November 23, 2020
Quarterly Report on Form 10-Q, as Exhibit 10.3 February 4, 2021
+Added: Incorporated by Reference Herein
+Added: Number Description Form Date
10.38 Amendment No.
−Removed: 7 to Lease Agreement by and between Arrowhead Pharmaceuticals, Inc.
+Added: 7 to Lease Agreement by and between Arrowhead Madison , Inc.
and University Research Park, dated December 9, 2020
Quarterly Report on Form 10-Q, as Exhibit 10.4 February 4, 2021
+Added: Amendment No.
+Added: 8 to Lease Agreement by and between Arrowhead Madison , Inc.
+Added: and University Research Park, dated August 26, 2022
+Added: Amendment No.
+Added: 9 to Lease Agreement by and between Arrowhead Madison , Inc.
+Added: and University Research Park, dated April 3, 2023
+Added: Amendment No.
+Added: 10 to Lease Agreement by and between Arrowhead Madison , Inc.
+Added: and University Research Park, dated June 28, 2023
+Added: Amendment No.
+Added: 11 to Lease Agreement by and between Arrowhead Madison , Inc.
+Added: and University Research Park, dated September 13, 2024
10.43 Office Lease by and between 177 Colorado Owner LLC and Arrowhead Pharmaceuticals, Inc., dated April 17, 2019
Quarterly Report on Form 10-Q, as Exhibit 10.1 August 5, 2019
−Removed: Incorporated by Reference Herein
−Removed: Number Description Form Date
10.44 First Amendment to Office Lease by and between Arrowhead Pharmaceuticals, Inc.
8 unchanged sentences
72, LLC, dated September 26, 2023
+Added: Annual Report on Form 10-K, as Exhibit 10.39
+Added: November 29, 2023
+Added: Financing Agreement by and between Company and Sixth Street Lending Partners, dated August 7, 2024
+Added: Stock Purchase Agreement by and between Company and Sarepta Therapeutics Investments, Inc., dated November 25, 2024
+Added: Securities Purchase Agreement by and between Company and Avoro Life Sciences Fund LLC, dated November 25, 2024
+Added: 16.1 Letter from Rose, Snyder & Jacobs LLP, dated December 4, 2023
+Added: Current Report on Form 8-K, as Exhibit 16.1
+Added: December 5, 2023
+Added: Arrowhead Pharmaceuticals, Inc.
+Added: Insider Trading Policy
21.1* List of Subsidiaries
23.1* Consent of Independent Public Registered Accounting Firm
+Added: Consent of Independent Public Registered Accounting Firm
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
4 unchanged sentences
Compensation Recoupment (Clawback) Policy, dated November 20, 2023
+Added: Annual Report on Form 10-K, as Exhibit 97
+Added: November 29, 2023
101.INS* Inline XBRL Taxonomy Extension Instance Document
+Added: Incorporated by Reference Herein
+Added: Number Description Form Date
101.SCH* Inline XBRL Taxonomy Extension Schema Document
33 unchanged sentences
Victoria Vakiener
+Added: /s/ Hongbo Lu Director November 26, 2024
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Reports of Independent Registered Public Accounting Firm (PCAOB ID:
+Added: Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of September 30, 202 4 and 202 3
6 unchanged sentences
Stockholders of Arrowhead Pharmaceuticals, Inc.
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Arrowhead Pharmaceuticals, Inc.
−Removed: and Subsidiaries (the Company) as of September 30, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended September 30, 2023, and the related notes (collectively referred to as the financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated November 29, 2023, expressed an unqualified opinion.
+Added: Opinion on the Consolidated Financial Statements
+Added: We have audited the accompanying consolidated balance sheet of Arrowhead Pharmaceuticals, Inc.
+Added: and subsidiaries (the Company) as of September 30, 2024, the related consolidated statement of operations and comprehensive loss, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows for the year ended, in conformity with U.S.
+Added: generally accepted accounting principles.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 26, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
+Added: Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Revenue Recognition – Revenue Recognized Over Time
−Removed: Description of the Matter
−Removed: As discussed in Note 1 and Note 2 to the Consolidated Financial Statements, the Company earns its revenue through license and collaboration agreements.
−Removed: For performance obligations related to services that are required to be recognized over time, the Company measures its progress to completion using various measures, including an input measure of total labor costs incurred divided by total labor costs expected to be incurred, time elapsed, and an output measure of total patient visits divided by total patient visits expected.
−Removed: The selection of measurement criteria is based on the nature and phase of trials being conducted.
−Removed: Auditing revenue recognition is complex and highly judgmental due to the variability and uncertainty associated with the Company’s assessment of measure of progress.
−Removed: Changes in these estimates would have a significant effect on the amount of revenue recognized.
−Removed: How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risk of material misstatement of license and collaboration agreement revenue including those associated with cost to complete estimates.
−Removed: We tested controls over management’s process to collect, review, and approve the data used in assessing revenue recognized over time.
−Removed: To test the measures of progress used for performance obligations related to services that are required to be recognized over time, our audit procedures included, among others, evaluating the appropriateness of the Company’s accounting policy for each type of arrangement, testing the identified measure of performance by reading contracts with customers, including all amendments, and reviewing the contract analyses prepared by management.
−Removed: We evaluated whether the selected measures of progress towards satisfaction of performance obligations were applied consistently.
−Removed: We also tested the completeness and accuracy of the underlying data used for the measure of progress by testing and or analyzing the underlying data.
−Removed: Rose, Snyder & Jacobs LLP
+Added: We conducted our audit in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: We believe that our audit provides a reasonable basis for our opinion.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
+Added: Sufficiency of audit evidence over valuation of future royalty sales liability
+Added: As discussed in Note 13 to the consolidated financial statements, the Company records the obligations under the Royalty Pharma Agreement with Royalty Pharma Investments (RPI) at carrying value using the effective interest method.
+Added: The Company amortizes the sale of future royalties utilizing the prospective method to estimate future royalties to be paid by the Company to RPI over the life of the arrangement.
+Added: The Company periodically assesses the amount and timing of expected royalty payments using a combination of internal projections and forecasts from external sources.
+Added: To the extent such payments differ from the Company’s initial estimates, the Company will prospectively adjust the amortization of the royalty obligation and the effective interest rate.
+Added: The estimate of the carrying value of the liability related to the sale of future royalties is derived from the estimate of future sales of olpasiran and the probability of success assumption.
+Added: The estimate of future sales of olpasiran is based on key assumptions such as patient population, market penetration, olpasiran
+Added: sales price, and the comparable guideline drug.
+Added: The liability related to the sale of future royalties was $341,361 thousand as of September 30, 2024.
+Added: We identified the evaluation of the sufficiency of audit evidence over the determination of the carrying value of the liability related to the sale of future royalties as a critical audit matter.
+Added: Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained because of the level of audit effort associated with evaluating the carrying value of the liability related to the sale of future royalties.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We applied auditor judgment to determine the nature and extent of procedures to be performed over the evaluation of the carrying value of the liability related to the sale of future royalties.
+Added: We evaluated the design and tested the operating effectiveness of certain internal controls related to management’s valuation process, including the determination of the key assumptions into the carrying value of the liability related to the sale of future royalties as described above.
+Added: We assessed the patient population and market penetration assumptions by comparing to independently sourced external market and industry data.
+Added: We performed sensitivity analyses over the estimated olpasiran sales price and probability of success using independently sourced external market and industry data and evaluated the impact of changes in those assumptions on the carrying value of the liability related to the sale of future royalties.
+Added: We assessed the reasonableness of the comparable guideline drug by evaluating against drugs similar to olpasiran in the marketplace.
+Added: We evaluated the sufficiency of audit evidence obtained by assessing the cumulative results of the audit procedures performed and potential bias in the accounting estimate, including the appropriateness of the nature and extent of such evidence.
We have served as the Company’s auditor since 2024.
−Removed: Encino, California
+Added: San Diego, CA
November 26, 2024
4 unchanged sentences
We have audited Arrowhead Pharmaceuticals, Inc.
−Removed: and its Subsidiaries (the Company’s) internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of September 30, 2023 and 2022 and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2023 and related notes, and our report dated November 29, 2023 expressed an unqualified opinion thereon.
+Added: and subsidiaries' (the Company) internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of September 30, 2024, the related consolidated statement of operations and comprehensive loss, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements), and our report dated November 26, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting.
+Added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
13 unchanged sentences
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
+Added: San Diego, CA
+Added: November 26, 2024
+Added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+Added: To the Board of Directors and
+Added: Stockholders of Arrowhead Pharmaceuticals, Inc.
+Added: Opinion on the Financial Statements
+Added: We have audited the accompanying consolidated balance sheet of Arrowhead Pharmaceuticals, Inc., and Subsidiaries (the Company) as of September 30, 2023, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended September 30, 2023, and the related notes (collectively referred to as the financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
+Added: Basis for Opinion
+Added: These consolidated financial statements are the responsibility of the Company’s management.
+Added: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Rose, Snyder & Jacobs LLP
+Added: We have served as the Company’s auditor from 2004 to 2023.
+Added: Encino, California
November 29, 2023
5 unchanged sentences
Cash, cash equivalents and restricted cash $ 102,685 $ 110,891
−Removed: Accounts receivable — 1,410
Available-for-sale securities, at fair value 578,276 292,735
−Removed: Held-to-maturity securities, at amortized cost — 268,391
Prepaid expenses 9,537 8,813
1 unchanged sentence
Total current assets 695,471 416,472
−Removed: Property and equipment, net 290,262 110,297
+Added: Property, plant and equipment, net 386,032 290,262
Intangible assets, net 8,562 10,262
−Removed: Held-to-maturity securities, at amortized cost — 105,872
Right-of-use assets 45,255 45,297
12 unchanged sentences
Lease liabilities, net of current portion 111,027 104,608
−Removed: Deferred revenue, net of current portion — 55,950
Liability related to the sale of future royalties 341,361 268,326
+Added: Credit facility 393,183 —
Total long-term liabilities 845,571 372,934
5 unchanged sentences
Additional paid-in capital 1,806,000 1,300,395
−Removed: Accumulated other comprehensive loss ( 3,222 ) ( 136 )
+Added: Accumulated other comprehensive income (loss) 4,750 ( 3,222 )
Accumulated deficit ( 1,625,523 ) ( 1,026,030 )
22 unchanged sentences
Loss before income tax expense and noncontrolling interest ( 612,460 ) ( 206,491 ) ( 172,709 )
−Removed: Income tax expense 2,784 3,785 2
+Added: Income tax (benefit) expense ( 2,767 ) 2,784 3,785
Net loss including noncontrolling interest ( 609,693 ) ( 209,275 ) ( 176,494 )
9 unchanged sentences
Other comprehensive loss, net of tax:
−Removed: Unrealized losses on available-for-sale securities ( 2,964 ) — —
+Added: Unrealized gains (losses) on available-for-sale securities 3,775 ( 2,964 ) —
Foreign currency translation adjustments 4,197 ( 122 ) ( 67 )
7 unchanged sentences
Comprehensive
−Removed: Income (Loss) Accumulated
+Added: Loss Accumulated
Interest Totals
4 unchanged sentences
Foreign currency translation adjustments — — — ( 67 ) — — ( 67 )
+Added: Interest in joint venture — — 39,750 — — 20,250 60,000
Net loss — — — — ( 176,063 ) ( 431 ) ( 176,494 )
3 unchanged sentences
Comprehensive
−Removed: Income (Loss) Accumulated
+Added: Loss Accumulated
Interest Totals
3 unchanged sentences
Common stock - restricted stock units vesting 913 1 ( 1 ) — — — —
+Added: Unrealized losses on available-for-sale securities — — — ( 2,964 ) — — ( 2,964 )
Foreign currency translation adjustments — — — ( 122 ) — — ( 122 )
−Removed: Interest in joint venture — — 39,750 — — 20,250 60,000
Net loss — — — — ( 205,275 ) ( 4,000 ) ( 209,275 )
3 unchanged sentences
Comprehensive
−Removed: Income (Loss) Accumulated
+Added: Loss Accumulated
Interest Totals
3 unchanged sentences
Common stock - restricted stock units vesting 1,048 1 ( 1 ) — — — —
−Removed: Unrealized losses on available-for-sale securities — — — ( 2,964 ) — — ( 2,964 )
+Added: Common stock issued, net of offering costs 15,790 16 429,249 — — — 429,265
+Added: Unrealized gains on available-for-sale securities — — — 3,775 — — 3,775
Foreign currency translation adjustments — — — 4,197 — — 4,197
14 unchanged sentences
Non-cash interest expense on liability related to the sale of future royalties 23,035 18,326 —
−Removed: Net loss (gain) from investments — 4,432 ( 1,708 )
+Added: Non-cash interest expense on credit facility 9,317 — —
+Added: Realized loss on investments 80 — 4,432
Changes in operating assets and liabilities:
6 unchanged sentences
Other ( 1,200 ) — 65
−Removed: Net cash provided by (used in) operating activities ( 153,890 ) ( 136,131 ) 171,312
+Added: Net cash used in operating activities ( 462,851 ) ( 153,890 ) ( 136,131 )
CASH FLOWS FROM INVESTING ACTIVITIES:
−Removed: Purchases of property and equipment ( 176,737 ) ( 52,777 ) ( 23,567 )
+Added: Purchases of property, plant and equipment ( 141,469 ) ( 176,737 ) ( 52,777 )
Purchases of investments ( 720,947 ) ( 246,141 ) ( 223,391 )
2 unchanged sentences
CASH FLOWS FROM FINANCING ACTIVITIES:
−Removed: Proceeds from the exercises of stock options 3,053 5,186 11,305
+Added: Proceeds from the issuance of common stock, net of offering costs 429,265 — —
Proceeds from the sale of future royalties 50,000 250,000 —
+Added: Proceeds from credit facility 392,000 — —
+Added: Payment of debt issuance costs ( 3,134 ) — —
+Added: Proceeds from the exercises of stock options 2,389 3,053 5,186
Proceeds from investment in joint venture — — 60,000
Net cash provided by financing activities 870,520 253,053 65,186
−Removed: Net increase (decrease) in cash, cash equivalents and restricted cash 3,008 ( 76,362 ) 40,939
+Added: Net (decrease) increase in cash, cash equivalents and restricted cash ( 12,403 ) 3,008 ( 76,362 )
Effect of exchange rate on cash, cash equivalents and restricted cash 4,197 ( 122 ) ( 67 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
−Removed: BEGINNING OR PERIOD 108,005 184,434 143,583
+Added: BEGINNING OF PERIOD 110,891 108,005 184,434
END OF PERIOD $ 102,685 $ 110,891 $ 108,005
−Removed: Supplementary disclosures:
−Removed: Interest paid $ — $ — $ —
+Added: Supplementary disclosure of cash flows:
Income Taxes Paid $ ( 3,744 ) $ — $ ( 2 )
+Added: Supplementary disclosure of non-cash investing activities:
+Added: Capital expenditures included in accounts payable and accrued expenses $ 4,206 $ 14,044 $ 17,578
+Added: Supplementary disclosure of non-cash financing activities:
+Added: Debt issuance costs included in accrued expenses $ 5,000 $ — $ —
The accompanying notes are an integral part of these consolidated financial statements.
9 unchanged sentences
Therapeutic Area Name Stage Product Rights
−Removed: Cardiometabolic Plozasiran (ARO-APOC3)
−Removed: Two Phase 2b and one Phase 3 Arrowhead
−Removed: Zodasiran (ARO-ANG3)
−Removed: Two Phase 2b Arrowhead
+Added: Cardiometabolic plozasiran
+Added: Phase 3 Arrowhead
+Added: Phase 2b Arrowhead
olpasiran Phase 3 Amgen
4 unchanged sentences
fazirsiran Phase 3 Takeda and Arrowhead
−Removed: JNJ-3989 Phase 2 Janssen (1)
−Removed: HZN-457 Phase 1 Horizon (2)
−Removed: ARO-C3 Phase 1/2a
+Added: daplusiran/tomligisiran
ARO-PNPLA3 Phase 1
−Removed: ARO-DUX4 Pre-Clinical Arrowhead
+Added: ARO-C3 Phase 1/2a
+Added: ARO-CFB Phase 1/2a
+Added: ARO-DUX4 Phase 1/2a
+Added: ARO-DM1 Phase 1/2a
Central Nervous System (CNS)
−Removed: ARO-SOD1 Pre-Clinical Arrowhead
−Removed: (1) On October 30, 2023, the Company entered into an Assignment and Consent Agreement with Janssen.
−Removed: (2) On October 6, 2023, Amgen announced that it has completed its acquisition of Horizon.
−Removed: The Company operates lab facilities in San Diego, California and Madison, Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place.
+Added: ARO-ATXN2 Phase 1/2a
+Added: 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.
9 unchanged sentences
Certain prior period amounts have been reclassified to conform with the current period presentation.
−Removed: The Company’s primary sources of financing have been through the sale of its securities, revenue from its licensing and collaboration agreements and the sale of certain future royalties.
−Removed: Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have both expanded
−Removed: significantly.
−Removed: Additionally, significant capital investment will be required as the Company’s pipeline matures into later stage clinical trials and as the Company plans to increase its internal manufacturing capabilities.
−Removed: At September 30, 2023, the Company had $ 110.9 million in cash, cash equivalents and restricted cash ($ 7.9 million in restricted cash) and $ 292.7 million in available-for-sale debt securities to fund operations.
−Removed: During the year ended September 30, 2023, the Company’s cash, cash equivalents and restricted cash and investments balance decreased by $ 78.6 million which was primarily due to cash used to fund its operations, offset by the $ 250.0 million upfront payment received from Royalty Pharma (Note 13) and $ 110.0 million in milestone payments from the Company’s collaboration and license agreements (Note 2).
+Added: The Company’s primary sources of financing have been through the sale of its equity securities, credit facility, revenue from its licensing and collaboration agreements and the sale of certain future royalties.
+Added: Research and development activities have required significant investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have
+Added: both expanded.
+Added: Additionally, significant capital investment will be required as the Company’s pipeline matures into later stage clinical trials, including commercialization efforts.
+Added: At September 30, 2024, the Company had $ 102.7 million in cash, cash equivalents and restricted cash ($ 3.5 million in restricted cash) and $ 578.3 million in available-for-sale securities to fund operations.
+Added: During the year ended September 30, 2024, the Company’s cash, cash equivalents and restricted cash and investments balance increased by $ 277.3 million.
+Added: This increase was primarily driven by net proceeds from the credit facility and the underwritten offering as discussed below, offset by ongoing expenses related to the Company’s research and development programs, general and administrative costs, and capital expenditures.
+Added: On August 7, 2024, the Company entered into a financing agreement (the “Financing Agreement”) with Sixth Street Lending Partners, as representatives of several lenders.
+Added: The Financing Agreement provides for a senior secured term loan facility of $ 500 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.
+Added: The Company received net proceeds of $ 388.9 million, after issuance costs as of September 30, 2024.
+Added: On January 2, 2024, the Company entered into an underwriting agreement with Jefferies LLC, BofA Securities, Inc., and Cowen and Company, LLC, as representatives of the several underwriters.
+Added: The Company issued 15,790,000 shares of common stock at an offering price of $ 28.50 per share.
+Added: The aggregate purchase price paid by investors was $ 450.0 million, and the Company received net proceeds of $ 429.3 million after deducting advisory fees and offering expenses.
In total, the Company is eligible to receive up to $ 2.7 billion in developmental, regulatory and sales milestones, and may receive various royalties on net sales from its licensing and collaboration agreements, subject to the terms and conditions of those agreements.
3 unchanged sentences
The preparation of financial statements in conformity with U.S.
−Removed: generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
+Added: GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
On an ongoing basis, the Company evaluates its estimates, judgments and assumptions.
1 unchanged sentence
Actual results could materially differ from those estimates.
−Removed: Variable Interest Entity (“VIE”)
−Removed: A VIE is an entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties;
−Removed: or (ii) has equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
−Removed: The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE.
−Removed: The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.
−Removed: On April 25, 2022, the Company entered into a license agreement with Visirna (Note 2) and consolidated Visirna’s financial statements in which the Company has a direct controlling financial interest based on the VIE model.
−Removed: The Company considers all the facts and circumstances, including its role in establishing Visirna and its ongoing rights and responsibilities to assess whether the Company has the power to direct the activities of Visirna.
−Removed: In general, the parties that make the most significant decisions affecting a VIE and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
−Removed: The Company also considers all of its economic interests to assess whether the Company has the obligation to absorb losses of Visirna or the right to receive benefits from it that could potentially be significant to Visirna.
−Removed: This assessment requires the Company to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to Visirna.
−Removed: Factors considered in assessing the significance include:
−Removed: the design of the Visirna, including its capitalization structure, subordination of interests, payment priority, and the reasons why the interests are held by the Company.
−Removed: At Visirna’s inception, the Company determined whether it was the primary beneficiary and if Visirna should be consolidated based on the facts and circumstances.
−Removed: The Company performs ongoing reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation is required.
−Removed: As of September 30, 2023, there were no events to be reconsidered in the consolidation.
Cash, Cash Equivalents and Restricted Cash
3 unchanged sentences
There was $ 3.5 million and $ 7.9 million restricted cash at September 30, 2024 and 2023, respectively, that is primarily held as collateral associated with letters of credit for the Company’s facility leases.
−Removed: Concentration of Credit Risk
−Removed: Financial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash, cash equivalents and restricted cash and investments.
−Removed: As of September 30, 2023 and 2022, the Company’s investments were primarily invested in money market funds, certificates of deposit, commercial paper, and corporate debt securities through highly rated financial institutions.
−Removed: The Company also maintains several bank accounts primarily at three financial institutions for its operations.
−Removed: These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $ 250,000 per institution.
−Removed: Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held.
−Removed: Investment securities are mainly held-to-maturity investments, available-for-sale, and marketable securities.
−Removed: These held-to-maturity investments may consist of investment-grade interest bearing instruments, primarily money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper, which are stated at amortized cost.
−Removed: The Company does not intend to sell these investment securities and the contractual maturities are not greater than 36 months.
−Removed: Those with maturities less than twelve months are included in short-term investments on the Company’s consolidated balance sheets, while those with remaining maturities in excess of twelve months are included in long-term investments on its consolidated balance sheets.
−Removed: Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security, and no gains or losses on held-to-maturity investment are realized until they are sold.
−Removed: The Company reassesses the classification of held-to-maturity at each reporting period.
+Added: The Company classified all of its investments in debt securities as available-for-sale and as current assets as they represent the investment of funds available for current operations as of September 30, 2024 and 2023.
The available-for-sale investments may consist of investment-grade interest bearing instruments, primarily money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper, which are accounted for at fair value.
−Removed: Changes in fair values are reported as unrealized gains or losses and are recorded in the Company’s consolidated statement of operations and comprehensive loss.
−Removed: On September 30, 2023, the Company changed the classification of debt securities to available-for-sale from held-to-maturity.
−Removed: As a result, these debt securities are carried at fair value.
−Removed: The Company’s marketable debt securities consisted of mutual funds that primarily invest in U.S.
−Removed: government bonds, U.S.
−Removed: government agency bonds, and corporate bonds.
Dividends from these funds were automatically re-invested.
−Removed: These securities were recorded at fair value, and all unrealized gains/losses were recorded in the Company’s consolidated statement of operations and comprehensive loss.
−Removed: In April 2022, the Company sold all of its investments in mutual funds for $ 122.3 million.
−Removed: The Company monitors its investments closely.
+Added: Changes in fair values are reported as unrealized gains or losses and are recorded in the Company’s consolidated statement of operations and comprehensive loss.
+Added: The Company evaluates its investments for impairment.
If an unrealized loss is determined to be other-than-temporary, it is written off as a realized loss through the consolidated statements of operations and comprehensive loss.
The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors, including the length of time to maturity and the extent to which the fair value has been less than the cost, recoverability of future cash flows as compared to carrying value of the security, the financial condition and the near-term prospects of the issuer, and the Company’s ability and intent to hold the security.
−Removed: If a decline in fair value of investments is determined to be other-than-temporary, the securities are written down to fair value as the new cost basis and the amount of the write down is accounted for as realized losses.
+Added: If a decline in fair value of investments is determined to be other-than-temporary, the securities are written down to fair value
+Added: as the new cost basis and the amount of the write down is accounted for as realized losses.
The Company did not recognize any other-than-temporary impairments of its investment for the years ended September 30, 2024, 2023, and 2022.
−Removed: Property and Equipment
−Removed: Property and equipment are recorded at cost.
−Removed: Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years .
+Added: Concentration of Credit Risk
+Added: Financial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash, cash equivalents and restricted cash and investments.
+Added: As of September 30, 2024 and 2023, the Company’s investments were primarily invested in money market funds, commercial paper, and corporate debt securities through highly rated financial institutions.
+Added: The Company has established guidelines relative to diversification and maturities that maintain safety and liquidity.
+Added: The Company periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity.
+Added: The Company also maintains several bank accounts primarily at two financial institutions for its operations.
+Added: These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $ 250,000 per institution.
+Added: Property, Plant and Equipment
+Added: Property, plant and equipment are recorded at cost, net of accumulated depreciation.
+Added: Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets.
Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term.
−Removed: The Company periodically assesses long-lived assets or asset groups, including property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable.
+Added: Construction in progress reflects amounts incurred for construction or improvements of property, plant and equipment that have not been placed in service.
+Added: Upon disposition, the cost and accumulated depreciation of assets retired or sold are removed from the respective asset category, and any gain or loss is recognized in the Company’s consolidated statement of operations and comprehensive loss.
+Added: The estimated useful lives of property, plant and equipment are as follows (in years):
+Added: Estimated Useful Lives
+Added: Research equipment 5 to 10
+Added: Computers and software 3 to 5
+Added: Leasehold improvements 3 to 15
+Added: The Company periodically assesses long-lived assets or asset groups, including property, plant and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable.
If the Company identifies an indicator of impairment, the Company assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset.
3 unchanged sentences
Intangible assets subject to amortization include certain patents and license agreements.
−Removed: The Company qualitatively evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount of intangible assets may exceed their implied fair values.
−Removed: As of September 30, 2023 and 2022, intangible impairment assessments indicated that there was no impairment.
+Added: The Company evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount of intangible assets may exceed their implied fair values.
+Added: No impairment charges were recorded during the years ended September 30, 2024, 2023, and 2022.
The Company determines whether a contract is, or contains, a lease at inception.
2 unchanged sentences
Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term.
+Added: As of September 30, 2024 and 2023, the Company is not reasonably certain that it will exercise renewal options for any lease facilities.
+Added: Therefore, these options are not included in the right-of-use assets and liabilities.
The interest rate implicit in lease contracts is typically not readily determinable.
2 unchanged sentences
Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.
+Added: Clinical Accruals
+Added: The Company accrues liabilities for products received or services incurred, particularly for ongoing clinical trials, where service providers have not yet billed or where billing terms do not align with the timing of the work performed as of the period-end.
+Added: These costs mainly include third-party clinical management or clinical research organization (CRO), laboratory analysis, and investigator fees.
+Added: Accrual estimates may be based on vendor communications to obtain pending invoices and/or estimates for services performed during the period.
+Added: In some cases, these estimates require judgment, drawing on an understanding of research and development programs, services provided during the period, prior experience, and, where applicable, the expected duration of third-party contracts.
+Added: Actual costs upon settlement may differ significantly from the accrued amounts in the Company’s consolidated financial statements, though historical estimates have not differed materially from actual costs.
Revenue Recognition
17 unchanged sentences
development milestones, generally based on the initiation of toxicity studies or clinical trials;
−Removed: regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a Clinical Trial Application (“CTA”) or a New Drug Application (“NDA”) in the United States;
+Added: regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a New Drug Application (“NDA”) in the United States;
and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas.
2 unchanged sentences
At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and royalties, and, if necessary, adjusts its estimate of the overall transaction price.
−Removed: Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in the Company’s consolidated statements of operation and comprehensive loss.
+Added: Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in the Company’s consolidated statements of operations and comprehensive loss.
Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or preclinical program.
19 unchanged sentences
The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of Financial Accounting Standards Board (“FASB”) Topic 808 - Collaborative Arrangements .
−Removed: For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Topic 606.
+Added: For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Topic 606 - Revenue for Contracts from Customers .
For units of account that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election.
−Removed: For collaborative arrangements that are within the scope of Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature
−Removed: of each activity.
+Added: For collaborative arrangements that are within the scope of Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity.
Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate.
−Removed: Research and Development
+Added: Research and Development Expenses
Costs and expenses that can be clearly identified as research and development are charged to expense as incurred.
3 unchanged sentences
The fair value of stock option awards is estimated using the Black-Scholes option valuation model which requires the input of subjective assumptions to calculate the value of stock options.
+Added: The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate for stock option awards.
For restricted stock units, the value of the award is based on the Company’s stock price at the grant date.
For performance-based restricted stock unit awards, the value of the award is based on the Company’s stock price at the grant date, with consideration given to the probability of the performance condition being achieved.
−Removed: The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate for stock option awards.
Expense is recognized over the vesting period for all awards and commences at the grant date for time-based awards and upon the Company’s determination that the achievement of such performance conditions is probable for performance-based awards.
4 unchanged sentences
The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in earnings in the period that includes the enactment date.
−Removed: Earnings per Share
−Removed: Basic earnings per share is computed using the weighted-average number of common shares outstanding during the period.
+Added: Variable Interest Entity (“VIE”)
+Added: A VIE is an entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties;
+Added: or (ii) has equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
+Added: The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE.
+Added: The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.
+Added: On April 25, 2022, the Company entered into a license agreement with Visirna (Note 2) and consolidated Visirna’s financial statements in which the Company has a direct controlling financial interest based on the VIE model.
+Added: The Company considers all the facts and circumstances, including its role in establishing Visirna and its ongoing rights and responsibilities to assess whether the Company has the power to direct the activities of Visirna.
+Added: In general, the parties that make the most significant decisions affecting a VIE and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
+Added: The Company also considers all of its economic interests to assess whether the Company has the obligation to absorb losses of Visirna or the right to receive benefits from it that could potentially be significant to Visirna.
+Added: This assessment requires the Company to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to Visirna.
+Added: Factors considered in assessing the significance include:
+Added: the design of Visirna, including its capitalization structure, subordination of interests, payment priority, and the reasons why the interests are held by the Company.
+Added: At Visirna’s inception, the Company determined whether it was the primary beneficiary and if Visirna should be consolidated based on the facts and circumstances.
+Added: The Company performs ongoing reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation is required.
+Added: As of September 30, 2024, there were no events to be reconsidered in the consolidation.
+Added: Net Loss per Share
+Added: Net loss per share is computed using the weighted-average number of common shares outstanding during the period.
Diluted earnings per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period.
2 unchanged sentences
Foreign Currency Translation Adjustments
−Removed: One of the Company’s wholly-owned subsidiaries’ functional currencies are not the United States dollar, which is the Company’s reporting currency.
+Added: One of the Company’s wholly-owned subsidiaries’ functional currencies is not the United States dollar, which is the Company’s reporting currency.
Assets and liabilities are translated at the exchange rate in effect at the balance sheet date.
1 unchanged sentence
Translation adjustments arising from the use of different exchange rates from period to period are included in the accumulated other comprehensive loss.
+Added: Segment Information
+Added: The Company operates as a single segment because its chief decision makers review operating results on an aggregate basis and manage its operations as a single operating segment.
Recent Accounting Pronouncements
−Removed: There have been no recent accounting pronouncements that have significantly impacted this Annual Report on Form 10-K.
+Added: In December 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures , to improve its income tax disclosure requirements.
+Added: Under the guidance, entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.
+Added: This guidance will become effective for the Company beginning on October 1, 2025.
+Added: The Company does not expect any material impact on its consolidated financial statements and related disclosures resulting from applying this ASU.
+Added: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):
+Added: Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses.
+Added: The guidance requires public companies with a single reportable segment to provide all disclosures required under ASC 280.
+Added: In addition, the guidance requires public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports.
+Added: The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
+Added: The amendments should be applied retrospectively to all prior periods presented in the financial statements.
+Added: The Company does not expect any material impact on its consolidated financial statements and related disclosures resulting from applying this ASU.
COLLABORATION AND LICENSE AGREEMENTS
16 unchanged sentences
3) Limited (“GSK”)
−Removed: On November 22, 2021, GSK and the Company entered into an Exclusive License Agreement (the “GSK License Agreement”).
−Removed: Under the GSK License Agreement, GSK has received an exclusive license for GSK-4532990 (formerly ARO-HSD).
+Added: GSK-HSD License Agreement
+Added: On November 22, 2021, GSK and the Company entered into an Exclusive License Agreement (the “GSK-HSD License Agreement”).
+Added: Under the GSK-HSD License Agreement, GSK has received an exclusive license for GSK-4532990 (formerly ARO-HSD).
The exclusive license is worldwide with the exception of greater China.
GSK is wholly responsible for all clinical development and commercialization of GSK-4532990 in its territory.
−Removed: At the inception of the GSK License Agreement, the Company identified one distinct performance obligation.
−Removed: The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study (the “GSK R&D Services”).
−Removed: Due to the specialized and unique nature of the GSK R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation.
The Company determined the initial transaction price totaled $ 120.0 million, including the upfront payment, which was collected in January 2022.
−Removed: The Company has excluded any future estimated milestones or royalties from this transaction price to date.
−Removed: The Company has allocated the total $ 120.0 million initial transaction price to its one distinct performance obligation for the GSK-4532990 license and the associated GSK R&D Services.
−Removed: As the Company has completed its performance obligation related to this agreement, the upfront payment of $ 120.0 million was fully recognized in the year ended September 30, 2022.
−Removed: Further, GSK dosed the first patient in a Phase 2b trial in March 2023, triggering a $ 30.0 million milestone payment to the Company which was paid in the third quarter of fiscal 2023.
−Removed: The Company is also eligible for an additional payment of $ 100.0 million upon achieving the first patient dosed in a Phase 3 trial.
−Removed: Furthermore, should the Phase 3 trial read out positively, and the potential new medicine receives regulatory approval in major markets, the deal provides for commercial milestone payments to the Company of up to $ 190.0 million at first commercial sale, and up to $ 590.0 million in sales-related milestone payments.
+Added: The Company has completed its performance obligation related to this agreement, and the upfront payment of $ 120.0 million was fully recognized in the year ended September 30, 2022.
+Added: Further, GSK dosed the first patient in a Phase 2b trial in March 2023 and paid a $ 30.0 million milestone payment to the Company in the third quarter of fiscal 2023.
+Added: The Company is eligible for an additional payment of $ 100.0 million upon achieving the first patient dosed in a Phase 3 trial.
+Added: Furthermore, should the Phase 3 trial read out positively, and the potential new medicine receives regulatory
+Added: approval in major markets, the deal provides for commercial milestone payments to the Company of up to $ 190.0 million at first commercial sale, and up to $ 590.0 million in sales-related milestone payments.
The Company is further eligible to receive tiered royalties on net product sales in a range of mid-teens to twenty percent.
−Removed: The Company has also performed certain development and manufacturing activities, including the manufacture of drug substance and drug product under GMP conditions, for GSK pursuant to the GSK License Agreement, for which the Company has been reimbursed for its costs.
−Removed: The Company recognized $ 0.3 million and $ 4.8 million in connection with these efforts for the years ended September 30, 2023 and 2022, respectively.
+Added: GSK-HBV Agreement
+Added: On December 11, 2023, the Company entered into an Amended and Restated License Agreement with GSK (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.
+Added: GSK5637608 had previously been licensed to Janssen in October 2018.
+Added: Under the terms of the GSK-HBV Agreement, the Company received $ 2.7 million in December 2023, upon signing the amended GSK-HBV Agreement.
+Added: The Company is eligible to receive up to $ 832.5 million in development and sales milestone payments under the GSK-HBV Agreement.
+Added: There were no contract assets and liabilities recorded as of September 30, 2024.
Horizon Therapeutics Ireland DAC (“Horizon”)
−Removed: On June 18, 2021, Horizon and the Company entered into a collaboration and license agreement (the “Horizon License Agreement”).
−Removed: Under the terms of the Horizon License Agreement, Horizon received a worldwide exclusive license for HZN-457, a clinical-stage medicine being developed by Horizon as a potential treatment for people with uncontrolled
−Removed: Horizon is wholly responsible for clinical development and commercialization of HZN-457.
−Removed: On October 6, 2023, Amgen completed its acquisition of Horizon.
+Added: In June 2021, Horizon and the Company entered into a collaboration and license agreement (the “Horizon License Agreement”).
+Added: Under the terms of the Horizon License Agreement, Horizon received a worldwide exclusive license for HZN-457, a clinical-stage medicine being developed by Horizon as a potential treatment for people with uncontrolled gout.
At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation.
The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of HZN-457 (the “Horizon R&D Services”).
−Removed: Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation.
−Removed: Beyond the Horizon R&D Services, which are the responsibility of the Company, Horizon will be responsible for managing future clinical development and commercialization of HZN-457.
−Removed: The Company conducted all activities through the preclinical stages of development of HZN-457.
−Removed: Under the terms of the agreement, the Company received an upfront payment of $ 40.0 million in July 2021.
−Removed: The Company determined the initial transaction price totaled $ 40.0 million and has excluded any future estimated milestones or royalties from this transaction price to date.
−Removed: The Company allocated the total $ 40.0 million initial transaction price to its one distinct performance obligation for the HZN-457 license and the associated Horizon R&D Services.
−Removed: Revenue was recognized on a straight-line basis over the timeframe for completing the Horizon R&D Services.
−Removed: The Company determined that the straight-line basis was appropriate as its efforts were expended evenly over the course of completing its performance obligation.
−Removed: Further, Horizon enrolled the first subject in December 2022 in a Phase 1 randomized, placebo-controlled trial to assess the safety, tolerability, pharmacokinetics and pharmacodynamics of HZN-457, triggering a $ 15.0 million milestone payment to the Company which was paid in the second quarter of fiscal 2023.
−Removed: On November 21, 2023, the Company received notice from Horizon that it has elected to terminate the Horizon License Agreement.
−Removed: Horizon exercised its right to terminate the Horizon License Agreement for convenience.
−Removed: The termination will take effect on December 21, 2023.
−Removed: In addition, the Company has performed certain development and manufacturing activities, including drug substance and drug product manufacture under GMP conditions, for Horizon pursuant to the Horizon License Agreement.
−Removed: The Company recognized $ 1.5 million and $ 2.5 million in connection with these efforts for the years ended September 30, 2023 and 2022, respectively.
+Added: The Company received a $ 40.0 million upfront payment in July 2021.
+Added: Revenue was recognized on a straight-line basis, which corresponded to the timeframe for completing the Horizon R&D Services, concluding in the first quarter of 2023.
+Added: Further, the Company received an additional $ 15.0 million upon Horizon’s initiation of a Phase 1 clinical trial in January 2023.
+Added: On October 6, 2023, Amgen completed its acquisition of Horizon and subsequently notified the Company of Amgen’s intent to terminate the HZN-457 license.
+Added: Horizon exercised its right to terminate the Horizon License Agreement for convenience, which took effect on December 21, 2023.
Takeda Pharmaceutical Company Limited (“Takeda”)
−Removed: On October 7, 2020, Takeda and the Company entered into an Exclusive License and Co-Funding Agreement (the “Takeda License Agreement”).
+Added: In October 2020, Takeda and the Company entered into an Exclusive License and Co-Funding Agreement (the “Takeda License Agreement”).
Under the Takeda License Agreement, Takeda and the Company will co-develop the Company’s fazirsiran program (formerly TAK-999 and ARO-AAT), the Company’s second-generation subcutaneously administered RNAi therapeutic candidate being developed as a treatment for liver disease associated with alpha-1 antitrypsin deficiency.
7 unchanged sentences
The Company considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of account within Topic 808, and as such, these co-funding amounts are recorded as research and development expenses or general and administrative expenses, as appropriate.
−Removed: Under the terms of the Takeda License Agreement, the Company received $ 300.0 million as an upfront payment in January 2021 and an additional $ 40.0 million upon Takeda’s initiation of a Phase 3 REDWOOD clinical study of fazirsiran in March 2023, and is eligible to receive up to $ 527.5 million in additional potential development, regulatory and commercial milestones.
−Removed: 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.
−Removed: Revenue is recognized using the input method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies).
−Removed: The Company previously expected these clinical trials to extend to September 2025 in order to demonstrate long term safety and efficacy in the open label extension (OLE) part of the studies;
−Removed: however, in August 2023, Takeda initiated a Phase 3 OLE study available to patients participating in these Phase 2 studies.
−Removed: Based on this new information, patients enrolled in the SEQUOIA and AROAAT2002 studies are expected to complete their Phase 2 study visits between June 2023 and December 2023, shortening the Company’s performance obligation.
−Removed: As a result, effective the second quarter of fiscal 2023, the Company changed its estimates of the revenue recognition to better reflect this newly estimated performance period.
−Removed: The effect of these changes in estimates resulted in accelerated revenue by $ 70.5 million, or $ 0.66 per share (diluted) for the year ended September 30, 2023.
−Removed: There were $ 0.9 million of contract liabilities recorded as current deferred revenue as of September 30, 2023.
−Removed: The Company also recorded $ 4.5 million as accrued expenses as of September 30, 2023 that was primarily driven by co-development and co-commercialization activities.
+Added: Under the terms of the Takeda License Agreement, the Company received $ 300.0 million as an upfront payment in January 2021 and an additional $ 40.0 million upon Takeda’s initiation of a Phase 3 REDWOOD clinical study of fazirsiran
+Added: in March 2023, and is eligible to receive up to $ 527.5 million in additional potential development, regulatory and commercial milestones.
+Added: The Company 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.
+Added: 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).
+Added: 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.
+Added: As such, all revenue has been fully recognized as of December 31, 2023.
+Added: There were no further deferred revenue and contract liabilities as of September 30, 2024.
+Added: The Company recorded $ 23.4 million as accrued expenses as of September 30, 2024 that was primarily driven by co-development and co-commercialization activities.
Janssen Pharmaceuticals, Inc.
−Removed: On October 3, 2018, Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson, and the Company entered into a License Agreement (the “Janssen License Agreement”).
−Removed: The Company also entered into a stock purchase agreement with JJDC, Inc.
−Removed: (“JJDC”), Johnson & Johnson’s venture capital arm (the “JJDC Stock Purchase Agreement”).
−Removed: Under the Janssen License Agreement, Janssen received a worldwide, exclusive license to the Company’s JNJ-3989 (formerly ARO-HBV) program, the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection.
−Removed: Beyond the Company’s Phase 1/2 study of JNJ-3989, which the Company was responsible for completing, Janssen is wholly responsible for clinical development and commercialization of JNJ-3989.
−Removed: Under the terms of the Janssen License Agreement, the Company received $ 175.0 million as an upfront payment, $ 75.0 million in the form of an equity investment by JJDC in the Company’s common stock under the JJDC Stock Purchase Agreement, and milestone and option payments totaling $ 73.0 million, and the Company may receive up to $ 825.0 million in development and sales milestone payments for the Janssen License Agreement.
−Removed: The Company is further eligible to receive tiered royalties on product sales up to mid-teens under the Janssen License Agreement.
−Removed: At the inception of the Janssen License Agreement, the Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibility to complete the Phase 1/2 study of JNJ-3989 and the Company’s responsibility to ensure certain manufacturing of JNJ-3989 drug product is completed and delivered to Janssen (the “Janssen R&D Services”).
−Removed: Due to the specialized and unique nature of these Janssen R&D Services and their direct relationship with the license, the Company determined that these deliverables represent one distinct bundle and, thus, one performance obligation.
−Removed: The Company determined the transaction price totaled approximately $ 252.7 million, which includes the upfront payment, the premium paid by JJDC for its equity investment in the Company, two $ 25.0 million milestone payments related to JNJ-3989, and estimated payments for reimbursable Janssen R&D Services to be performed.
−Removed: The Company has allocated the total $ 252.7 million initial transaction price to its one distinct performance obligation for the JNJ-3989 license and the associated Janssen R&D Services.
−Removed: The Company recognized this transaction price in its entirety as of September 30, 2021, as its performance obligations were substantially completed.
−Removed: There were no contract assets and liabilities recorded as of September 30, 2023.
−Removed: On April 7, 2023, Janssen voluntarily terminated its collaboration agreement with the Company, dated October 3, 2018.
−Removed: Upon termination of the collaboration agreement, the Company regained full rights to ARO-PNPLA3, formerly called JNJ-75220795.
−Removed: ARO-PNPLA3 is in Phase 1 clinical trials that are now being developed by the Company.
−Removed: On September 28, 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement.
+Added: On April 7, 2023, Janssen voluntarily terminated its collaboration agreement with the Company and the Company regained full rights to ARO-PNPLA3, formerly called JNJ-75220795.
+Added: ARO-PNPLA3 is in Phase 1 clinical trials, which are now being developed by the Company.
+Added: Further, on December 11, 2023, the Company entered into the GSK-HBV Agreement, as discussed above, pursuant to which GSK received an exclusive license for daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989).
+Added: Daplusiran/tomligisiran had previously been licensed to Janssen in October 2018.
+Added: In September 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement.
Under the Second Collaboration and License Agreement (the “Olpasiran Agreement”), Amgen received a worldwide, exclusive license to the Company’s novel RNAi olpasiran (previously referred to as AMG-890 or ARO-LPA) program.
2 unchanged sentences
Under the Olpasiran Agreement, the Company has received $ 35.0 million in upfront payments and $ 21.5 million in the form of an equity investment by Amgen in the Company’s common stock.
−Removed: Further, the Company received additional an
−Removed: $ 55.0 million in milestone payments;
+Added: Further, the Company received an additional $ 55.0 million in milestone payments;
$ 10.0 million upon Amgen’s initiation of a Phase 1 study in September 2018, $ 20.0 million upon its initiation of a Phase 2 clinical study in July 2020, and $ 25.0 million upon its first subject enrollment in a Phase 3 trial in December 2022.
1 unchanged sentence
There were no contract assets and liabilities recorded as of September 30, 2024.
−Removed: In November 2022, Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) and the Company entered into a Royalty Purchase Agreement (the “Royalty Pharma Agreement”).
+Added: In November 2022, Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) and the Company entered into a Royalty Purchase Agreement with Royalty Pharma (the “Royalty Pharma Agreement”).
+Added: Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid an upfront amount of $ 250.0 million during the first quarter of fiscal 2023.
+Added: An additional milestone payment of $ 50.0 million was paid during the third quarter of fiscal 2024 due to the completed enrollment of the Phase 3 OCEAN(a) outcomes trial for olpasiran.
In consideration for the payments under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement.
The Company remains eligible to receive up to an additional $ 485.0 million in remaining development, regulatory and sales milestone payments payable from Amgen and Royalty Pharma.
−Removed: Joint Venture and License Agreement with Visirna Therapeutics, Inc.
−Removed: On April 25, 2022, the Company entered into a License Agreement with Visirna (the “Visirna License Agreement”), pursuant to which Visirna received an exclusive license to develop, manufacture and commercialize four of the Company’s RNAi-based investigational cardiometabolic medicines in Greater China (including the People’s Republic of China, Hong Kong, Macau and Taiwan).
−Removed: Pursuant to a Share Purchase Agreement entered into simultaneously with the Visirna License Agreement (the “Visirna SPA”), the Company acquired a majority stake in Visirna (after accounting for shares reserved for Visirna’s employee stock ownership plan) as partial consideration for the Visirna License Agreement.
−Removed: Under the Visirna SPA, entities affiliated with Vivo Capital also acquired a minority stake in Visirna in exchange for $ 60.0 million in upfront capital to support the operations of Visirna.
−Removed: As further consideration under the Visirna License Agreement, the Company is also eligible to receive potential royalties on commercial sales.
−Removed: PROPERTY AND EQUIPMENT
−Removed: The following table summarizes the Company’s major classes of property and equipment:
+Added: BALANCE SHEET ACCOUNTS
+Added: Property, Plant and Equipment
+Added: The following table summarizes the Company’s major classes of property, plant and equipment:
September 30,
(in thousands)
−Removed: Computers, software, office equipment and furniture $ 2,240 $ 2,182
Land $ 2,996 $ 2,996
+Added: Building 75,988 —
Research equipment 65,353 56,509
+Added: Furniture 5,594 1,540
+Added: Computers and software 981 700
Leasehold improvements 104,410 103,813
2 unchanged sentences
Accumulated depreciation and amortization ( 58,021 ) ( 41,951 )
−Removed: Property and equipment, net $ 290,262 $ 110,297
−Removed: Depreciation and amortization expense for property and equipment for the years ended September 30, 2023, 2022, and 2021 was $ 10.7 million, $ 8.7 million and $ 6.6 million respectively.
−Removed: The increase in the construction in progress during 2023 was mainly due to the continuing developments of manufacturing, laboratory and office facilities in Verona, Wisconsin.
−Removed: In May 2023, the Company completed the development of the San Diego facility, which resulted in the reclassification of related construction in progress to leasehold improvements as of September 30, 2023.
+Added: Property, plant and equipment, net $ 386,032 $ 290,262
+Added: Depreciation and amortization expense for property, plant and equipment for the years ended September 30, 2024, 2023, and 2022 was $ 16.9 million, $ 10.7 million and $ 8.7 million, respectively.
+Added: During the first quarter of fiscal 2024, the Company completed the build out of one of its laboratory and office facilities in Verona, Wisconsin, which resulted in the reclassification of $ 76.0 million from construction in progress to building as of September 30, 2024.
+Added: Further, the Company commenced depreciation on the newly completed facility over a 39 -year period.
+Added: Accrued Expenses
+Added: Accrued expenses consist of the following:
+Added: September 30,
+Added: (in thousands)
+Added: Accrued R&D expenses $ 28,069 $ 12,826
+Added: Accrued R&D expenses;
+Added: co-development 23,351 5,895
+Added: Accrued capital expenditures 4,206 14,044
+Added: Other 7,391 6,998
+Added: Total accrued expenses $ 63,017 $ 39,763
The Company’s investments consisted of the following:
4 unchanged sentences
Unrealized Losses Fair Value
−Removed: Available-for-sale debt securities $ 295,699 $ — $ ( 2,964 ) $ 292,735
+Added: Available-for-sale securities $ 577,465 $ 837 $ ( 26 ) $ 578,276
Total current investments $ 577,465 $ 837 $ ( 26 ) $ 578,276
−Removed: On September 30, 2023, the Company changed the classification of its investment securities from held-to-maturity to available-for-sale.
−Removed: This change enables the Company’s need to be able to respond to market and liquidity risks in managing its portfolio.
−Removed: Such investments are carried at fair value with any unrealized gains and losses reported as a component of other accumulated comprehensive loss.
−Removed: At the date of the transfer, the carrying value of the Company’s held-to-maturity securities was $ 295.7 million, and net unrealized losses of $ 3.0 million were recognized in accumulated other comprehensive loss.
−Removed: The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position have any credit loss impairment as of September 30, 2023.
As of September 30, 2023
3 unchanged sentences
Unrealized Losses Fair Value
−Removed: Short-term investments (due within one year)
−Removed: Held-to-maturity debt securities
−Removed: $ 218,391 $ — $ ( 3,661 ) $ 214,730
−Removed: Held-to-maturity certificate of deposit
+Added: Available-for-sale securities
$ 295,699 $ 3 $ ( 2,967 ) $ 292,735
Total current investments $ 295,699 $ 3 $ ( 2,967 ) $ 292,735
−Removed: Long-term investments (Due within one through three years)
−Removed: Held-to-maturity debt securities $ 105,872 $ — $ ( 5,569 ) $ 100,303
−Removed: Total long-term investments $ 105,872 $ — $ ( 5,569 ) $ 100,303
+Added: As of September 30, 2024, the gross unrealized losses were immaterial, and all of the Company’s available-for-sale investments were due within one year or less.
+Added: On September 30, 2023, the Company changed the classification of its investment securities from held-to-maturity to available-for-sale.
+Added: At the date of the transfer, the carrying value of the Company’s held-to-maturity securities was $ 295.7 million, and net unrealized losses of $ 3.0 million were recognized in accumulated other comprehensive loss.
+Added: The Company has determined that the available-for-sale securities that were in an unrealized loss position did not have any credit loss impairment as of September 30, 2024 and 2023.
INTANGIBLE ASSETS
31 unchanged sentences
Preferred stock $ 0.001 5,000 — —
−Removed: On March 16, 2023, the Company’s stockholders approved an increase in authorized common shares, par value $ 0.001 per share, from 145,000,000 to 290,000,000 .
−Removed: The amendment to the Amended and Restated Certificate of Incorporation was filed on April 27, 2023.
−Removed: As of September 30, 2023 and 2022, respectively, 12,709,837 and 14,000,392 shares of common stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2004 Equity Incentive Plan, 2013 Incentive Plan, and 2021 Incentive Plan, as well as for inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.
+Added: As of September 30, 2024 and 2023, respectively, 11,492,293 and 12,709,837 shares of common stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2013 and 2021 Incentive Plans, as well as for other inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.
+Added: On January 2, 2024, the Company entered into an underwriting agreement with Jefferies LLC, BofA Securities, Inc., and Cowen and Company, LLC, as representatives of the several underwriters.
+Added: The Company issued 15,790,000 shares of common stock at an offering price of $ 28.50 per share.
+Added: The aggregate purchase price paid by investors was $ 450.0 million and the Company received net proceeds of $ 429.3 million after deducting advisory fees and offering expenses.
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 $ 250,000,000 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 (“ATM Offering”).
1 unchanged sentence
The Company will pay Jefferies LLC a commission of up to 3.0 % of the aggregate gross proceeds received from all sales of the common stock under the Open Market Sale Agreement.
−Removed: Unless otherwise terminated, the ATM Offering shall terminate upon the earlier of (i) the sale of all shares of common stock subject to the Sales Agreement and (ii) the termination of the Sales Agreement as permitted therein.
+Added: Unless otherwise terminated, the ATM Offering shall terminate upon the earlier of (i) the sale of all shares of common stock subject to the Open Market Sale Agreement and (ii) the termination of the Open Market Sale Agreement as permitted therein.
The Company and Jefferies may each terminate the Open Market Sale Agreement at any time upon prior notice.
4 unchanged sentences
There were no contingent liabilities recorded as of September 30, 2024 and 2023.
−Removed: On December 20, 2021, the Company completed a purchase of 13 acres of land in the Verona Technology Park in Verona, Wisconsin, which is being developed into an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility which will support the Company’s process development and analytical activities.
−Removed: As of September 30, 2023, the Company has incurred $ 166.2 million and intends to spend an additional $ 120.0 million to $ 130.0 million to complete the build out of the facilities.
−Removed: As part of this land acquisition, the Company entered into a development agreement with the City of Verona to construct certain infrastructure improvements within the tax increment district and will be reimbursed up to $ 16.0 million by the City of Verona by future tax increment revenue generated from the developed property.
−Removed: The total amount of funding that City of Verona will pay under the Tax Increment Financing program is not guaranteed and will depend on future tax revenues generated from the developed property .
−Removed: The Company also became eligible to receive up to $ 2.5 million in refundable Wisconsin state income tax credits from the Wisconsin Economic Development Corporation (WEDC) as incentives for investing in the local community and creating new job opportunities.
−Removed: As of September 30, 2023, the Company has collected $ 1.5 million of these credits.
−Removed: Technology License Commitments
−Removed: The Company has licensed from third parties the rights to use certain technologies for its research and development activities, as well as in any products it may develop using these licensed technologies.
−Removed: These agreements and other similar agreements often require the Company to make milestone and royalty payments.
−Removed: Milestone payments, for example, may be
−Removed: required as the research and development process progresses through various stages of development, such as when clinical candidates enter or progress through clinical trials, upon NDA and/or certain sales level milestones.
−Removed: The Company did not reach any milestones during the years of 2023 and 2022.
−Removed: During 2021, the Company triggered the milestone related to the progression of the ARO-ENaC and ARO-HIF2 candidates and made milestone payments of $ 2.4 million.
−Removed: On November 19, 2021, the Company entered into a 15 -year lease for approximately 144,000 square feet of office and research and development laboratory space in San Diego, California, for which the rent commencement date began on April 19, 2023.
−Removed: This new facility accommodates increased personnel for its expanding pipeline of current and future drug candidates.
−Removed: Pursuant to the lease, within twelve months of the expiration of the initial 15 -year term, the Company has the option to extend the lease for up to one additional ten-year term, with certain annual increases in base rent.
−Removed: The lease agreement grants the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor, with a maximum amount of $ 7.2 million, subject to a 7 % interest per annum over the base term.
−Removed: Further, on September 25, 2023, the Company executed the first amendment to the lease, which grants a second ATIA with a maximum amount of $ 23.6 million, bearing interest at a rate of 9 % per annum over the base term.
−Removed: The Company has received $ 27.8 million ATIA from the lessor as of September 30, 2023.
−Removed: As a result, the Company remeasured its lease liability and right-of-use assets to reflect these additional allowances and the related increase lease payments.
−Removed: The Company has further concluded that these ATIAs have no effects on the classification of the lease.
−Removed: Other Significant Leases
+Added: The Company owns land in the Verona Technology Park in Verona, Wisconsin, which has been developed into an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility which will support the Company’s manufacturing process development and analytical activities.
+Added: During the first quarter of fiscal 2024, the Company completed the build out of one of its laboratory and office facilities.
+Added: As of September 30, 2024, the Company has incurred $ 285.7 million and intends to spend an additional $ 8.0 million to complete the build out of the facilities.
Pasadena, California :
1 unchanged sentence
for its corporate headquarters from 177 Colorado Owner, LLC, which lease expires on April 30, 2027.
−Removed: The lease contains an option to renew for one term of five years.
+Added: The lease contains an option to renew for one additional five-year term.
+Added: The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of September 30, 2024.
San Diego, California :
−Removed: The Company subleased space from Halozyme, Inc.
−Removed: for additional research and development space in San Diego, California.
−Removed: The term of this sublease commenced on April 1, 2020 and ended on January 14, 2023.
−Removed: On December 23, 2022, the Company entered into a new six-month lease agreement with 11404 & 11408 Sorrento Valley Owner (DE) LLC, effective January 15, 2023.
−Removed: The lease ended on July 15, 2023.
+Added: The Company leases 144,000 square feet of office and research and development laboratory space located at 10102 Hoyt Park from 11404 & 11408 Sorrento Valley Owner, LLC, which lease expires on April 30, 2038.
+Added: Pursuant to the lease, within twelve months of the expiration of the initial 15 -year term, the Company has the option to
+Added: extend the lease for up to one additional ten-year term, with certain annual increases in base rent.
+Added: The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of September 30, 2024.
+Added: The lease agreement grants the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor, with a maximum amount of $ 7.2 million, subject to a 7 % interest per annum over the base term.
+Added: Further, on September 25, 2023, the Company executed the first amendment to the lease, which grants a second ATIA with a maximum amount of $ 23.6 million, bearing interest at a rate of 9 % per annum over the base term.
+Added: The Company received $ 3.1 million and $ 27.7 million in ATIA from the lessor during fiscal years 2024 and 2023, respectively.
+Added: As a result, the Company remeasured its lease liability and right-of-use assets to reflect these additional allowances and the related increased lease payments.
+Added: The Company has further concluded that these ATIAs have no effects on the classification of the lease.
+Added: The Company previously subleased additional research and development space in San Diego, California, which sublease ended during the fiscal year of 2023.
Madison, Wisconsin :
−Removed: The Company leases space for office and laboratory facilities, which expires on September 30, 2031.
+Added: The Company leases 107,000 square feet space located at 502 South Rosa Road for its office and laboratory facilities from University Research Park, Inc., which lease expires on September 30, 2031.
The lease contains options to renew for two terms of five years .
−Removed: After accounting for additional rental square feet added pursuant to amendments to the lease agreement in 2019 and 2020, the Company currently leases a total of 115,000 square feet.
+Added: The Company is not reasonably certain that it will exercise this option and therefore it is not included in right-of-use assets and liabilities as of September 30, 2024.
The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:
5 unchanged sentences
Non-current operating lease liabilities Lease liabilities, net of current portion 111,027 104,608
−Removed: The components of lease cost along with its classification on the Company’s consolidated statements of operations were as follows:
Year Ended September 30,
8 unchanged sentences
(1) Variable lease cost is primarily related to operating expenses associated with the Company’s operating leases.
−Removed: There was $ 1.4 million, $ 0.3 million and $ 0 short-term lease cost during the years ended September 30, 2023, 2022, and 2021, respectively.
+Added: There was $ 0 , $ 1.4 million and $ 0.3 million short-term lease cost during the years ended September 30, 2024, 2023, and 2022, respectively.
The following table presents maturities of operating lease liabilities on an undiscounted basis as of September 30, 2024:
11 unchanged sentences
Operating cash flows from operating leases $ 3,099 $ 48,391 $ —
−Removed: Right-of-use assets obtained in exchange for amended operating lease liabilities $ 17,071 $ — $ —
+Added: Right-of-use assets adjusted in exchange for new/amended operating lease liabilities $ ( 29 ) $ 17,071 $ —
Cash paid for amounts included in the measurement of lease liabilities:
4 unchanged sentences
The Company has three plans that provide for equity-based compensation.
−Removed: Under the 2004 Equity Incentive Plan (the “2004 Plan”) and the 2013 Incentive Plan (the “2013 Plan”), 0 and 3,408,707 shares, respectively, of the Company’s common stock are reserved for the grant of stock options and restricted stock awards to employees and directors of the Company as of September 30, 2023.
−Removed: On March 18, 2021, the Company’s Board of Directors approved the Arrowhead Pharmaceuticals, Inc.
−Removed: 2021 Incentive Plan (the “2021 Plan”), which authorized 8,000,000 shares (subject to certain adjustments) available for grants of stock options, stock appreciation rights, restricted and unrestricted stock, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock.
+Added: Under the 2013 Incentive Plan (the “2013 Plan”), 2,899,230 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of September 30, 2024.
+Added: Under the 2021 Incentive Plan (the “2021 Plan”), 8,000,000 shares (subject to certain adjustments) of the Company’s common stock are reserved for grants of stock options, stock appreciation rights, restricted and unrestricted stock, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock.
The maximum number of shares authorized under the 2021 Plan will be (i) reduced by any shares subject to awards made under the 2013 Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash.
−Removed: As of September 30, 2023, the total number of shares reserved for issuance was 6,204,720 shares, which includes 217,922 shares that were forfeited under the 2013 Plan, and 1,979,364 shares have been granted under the 2021 Plan.
−Removed: In addition, there were 707,432 shares reserved for options and 683,825 shares reserved for restricted stock units issued as inducement grants to new employees granted outside of the Company’s equity-based compensation plans under Rule 5635(c)(4) of the Nasdaq Listing Rules.
+Added: As of September 30, 2024, the total number of shares available for issuance was 4,600,465 shares, which includes 159,678 and 190,627 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 3,749,840 shares have been granted under the 2021 Plan.
+Added: Under the Inducement Plan (the “Inducement Plan”), 832,950 shares of the Company’s common stock are authorized for issuance pursuant to grants of stock options, stock appreciation rights, restricted and unrestricted stock, stock units (including restricted stock units), performance awards, cash awards, and other awards convertible into or otherwise based on shares of the Company’s common stock.
+Added: Awards under the Inducement Plan may only be granted to new employees of the Company in accordance with the provisions of Rule 5635(c)(4) of the Nasdaq Listing Rules.
+Added: As of September 30, 2024, the total number of shares remaining available for issuance was 510,600 shares, and 362,050 shares have been granted under the Inducement Plan.
+Added: In addition, prior to adoption of the Inducement Plan, the Company previously granted stand-alone inducement awards in the form of stock options and restricted stock units outside of the Company's equity plans to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.
+Added: As of September 30, 2024, there were 655,645 and 244,625 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.
The following table presents a summary of awards outstanding:
As of September 30, 2024
−Removed: 2004 Plan 2013 Plan 2021 Plan Inducement Awards Total
+Added: 2013 Plan 2021 Plan Inducement Awards Total
Granted and outstanding awards:
2 unchanged sentences
Total 2,899,230 2,800,927 1,191,671 6,891,828
+Added: The following table summarizes stock-based compensation expenses included in operating expenses:
+Added: Year Ended September 30,
+Added: 2024 2023 2022
+Added: (in thousands)
+Added: Research and development $ 29,527 $ 34,332 $ 32,371
+Added: General and administrative 37,570 43,798 88,522
+Added: Total $ 67,097 $ 78,130 $ 120,893
Stock Option Awards
4 unchanged sentences
Outstanding at September 30, 2023 2,263,477 $ 22.68
−Removed: Granted 32,151 33.03
Cancelled or expired ( 58,957 ) 36.80
5 unchanged sentences
Stock-based compensation expense related to stock options outstanding for the years ended September 30, 2024, 2023, and 2022 was $ 2.8 million, $ 8.4 million and $ 10.8 million, respectively.
−Removed: As of September 30, 2023, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $ 2.9 million will be recognized in the Company’s results of operations over a weighted average period of 0.4 years.
+Added: As of September 30, 2024, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $ 0.1 million will be recognized in the Company’s results of operations over a weighted average period of 2 months.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model.
−Removed: The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable.
−Removed: The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and
−Removed: subjective variables.
+Added: The Black-Scholes pricing valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable.
+Added: The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables.
Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
4 unchanged sentences
Risk-free interest rate (2)
−Removed: 3.69 – 4.57 %
N/A 3.69 – 4.57 %
Expected volatility (3)
−Removed: N/A 86.2 – 90.4 %
+Added: N/A 86.4 % N/A
Expected term (in years) (4)
−Removed: 6.25 N/A 6.25
−Removed: Weighted-average grant date fair value per share 25.61 N/A 48.64
+Added: Weighted-average grant date fair value per share N/A 25.61 N/A
(1) The dividend yield is zero as the Company currently does not pay a dividend.
2 unchanged sentences
(3) Volatility is estimated based on volatility average of the Company’s common stock price.
−Removed: (4) The expected term represents the period of time that stock options granted are expected to be outstanding, by using historical exercise patterns and post-vesting termination behavior.
−Removed: (5) No options were granted during the year ended September 30, 2022.
+Added: (4) The computation of expected term was determined based on safe harbor rules, considering the contractual terms of the awards and vesting schedules.
+Added: (5) No options were granted during the year ended September 30, 2024 and September 30, 2022.
+Added: Visirna ESOP :
+Added: On October 1, 2023, Visirna, a subsidiary of the Company, granted 7,500,000 stock options to its employees from the Employee Stock Option Plan (the “Visirna ESOP”), which authorizes 20,000,000 shares for issuance.
+Added: The Visirna ESOP is independently managed by Visirna, including the valuation process.
+Added: As of September 30, 2024, stock-based compensation expense related to the Visirna ESOP was $ 6.9 million.
Restricted Stock Units
−Removed: Restricted stock units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans and as inducements grants granted outside of the Company’s equity-based compensation plans.
+Added: Restricted stock units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans, the Inducement Plan and as inducements awards granted outside of the Company’s equity-based compensation plans.
At vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock.
8 unchanged sentences
The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.
−Removed: On July 8, 2022, the Company revised the equity award made to its Chief Executive Officer on January 1, 2022 consisting of 800,000 shares, equal in value to $ 38.4 million, that was a 100% market-based award.
−Removed: The revised awards consist of 99,521 RSUs and 149,282 performance-based RSUs.
−Removed: No incremental expense resulted from the modification.
−Removed: The fair values of these awards were estimated on the date of grant using a closed-form valuation model (Monte-Carlo).
For the years ended September 30, 2024, 2023 and 2022, the Company recorded stock-based compensation expense of $ 64.3 million, $ 69.7 million and $ 113.6 million, respectively, related to shares of RSUs.
24 unchanged sentences
(in thousands)
−Removed: Available-for-sale debt securities
−Removed: government bonds $ 31,553 $ — $ — $ 31,553
−Removed: Municipal securities — 7,093 — 7,093
+Added: Available-for-sale securities
+Added: government and agency securities $ — $ 160,723 $ — $ 160,723
Commercial notes — 179,714 — 179,714
Corporate debt securities — 237,839 — 237,839
−Removed: Total available-for-sale debt securities
+Added: Total available-for-sale securities
— 578,276 — 578,276
+Added: Cash equivalents
Money market instruments 66,966 — — 66,966
+Added: Total cash equivalents 66,966 — — 66,966
Total financial assets $ 66,966 $ 578,276 $ — $ 645,242
−Removed: $ 31,900 $ 261,182 $ — $ 293,082
September 30, 2023
1 unchanged sentence
(in thousands)
−Removed: Held-to-maturity debt securities
+Added: Available-for-sale securities
government bonds $ 31,553 $ — $ — $ 31,553
2 unchanged sentences
Corporate debt securities — 231,884 — 231,884
−Removed: Certificate of deposits 50,000 — — 50,000
−Removed: Total held-to-maturity debt securities
+Added: Total available-for-sale securities
31,553 261,182 — 292,735
+Added: Cash equivalents
Money market instruments 39,733 — — 39,733
+Added: Total cash equivalents 39,733 — — 39,733
Total financial assets $ 71,286 $ 261,182 $ — $ 332,468
−Removed: $ 91,235 $ 313,060 $ — $ 404,295
−Removed: Debt securities were reclassified from held-to-maturity to available-for-sale recorded at fair value on a recurring basis.
−Removed: The fair value of debt securities are priced using model pricing based on the securities’ relationship to other benchmark quoted prices as provided by an independent third party, and under GAAP are considered a Level 2 input.
−Removed: There were no transfers between Levels 1, 2, and 3 of the fair value hierarchy during the years ended September 30, 2023 and 2022.
−Removed: The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses of the Company approximate fair value based on the short maturities of these instruments.
−Removed: At September 30, 2023, the Company did not have any nonrecurring fair value measurements of nonfinancial assets or nonfinancial liabilities.
Income Tax Provision
−Removed: The components of the loss before income taxes are as follows:
+Added: The components of the loss before income tax expense and noncontrolling interest are as follows:
Year Ended September 30,
9 unchanged sentences
$ 148 $ 1,074 $ —
+Added: 375 1,710 304
+Added: ( 3,290 ) — 3,481
Total current tax
2 unchanged sentences
Income tax provision $ ( 2,767 ) $ 2,784 $ 3,785
−Removed: The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations.
+Added: The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations and comprehensive loss.
A notional 21% tax rate was applied as follows:
29 unchanged sentences
Right-of-use assets ( 10,792 ) ( 9,966 )
−Removed: State taxes — ( 19,390 )
+Added: Unrealized gains ( 194 ) —
Total gross deferred tax liability $ ( 24,141 ) $ ( 19,844 )
4 unchanged sentences
On the basis of this evaluation at September 30, 2024 and 2023, a valuation allowance of $ 448.9 million and $ 284.6 million, respectively, has been recorded.
−Removed: As of September 30, 2023, the Company had accumulated federal and state net operating loss (“NOL”) carry forwards of $ 134.3 million and $ 491.5 million, respectively.
−Removed: Of the $ 134.3 million of federal NOL carryforwards, $ 34.0 million was generated before January 1, 2018 and is subject to the 20-year carryforward period (“pre-Tax Act losses”).
−Removed: The remaining $ 100.3 million (“post-Tax Act losses”) can be carried forward indefinitely but is subject to the 80% taxable income limitation.
−Removed: Of the $ 491.5 million of state NOL carryforwards $ 2.9 million can be carried forward indefinitely.
−Removed: The pre-Tax Act U.S.
−Removed: federal and state net operating loss carryforwards will expire at various dates through 2041.
−Removed: Pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) Sections 382 and 383, annual use of an entity’s NOL and research and development credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% within a three-year period.
−Removed: The amount of the annual limitation is determined based on the value of the entity immediately prior to the ownership change.
−Removed: Subsequent ownership changes may further affect the limitation in future years.
−Removed: If limited, the related tax asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.
−Removed: To date, the Company has not completed an analysis pursuant to Sections 382 and 383.
−Removed: Future changes in ownership may occur which could limit the Company’s ability to utilize attributes.
+Added: As of September 30, 2024, the Company had accumulated federal, state, and foreign net operating loss (“NOL”) carry forwards of $ 223.1 million, $ 693.2 million and $ 38.3 million, respectively.
+Added: Of the $ 223.1 million in federal NOL carryforwards, $ 23.3 million was generated before January 1, 2018, and is subject to a 20-year carryforward period (“pre-Tax Act losses”), with expiration beginning in 2031.
+Added: The remaining $ 199.8 million (“post-Tax Act losses”) can be carried forward indefinitely but is subject to an 80% taxable income limitation.
+Added: Of the $ 693.2 million in state NOL carryforwards, $ 5.4 million can be carried forward indefinitely, while the remaining balance begins to expire in 2031.
+Added: The Company also has foreign NOL carryforwards totaling $ 38.3 million, which begin to expire in 2027.
+Added: Additionally, the Company has federal and state income tax credits of $ 85.6 million and $ 20.1 million, respectively.
+Added: The federal credits begin to expire in 2035.
+Added: Of the state income tax credits, $ 11.2 million begins to expire in 2035, while the remaining credits can be carried forward indefinitely.
+Added: Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), the annual use of an entity’s NOL and research and development credit carryforwards may be limited if there is a cumulative ownership change of greater than 50% within a three-year period.
+Added: The annual limitation is determined based on the entity’s value immediately prior to the ownership change.
+Added: Future ownership changes could further affect the limitation.
+Added: If a limitation is applied, the related tax asset would be removed from the deferred tax asset schedule, with a corresponding reduction in the valuation allowance.
+Added: To date, the Company has completed an analysis pursuant to Sections 382 and 383 through September 30, 2023.
+Added: Ownership Changes may have occurred since then, and future changes could potentially limit the Company’s ability to utilize these attributes.
Uncertainty in Income Taxes
The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more-likely-than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
−Removed: In making this assessment, a company must determine whether it is more-likely-than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities.
+Added: In making this assessment, a company must determine whether it is more-likely-than not that a tax position
+Added: will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities.
The following table summarizes the Company’s gross unrecognized tax benefits:
6 unchanged sentences
Gross increase for current period tax positions 3,415 3,049 —
+Added: Lapse of statue of limitations ( 1,992 ) — —
Ending balance of unrecognized tax benefits $ 16,613 $ 14,536 $ 3,481
−Removed: For the years ended September 30, 2023, 2022 and 2021, the Company has recorded income tax expense of $ 0 , $ 3.5 million and $ 0 respectively, related to uncertain tax positions.
+Added: The Company has recorded income tax benefit of $ 3.3 million for the year ended September 30, 2024, and income tax expense of $ 0 and $ 3.5 million for the years ended September 30, 2023 and 2022, respectively, related to uncertain tax positions inclusive of interest and penalties.
The Company’s policy is to recognize potential interest and penalties related to unrecognized tax benefits associated with uncertain tax positions, if any, in the income tax provision.
−Removed: As of September 30, 2023, the Company has accrued interest and penalties of $ 0.6 million and $ 0.9 million, respectively.
−Removed: If the unrecognized tax benefit at September 30, 2023 are ultimately recognized, excluding the impact of U.S.
−Removed: Tax benefits netted against deferred taxes that are subject to a valuation allowance, approximately $ 3.5 million would result in a reduction in the Company’s income tax expense and effective tax rate.
−Removed: The Company expects that $ 3.5 million of its unrecognized tax benefits to change over the next 12 months.
+Added: As of September 30, 2024, the Company has not accrued any interest or penalties.
+Added: If the unrecognized tax benefit as of September 30, 2024 is ultimately recognized, there would be no reduction in the Company’s income tax expense or effective tax rate, excluding the impact of U.S.
+Added: Tax benefits netted against deferred taxes that are subject to a valuation allowance.
+Added: The Company does not anticipate any changes in its unrecognized tax benefits over the next 12 months.
The Company is subject to taxation in the U.S.
4 unchanged sentences
There are no other audits in any other jurisdictions.
+Added: Deferred income taxes have not been provided for undistributed earnings of the Company’s consolidated foreign subsidiaries because of the Company’s intent to reinvest such earnings indefinitely in active foreign operations.
+Added: At September 30, 2024, the Company had $ 0 in unremitted earnings that were permanently reinvested related to its consolidated foreign subsidiaries.
+Added: The tax Cuts and Jobs Act subjects a U.S.
+Added: shareholder to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.
+Added: The FASB Staff Q&A, Topic 740 No.
+Added: Accounting for GILTI, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year that the tax is incurred as a period expense only.
+Added: The Company has elected to account for GILTI in the year the tax is incurred.
EMPLOYEE BENEFIT PLANS
The Company sponsors a defined contribution retirement plan which is under Section 401(k) of the Internal Revenue Code and is designed to adhere to ERISA Fiduciary standards.
−Removed: Substantially all of the Company’s employees are eligible to participate this plan.
+Added: All of the Company’s full-time employees are eligible to participate this plan.
Under the terms of the plan, an eligible employee may elect to contribute a portion of their salary on a pre-tax basis, subject to federal statutory limitations.
3 unchanged sentences
LIABILITY RELATED TO THE SALE OF FUTURE ROYALTIES
−Removed: On November 9, 2022, the Company and Royalty Pharma entered into the Royalty Pharma Agreement, pursuant to which Royalty Pharma agreed to pay up to $ 410.0 million in cash to the Company in consideration for the Company’s future royalty interest in olpasiran, a small interfering RNA (siRNA) originally developed by the Company and licensed to Amgen in 2016 under the Olpasiran Agreement.
+Added: In November 2022, the Company and Royalty Pharma entered into the Royalty Pharma Agreement, pursuant to which Royalty Pharma agreed to pay up to $ 410.0 million in cash to the Company in consideration for the Company’s future royalty interest in olpasiran, a siRNA originally developed by the Company and licensed to Amgen in September 2016 under the Olpasiran Agreement.
Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid $ 250.0 million upfront and agreed to pay up to an additional $ 160.0 million in aggregate one-time milestone payments due if and when the following milestone events occur:
(i) $ 50.0 million on completion of enrollment in the OCEAN Phase 3 clinical trial for olpasiran, (ii) $ 50.0 million upon receipt of FDA approval of olpasiran for an approved indication (reduction in the risk of myocardial infarction, urgent coronary revascularization, or coronary heart disease death in adults with established cardiovascular disease and elevated Lp(a)), and (iii) $ 60.0 million upon Royalty Pharma’s receipt of at least $ 70.0 million of royalty payments under the Royalty Pharma Agreement in any single calendar year.
+Added: During the third quarter of fiscal 2024, Amgen completed enrollment of the Phase 3 OCEAN(a) outcomes trial of olpasiran, which triggered a $ 50.0 million milestone payment that the Company received in the same quarter.
In consideration for the payment of the foregoing amounts under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement.
The Company remains eligible to receive any milestone payments potentially payable by Amgen under the Olpasiran Agreement.
−Removed: The Company has evaluated the terms of the Royalty Pharma Agreement and concluded in accordance with the relevant accounting guidance that the Company accounted for the transaction as debt and the funding of $ 250.0 million from Royalty Pharma was recorded as a liability related to the sale of future royalties on its consolidated balance sheets.
−Removed: The Company is not obligated to repay this upfront funding received under the Royalty Pharma Agreement.
−Removed: This liability is amortized over the expected repayment term using an effective interest rate method.
−Removed: The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement.
−Removed: The interest rate may vary during the term of the agreement depending on a number of factors, including the amount and timing of forecasted net revenues which affects the repayment timing and ultimate amount of repayment.
−Removed: The Company will evaluate the effective interest rate periodically based on its current revenue forecasts utilizing the prospective method.
−Removed: For 2023, the Company recognized non-cash interest expense of $ 18.3 million, on the consolidated statements of operations and comprehensive loss.
−Removed: EARNINGS PER SHARE
−Removed: The following table presents the computation of basic and diluted earnings per share for the years ended September 30, 2023, 2022 and 2021.
+Added: The Company has evaluated the terms of the Royalty Pharma Agreement and concluded in accordance with the relevant accounting guidance that the Company accounted for the transaction as debt and the funding of $ 250.0 million and $ 50.0 million from Royalty Pharma were recorded as liabilities related to the sale of future royalties on its consolidated balance sheets.
+Added: The Company is not obligated to repay these funds received under the Royalty Pharma Agreement.
+Added: The Company records the obligations at their carrying value using the effective interest method.
+Added: In order to amortize the sale of future royalties, the Company utilizes the prospective method to estimate the future royalties to be paid by the Company to the counterparty over the life of the arrangement.
+Added: Under the prospective method, a new effective interest rate is determined based on the revised estimate of remaining cash flows.
+Added: The new rate is the discount rate that equates the present value of the revised estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize non-cash interest expense for the remaining periods.
+Added: The Company periodically assesses the amount and the timing of expected royalty payments using a combination of internal projections and forecasts from external sources.
+Added: The estimates of future net product sales (and resulting royalty payments) are based on key assumptions including population, penetration, probability of success and sales price, among others.
+Added: To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the effective interest rate.
+Added: As of September 30, 2024, the estimated effective interest rate was 6.3 %.
+Added: The following table presents the activity with respect to the liability related to the sale of future royalties.
+Added: September 30,
+Added: (in thousands)
+Added: Beginning carrying value
+Added: $ 268,326 $ —
+Added: Upfront payment received
+Added: Milestone payment received 50,000 —
+Added: Non-cash interest expense recognized 23,035 18,326
+Added: Ending carrying value
+Added: $ 341,361 $ 268,326
+Added: FINANCING AGREEMENT
+Added: On August 7, 2024 (the “Closing Date”), the Company entered into the Financing Agreement with the guarantors party thereto, the lenders party thereto (the “Lenders”), and Sixth Street Lending Partners (“Sixth Street”), as the administrative agent and collateral agent for the Lenders.
+Added: The Financing Agreement establishes a senior secured term loan facility of $ 500.0 million (the “Credit Facility”), consisting of $ 400.0 million funded on the Closing Date and an additional $ 100.0 million available at the Company’s option, subject to mutual agreement with Sixth Street, over the seven-year term.
+Added: The outstanding principal balance of this Credit Facility, along with the accrued but unpaid interest, is due and payable on August 7, 2031 and bears interest at an annual rate of 15.0 %.
+Added: On the Closing Date, the Company received net proceeds of
+Added: $ 390.7 million, after issuance costs.
+Added: Additional fees related to third parties have been paid or accrued as of September 30, 2024.
+Added: The Company is permitted to use the net proceeds for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries.
+Added: The Company will have the right to prepay loans under the Credit Facility at any time.
+Added: The Company is required to partially repay loans under the Credit Facility with proceeds from certain asset sales, condemnation events and extraordinary receipts, subject, in some cases, to reinvestment rights.
+Added: If the Company repays in full the aggregate principal outstanding under the Credit Facility and such payment in full occurs on or prior to August 7, 2028, the Company will be required to make an additional payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve a multiple of two times on invested capital of the aggregate principal amount funded on the Closing Date.
+Added: If such payment in full occurs after August 7, 2028, the Company will be required to make an additional payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve the greater of the multiple of two times on invested capital of the aggregate principal amount funded on the Closing Date and the present value of all interest payments that would have been payable from such date through the maturity date of the Credit Facility.
+Added: All obligations under the Financing Agreement will be secured on a first-priority basis, subject to certain exceptions, by security interests in substantially all assets of the Company and material subsidiaries of the Company, including its intellectual property, and will be guaranteed by material subsidiaries of the Company, including foreign subsidiaries, subject to certain exceptions.
+Added: The Financing Agreement contains customary covenants, including, without limitation, a financial covenant to maintain liquidity (cash, cash equivalents and investments) of at least $ 100.0 million if the Company ’ s market capitalization is above $ 1.5 billion, and negative covenants that, subject to certain exceptions, restrict indebtedness, liens, investments (including acquisitions), fundamental changes, asset sales and licensing transactions, dividends, modifications to material agreements, payment of subordinated indebtedness, and other matters customarily restricted in such agreements.
+Added: The Company is subject to restrictions on sales and licensing transactions with respect to certain core intellectual property, subject to certain exceptions, including certain transactions related to areas outside the United States, United Kingdom, European Union, Japan and China.
+Added: The Financing Agreement contains certain embedded features that were identified and evaluated as not material to the consolidated financial statements.
+Added: The outstanding balance of the Credit Facility consisted of the following:
+Added: September 30,
+Added: (in thousands)
+Added: Initial Term Loan
+Added: $ 400,000 $ —
+Added: Interest on the Initial Term Loan
+Added: Unamortized debt discount and issuance costs
+Added: Net carrying amount $ 393,183 $ —
+Added: The following table sets forth total interest expense recognized related to the Credit Facility:
Year Ended September 30,
2024 2023 2022
+Added: (in thousands)
+Added: Amortization of debt discount and issuance costs
+Added: $ 317 $ — $ —
+Added: Contractual interest expense
+Added: Total interest expense
+Added: $ 9,317 $ — $ —
+Added: The amounts shown in the table below, related to the Credit Facility, represent the maximum payments the Company is obligated to make to the Lenders during the indicated periods.
+Added: A principal repayment of $ 400.0 million is scheduled for the fifth year, in line with the contractual terms of the Credit Facility.
+Added: Actual payments may vary and could be lower than the amounts presented in the table.
+Added: (in thousands)
+Added: NET LOSS PER SHARE
+Added: The following table presents the computation of basic and diluted net loss per share for the years ended September 30, 2024, 2023 and 2022.
+Added: Year Ended September 30,
+Added: 2024 2023 2022
(in thousands, except per share amounts)
4 unchanged sentences
Weighted-average diluted shares outstanding 119,784 106,750 105,426
−Removed: Basic earnings per share $ ( 1.92 ) $ ( 1.67 ) $ ( 1.36 )
−Removed: Diluted earnings per share $ ( 1.92 ) $ ( 1.67 ) $ ( 1.36 )
−Removed: Potentially dilutive securities representing approximately 4,053,000 , 3,885,000 and 2,063,000 shares of common stock were excluded from the computation of diluted earnings per share for the years ended September 30, 2023, 2022 and 2021, respectively, because their effect would have been anti-dilutive.
+Added: Basic net loss per share $ ( 5.00 ) $ ( 1.92 ) $ ( 1.67 )
+Added: Diluted net loss per share $ ( 5.00 ) $ ( 1.92 ) $ ( 1.67 )
+Added: The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive.
+Added: Year Ended September 30,
+Added: 2024 2023 2022
+Added: (in thousands)
+Added: Options 707 633 533
+Added: Restricted stock units 4,030 3,420 3,352
+Added: Total 4,737 4,053 3,885
SUBSEQUENT EVENTS
−Removed: On October 30, 2023, the Company entered into an Assignment and Consent Agreement with Janssen, whereby, the Company consented to the assignment of the Janssen License Agreement to GSK, which assignment shall be effective upon the receipt of certain anti-trust approvals.
+Added: On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Collaboration Agreement”) with Sarepta Therapeutics, Inc.
+Added: (“Sarepta”) for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and the lungs.
+Added: Under the Collaboration Agreement, Sarepta has received an exclusive worldwide license to the Company’s ARO-DUX4, ARO-DM1, ARO-MMP7, and ARO-ATXN2 clinical stage programs.
+Added: Sarepta has also received an exclusive sublicensable worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs.
+Added: Pursuant to the Collaboration Agreement, Sarepta will be able to select up to six new targets for which the Company will perform discovery, optimization and preclinical development.
+Added: Upon completion of the Company’s preclinical
+Added: activities, Sarepta will receive an exclusive license to the Company’s product-specific intellectual property rights covering those compounds and be wholly responsible for clinical development and commercialization of each compound.
+Added: Closing of the Collaboration Agreement is subject to clearance under the Hart-Scott Rodino Antitrust Improvements Act.
+Added: In connection with the Collaboration Agreement, on November 25, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with an affiliate of Sarepta for a private placement of shares of common stock of the Company (the “Private Placement”).
+Added: Pursuant to the Stock Purchase Agreement, the Company sold 11,926,301 shares of common stock, at a price per share of $ 27.25 , for an aggregate value of approximately $ 325.0 million.
+Added: The Private Placement is expected to close concurrently with the Collaboration Agreement.
+Added: Under the terms of the agreements taken together, the Company expects to receive $ 500.0 million as an upfront payment under the Collaboration Agreement, $ 325.0 million in the form of an equity investment under the Stock Purchase Agreement, and $ 250.0 million to be paid in annual installments of $ 50.0 million over 5 years.
+Added: The Company is also eligible to receive $ 300.0 million in near-term payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study, which the Company is on track to achieve.
+Added: Further, for each of the 13 programs, the Company is eligible to receive development milestone payments between $ 110.0 million and $ 180.0 million per program and sales milestone payments between $ 500.0 million and $ 700.0 million per program.
+Added: The Company is also eligible to receive tiered royalties on net sales of licensed products of up to the low double digits.
+Added: On November 26, 2024, the Company also entered into an amendment to the Credit Facility to modify, subject to certain conditions, amongst other things, the requirements to make prepayments of the loans under the Credit Facility with respect to the transactions contemplated by the Collaboration Agreement and the Stock Purchase Agreement.
+Added: On November 25, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional and accredited investor for a private placement of pre-funded warrants to purchase shares of common stock with an exercise price of $ 0.001 per share.
+Added: Pursuant to the Securities Purchase Agreement, the Company sold pre-funded warrants to purchase up to 917,441 shares of common stock at a purchase price of $ 27.25 per pre-funded warrant, for an aggregate value of approximately $ 25.0 million.
+Added: The transaction is expected to close on or about November 27, 2024.
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.