What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2025-02-10 · 262 added, 157 removed, 510 unchanged (45% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Current assets:

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Lease liabilities 6,782 6,342

Deferred revenue 43,268 —

Credit facility 65,000 —

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Arrowhead Pharmaceuticals, Inc.

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

Three Months Ended December 31,

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

2025 2024 2025 2024

Revenue $ 542,709 $ — $ 545,209 $ 3,551

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Total operating expenses 161,507 126,191 325,419 266,287

Operating loss ( 161,412 ) ( 136,545 )

Operating income (loss) 381,202 ( 126,191 ) 219,790 ( 262,736 )

Other income (expense):

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Total other expense ( 11,586 ) ( 805 ) ( 25,289 ) ( 2,949 )

Loss before income tax expense and noncontrolling interest ( 175,115 ) ( 138,689 )

Income (loss) before income tax expense and noncontrolling interest 369,616 ( 126,996 ) 194,501 ( 265,685 )

Income tax expense (benefit) 1,753 — 1,856 ( 3,313 )

Net loss including noncontrolling interest $ ( 175,218 ) $ ( 135,376 )

Net income (loss) including noncontrolling interest $ 367,863 $ ( 126,996 ) $ 192,645 $ ( 262,372 )

Net loss attributable to noncontrolling interest, net of tax ( 2,582 ) ( 1,696 ) ( 4,715 ) ( 4,208 )

Net loss attributable to Arrowhead Pharmaceuticals, Inc.

Net income (loss) attributable to Arrowhead Pharmaceuticals, Inc.

$ 370,445 $ ( 125,300 ) $ 197,360 $ ( 258,164 )

Net loss per share attributable to Arrowhead Pharmaceuticals, Inc.:

Net income (loss) per share attributable to Arrowhead Pharmaceuticals, Inc.:

Basic $ 2.78 $ ( 1.02 ) $ 1.53 $ ( 2.24 )

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Diluted 134,484 123,285 130,265 115,307

Other comprehensive loss, net of tax:

Unrealized (losses) gains on available-for-sale securities ( 507 ) 1,909

Other comprehensive income (loss), net of tax:

Unrealized gains on available-for-sale securities 653 216 146 2,125

Foreign currency translation adjustments ( 400 ) ( 56 ) ( 506 ) 2

Comprehensive loss $ ( 175,831 ) $ ( 133,409 )

Comprehensive income (loss) $ 368,116 $ ( 126,836 ) $ 192,285 $ ( 260,245 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Common stock - restricted stock units vesting 209 — — — — — —

Pre-funded warrants 917 1 24,999 — — — 25,000

Issuance of pre-funded warrants — — 25,000 — — — 25,000

Foreign currency translation adjustments — — — ( 106 ) — — ( 106 )

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Balance at December 31, 2024 124,655 $ 217 $ 1,846,843 $ 4,137 $ ( 1,798,608 ) $ 3,486 $ 56,075

Stock-based compensation — — 16,027 — — — 16,027

Exercise of stock options 353 — 2,619 — — — 2,619

Common stock - restricted stock units vesting 1,128 1 — — — — 1

Common stock issued 11,926 12 241,375 — — — 241,387

Foreign currency translation adjustments — — — ( 400 ) — — ( 400 )

Unrealized gains on available-for-sale securities — — — 653 — — 653

Net income — — — — 370,445 ( 2,582 ) 367,863

Balance at March 31, 2025 138,062 $ 230 $ 2,106,864 $ 4,390 $ ( 1,428,163 ) $ 904 $ 684,225

Amount ($) Additional

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Balance at December 31, 2023 107,500 $ 200 $ 1,320,356 $ ( 1,255 ) $ ( 1,158,894 ) $ 13,307 $ 173,714

Stock-based compensation — — 17,750 — — — 17,750

Exercise of stock options 120 — 1,512 — — — 1,512

Common stock - restricted stock units vesting 723 1 ( 1 ) — — — —

Common stock issued, net of offering costs 15,790 16 429,249 — — — 429,265

Foreign currency translation adjustments — — — ( 56 ) — — ( 56 )

Unrealized losses on available-for-sale securities — — — 216 — — 216

Net loss — — — — ( 125,300 ) ( 1,696 ) ( 126,996 )

Balance at March 31, 2024 124,133 $ 217 $ 1,768,866 $ ( 1,095 ) $ ( 1,284,194 ) $ 11,611 $ 495,405

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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(in thousands)

Three Months Ended December 31,

Six Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 175,218 ) $ ( 135,376 )

Adjustments to reconcile net loss to net cash flow from operating activities

Net income (loss) $ 192,645 $ ( 262,372 )

Adjustments to reconcile net income (loss) to net cash flow from operating activities

Stock-based compensation 31,236 37,444

Depreciation and amortization 11,319 8,788

Accretion of note premiums/discounts ( 5,704 ) ( 835 )

(Accretion) amortization of note premiums/discounts ( 2,788 ) 896

Realized loss on investments — ( 80 )

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Other 3,169 —

Net cash used in operating activities ( 146,272 ) ( 117,840 )

Net cash provided by (used in) operating activities 313,781 ( 210,217 )

CASH FLOWS FROM INVESTING ACTIVITIES:

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Proceeds from sales and maturities of investments 347,402 208,615

Net cash provided by investing activities 76,910 64,839

Net cash used in investing activities ( 343,303 ) ( 204,098 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the exercises of stock options 3,253 1,779

Proceeds from the issuance of pre-funded warrants 25,000 —

Payments of debt issuance cost ( 5,000 ) —

Proceeds from the issuance of common stock, net of offering costs — 429,265

Proceeds from the issuance of warrants 25,000 —

Payments of debt issuance costs ( 5,000 ) —

Proceeds from the issuance of common stock 241,388 —

Repayments of credit facility ( 151,625 ) —

Net cash provided by financing activities 113,016 431,044

Net decrease in cash, cash equivalents and restricted cash ( 48,728 ) ( 52,734 )

Net increase in cash, cash equivalents and restricted cash 83,494 16,729

Effect of exchange rate on cash, cash equivalents and restricted cash ( 470 ) 84

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Supplementary disclosure of cash flows:

Interest paid $ ( 19 ) $ —

Income taxes paid $ ( 81 ) $ ( 3,014 )

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zodasiran Phase 2b Arrowhead

Phase 3 Amgen

Pulmonary ARO-RAGE Phase 1/2a

ARO-MMP7 Phase 1/2a

Liver GSK-4532990 Phase 2b GSK

Phase 3 Takeda and Arrowhead

daplusiran/tomligisiran Phase 2 GSK

olpasiran Phase 3 Amgen

ARO-PNPLA3 Phase 1

ARO-C3 Phase 1/2a

ARO-CFB Phase 1/2a Arrowhead

ARO-INHBE Phase 1/2a Arrowhead

ARO-DUX4 Phase 1/2a Arrowhead

ARO-DM1 Phase 1/2a Arrowhead

GSK-4532990 Phase 2b GSK

ARO-INHBE Phase 1/2a

Pulmonary ARO-RAGE Phase 1/2a

SRP-1002 (ARO-MMP7)

Liver fazirsiran

Takeda and Arrowhead

Neuromuscular

SRP-1001 (ARO-DUX4)

Phase 1/2a Sarepta

SRP-1003 (ARO-DM1)

Phase 1/2a Sarepta

Central Nervous System (CNS)

ARO-ATXN2 Phase 1/2a Arrowhead

SRP-1004 (ARO-ATXN2)

Phase 1/2a Sarepta

Phase 1/2a Arrowhead

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 also operates an active pharmaceutical ingredient manufacturing and supporting laboratory facility in Verona, Wisconsin.

The Company’s principal executive offices are located in Pasadena, California.

During the first quarter of fiscal 2025, the Company continued to develop and advance its pipeline and partnered candidates.

Thus far in fiscal 2025, the Company has continued to develop and advance its pipeline and partnered candidates.

Several key recent developments include:

• Announced Topline results from Part 2 of a Phase 1/2 clinical study of ARO-C3, the Company’s investigational RNAi therapeutic designed to reduce liver production of complement component 3 (C3) as a potential therapy for various complement mediated diseases.

ARO-C3 achieved reductions in alternative pathway complement activity and proteinuria;

• Showcased preclinical data supporting the advancement of two first-in-class clinical stage, RNAi-based investigational therapeutics being developed by the Company for the treatment of obesity and metabolic diseases;

• Announced preclinical results on ARO-ALK7, which is the first RNAi-based therapy designed to silence adipocyte expression of the ACVR1 to reduce the production of Activin receptor-like kinase 7 (ALK7), which acts as a receptor in a pathway that regulates energy homeostasis in adipose tissue.

Arrowhead received regulatory clearance to initiate a Phase 1/2a clinical trial of ARO-ALK7 in New Zealand, which the company anticipates will begin dosing in the second quarter of 2025;

• Entered into a global licensing and collaboration agreement with Sarepta Therapeutics, Inc (“Sarepta”) on November 25, 2024, which closed on February 7, 2025.

Closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Upon closing, the Company received $ 325.0 million through the purchase of 11,926,301 shares of Company common stock by Sarepta, at a price per share of $ 27.25 , and received $ 500.0 million as an upfront payment on February 24, 2025.

The Company will also receive $ 250.0 million to be paid in equal installments over five years and is eligible to receive an additional $ 300.0 million in near-term payments.

Additionally, the Company is eligible to receive royalties on commercial sales and up to approximately $ 10.0 billion in future potential milestone payments;

• Submitted a New Drug Application (NDA) to the U.S.

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The FDA provided a Prescription Drug User Fee Act (PDUFA) action date of November 18, 2025, and indicated it is not currently planning to hold an advisory committee meeting;

• Entered into a global and collaboration agreement with Sarepta Therapeutics, Inc.

The Company received $ 325.0 million as an equity investment on February 7, 2025 and will receive $ 500.0 million as an upfront payment during the second quarter of fiscal 2025.

The Company will also receive $ 250.0 million to be paid in equal installments over five years and is eligible to receive an additional $ 300.0 million in near-term payments.

Additionally, the Company is eligible to receive royalties on commercial sales and up to approximately $ 10.0 billion in future potential milestone payments;

• GSK dosed the fifth patient in a Phase 2 trial in December 2024, triggering a $ 2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025;

• GSK dosed its fifth patient in a Phase 2 trial in December 2024, triggering a $ 2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025;

• Announced that the Company has dosed the first subjects in a Phase 1/2a clinical trial of ARO-INHBE;

• Presented interim results from a Phase 1/2a clinical study of ARO-CFB at the 8th Complement-Based Drug

Development Summit.

• Presented interim results from a Phase 1/2a clinical study of ARO-CFB at the 8th Complement-Based Drug Development Summit.

The study resulted in multiple promising findings including:

(1) ARO-CFO led to dose dependent reductions in circulating CFB protein by up to 90% with greater than 3 months duration, (2) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway activity based on Wieslab AP, and (3) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway hemolytic activity, measured by AH50;

• Filed a request for regulatory clearance to initiate Phase 1/2a clinical trial of ARO-ALK7, which is being developed as a potential treatment for obesity.

(1) ARO-CFB led to dose dependent reductions in circulating CFB protein by up to 90% with greater than 3 months duration, (2) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway activity based on Wieslab AP, and (3) single and multiple doses of ARO-CFB led to near complete inhibition of alternative pathway hemolytic activity, measured by AH50.

Consolidation and Basis of Presentation

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The financial data of the Company included herein are unaudited.

In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position as of December 31, 2024 and the results of operations and cash flows for the periods presented.

In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position as of March 31, 2025 and the results of operations and cash flows for the periods presented.

All intercompany transactions and balances have been eliminated.

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Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended September 30, 2024 for more complete descriptions and discussions.

Operating results and cash flows for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025.

Operating results and cash flows for the six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025.

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.

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 both expanded.

Additionally, significant investment will be required as the Company’s pipeline matures into later stage clinical trials, including commercialization efforts.

As of December 31, 2024, the Company had $ 53.9 million in cash, cash equivalents and restricted cash ($ 2.1 million in restricted cash) and $ 499.0 million in available-for-sale securities to fund operations.

During the three months ended December 31, 2024, the Company’s cash, cash equivalents and restricted cash and investments balance decreased by $ 128.0 million, which was primarily due to ongoing expenses related to the Company’s research and development programs, general and administrative expenses, and capital expenditures, offset by proceeds of $ 25.0 million from the sale of pre-funded warrants.

In total, the Company is eligible to receive up to $ 14.1 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.

Additionally, significant investment will be required as the Company’s pipeline matures into later stage clinical trials and commercialization efforts.

As of March 31, 2025, the Company had $ 185.7 million in cash, cash equivalents and restricted cash ($ 2.1 million in restricted cash) and $ 911.7 million in available-for-sale securities to fund operations.

During the six months ended March 31, 2025, the Company’s cash, cash equivalents and restricted cash and investments balance increased by $ 416.4

million, which was primarily due to the $ 500.0 million as an upfront payment and $ 325.0 million in the form of an equity investment under the Sarepta agreement, partially offset by ongoing expenses related to the Company’s research and development programs and repayments on the credit facility.

In total, the Company is eligible to receive up to $ 13.3 billion in additional 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.

Summary of Significant Accounting Policies

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Disaggregation of Income Statement Expenses, in November 2024, and ASU 2025-01, Clarifying the Effective Date .

updates require entities to provide disaggregated disclosure of income statement expenses.

These updates require entities to provide disaggregated disclosures of income statement expenses.

The ASUs do not affect the expense captions presented on the face of the income statement but instead require the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements.

The ASUs will become effective for the Company beginning October 1, 2027, and is not expected to have a material impact on its consolidated financial statements and related disclosures.

The ASUs will become effective for the Company beginning October 1, 2027, and are not expected to have a material impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The following table provides a summary of revenue recognized:

Three Months Ended December 31,

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

2025 2024 2025 2024

(in thousands)

GSK $ 3 $ — $ 2,503 $ 2,685

Takeda — — — 866

Sarepta 542,706 — 542,706 —

Total $ 542,709 $ — $ 545,209 $ 3,551

The following table summarizes the balance of receivables and contract liabilities related to the Company’s collaboration and license agreements:

December 31, 2024 September 30, 2024

The following table summarizes the balance of receivables and contract liabilities related to the Company’s

collaboration and license agreements:

March 31, 2025 September 30, 2024

(in thousands)

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The Company is eligible to receive up to $ 830.0 million in development and sales milestone payments under the GSK-HBV Agreement.

As of December 31, 2024, the Company recorded $ 2.5 million in accounts receivable and no liabilities.

As of March 31, 2025, the Company recorded an insignificant amount in accounts receivable and no liabilities.

Horizon Therapeutics Ireland DAC (“Horizon”)

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The Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study and to ensure certain manufacturing of fazirsiran drug product is completed and delivered to Takeda (the “Takeda R&D Services”).

Due to the specialized and unique nature of these Takeda 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.

Due to the specialized and unique nature of these Takeda 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.

Beyond the Takeda R&D Services, which are the responsibility of the Company, Takeda will be responsible for managing future clinical development and commercialization outside the United States.

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As such, all revenue has been fully recognized as of December 31, 2023.

There were no further deferred revenue and contract liabilities as of December 31, 2024.

The Company recorded $ 33.6 million as accrued expenses as of December 31, 2024 that was primarily driven by co-development and co-commercialization activities.

There were no further deferred revenue and contract liabilities as of March 31, 2025.

The Company recorded $ 28.8 million as accrued expenses as of March 31, 2025 that was primarily driven by co-development and co-commercialization activities.

Janssen Pharmaceuticals, Inc.

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.

ARO-PNPLA3 is in Phase 1 clinical trials, which are

now being developed by the Company.

ARO-PNPLA3 is in Phase 1 clinical trials, which are now being developed by the Company.

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 JNJ-3989 (formerly ARO-HBV).

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The Company has substantially completed its performance obligations under the Olpasiran Agreement.

There were no contract assets and liabilities recorded as of December 31, 2024.

There were no contract assets and liabilities recorded as of March 31, 2025.

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”).

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Sarepta Therapeutics, Inc.

( “Sarepta” )

On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Sarepta Collaboration Agreement”) with Sarepta for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs.

Under the Sarepta Collaboration Agreement, Sarepta received an exclusive worldwide license to the Company’s ARO-DUX4, ARO-DM1, ARO-MMP7, and ARO-ATXN2 clinical stage programs.

Sarepta also received an exclusive sublicensable worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs.

Further, Sarepta may select up to six gene targets for which the Company will perform discovery, optimization and preclinical development activities to identify RNAi compounds against each selected target.

Upon completion of the Company’s preclinical activities, Sarepta will receive an exclusive license to the Company’s intellectual property rights to exploit those compounds and be wholly responsible for clinical development and commercialization of each compound.

Under the terms of the Sarepta Collaboration Agreement, together with the Stock Purchase Agreement (the "Stock Purchase Agreement") the Company entered into with an affiliate of Sarepta (See Note 6), 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.

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.

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, subject to the terms and conditions of the Sarepta Collaboration Agreement.

The Company is also eligible to receive tiered royalties on net sales of licensed products of up to the low double digits.

On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Sarepta Collaboration Agreement”) with Sarepta for the development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs.

The Company concurrently entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Sarepta (see Note 6).

Under the Sarepta Collaboration Agreement, Sarepta received an exclusive worldwide license to SRP-1001 (formerly ARO-DUX4), SRP-1003 (formerly ARO-DM1), SRP-1002 (formerly ARO-MMP7), and SRP-1004 (formerly ARO-ATXN2) clinical stage programs (the “C1” programs).

Sarepta also received an exclusive sublicensable worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs (the “C2” programs).

The Company will perform certain research and development activities for the C1 and C2 programs.

Further, Sarepta may select up to six gene targets for which the Company will perform discovery, optimization and

preclinical development activities to identify RNAi compounds against each selected target (the “C3” programs).

Upon target acceptance, Sarepta will receive an exclusive license to the Company’s intellectual property rights to exploit compounds directed to those targets and is wholly responsible for clinical development and commercialization of each compound after the Company delivers a CTA ready data package (the "CTA package").

The Company identified 17 performance obligations under the Sarepta Collaboration Agreement.

The four C1 licenses are distinct performance obligations from the four C1 research and development performance obligations since the customer can use and benefit from the licenses separately.

The performance obligations for the licenses were satisfied during the quarter upon delivery and the research and development performance obligations will be satisfied as the work is performed.

The remaining nine performance obligations include three C2 preclinical stage program licenses and research and development activities, and six C3 unidentified discovery target licenses and research and development activity.

Each of the three C2 programs and the six C3 programs were determined to represent one performance obligation, as the customer cannot benefit from the use of the product license at the point of transfer until the specified research and development activities are performed.

As such, each of the C2 and C3 product licenses and respective research and development work will be combined to form one performance obligation.

For these nine performance obligations, revenue will be recognized over time as the work is performed.

For performance obligations recognized over time, the estimated performance period over which revenue will be recognized is determined to be the period over which the Company estimates it will perform the research and development activities.

The Company determined that the most appropriate method of measuring progress for these performance obligations is an input method based on research and development costs in the program budget.

Accordingly, the Company has estimated the total cost required to complete its obligation and recognized an amount of revenue equal to the proportion of services performed, which is reassessed on an ongoing basis as the program progresses.

In the period an agreement expires or is terminated, remaining deferred revenue, if any, is recognized as revenue.

Under the terms of the Sarepta Collaboration Agreement, the Company received an upfront payment of $ 500.0 million on February 14, 2025.

In addition, on February 7, 2025, the Company received $ 325.0 million in the form of an equity investment under the Stock Purchase Agreement.

Based upon the Company's share price on February 7, 2025, (the “Closing Date”), the difference between the $ 325.0 million and the fair value of the shares on the Closing date resulted in a premium of $ 83.6 million.

The premium is included as part of the total consideration of the Sarepta Collaboration Agreement for revenue recognition purposes.

The Company expects to receive $ 250.0 million to be paid in annual installments of $ 50.0 million over the first five years of the agreement.

The Company is also eligible receive reimbursement of certain costs related to carrying out the research and development activities for the C1 programs.

The fixed consideration of $ 833.6 million and an estimated variable consideration of $ 71.2 million were allocated to all performance obligations based on their relative standalone selling price.

Standalone selling prices for the product licenses were determined using an adjusted market-based approach through the net present value of the expected future cash flows for each program.

The standalone selling prices for the research and development work were determined based on an expected cost plus margin approach.

The fixed and estimated variable consideration of $ 904.9 million was allocated in accordance to the following table:

March 31, 2025

(in thousands)

Upfront payment

Equity premium

Fixed consideration

Estimated variable consideration

Total transaction price

The Company estimates the stand-alone selling price for each distinct performance obligation, which involves assumptions that may require significant judgment.

The Company’s estimates of the stand-alone selling price for license-related performance obligations includes forecasted revenues and expenses, phase dates, probability of success, development timelines, and the discount rate.

The estimates of the stand-alone selling price for research and development or other service-related performance obligations generally include forecasting the expected costs of satisfying a performance obligation at market rates.

The Company identified a discount for accounting revenue recognition purposes which was allocated proportionally to each of the performance obligations based upon their standalone selling price.

The Company will receive reimbursement of certain costs related to carrying out the research and development activities for the C1 programs as well as development milestone payments of up to $ 300.0 million .

Further, for each of the

13 programs, the Company is eligible to receive regulatory milestone payments between $ 110.0 million and $ 180.0 million per program.

Variable consideration associated with the milestones that may be achieved will be allocated to the performance obligation to which it is determined to be related, which will be the respective development work that is being reimbursed and the respective programs to which the milestones relate.

ARO-DM1 Development Milestones will be allocated between the license and development work based on the allocation of the standalone selling price.

The Company constrained all of the ARO-DM1 Development Milestones and other development milestones as there is a high degree of uncertainty around the occurrence of those events.

The Company is also eligible to receive sales milestone payments between $ 500.0 million and $ 700.0 million per program as well as tiered royalties on net sales of licensed products of up to the low double digits, subject to the terms and conditions of the Sarepta Collaboration Agreement.

The Company has applied the sales-based scope exception to the sales milestones and the royalty-based payments.

The Sarepta Collaboration Agreement commenced in February 2025 and may be terminated by either party in the event of a material breach as defined therein.

In addition, Sarepta may voluntarily terminate the Sarepta Collaboration Agreement with 30 days' written notice to the Company if terminated prior to any regulatory approval of a licensed product.

Unless earlier terminated, the Sarepta Collaboration Agreement expires on a product-by-product and country-by-country basis, upon the date of expiration of the relevant royalty term for such product in such country.

As of March 31, 2025, the Company recorded $ 542.7 million in revenue from Sarepta, $ 2.4 million in accounts receivable and $ 43.3 million in deferred revenue.

The recognition of the remaining revenue for the performance obligations is dependent upon the time it takes to complete the respective research and development activities and in consideration of the timing of the selection of the C3 programs.

Accordingly, the end dates are subject to change.

The Company expects to recognize the unsatisfied performance obligations in accordance with the various agreements, and all performance obligations are currently estimated to be fully satisfied by March 31, 2031.

BALANCE SHEET ACCOUNTS

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The following table summarizes the Company’s major classes of property, plant and equipment:

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(in thousands)

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Property, plant and equipment, net $ 384,803 $ 386,032

Depreciation and amortization expense for property, plant and equipment for the three months ended December 31, 2024 and 2023 was $ 4.8 million and $ 3.8 million, respectively.

Depreciation and amortization expense for property, plant and equipment for the three months ended March 31, 2025 and 2024 was $ 5.6 million and $ 4.1 million, respectively.

Depreciation and amortization expense for property, plant and equipment for the six months ended March 31, 2025 and 2024 was $ 10.4 million and $ 7.9 million, respectively.

During the first quarter of fiscal 2025, the Company completed the build out of its manufacturing facility in Verona, Wisconsin.

This resulted in the reclassification of $ 162.7 million from construction in progress to building and $ 2.6 million to manufacturing equipment as of December 31, 2024.

This resulted in the reclassification of $ 172.9 million from construction in progress to buildings and $ 13.8 million to manufacturing equipment as of March 31, 2025.

Additionally, the Company began depreciating the newly completed manufacturing facility over a 39 -year period and the manufacturing equipment over 7 - or 10 -year periods.

During the first quarter of fiscal 2024, the Company completed the build out of its laboratory and office facilities in Verona, Wisconsin, which resulted in the reclassification of $ 76.0 million from construction in progress to buildings as of December 31, 2024.

Accrued Expenses

Accrued expenses consist of the following:

December 31, 2024 September 30, 2024

Accrued expenses consisted of the following as of:

March 31, 2025 September 30, 2024

(in thousands)

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The Company’s investments consisted of the following:

As of December 31, 2024

As of March 31, 2025

(in thousands)

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The following table summarizes the contract maturity of the available-for-sale securities as of:

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(in thousands)

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After one to two years

After two to three years 188,533 —

$ 911,700 $ 578,276

As of December 31, 2024 and September 30, 2024, the gross unrealized losses were immaterial.

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 December 31, 2024 and 2023.

As of March 31, 2025 and September 30, 2024, the gross unrealized losses were immaterial.

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 March 31, 2025 and 2024.

INTANGIBLE ASSETS

3 unchanged sentences

(in thousands) (in years)

As of December 31, 2024

As of March 31, 2025

Patents $ 21,728 $ 15,649 $ — $ 6,079 14

6 unchanged sentences

Intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist.

No impairment indicators were identified during the three months ended December 31, 2024 and 2023.

No impairment indicators were identified during the six months ended March 31, 2025 and 2024.

Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives.

Intangible assets amortization expense was $ 0.4 million for the three months ended December 31, 2024 and 2023.

Intangible assets amortization expense was $ 0.4 million for the three months ended March 31, 2025 and 2024, and $ 0.9 million for each of six months ended March 31, 2025 and 2024.

None of the intangible assets with definite useful lives are anticipated to have a residual value.

The following table presents the estimated future amortization expense related to intangible assets as of December 31, 2024:

The following table presents the estimated future amortization expense related to intangible assets as of March 31, 2025:

Amortization Expense

7 unchanged sentences

(in thousands)

As of December 31, 2024

As of March 31, 2025

Common stock $ 0.001 290,000 138,062 138,062

$ 0.001 290,000 125,572 125,572

Preferred stock $ 0.001 5,000 — —

2 unchanged sentences

Preferred stock $ 0.001 5,000 — —

(1) Includes shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.

As of December 31, 2024 and September 30, 2024, respectively, 11,663,040 and 11,492,293 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.

As of March 31, 2025 and September 30, 2024, respectively, 10,134,173 and 11,492,293 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.

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 (“Avoro Pre-Funded Warrants”).

8 unchanged sentences

Accordingly, the Company has classified the Avoro Pre-funded Warrants as permanent equity.

As of December 31, 2024, no shares underlying the Avoro Pre-Funded Warrants had been exercised.

As of March 31, 2025, no shares underlying the Avoro Pre-Funded Warrants had been exercised.

In connection with the Sarepta Collaboration Agreement, on November 25, 2024, the Company entered into the Stock Purchase Agreement with an affiliate of Sarepta for a private placement of shares of common stock of the Company (the “Private Placement”).

6 unchanged sentences

The Company and Jefferies may each terminate the Open Market Sale Agreement at any time upon prior notice.

As of December 31, 2024, no shares have been issued under the Open Market Sale Agreement.

As of March 31, 2025, no shares have been issued under the Open Market Sale Agreement.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount is reasonably estimable, the Company will accrue a liability for the estimated loss.

There were no contingent liabilities recorded as of December 31, 2024.

There were no contingent liabilities recorded as of March 31, 2025.

The Company owns land in the Verona Technology Park in Verona, Wisconsin, where it has constructed an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility to support manufacturing process development and analytical activities.

As of December 31, 2024, the build-out of these facilities was completed, with total costs incurred of $ 291.2 million.

As of March 31, 2025, the build-out of these facilities was completed, with total costs incurred of $ 292.6 million.

The Company has an expected outstanding balance of approximately $ 3.7 million remaining to be settled.

3 unchanged sentences

The lease contains an option to renew for one additional five-year term.

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 December 31, 2024.

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 March 31, 2025.

San Diego, California :

1 unchanged sentence

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.

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 December 31, 2024.

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 March 31, 2025.

The lease agreement, as amended, granted the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor.

5 unchanged sentences

The lease contains options to renew for two terms of five years .

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 December 31, 2024.

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 March 31, 2025.

The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

Lease Assets and Liabilities Classification December 31, 2024 September 30, 2024

Lease Assets and Liabilities Classification March 31, 2025 September 30, 2024

(in thousands)

2 unchanged sentences

Non-current operating lease liabilities Lease liabilities, net of current portion 107,529 111,027

Three Months Ended December 31,

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

Lease Cost Classification 2025 2024 2025 2024

7 unchanged sentences

(1) Variable lease cost is primarily related to operating expenses associated with the Company’s operating leases.

There was $ 0 short-term lease cost during the three months ended December 31, 2024 and 2023, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of December 31, 2024:

There was no short-term lease cost during the three and six months ended March 31, 2025 and 2024, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of March 31, 2025:

(in thousands)

2025 (remainder of fiscal year) $ 11,616

2025 (remainder) $ 7,776

2030 and thereafter 114,790

3 unchanged sentences

Supplemental cash flow and other information related to leases was as follows:

Three Months Ended December 31,

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

2025 2024 2025 2024

(in thousands)

Cash received for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ — $ — $ — $ 3,099

Right-of-use assets adjusted in exchange for new/amended operating lease liabilities $ — $ 64

Right-of-use assets obtained in exchange for amended operating lease liabilities $ — $ — $ — $ 64

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.

Under the 2013 Incentive Plan (the “2013 Plan”), 2,855,923 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of December 31, 2024.

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.

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.

As of December 31, 2024, the total number of shares available for issuance was 4,262,537 shares, which includes 161,085 and 277,690 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 4,176,238 shares have been granted under the 2021 Plan.

Under the 2013 Incentive Plan (the “2013 Plan”), 2,391,211 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of March 31, 2025.

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.

As of March 31, 2025, the total number of shares available for issuance was 2,282,102 shares, which includes 166,023 and 331,638 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 6,215,559 shares have been granted under the 2021 Plan.

Under the Company ’ s 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.

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.

As of December 31, 2024, the total number of shares remaining available for issuance was 453,601 shares, and 428,800 shares have been granted under the Inducement Plan.

As of March 31, 2025, the total number of shares remaining available for issuance was 392,611 shares, and 507,340 shares have been granted under the Inducement Plan.

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.

As of December 31, 2024, there were 602,939 and 183,750 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.

As of March 31, 2025, there were 602,355 and 151,500 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.

The following table presents a summary of awards outstanding attributable to Arrowhead Pharmaceuticals, Inc.:

As of December 31, 2024

March 31, 2025

2013 Plan 2021 Plan Inducement Awards Total

4 unchanged sentences

The following table summarizes stock-based compensation expenses included in operating expenses:

Three Months Ended December 31,

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

2025 2024 2025 2024

(in thousands)

3 unchanged sentences

Stock Option Awards

The following table presents a summary of the stock option activity for the three months ended December 31, 2024:

The following table presents a summary of the stock option activity for the six months ended March 31, 2025:

Shares Weighted-

5 unchanged sentences

Exercised ( 422,333 ) 7.67

Outstanding at December 31, 2024

Outstanding at March 31, 2025

1,525,717 $ 27.35 3.7 $ 3,831,887

Exercisable at December 31, 2024

Exercisable at March 31, 2025

1,525,717 $ 27.35 3.7 $ 3,831,887

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the exercise price of the option.

The total intrinsic value of the options exercised during the three months ended December 31, 2024 and 2023 was $ 0.9 million and $ 0.6 million, respectively.

Stock-based compensation expense related to stock options outstanding for the three months ended December 31, 2024 and 2023, was $ 0.1 million and $ 1.5 million, respectively.

As of December 31, 2024, the pre-tax compensation expense for all outstanding unvested stock options is considered nominal and will be recognized in the Company’s results of operations over a weighted average period of 4 days.

The total intrinsic value of the options exercised during the three months ended March 31, 2025 and 2024 was $ 3.7 million and $ 2.5 million, respectively.

The total intrinsic value of the options exercised during the six months ended March 31, 2025 and 2024 was $ 4.6 million and $ 3.1 million, respectively.

Stock-based compensation expense related to stock options outstanding for the three months ended March 31, 2025 and 2024, was $ 3.0 thousand and $ 0.6 million, respectively.

Stock-based compensation expense related to stock options outstanding for the six months ended March 31, 2025 and 2024, was $ 0.1 million and $ 2.1 million, respectively.

As of March 31, 2025, the pre-tax compensation expense for all outstanding unvested stock options is considered nominal.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model.

2 unchanged sentences

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.

No options were granted during the three months ended December 31, 2024 and 2023.

No options were granted during the six months ended March 31, 2025 and 2024.

Visirna ESOP :

1 unchanged sentence

The Visirna ESOP is independently managed by Visirna, including the valuation process.

For the three months ended December 31, 2024 and 2023, stock-based compensation expense related to the Visirna ESOP was $ 1.0 million and $ 2.0 million, respectively.

For the three months ended March 31, 2025 and 2024, stock-based compensation expense related to the Visirna ESOP was $ 0.9 million and $ 1.2 million, respectively.

For the six months ended March 31, 2025 and 2024, stock-based compensation expense related to the Visirna ESOP was $ 1.9 million and $ 3.2 million, respectively.

Restricted Stock Units

9 unchanged sentences

Forfeited ( 219,125 ) 33.97

Outstanding at December 31, 2024

Outstanding at March 31, 2025

5,933,743 $ 38.49

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.

For the three months ended December 31, 2024 and 2023, the Company recorded $ 14.1 million and $ 16.2 million of expense related to RSUs, respectively.

As of December 31, 2024, there was $ 75.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.5 years.

For the three months ended March 31, 2025 and 2024, the Company recorded $ 15.1 million and $ 16.0 million of expense related to RSUs, respectively.

For the six months ended March 31, 2025 and 2024, the Company recorded $ 29.2 million and $ 32.2 million of expense related to RSUs, respectively.

As of March 31, 2025, there was $ 97.9 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.8 years.

FAIR VALUE MEASUREMENTS

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair

The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Note 10 - Fair Value Measurements of Notes to Consolidated Financial Statements of Part IV, “Item 15.

3 unchanged sentences

This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3.

The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused

the transfer.

As of December 31, 2024 and September 30, 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer.

As of March 31, 2025 and September 30, 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

December 31, 2024

March 31, 2025

Level 1 Level 2 Level 3 Total

26 unchanged sentences

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.

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.

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

The Company remains eligible to receive any milestone payments potentially payable by Amgen under the Olpasiran Agreement.

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.

7 unchanged sentences

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.

As of December 31, 2024, the estimated effective interest rate was 6.3 %.

As of March 31, 2025, the estimated effective interest rate was 6.3 %.

The following table presents the activity with respect to the liability related to the sale of future royalties.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(in thousands)

8 unchanged sentences

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.

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 %.

On the Closing Date, the Company received net proceeds of $ 390.7 million, after issuance costs.

Additional fees related to third parties have been paid as of December 31, 2024.

The loans under the Credit Facility bear interest at an annual rate 15.0 %, and the interest is paid in kind and added to the outstanding principal balance of the Credit Facility each period.

The outstanding principal balance of this Credit Facility, including amounts representing accrued but unpaid interest previously paid in kind, is due and payable on August 7, 2031.

The Company is permitted to use the net proceeds for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries.

2 unchanged sentences

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.

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.

On November 26, 2024, the Company entered into an amendment to the Financing Agreement to modify, amongst other things, the requirements to make prepayments of the loans under the Credit Facility with respect to certain transactions.

The Company paid $ 1.6 million during the second quarter of fiscal 2025, representing 65 % of the milestone payments from GSK under the Credit Facility term.

intellectual property, and will be guaranteed by material subsidiaries of the Company, including foreign subsidiaries, subject to certain exceptions.

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.

On November 26, 2024, the Company entered into an amendment to the Financing Agreement (the "Amendment") to modify, amongst other things, some of the prepayment terms of the loans under the Credit Facility, including, the prepayment terms related to the Sarepta Collaboration Agreement.

The Amendment was effective on February 14, 2025, following the closing of the Sarepta Collaboration Agreement and receipt of the $ 500.0 million upfront payment from Sarepta.

As a result, the Company paid $ 150.0 million of the loans under the Credit Facility during the second quarter of fiscal 2025.

The Amendment was accounted for as a debt modification under ASC 470-50, “Debt—Modification and extinguishments ” since the amendment did not result in substantially different terms.

In connection with the Amendment, the Company did not incur significant third-party fees.

The Company also paid $ 1.6 million during the second quarter of fiscal 2025, representing 65 % of the milestone payments from GSK under the Credit Facility term.

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.

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.

2 unchanged sentences

The outstanding balance of the Credit Facility consisted of the following:

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(in thousands)

3 unchanged sentences

Current portion of credit facility ( 65,000 ) —

Payments ( 151,625 ) —

Credit facility, net of current portion $ 208,927 $ 393,183

The following table sets forth total interest expense recognized related to the Credit Facility:

Three Months Ended December 31,

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

2025 2024 2025 2024

(in thousands)

Amortization of debt discount and issuance costs

$ 1,129 $ — $ 1,682 $ —

Contractual interest expense

15,009 — 30,687 —

Total interest expense

NET LOSS PER SHARE

The following table presents the computation of basic and diluted net loss per share.

Three Months Ended December 31,

$ 16,138 $ — $ 32,369 $ —

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.

Principal repayment of up to $ 160.0 million is scheduled through the fifth year, in line with the contractual terms of the Credit Facility.

Actual payments may vary and could be lower than the amounts presented in the table.

(in thousands)

2025 (remainder) $ 50,000

NET INCOME (LOSS) PER SHARE

The following table presents the computation of basic and diluted net income (loss) per share for the three and six months ended March 31, 2025 and 2024.

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

2025 2024 2025 2024

(in thousands, except per share amounts)

Net loss attributable to Arrowhead Pharmaceuticals, Inc.

Net income (loss) attributable to Arrowhead Pharmaceuticals, Inc.

$ 370,445 $ ( 125,300 ) $ 197,360 $ ( 258,164 )

4 unchanged sentences

134,484 123,285 130,265 115,307

Basic net loss per share $ ( 1.39 ) $ ( 1.24 )

Diluted net loss per share $ ( 1.39 ) $ ( 1.24 )

Basic net income (loss) per share $ 2.78 $ ( 1.02 ) $ 1.53 $ ( 2.24 )

Diluted net income (loss) per share $ 2.75 $ ( 1.02 ) $ 1.52 $ ( 2.24 )

(1) Includes shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.

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.

Three Months Ended December 31,

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net income (loss) per share because to include them would be anti-dilutive.

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

2025 2024 2025 2024

(in thousands)

2 unchanged sentences

Total 6,049 4,006 5,317 4,588

SUBSEQUENT EVENTS

As previously disclosed, on November 25, 2024, the Company and Sarepta entered into the Sarepta Collaboration Agreement for the co-development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs.

The Company also entered into a Stock Purchase Agreement with an affiliate of Sarepta for a private placement of shares of common stock of the Company.

On February 7, 2025, after receipt of clearance under the Hart-Scott Rodino Antitrust Improvements Act, the transactions contemplated by the Sarepta Collaboration Agreement and the Stock Purchase Agreement closed.

Upon closing, the Company received $ 325.0 million for the purchase of 11,926,301 shares of common stock, at a price per share of $ 27.25 and will receive $ 500.0 million as an upfront payment under the Sarepta Collaboration Agreement.

The Company and an affiliate of Sarepta also entered into the previously-disclosed Investor Rights Agreement at closing.

The Company's estimated annual effective tax rate significantly fluctuates for fiscal year 2025 with small changes to the Company’s estimated income.

For the three months ended March 31, 2025, the Company has recorded a discrete income tax expense of $ 1.8 million.

The income tax provision for the three months ended March 31, 2024, resulted in no tax expense.

For the six months ended March 31, 2025, the Company has recorded a discrete income tax expense of $ 1.9 million and for the six months ended March 31, 2024, the Company has recorded a discrete income tax benefit of $ 3.3 million.

Income tax expense for the three and six months ended March 31, 2025 was based on actual year to date income recorded and statutory tax rates.

The Company does not anticipate any changes in its unrecognized tax benefits over the next 12 months.

Due to the presence of net operating loss carryforwards, all of the income tax years remain open for examination domestically.

The Company has not been notified that it is under audit by the Internal Revenue Service or foreign taxing authorities;

however, the Company has been notified of an income tax examination by the state of California.

There are no other audits in any other jurisdictions.

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

What changed 10-Q

Item 1. Financial Statements