Arrowhead (ARWR) Q3 Revenue Drops 41%

Arrowhead Pharmaceuticals (ARWR -1.53%), a biotechnology firm focused on developing RNA interference (RNAi) therapeutics, released its fiscal third-quarter earnings on August 7, 2025. The most notable news from the release was a substantial miss on both GAAP revenue and earnings for Q3 FY2025 compared to analyst expectations. The company reported $27.8 million in GAAP revenue, well below GAAP estimates of $46.8 million, and a loss per share of $(1.26) (GAAP), underperforming the $(0.95) GAAP loss analysts had forecasted. Operating losses remained high, but cash and investments rose, strengthening Arrowhead’s balance sheet. The quarter reflected both ongoing financial volatility and continued progress in moving the company’s clinical pipeline toward commercialization.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Key Success Factors

Arrowhead Pharmaceuticals is a biotechnology company developing RNAi-based therapeutics, focusing on diseases with significant unmet needs. Its main technology, the TRiMTM platform, enables precise targeting of RNA molecules within the body, allowing for the silencing of disease-causing genes in specific tissues. This approach holds potential for treating conditions previously considered untreatable by traditional medicines.

In recent years, Arrowhead has concentrated on advancing its drug pipeline with an emphasis on late-stage development, regulatory approvals, and commercialization readiness. It actively builds strategic partnerships with larger pharmaceutical companies to leverage expertise, expand market reach, and secure funding. The versatility of the TRiMTM platform, successful trial results, and regulatory progress are central to Arrowhead’s long-term growth.

Quarter Highlights: Financial and Operating Developments

The third quarter featured several notable financial shifts. GAAP revenue was $27.8 million for Q3 FY2025—a miss of nearly 41% from the $46.8 million analyst consensus. GAAP revenue for Q3 FY2025 was down sharply compared to the previous quarter, which benefited from a one-time payment related to the Sarepta partnership. GAAP earnings per share for Q3 FY2025 fell short by $0.31 compared to analysts’ forecasts.

Operating expenses increased in Q3 FY2025, as GAAP research and development spending climbed 6.5% from Q3 FY2024 to $162.4 million. GAAP general and administrative (G&A) spending also rose meaningfully, up 30.5% from Q3 FY2024. Total GAAP operating expenses were $193.3 million for Q3 FY2025, tracking the growth of Arrowhead’s clinical programs and broadened commercial preparations. The GAAP operating loss of $165.6 million for Q3 FY2025 was somewhat improved versus the prior-year period, but negative swings in other income and an increased GAAP net loss illustrate ongoing pre-commercial pressures as the company pursues regulatory approvals.

Cash resources rose to $900.4 million as of Q3 FY2025, driven by partner inflows. Total equity was $522.3 million as of Q3 FY2025, further strengthening the balance sheet. The company also reduced its credit facility debt. GAAP deferred revenue was $22.979 million as of Q3 FY2025.

The company’s late-stage pipeline advanced meaningfully. Plozasiran, Arrowhead’s leading RNAi candidate for rare lipid disorders, achieved a significant regulatory milestone with a New Drug Application (NDA) acceptance by the U.S. Food and Drug Administration (FDA) for familial chylomicronemia syndrome. The FDA assigned a Prescription Drug User Fee Act (PDUFA) target date of November 18, 2025. Enrollment completed for Phase 3 studies in severe hypertriglyceridemia, with data expected in mid-2026. Arrowhead also started a Phase 3 trial for zodasiran, another RNAi-based treatment targeting rare cholesterol disorders.

Additionally, Arrowhead’s majority-owned subsidiary, Visirna, entered a business agreement with Sanofi for rights to four cardiometabolic programs in Greater China. The deal brought immediate payments of $130 million from Sanofi and allowed for up to $265 million in potential milestones. In parallel, the company earned a $100 million milestone payment from Sarepta Therapeutics and is anticipating further near-term milestones that could total up to $200 million by the end of 2025.

From a commercial perspective, Arrowhead prepared for the possible plozasiran launch by expanding its U.S. sales force and engaging with payers and rare disease stakeholders. It established a field presence in Europe, positioning itself for a global rollout should the product receive regulatory approval. Operational teams focused on rare disease awareness and patient identification, which is crucial for conditions like FCS, where the target population numbers in the hundreds to a few thousand in the U.S.

Product Pipeline Progress and Segment Notes

Plozasiran, a liver-targeted RNAi therapeutic, remains Arrowhead’s primary near-term value driver. The drug is being studied for two main conditions: familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (SHTG). The approved NDA for FCS could result in commercial launch as early as late 2025 if the FDA approves the drug. For SHTG, ongoing Phase 3 studies aim to provide broader label expansion potential, targeting a U.S. population of up to 3-4 million patients.

Zodasiran, also an RNAi therapy targeting rare cholesterol disorders, dosed its first subject in the latest Phase 3 trial for homozygous familial hypercholesterolemia (HoFH). Expansion beyond HoFH is not planned at this time, due to the complexity and requirements for broader clinical studies in other population subsets.

The obesity portfolio progressed as well. ARO-INHBE and ARO-ALK7, both RNAi therapy candidates targeting biological pathways involved in fat metabolism, entered Phase 1/2 studies. Both monotherapy and combination arms (notably with GLP-1 agonist tirzepatide) are included in clinical development plans, with initial data expected late 2025 or soon after.

Arrowhead’s research and development pipeline is supported by the TRiMTM platform, which enables delivery of RNAi drugs to different tissues, including liver, adipose (fat), muscle, and the central nervous system (CNS). This versatility underpins partnerships with companies such as Takeda and Amgen, and drives a company goal to advance 20 clinical-stage or marketed products by 2025.

Outlook and Guidance

Management guided that Arrowhead is funded through 2028, even as it moves multiple late-stage programs forward and ramps up commercialization efforts. The company’s focus is on achieving regulatory approval for plozasiran, with launch readiness targeted for late 2025 pending the FDA decision, specifically the PDUFA action date set for November 18, 2025. Key near-term catalysts include the expected readout of pivotal SHTG data in mid-2026 and potential partnership milestones from both Sarepta and Visirna within the next twelve months.

No detailed forward guidance on revenue, earnings, or margin was offered for the coming quarters or fiscal year. Management instead pointed to ongoing milestone-driven revenue cycles and signaled that operating losses would persist as the company continues to invest in product development and commercial readiness until product revenues begin. Investors should monitor progress on regulatory reviews, commercialization milestones, and further data updates from ongoing clinical trials.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.