What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-12 · 220 added, 174 removed, 598 unchanged (40% of the section changed)

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(in thousands, except per share amounts)

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

Current assets:

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Accumulated deficit ( 1,603,404 ) ( 1,625,523 )

Total Arrowhead Pharmaceuticals, Inc.

Stockholders’ equity 522,313 185,444

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Arrowhead Pharmaceuticals, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive (Loss) Income

(in thousands, except per share amounts)

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

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

2025 2024 2025 2024

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Total operating expenses 193,317 176,141 518,736 442,428

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

Other income (expense):

Operating (loss) income ( 165,550 ) ( 176,141 ) 54,240 ( 438,877 )

Other (expense) income:

Interest income 11,019 6,498 28,236 15,550

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Other, net ( 176 ) 760 603 1,370

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

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

Total other (expense) income ( 13,539 ) 2,164 ( 38,828 ) ( 785 )

(Loss) income before income tax expense and noncontrolling interest ( 179,089 ) ( 173,977 ) 15,412 ( 439,662 )

Income tax (benefit) expense ( 437 ) — 1,419 ( 3,313 )

Net (loss) income including noncontrolling interest $ ( 178,652 ) $ ( 173,977 ) $ 13,993 $ ( 436,349 )

Net loss attributable to noncontrolling interest, net of tax ( 3,411 ) ( 3,184 ) ( 8,126 ) ( 7,392 )

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

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

$ ( 175,241 ) $ ( 170,793 ) $ 22,119 $ ( 428,957 )

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

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

Basic $ ( 1.26 ) $ ( 1.38 ) $ 0.17 $ ( 3.63 )

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Foreign currency translation adjustments 91 ( 141 ) ( 415 ) ( 139 )

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

Comprehensive (loss) income $ ( 177,685 ) $ ( 173,869 ) $ 14,600 $ ( 434,114 )

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

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

Unrealized gains on available-for-sale securities — — — ( 507 ) — — ( 507 )

Unrealized losses on available-for-sale securities — — — ( 507 ) — — ( 507 )

Net loss — — — — ( 173,085 ) ( 2,133 ) ( 175,218 )

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

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

Unrealized gains on available-for-sales 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

Stock-based compensation — — 13,043 — — — 13,043

Exercise of stock options 36 — 223 — — — 223

Common stock - restricted stock units vesting 46 — — — — — —

Foreign currency translation adjustments — — — 91 — — 91

Unrealized gains on available-for-sales securities — — — 876 — — 876

— — — — ( 175,241 ) ( 3,411 ) ( 178,652 )

Balance at June 30, 2025 138,144 $ 230 $ 2,120,130 $ 5,357 $ ( 1,603,404 ) $ ( 2,507 ) $ 519,806

Amount ($) Additional

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Foreign currency translation adjustments — — — 58 — — 58

Unrealized losses on available-for-sale securities — — — 1,909 — — 1,909

Unrealized gains on available-for-sale securities — — — 1,909 — — 1,909

Net loss — — — — ( 132,864 ) ( 2,512 ) ( 135,376 )

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

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

Unrealized gains 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

Stock-based compensation — — 17,050 — — — 17,050

Exercise of stock options 43 — 388 — — — 388

Common stock - restricted stock units vesting 51 — — — — — —

Foreign currency translation adjustments — — — ( 141 ) — — ( 141 )

Unrealized gains on available-for-sale securities — — — 249 — — 249

Net loss — — — — ( 170,793 ) ( 3,184 ) ( 173,977 )

Balance at June 30, 2024 124,227 $ 217 $ 1,786,304 $ ( 987 ) $ ( 1,454,987 ) $ 8,427 $ 338,974

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

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(in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Proceeds from the sales of future royalties — 50,000

Proceeds from the issuance of warrants 25,000 —

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Repayments of credit facility ( 201,625 ) —

Proceeds from Visirna credit agreement 7,098 —

Net cash provided by financing activities 70,337 481,431

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

Net increase (decrease) in cash, cash equivalents and restricted cash 27,485 ( 41,353 )

Effect of exchange rate on cash, cash equivalents and restricted cash ( 377 ) ( 139 )

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Cardiometabolic plozasiran Phase 3

zodasiran Phase 2b Arrowhead

zodasiran Phase 3

olpasiran Phase 3 Amgen

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

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

Several key recent developments include:

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

The following is a summary of select significant developments affecting our business that have occurred since the filing of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024:

• Triggered a $ 100.0 million milestone payment from Sarepta Therapeutics, Inc., which was triggered on July 27, 2025, when the Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1);

• Announced the signing of an asset purchase agreement between Sanofi and Visirna Therapeutics, a majority-owned subsidiary of the Company, created to develop and commercialize four of the Company’s investigational cardiometabolic candidates in Greater China.

Under the terms of the agreement, Sanofi will acquire rights to develop and commercialize investigational plozasiran, the Company's first-in-class RNAi therapeutic candidate designed to reduce production of apolipoprotein C-III (APOC3) as a potential treatment for familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (SHTG), in Greater China;

• Initiated and dosed the first subject in the YOSEMITE Phase 3 clinical trial of zodasiran, the Company’s investigational RNAi therapeutic being developed as a potential treatment for homozygous familial

hypercholesterolemia (HoFH), a rare genetic condition that leads to severely elevated LDL-cholesterol and early onset cardiovascular disease;

• Completed enrollment of SHASTA-3, SHASTA-4, and MUIR-3 Phase 3 clinical trials of plozasiran.

The Company’s global Phase 3 clinical studies are designed to support regulatory submissions for approval of investigational plozasiran in the treatment of severe hypertriglyceridemia.

The Company previously submitted a New Drug Application to the U.S.

Food and Drug Administration (“FDA”) on November 16, 2024 for plozasiran based on positive Phase 3 PALISADE study results in patients with familial chylomicronemia syndrome, which the FDA accepted on January 17, 2025, with 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;

• Initiated a Phase 1/2a clinical trial of ARO-ALK7 for the treatment of obesity.

ARO-ALK7 is the first RNAi-based therapy designed to silence adipocyte expression of the ACVR1C gene 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;

• 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.

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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.

Food and Drug Administration (FDA) on November 16, 2024, which was accepted for filing on January 17, 2025.

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;

• 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;

• Announced that the Company 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.

The study resulted in multiple promising findings including:

The study resulted in multiple findings including:

(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.

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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 March 31, 2025 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 June 30, 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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Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted from the accompanying interim consolidated financial statements and related notes.

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 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.

Readers are urged to review the Company’s Annual Report on Form

10-K for the fiscal year ended September 30, 2024 for more complete descriptions and discussions.

Operating results and cash flows for the nine months ended June 30, 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.

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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.

As of June 30, 2025, the Company had $ 129.8 million in cash, cash equivalents and restricted cash ($ 2.2 million in restricted cash) and $ 770.6 million in available-for-sale securities to fund operations.

During the nine months ended June 30, 2025, the Company’s cash, cash equivalents and restricted cash and investments balance increased by $ 219.4 million, which was primarily due to the $ 500.0 million as an upfront payment under the Sarepta agreement and $ 325.0 million in the form of an equity investment under the Sarepta agreement, and $ 25.0 million in the form of pre-funded warrants, partially offset by ongoing expenses related to the Company’s research and development programs, $ 201.6 million payments on its credit facility, and $ 28.2 million interest income earned on investments.

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.

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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 are 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 the Company is currently evaluating the 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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While the ASU implements further segment disclosure requirements, it does not change how an entity identifies its operating or reportable segments and it will have no impact on the Company’s consolidated financial condition, results of operations or cash flows.

This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2025, and subsequent interim periods.

Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.

The Company plans to adopt the ASU's in connection with our Annual Report on Form 10-K for the fiscal year ending September 30, 2025, as required and will be applied retrospectively to all periods presented.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which enacts significant changes to U.S.

tax and related laws.

Some of the provisions of the new tax law affecting corporations include but are not limited to expensing of domestic research expenses, reinstate the limit of the deduction of interest expense to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19, 2025.

The Company is currently evaluating the impact the new tax law will have on its financial condition and results of operations.

Preliminarily, the Company does not anticipate a material change to its effective income tax rate and its net deferred federal income tax assets as the Company maintains a full valuation allowance.

COLLABORATION AND LICENSE AGREEMENTS

The following table provides a summary of revenue recognized:

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

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

2025 2024 2025 2024

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Total $ 27,767 $ — $ 572,976 $ 3,551

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

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

June 30, 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 March 31, 2025, the Company recorded an insignificant amount in accounts receivable and no liabilities.

Horizon Therapeutics Ireland DAC (“Horizon”)

In June 2021, Horizon and the Company entered into a collaboration and license agreement (the “Horizon License Agreement”).

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.

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.

Horizon exercised its right to terminate the Horizon License Agreement for convenience, which took effect on December 21, 2023.

As of June 30, 2025, the Company had no contract assets and liabilities recorded.

Takeda Pharmaceutical Company Limited (“Takeda”)

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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.

Within the United States, fazirsiran, if approved, will be co-commercialized under a 50/50 profit sharing structure.

Within the United States, fazirsiran, if approved, will be co-commercialized under a 50/50 profit

sharing structure.

Outside the United States, Takeda received an exclusive license to commercialize fazirsiran and will lead the global commercialization strategy, while the Company will be eligible to receive tiered royalties of 20 % to 25 % on net sales.

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.

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.

Within the United States, the Company will also participate in co-development and co-commercialization efforts and will co-fund these efforts with Takeda as part of the 50/50 profit sharing structure within the United States.

The Company determined that the key deliverables included the license and certain research and development 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.

Takeda is responsible for managing clinical development and commercialization outside the United States.

Within the United States, the Company and Takeda are responsible in the co-development and co-commercialization efforts.

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.

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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 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.

There were no further deferred revenue and contract liabilities as of June 30, 2025.

The Company recorded $ 24.6 million as accrued expenses as of June 30, 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.

There are no currently active trials for ARO-PNPLA3.

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 March 31, 2025.

There were no contract assets and liabilities recorded as of June 30, 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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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).

Under the Sarepta Collaboration Agreement, Sarepta received an exclusive sublicensable 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").

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).

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 performance obligations for the licenses were satisfied in the second quarter of fiscal 2025 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.

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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 these nine performance obligations, revenue is 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.

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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 entitled 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.

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

March 31, 2025

June 30, 2025

(in thousands)

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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.

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 based on the difference between the aggregate stand-alone selling price and the transaction price for accounting revenue recognition purposes.

The Company allocated the discount proportionally to each of the performance obligations based upon their standalone selling price.

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

ARO-DM1 development milestones were allocated between the license and development work based on the allocation of the standalone selling price.

The Company will recognize the ARO-DM1 development milestones and other development milestones as revenue in the periods the underlying milestone events are achieved as achievement of the milestone events are highly susceptible to factors outside of the entity's influence and therefore there is a possibility that the milestone event will not be achieved.

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.

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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.

As of June 30, 2025, the Company recorded $ 570.3 million in revenue from Sarepta, $ 9.7 million in accounts receivable and $ 23.0 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:

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(in thousands)

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Property, plant and equipment, net $ 381,048 $ 386,032

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 $ 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 March 31, 2025.

Depreciation and amortization expense for property, plant and equipment for the three months ended June 30, 2025 and 2024 was $ 5.8 million and $ 4.4 million, respectively.

Depreciation and amortization expense for property, plant and equipment for the nine months ended June 30, 2025 and 2024 was $ 16.2 million and $ 12.3 million, respectively.

During the first quarter of fiscal 2025, the Company substantially completed the build out of its manufacturing facility in Verona, Wisconsin, leading to the reclassification of $ 162.7 million from construction in progress to buildings and $ 2.6 million from construction in progress to manufacturing equipment.

The Company subsequently incurred and capitalized $ 10.6 million to buildings and $ 13.9 million to manufacturing equipment during the second and third quarters of fiscal 2025.

Furthermore, 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 $ 71.8 million from construction in progress to buildings.

The Company subsequently incurred and capitalized $ 4.2 million from construction in progress to buildings in fiscal 2024.

Accrued Expenses

Accrued expenses consisted of the following as of:

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(in thousands)

Accrued R&D expenses

Accrued research and development expenses

$ 31,708 $ 28,069

Accrued R&D expenses;

Accrued research and development expenses;

co-development

3 unchanged sentences

$ 64,818 $ 63,017

As of June 30, 2025, the Company’s accrued research and development expenses was primarily attributable to ongoing clinical trial operations, preclinical animal studies, and associated toxicology assessments.

In addition, accrued research and development expenses;

co-development relates to the co-development and co-commercialization activities under the Takeda License Agreement (see Note 2).

The Company’s investments consisted of the following:

As of March 31, 2025

As of June 30, 2025

(in thousands)

12 unchanged sentences

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(in thousands)

4 unchanged sentences

$ 770,579 $ 578,276

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.

As of June 30, 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 June 30, 2025 and 2024.

INTANGIBLE ASSETS

3 unchanged sentences

(in thousands) (in years)

As of March 31, 2025

As of June 30, 2025

Patents $ 21,728 $ 16,037 $ — $ 5,691 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 six months ended March 31, 2025 and 2024.

No impairment indicators were identified during the nine months ended June 30, 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 March 31, 2025 and 2024, and $ 0.9 million for each of six months ended March 31, 2025 and 2024.

Intangible assets amortization expense was $ 0.4 million for the three months ended June 30, 2025 and 2024, and $ 1.3 million for each of the nine months ended June 30, 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 March 31, 2025:

The following table presents the estimated future amortization expense related to intangible assets as of June 30, 2025:

Amortization Expense

7 unchanged sentences

(in thousands)

As of March 31, 2025

As of June 30, 2025

Common stock (1)

$ 0.001 290,000 138,144 138,144

Preferred stock $ 0.001 5,000 — —

2 unchanged sentences

Preferred stock $ 0.001 5,000 — —

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.

(1) Does not include shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.

As of June 30, 2025 and September 30, 2024, respectively, 10,081,964 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 March 31, 2025, no shares underlying the Avoro Pre-Funded Warrants had been exercised.

As of June 30, 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 March 31, 2025, no shares have been issued under the Open Market Sale Agreement.

As of June 30, 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 March 31, 2025.

There were no contingent liabilities recorded as of June 30, 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 March 31, 2025, the build-out of these facilities was completed, with total costs incurred of $ 292.6 million.

As of June 30, 2025, the build-out of these facilities was substantially completed, with total costs incurred of $ 293.2 million.

These costs included (i) $ 76.0 million capitalized to building, related to the laboratory and office facility, and (ii) $ 11.5 million capitalized to research equipment, $ 173.3 million capitalized to building, $ 16.5 million capitalized to manufacturing equipment, and $ 15.9 million in construction in progress, related to the drug manufacturing facility.

The Company has an expected outstanding balance of approximately $ 3.3 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 March 31, 2025.

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 June 30, 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 March 31, 2025.

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 June 30, 2025.

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

3 unchanged sentences

Madison, Wisconsin :

The Company leases 107,000 square feet space located at 502 South Rosa Road for its office and laboratory facilities, which lease expires on September 30, 2031.

The Company leases 110,956 square feet space, which it increased from 107,000 square feet on June 30, 2025, located at 502 South Rosa Road for its office and laboratory facilities, which lease expires on September 30, 2031.

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 March 31, 2025.

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 June 30, 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 March 31, 2025 September 30, 2024

Lease Assets and Liabilities Classification June 30, 2025 September 30, 2024

(in thousands)

2 unchanged sentences

Non-current operating lease liabilities Lease liabilities, net of current portion 105,690 111,027

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

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

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 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:

There was no short-term lease cost during the three and nine months ended June 30, 2025 and 2024, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of June 30, 2025:

(in thousands)

5 unchanged sentences

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

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

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

2025 2024 2025 2024

9 unchanged sentences

The Company has three plans that provide for equity-based compensation.

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.

Under the 2013 Incentive Plan (the “2013 Plan”), 2,350,117 awards are granted and outstanding, relating to stock options and restricted stock awards to employees and directors as of June 30, 2025.

Under the 2021 Incentive Plan (the “2021 Plan”), 8,000,000 shares (subject to certain adjustments) of the Company’s common stock are authorized 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.

As of June 30, 2025, 6,215,559 shares have been granted under the 2021 Plan.

The total number of shares available for issuance was 2,308,495 shares, which includes 170,898 and 353,156 shares that were forfeited under the 2013 and 2021 Plans, respectively.

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 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.

As of June 30, 2025, 607,340 shares have been granted under the Inducement Plan.

The total number of shares remaining available for issuance was 307,924 shares.

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

As of June 30, 2025, there were 602,355 and 138,775 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.:

March 31, 2025

June 30, 2025

2013 Plan 2021 Plan Inducement Awards Total

3 unchanged sentences

Total 2,350,117 3,920,811 1,194,617 7,465,545

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

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

The following table summarizes stock-based compensation expenses included in operating expenses attributable to Arrowhead Pharmaceuticals, Inc.:

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

2025 2024 2025 2024

4 unchanged sentences

Stock Option Awards

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

The following table presents a summary of the stock option activity for the nine months ended June 30, 2025:

Shares Weighted-

5 unchanged sentences

Exercised ( 458,552 ) 7.55

Outstanding at March 31, 2025

Outstanding at June 30, 2025

1,484,623 $ 27.75 3.5 $ 5,750,674

Exercisable at March 31, 2025

Exercisable at June 30, 2025

1,484,623 $ 27.75 3.5 $ 5,750,674

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 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 total intrinsic value of the options exercised during the three months ended June 30, 2025 and 2024 was $ 0.3 million and $ 0.7 million, respectively.

The total intrinsic value of the options exercised during the nine months ended June 30, 2025 and 2024 was $ 4.9 million and $ 3.8 million, respectively.

For the three months ended June 30, 2025, there was no stock-based compensation expense related to stock options outstanding, while $ 0.4 million was recorded for the same period in 2024.

Stock-based compensation expense related to stock options outstanding for the nine months ended June 30, 2025 and 2024, was $ 0.1 million and $ 2.5 million, respectively.

As of June 30, 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.

1 unchanged sentence

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.

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

No options were granted during the nine months ended June 30, 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 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.

For the three months ended June 30, 2025 and 2024, stock-based compensation expense related to the Visirna ESOP was $ 1.1 million and $ 2.3 million, respectively.

For the nine months ended June 30, 2025 and 2024, stock-based compensation expense related to the Visirna ESOP was $ 3.0 million and $ 5.5 million, respectively.

Restricted Stock Units

9 unchanged sentences

Forfeited ( 259,831 ) 32.96

Outstanding at March 31, 2025

Outstanding at June 30, 2025

5,980,922 $ 37.97

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 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.

For the three months ended June 30, 2025 and 2024, the Company recorded $ 11.9 million and $ 14.3 million of expense related to RSUs, respectively.

For the nine months ended June 30, 2025 and 2024, the Company recorded $ 41.1 million and $ 46.5 million of expense related to RSUs, respectively.

As of June 30, 2025, there was $ 85.8 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.7 years.

FAIR VALUE MEASUREMENTS

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

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

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.

Exhibits and Financial Statement Schedules” of its Annual Report on Form 10-K for the year ended September 30, 2024.

Exhibits and Financial Statement Schedules” of its Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption.

2 unchanged sentences

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:

March 31, 2025

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

The following tables present 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:

June 30, 2025

Level 1 Level 2 Level 3 Total

2 unchanged sentences

government and agency securities $ — $ 221,877 $ — $ 221,877

Municipal securities — 7,019 — 7,019

Commercial notes — 26,449 — 26,449

3 unchanged sentences

Money market instruments 81,283 — — 81,283

Term deposit — 11,049 — 11,049

Treasuries — 7,960 — 7,960

Commercial notes — 23,770 — 23,770

17 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:

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.

(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.

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.

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

As of June 30, 2025, the estimated effective interest rate was 9.1 %.

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(in thousands)

6 unchanged sentences

FINANCING AGREEMENT

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.

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 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.

On August 7, 2024 (the “Closing Date”), the Company entered into a 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 (the “Financing Agreement”).

The loans under the Credit Facility bear interest at an annual rate of 15.0 %, which 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

2 unchanged sentences

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.

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.

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 two times multiple of invested capital (“MOIC”) of the aggregate principal amount funded on the Closing Date (the “MOIC Payment”).

If such payment in full occurs after August 7, 2028, the Company will be required to make a payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve the greater of the MOIC Payment and the present value of all interest payments that would have been payable from such date through the maturity date of the Credit Facility discounted at the Treasury Rate (as defined in the Financing Agreement) plus 0.5 %;

provided that such payment amount in this instance will not exceed the amount necessary for the lenders to achieve a 2.5 times MOIC.

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 added an additional prepayment clause that requires certain contractual prepayments of principle and MOIC payments throughout the life of the loans under the Credit Facility.

Additionally, any prepayment will be split with 50 % of any such prepayment paying down the principle balance of the loans under the Credit Facility and the other 50 % being applied to prepay the MOIC Payment.

In the event the prepayment amounts result in fees being prepaid in excess of the actual amounts required to be paid, the excess fees shall be reallocated and applied to reduce the amount of the principal balance upon repayment in full of the loans under the Credit Facility.

As of June 30, 2025, the Company has paid $ 100.0 million in MOIC payments of which $ 25.3 million is expected to be applied to principal upon repayment in full.

To date, the Company has paid $ 201.6 million of the loans under the Credit Facility during 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.

All obligations under the Financing Agreement are secured on a first-priority basis by security interests in substantially all assets of the Company and material subsidiaries of the Company, including its intellectual property, subject to certain exceptions, and is 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, distributions from certain parties, and other matters customarily restricted in such agreements.

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.

1 unchanged sentence

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(in thousands)

1 unchanged sentence

Accumulated interest on the Initial Term Loan 53,454 9,000

Unamortized debt discount and issuance costs ( 14,135 ) ( 15,817 )

Accumulated accretion of the MOIC Payment

Unamortized debt issuance costs ( 14,284 ) ( 15,817 )

Current portion of credit facility ( 40,000 ) —

2 unchanged sentences

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

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

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

2025 2024 2025 2024

(in thousands)

Amortization of debt discount and issuance costs

Amortization of debt issuance costs

$ 420 $ — $ 1,533 $ —

Accretion of the MOIC Payment 2,218 — 2,787 —

Contractual interest expense

2 unchanged sentences

$ 16,404 $ — $ 48,774 $ —

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.

The amounts shown in the table below, related to the Credit Facility, represent the expected repayments of principle and accrued interest balance as of June 30, 2025 as well as any mandatory prepayments that the Company is obligated to make to the Lenders during the indicated periods.

The principal balance will increase from accrued paid in kind interest and the table does not include MOIC payments beyond those contractually determined.

Actual payments on current principal may vary from the amounts presented in the table.

(in thousands)

2025 (remainder) $ —

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,

In May 2025, Visirna entered into the Revolving Credit Agreement with Bank of Zhejiang.

The maximum aggregate credit facility is 73.0 million Chinese Yuan ($ 10.0 million) bearing an annual interest rate of 4.1 %.

The term of each loan is twelve months .

The amount outstanding as of June 30, 2025 was 50.8 million Chinese Yuan ($ 7.1 million) on the credit facility which was classified as other current liabilities.

NET (LOSS) INCOME PER SHARE

The following table presents the computation of basic and diluted net (loss) income per share for the three and nine months ended June 30, 2025 and 2024.

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

2025 2024 2025 2024

(in thousands, except per share amounts)

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

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

$ ( 175,241 ) $ ( 170,793 ) $ 22,119 $ ( 428,957 )

4 unchanged sentences

139,039 124,199 133,352 118,260

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 )

Basic net (loss) income per share $ ( 1.26 ) $ ( 1.38 ) $ 0.17 $ ( 3.63 )

Diluted net (loss) income per share $ ( 1.26 ) $ ( 1.38 ) $ 0.17 $ ( 3.63 )

(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 income (loss) per share because to include them would be anti-dilutive.

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

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

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

2025 2024 2025 2024

3 unchanged sentences

Total 5,946 4,729 5,526 4,771

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

For the three months ended June 30, 2025, the Company has recorded a discrete income tax benefit of $ 0.4 million.

The income tax provision for the three months ended June 30, 2024, resulted in no tax expense.

For the nine months ended June 30, 2025, the Company has recorded a discrete income tax expense of $ 1.4 million, and for the nine months ended June 30, 2024, the Company has recorded a discrete income tax benefit of $ 3.3 million.

Income tax expense for the three and nine months ended June 30, 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.

3 unchanged sentences

There are no other audits in any other jurisdictions.

SUBSEQUENT EVENTS

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

The Asset Purchase Agreement is scheduled to close during the second half of the

In connection with the Asset Purchase Agreement, the Company consented to the partial assignment of the Visirna License Agreement by Visirna HK to Sanofi (as so assigned, the “Sanofi License Agreement”), amongst other agreements between the Company and Visirna, effective as of the closing of the Asset Purchase Agreement.

After giving effect to the Asset Purchase Agreement, Visirna HK retains rights to develop and commercialize in Greater China three other cardiometabolic drugs licensed to it pursuant to the Visirna License Agreement.

Upon closing of the Asset Purchase Agreement, Visirna will receive an upfront payment of $ 130.0 million from Sanofi and is eligible to receive further milestone payments of up to $ 265.0 million upon approval of plozasiran across various indications in mainland China.

The Company is also eligible to receive royalties from Sanofi on net commercial product sales in Greater China under the Sanofi License Agreement.

Sarepta DM1 Milestone

On July 27, 2025, the Company triggered a $ 100.0 million milestone payment from Sarepta.

The Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for treatment of type 1 myotonic dystrophy (DM1), as outlined in the Sarepta Collaboration Agreement, triggering the milestone.

The Company is eligible to receive up to an additional $ 200.0 million in near-term milestone payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study of ARO-DM1.

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