Arrowhead Pharmaceuticals (ARWR) Q3 2022 Earnings Call Transcript

Arrowhead Pharmaceuticals (ARWR -2.65%)
Q3 2022 Earnings Call
Aug 04, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference over to Vincent Anzalone, vice president of investor relations for Arrowhead.

Please go ahead, Vince.

Vincent Anzalone -- Vice President of Investor Relations

Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2022 third quarter ended June 30, 2022. With us today from management are president and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter; Dr.

Javier San Martin, our chief medical officer, who will provide an update on our mid-and later-stage clinical pipeline; Dr. James Hamilton, our senior vice president of Discovery and Translational Medicine, who will provide an update on our earlier stage programs; and Ken Myszkowski, our chief financial officer, who will give a review of the financials. In addition, Tracie Oliver, our newly appointed chief commercial officer; and Patrick O'Brien, who was recently promoted to chief operating officer and general counsel, will both be available during the Q&A portion of the call. Before we begin, I would like to remind you that comments made during today's call contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

All statements, other than statements of historical facts, are forward-looking statements and are subject to numerous risks and uncertainties that could cause actual results to mature to differ materially from those expressed in any forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. With that said, I'd like to turn the call over to Christopher Anzalone, president and CEO of the company. Chris?

Christopher Anzalone -- President and Chief Executive Officer

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Before I cover key events and progress during the previous quarter, I want to talk about some recent management additions that make us a stronger company today and importantly, as we grow into a vertically integrated, commercial-stage pharmaceutical company. We're currently conducting one phase 3 study for a wholly owned drug candidate, and I expect us to begin one or two additional phase 3 studies next year.

As such, there are important strategic decisions we need to begin considering that will affect how we ultimately commercialize these drug candidates. We are thrilled to welcome Tracie Oliver as our chief commercial officer to start to build out our commercial infrastructure and more immediately contribute to the planning of our late-stage programs to ensure that our future commercial requirements are harmonized with clinical datasets and ultimate drug labels. Tracie has over 30 years of global experience in the biopharmaceutical industry, leading both R&D and commercial organizations. Prior to joining Arrowhead, she had our own consulting practice, focused on providing guidance to small, emerging commercial stage biotech companies on the proper strategy, timelines, methods, and ultimately the buildout of new commercial organizations Those skills and experience are critical to Arrowhead as we look to take the next steps in our growth as a company.

Prior to her consulting business, Tracie was with Shire Pharmaceuticals through the acquisition of Baxalta and was global head of new product planning and device strategy. Prior to that, she held several commercial roles at Baxter and Baxalta, including establishing a new oncology franchise and leading the North America immunology business unit and autoimmune franchise. Tracie began her career in the biopharmaceutical industry with Johnson & Johnson and served as head of ortho biotech nephrology business unit in Canada, Ortho McNeil Neurologics, and McNeil Pediatrics in the USA. As we continue this type of growth in personnel and departments, we need to be more deliberate in our drive to continue operational excellence.

There can be a tendency toward an inverse relationship between the size of an organization and its ability to operate efficiently, creatively, and rapidly. It is important to us that we maintain our operational excellence as we grow, and Patrick O'Brien, our general counsel, will now also take on the role of chief operating officer to help ensure this. I will now move on to review some of our recent progress. We view setbacks as a normal part of innovation and if we can learn something from them, they may serve as an investment in the future.

The recent progress we've made in our pulmonary platform is a good example of this and a powerful illustration of how fast Arrowhead can move. As you know, our first candidate in the clinic using the pulmonary targeted TRiM platform was ARO-ENaC for the treatment of cystic fibrosis. Last year, we decided to pause enrollment in the ARO-ENaC first-in-human clinical study, as we further investigated some findings from a non-clinical toxicology study that suggested some local lung inflammation after chronic treatment at certain high doses. Many open questions remained.

James will speak to what we learned in more detail later in the call. But after extensive investigation, consultation with internal and external toxicology experts, and additional studies, it appears that findings were consistent with what is called lung macrophage overload. Essentially, the volume of material, not necessarily the specific drug or target was swamping the lungs' clearance mechanisms and causing an inflammatory response. So, the clear way to move forward is to understand the amount of material that triggers this phenomenon and develop more potent, longer-acting candidates to stay below the assumed cumulative dose threshold.

I believe we have done that for our next-generation candidates, ARO-RAGE and ARO-MUC5AC, resulting in three important improvements. First, we think we can now achieve better knockdown with less exposure. Second, we think we can give a single dose as opposed to our previous need to dose on three consecutive days. And third, we believe we can now stretch the dose interval substantially.

For example, ARO-ENaC was going to be dosed three times -- I'm sorry, three times, every two or three weeks and ARO-RAGE has duration that potentially lasts multiple months after a single dose. Each of these improvements are important on their own. But together, we believe they dramatically changed the profile of our next-generation pulmonary candidates. So where are we now? The work and lessons that went into this happened over an extended period, culminating this quarter -- this last quarter in two important events.

We held a pulmonary R&D Day to go over our findings and present non-clinical data from our next-generation candidates ARO-RAGE and ARO-MUC5AC. And then shortly after, we began dosing patients in two clinical studies. As I said, I think this is a great example of what Arrowhead is capable of. We went from pausing enrollment of the ARO-ENaC clinical program to initiating clinical studies and dosing human subjects with next-generation candidates that potentially have dramatically improved profiles in about 12 months.

There was an enormous amount of work, thoughts, creativity, technology, and innovation that enabled this result. The pulmonary TRiM platform is an important expansion of our technology that we expect will help a large number of patients and create a substantial amount of value. But it is just one example of how we are growing our platform. We expect many more going forward.

Another set of key accomplishments during the quarter related to execution on our later-stage programs for our cardiometabolic candidates, ARO-APOC3 and ARO-ANG3. Between the two candidates, we have five active clinical studies that range from ultra-rare disease populations to high-prevalence diseases. The design and execution of clinical studies for diseases on opposite ends of the size spectrum typically have different tactics and require specialized expertise. I'm happy to report that our clinical development and clinical operations teams have been successfully running all of these studies.

On the rare disease side, the phase 3 PALISADE study of ARO-APOC3 in patients with FCS is efficiently enrolling patients, and we have worked hard during the quarter to identify and open new countries and sites that should contribute to rapid enrollment of the study. In addition, during the quarter, we initiated the phase 2 GATEWAY study of ARO-ANG3 in patients with HoFH. This study is also enrolling patients efficiently, and we look forward to seeing data in the future. On the high-prevalence disease side, we have three ongoing studies.

For ARO-APOC3, we are running the SHASTA-2 phase 2 study in patients with severe hypertriglyceridemia and the MUIR phase 2 study in patients with mixed dyslipidemia. We have executed well on both studies, and we believe we are on schedule for readouts in both studies in 2023. In fact, we recently reached total planned enrollment from MUIR. For ARO-ANG3, there's one high-prevalence disease study, the phase 2 ARCHES-2 study in patients with mixed dyslipidemia.

This study was fully enrolled earlier in the year and should be complete at the end of the year, and enable a readout in the first half of next year. The other two accomplishments from the recent quarter that I want to highlight are related to corporate goals that aim to maximize the value of our technology over the long term. First, we announced that we broke ground on the construction of a new commercial-scale manufacturing facility and received upwards -- receive awards of up to $18.5 million in incentives to invest in the local region and create new jobs. This is an important investment in Arrowhead's future as a vertically integrated commercial stage pharmaceutical company.

It helps us control the manufacturing process, both operationally and strategically for our wholly owned programs and potentially for our partner programs in the future. It potentially reduces the cost of our clinical and commercial drug supply and importantly helps eliminate any future bottlenecks related to drug manufacturing. Lastly, related to corporate goals, during the last quarter, we also announced that Arrowhead formed Visirna Therapeutics, a joint venture with Vivo Capital, in which Arrowhead is a majority shareholder, to expand the reach of innovative medicines in Greater China. Arrowhead licensed for investigational RNAi therapeutics to Visirna for cardiometabolic diseases in Mainland China, Hong Kong, Macau, and Taiwan.

Vivo Capital provides $60 million in initial funding to Visirna. This transaction potentially allows us to expand our reach into geographies that are beyond our core focus while retaining a substantial economic interest. So in summary, Arrowhead had a productive quarter, where we saw progress in our pipeline of industry-leading RNAi therapeutics, our wide-reaching and expanding TRiM technology platform, and our corporate goals. With that overview, I now like to turn the call over to Dr.

Javier San Martin. Javier?

Javier San Martin -- Chief Medical Officer

Thank you, Chris, and good afternoon, everyone. First, I want to highlight data on the phase 2 2002 study of fazirsiran, formerly called ARO-AAT and TAK-999, presented in July at the EASL, International Liver Congress and published simultaneously in the New England Journal of Medicine. The presentation generated significant enthusiasm within the audience, welcoming positive data to address liver disease with no approved therapy and the validation of a New England Publication. Fazirsiran is a potential first-in-class investigational RNAi therapy designed to reduce production of a mutant form of alpha-1 antitrypsin protein called Z-AAT as a potential treatment for the rare genetic liver disease associated with alpha-1 antitrypsin deficiency, Z-AAT accumulation is believed to be the cause of progressing liver disease in patients with AAT deficiency.

Reducing production of pro-inflammatory Z-AAT protein has the potential to halt the progression of liver disease and potentially allow the liver to regenerate and repair. The data from this program are exciting and encouraging. The open-label AROAAT-2002 phase 2 study in 16 patients with AATD liver disease suggest a strong effect and the potential to improve multiple downstream markers of liver health. Decrease in fibrosis severity of at least one stage occurred in seven of 12 patients, or 58%, receiving the 200-milligram dose, including two patients with cirrhosis.

All patients had reductions in accumulated total mutant Z-AAT in the liver with a median reduction at week 24 or 48 of 83%. Reductions in liver Z-AAT concentrations were also associated with histologic improvements in inflammation. After treatment, all patients had a decreased histologic globule burden, with the mean score decreasing by 69% at week 24 or 48. Biomarkers of liver injury were also reduced.

At baseline, mean ALT concentrations were above the upper limit of normal range in all cohorts. After treatment, ALT concentrations decreased in all cohorts from week 16 through week 52. All 12 patients with ALT concentrations above the upper limit of the normal range at baseline had reductions to normal levels at week 52. In addition to activity and efficacy measures, safety and tolerability measures continue to be encouraging.

Fazirsiran was generally well tolerated in the 2002 study. Over a period of one and a half years, there were no deaths, discontinuations of treatment with fazirsiran, or dose interruptions. The most common adverse events that emerged or worsened after the first administration of fazirsiran were arthralgia and transient increased concentrations of blood creatinine kinase. There were no apparent dose dependent increases in the frequency or severity of adverse events.

So far, there have been no major pulmonary adverse events resulting in drug or trial discontinuations. Four of the six patients who entered the trial while receiving AAT augmentation therapy had a history of emphysema, and none reported exacerbations. Fazirsiran phase 2 placebo-controlled SEQUOIA study has also reached the end of the treatment period. We collected the final 12-month biopsy from the final patient recently, and will now be processing samples and analyzing data over the coming months.

The deadline is in September to submit a late-breaker to present at the AASLD Liver Meeting in November. The timing will be tight to have enough data to justify a late-breaker, so it is a low probability that we will be presenting data at that congress. We should, however, have a rather complete dataset on SEQUOIA in the fourth quarter of this year, so we and our partners at Takeda will together determine the best way to communicate those results publicly. Regarding status of a phase 3 study, we and Takeda are in the process of having discussions with regulators on the development path.

We do not want to comment specifically on those discussions as they are ongoing. Moving on to our cardiometabolic candidates. I will provide the status of the VISTA studies of ARO-ANG3 and the SUMMIT studies of ARO-APOC3. The VISTA program of ARO-ANG3, our investigational medicine designed to reduce production of angiopoietin-like protein 3 as a potential treatment for patients with dyslipidemia, has two ongoing studies.

The first, ARCHES-2 in 204 patients with mixed dyslipidemia, is fully enrolled. We anticipate that the ARCHES-2 will be complete around the end of 2022 and top-line data will be available to share in the first half of 2023. In addition to the planned study period, patients will be eligible to continue in an open-label extension period after completing the week 36 visit. The second active study of ARO-ANG3 is GATEWAY in up to 16 subjects with homozygous familial hypercholesterolemia, or HoFH.

We anticipate that this study will be fully enrolled by the end of the year, and we intend to share data in 2023 when possible. Moving on to ARO-APOC3. The SUMMIT program of ARO-APOC3, our investigational medicine targeting apolipoprotein C-III being studied in patients with various lipid disorders, has three ongoing studies. Two phase 2 studies; SHASTA-2 in patients with severe hypertriglyceridemia, or SHTG; and MUIR in patients with mixed dyslipidemia; and the phase 3 PALISADE study in patients with familial chylomicronemia syndrome, or FCS.

MUIR has now reached the total planned enrollment of 320 patients. We have a number of patients still in screening, so we will allow some additional patients to join the study but are not screening any new patients. SHASTA-2 has enrolled over 80% of the planned number of patients, and we anticipate full enrollment this year. This would allow for both studies to be completed in 2023.

PALISADE is planned to enroll approximately 72 patients with FCS. We continue to open new clinical sites around the world and enroll new patients into the study. We are still on schedule and anticipate that PALISADE will reach full enrollment in the middle of 2023, which would allow for study completion in 2024. I will now turn the call over to Dr.

James Hamilton. James?

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

[Technical difficulty] some updates on some of our earlier stage development programs. Let's start with the pulmonary platform. As Chris mentioned, we hosted an R&D Day on our emerging pipeline of pulmonary targeted RNAi therapeutics and the technology platform that these candidates are built upon. We have learned a great deal about the platform with details provided in the archived pulmonary R&D Day webcast available on our website.

In summary, we believe that we now have improved siRNA triggers with longer pharmacodynamic duration allowing less frequent dose administration, which are less likely to overload lung clearance mechanisms and are less likely to induce pulmonary inflammation. This gives us increased confidence in the platform as we move forward with current and planned future clinical studies and additional toxicology studies. We also presented preclinical data on the development of our next-generation pulmonary candidates, ARO-MUC5AC and ARO-RAGE, which have recently begun dosing in clinical studies, and ARO-MMP7, which will be approaching clinical studies later this year. ARO-MUC5AC is the first investigational medicine to directly silence expression of pathologic MUC5AC, a mucin protein with upregulated expression in the asthmatic airway, and potentially address muco-obstructive disease, characterized by mucus hypersecretion in a fundamentally different way than current therapies.

Preclinical results have shown deep silencing of up to 70% to 90% of induced MUC5AC expression in mice and primates. In a sheep model of allergic asthma, ARO-MUC5AC effectively preserved airway function. ARO-RAGE is an investigational medicine designed to reduce expression of the receptor for advanced glycation end products that aims to achieve broader anti-inflammatory effects compared to current biologics and with a more convenient inhaled mode of administration. Preclinical studies have shown that single inhaled doses of ARO-RAGE in rats and primates led to reductions of greater than 90% in lung RAGE mRNA and in serum sRAGE protein, a circulating biomarker for RAGE target engagement in the lung.

Pharmacodynamic response appears to be highly durable enabling bimonthly or quarterly dosing. Earlier this month, we announced that we had dosed the first subjects in Phase 1/2a clinical trials of both ARO-MUC5AC and ARO-RAGE. We have since completed dosing the first cohort of healthy volunteers in both studies. Both studies have three parts, consisting of single ascending and multiple ascending doses in normal healthy volunteers, and multiple dose cohorts in asthma patients with dose levels selected for patient cohorts based on data from normal healthy volunteers.

The third pulmonary program we discussed at the R&D day is ARO-MMP7, our newest and previously undisclosed candidate designed to the reduce expression of matrix metalloproteinase 7, or MMP7, as a potential treatment for idiopathic pulmonary fibrosis, or IPF. MMP7 plays multiple roles in IPF pathogenesis, including promoting inflammation and aberrant epithelial repair and fibrosis. Silencing MMP7 expression in a rat IPF model reduced inflammatory cell infiltration, limited lung fibrosis, and preserved pulmonary function. We are conducting CTA-enabling work and preparation now, and we are on track to file this year to initiate first-in-human clinical studies.

Our last early stage clinical program is ARO-C3, our investigational RNAi therapeutic designed to reduce production of complement component 3, or C3, as a potential therapy for various complement-mediated diseases. We are approaching the final healthy volunteer cohort in Part 1 of a phase 1/2 study. Data from Part 1 will inform dose selection for Part 2, which will include eligible subjects with paroxysmal nocturnal hemoglobinuria, or PNH, and complement-mediated renal diseases, including IgA nephropathy and C3 glomerulopathy. We anticipate that Part 2 of the study will start before the end of the year.

I will now turn the call over to Ken Myszkowski. Ken?

Ken Myszkowski -- Chief Financial Officer

Thank you, James, and good afternoon, everyone. As we reported today, our net loss for the three months ended June 30, 2022 was $72.0 million or $0.68 per share based on 105.8 million fully diluted weighted average shares outstanding. This compares with net loss of $29.9 million, or $0.29 per share based on 104.1 million fully diluted weighted average shares outstanding for the three months ended June 30, 2021. Revenue for the quarter ended June 30, 2022 was $32.4 million, compared to $45.9 million for the quarter ended June 30, 2021.

Revenue in the current period primarily relates to our collaboration agreements with Takeda and Horizon. Revenue will be recognized as we complete our performance obligations, which include managing the ongoing AAT phase 2 clinical trials for Takeda, and delivering a phase 1 ready candidate to Horizon. There remains $142.1 million of revenue to be recognized associated with the Takeda collaboration, which we anticipate will be recognized over approximately two years. And there remains $13 million of revenue to be recognized for Horizon, which we anticipate will be recognized by the end of calendar 2022.

Revenue in the prior period primarily related to the recognition of a portion of the milestones received from our license and collaboration agreements with Janssen and Takeda. Total operating expenses for the quarter ended June 30, 2022, were $105.3 million, compared to $77.8 million for the quarter ended June 30, 2021. This increase is driven by higher employee compensation expense, including stock compensation expense, as well as higher R&D discovery expense. Net cash used by operating activities during the quarter ended June 30, 2022, was $68.9 million, compared with net cash used by operating activities of $29.6 million for the quarter ended June 30, 2021.

The increase in cash used by operating activities is driven by higher expenses in research and development and we expect our operating cash burn to be $70 million to $80 million next quarter. And I will provide additional guidance during our year-end conference call. Turning to our balance sheet. Our cash and investments totaled $582.4 million at June 30, 2022, compared to $613.4 million at September 30, 2021.

The decrease in our cash and investments was primarily due to cash used for operating activities, mostly offset by cash inflows from GSK and the cash investment in our joint venture, Visirna. Our common shares outstanding at June 30, 2022, were 105.8 million. With that brief overview, I will now turn the call back to Chris.

Christopher Anzalone -- President and Chief Executive Officer

Thanks, Ken. We have a large and growing pipeline of clinical drug candidates, providing us with the opportunity to help millions of patients and create a substantial amount of value. It also affords us the opportunity to regularly report clinical data so stakeholders can follow our progress. However, with the development of next-generation pulmonary candidates and timing of other studies, we have been in a bit of a data desert over the last several quarters.

We are now emerging from that desert. Between now and the end of next year, I expect at least 12 clinical readouts between our wholly owned and partnered programs. They include the following. One, biopsy data from the SEQUOIA study in AAT with fazirsiran.

Two, phase 1/2 data from ARO-C3 in healthy volunteers and different patient populations. Three, phase 1/2 data from ARO-RAGE in healthy volunteers and patients. Four, phase 1/2 data from ARO-MUC5AC in healthy volunteers and patients. Five, phase 2 data from olpasiran in Amgen's Lp(a) study.

Sixth, phase 2 data from the ARO-ANG3 Arches-2 study in mixed dyslipidemia. Seven, phase 2 data from the ARO-ANG3 GATEWAY study in HoFH. Eight, phase 2 data from the ARO-APOC3 Muir study in mixed dyslipidemia. Nine, phase 2 data from the ARO-APOC3 SHASTA-2 study in severe hypertriglyceridemia.

Ten, phase 1 data from ARO-MMP7 in healthy volunteers and possibly IPF patients. Eleven, phase 2 data from various Janssen studies of JNJ-3989 in HBV patients; and 12, phase 1 data from Janssen's NASH study with JNJ-0795. We are excited about these and other programs and look forward to updating you on our progress. Thank you for joining us today.

And I would now like to open the call to your questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. Our first question comes from Luca Issi with RBC. Please go ahead.

Luca Issi -- RBC Capital Markets -- Analyst

Great. Thanks so much for taking my questions. I have two quick ones. Maybe one, Javier.

Congrats on publishing, obviously, the New England Journal Medicine. I think the 100-milligram dose and the 200-milligram dose have essentially hyperimposable PD curves in the serum. However, the improvement in fibrosis only occurred in high dose and not in the low dose. So just wondering what's the best way to rationalize that difference? And then maybe quickly on the cash position.

You're obviously still fairly well capitalized, however, your opex and capex are both going up. So wondering how you're thinking about options to extend your runway. Thanks so much.

Javier San Martin -- Chief Medical Officer

Thank you. This is Javier. So if you think about the 2002 study, we enrolled 12 patients in the 200-milligram dose. All of them had a biopsy of six months and eight of them at 12 months.

And we only enrolled four patients in the 100-milligram dose, and they all have a pair biopsy in between six months. With a caveat that one of the four patients in the 100-milligram did not have the paired biopsies, so we can't report in those patients. So, we only have three patients in the 100 milligrams that have very robust effect on Z protein, ALTs, liver Z protein, globule, and inflammation, but we didn't see a change in fibrosis at that early point in those three patients. So, I think it's a little bit about the small numbers.

In contrast, as you said, in the 12 patients that received 200 milligrams, we saw all the improvement in the different biomarkers and parameters. We also saw seven out of 12 improvements in fibrosis. I think the reason here is likely to be the small sample size, the variability of leading fibrosis, which is well known. And you're right that the magnitude of the PD effect is very consistent between the 100 and 200 milligrams.

But we believe that when you put all the data together, absence of any safety issue between 100 and 200 milligrams, very consistent suppression of the Z protein. When you look at the PK and the PD, there are small differences, but I think it favored the 200-milligram dose. So, I think when you put all the information together, there are reasons to see the 200 milligrams as the best dose to move forward. And as I said, the difference in fibrosis is likely to be variability in a small sample size.

Ken Myszkowski -- Chief Financial Officer

And Luca, I'll take the cash question. So, I agree, I feel comfortable with our cash position right now in large part because we have right now six partnerships with five different companies, if I have my math right. And those partnerships are maturing. I think that we have access to a substantial amount of capital across all those partnerships over the next 12 months to 24 months.

So, we feel good about that inflow. But also, as you know, Luca, we're really good at pushing new drug candidates in the clinic. We've got a pipeline -- a clinical pipeline right now of 10 or 11 candidates, and I think that grows to 20 in the next few years. And I think that's important ammunition to do the future deals.

Now, I think we'll be pretty choosy about that. And I think that ultimately, the majority of our pipeline will be wholly owned and will commercialize ourselves, but we will have access to other non-core assets that we can partner. I would expect, on average, of around a deal a year, a new deal a year to be about the right cadence. That may change from year to year.

But I think, on average, that's probably the way to think about it. And I just think that gives us access to as much capital as we need in the near term.

Luca Issi -- RBC Capital Markets -- Analyst

Thank you so much.

Operator

Our next question comes from Maury Raycroft with Jefferies. Please go ahead.

Unknown speaker

This is Farzin on for Maury. Can you say some expectations for the phase 2 AAT SEQUOIA data and the effect sizes you'd expect to achieve?

Christopher Anzalone -- President and Chief Executive Officer

Yeah. I don't think we are going to want to get in to front running that. We haven't seen those data yet. Look, we feel -- we are looking forward to seeing those data.

The data so far that we've seen have been consistent, as Javier said, we've seen circulating AAT levels and it's consistent across patients. We've seen in a handful of patients in the open-label study with a good histological response in six months to 12 months. And so we expect -- we're looking forward to seeing those data. I don't want to put any expectations around them, but I wouldn't expect the basic story to change.

And I just think my hope is that the SEQUOIA data just reinforced the existing story.

Unknown speaker

OK. Thank you.

Operator

Our next question comes from Ted Tenthoff with Piper Sandler. Please go ahead.

Ted Tenthoff -- Piper Sandler -- Analyst

Hi, everybody. Thanks so much for taking my question. So, I guess picking up a little bit on the last question and again, appreciating that there's -- we'll see what the data has to say. Walk us through sort of how you guys are seeing the potential paths forward? How you and Takeda are sort of discussing it following the data for ATT -- AAT? Thank you.

Christopher Anzalone -- President and Chief Executive Officer

Thank you, Ted. You know, look, I'm a middle child, and I like to give people what they want, but I can't give you that. We are in -- or Takeda is in discussions with the FDA, and we're just going to have to wait to see where those go. We feel comfortable that the FDA -- we are aligned with the FDA in appreciating the importance of this disease and the fact that there's no good treatment for it right now, liver disease associated with AAT.

We've got, I think, the only thing in the clinic that really offers these patients hope. And so my hope is that we can get to alignment reasonably soon with the regulators. But I can't really give you an idea about where that's going. Now the SEQUOIA data, I think will be -- could be helpful because it just gives us more numbers.

And hopefully, we see what we've been seeing in the smaller open-label study. But that should -- my hope is that that will help the discussions along, but we'll see how that goes.

Ted Tenthoff -- Piper Sandler -- Analyst

Great. Thank you. Looking forward to it.

Christopher Anzalone -- President and Chief Executive Officer

Thanks, Ted.

Operator

Our next question comes from Ellie Merle with UBS. Please go ahead.

Ellie Merle -- UBS -- Analyst

Hey, guys, thanks for taking the question. Just on the pulmonary franchise, if I heard exactly, you've completed dosing in the first cohort in healthy volunteers for MUC5AC and RAGE. I guess, I know that we're starting with sort of single ascending dose here in healthy volunteers. But I guess, what are sort of the circulating biomarkers or measures of these protein levels taken in these healthy volunteers and any kind of initial data points in terms of target engagement here? And then, I guess, as you move into the multiple ascending dose, as well as -- into patient dosing, I mean even, I guess, early on and even just healthy in that dosing, could we potentially get some of these biomarkers as well just in terms of target engagement? And I guess, first, if you're measuring it, but then also thinking about from our perspective where we set the time frame under what we could potentially learn about this? Thanks.

Christopher Anzalone -- President and Chief Executive Officer

So, James, why don't you talk about what we're measuring, and then I'll address the question about information flow.

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

Sure. Yeah. So both -- you're right, we completed the first cohort for both ARO-MUC5AC and ARO-RAGE. It's anascending -- single ascending dose study.

We start with the lowest dose, of course. And we measure in the multi-C study, we measure sputum MUC5AC levels. And then we will also, in that study, measure expression of MUC5AC in Bronchoalveolar lavage fluid. So, there's not a blood biomarker for MUC5AC, but it's sputum and BAL based.

And those have been drawn, but we haven't -- there's a lag. We haven't seen any of that yet. And similarly, for RAGE, there is a blood biomarker sRAGE, which is -- and drawn -- that will be drawn on all the healthy volunteer cohorts, as well as in the patient cohorts. We will also look at sputum RAGE levels and RAGE in the bulk fluid as well.

So, there's several different biomarkers that we can look at in both studies.

Christopher Anzalone -- President and Chief Executive Officer

And regarding data flow, so my expectation is that certainly in '23, we'll have results from those studies. If we, to be more granular, are there opportunities for us to release data earlier than when the entire studies are completed? That's a possibility, but we just don't have any visibility on that right now because the -- it is still ongoing and they're still fairly early in the studies. And so that's the best guidance I can give you, but I do expect whole data in '23, and I just don't know about partial data upstream of that.

Ellie Merle -- UBS -- Analyst

Got it. But I guess in terms of, internally, for you guys, even if these are healthy patients or healthy volunteers, you at least will, from these markers maybe get a bit of a sense in terms of whether or not you're engaging the target, perhaps even in the near term.

Christopher Anzalone -- President and Chief Executive Officer

Yeah. I think that's fair. I think the data from healthy volunteers will teach us a lot. As James said, we have taken -- we have samples.

We haven't seen anything yet. So, we have no data at this point. And of course, these are very low doses, I believe. So, I don't even know if we would see any knockdown of these early doses, but your point is a good one.

I think that we can learn something from the healthy volunteers.

Ellie Merle -- UBS -- Analyst

Understood. Thanks so much.

Operator

Our next question comes from Joel Beatty with Baird.

Joel Beatty -- Baird -- Analyst

Thanks for taking the question. What's the outlook currently for your platform for oncology programs?

Christopher Anzalone -- President and Chief Executive Officer

Yeah. So, I think we learned a lot this year and last year with the ARO-HIF2. As we've said in the past, I think the HIF2 market has changed a bit, and so it didn't make sense for us to push that candidate forward. I also think that we learned a lot about knockdown in oncology.

The good news was, I think, we saw it. And I think we can do better. And so it's -- we are looking to continue to develop that platform. We have nothing in the near term.

Don't expect anything this year in oncology. But we'll see where that goes going forward. It's not a real core of ours, but we do think there is value there, and we do think that RNAi may play a role in oncology at some point. And so we're still working on it.

Joel Beatty -- Baird -- Analyst

Thank you.

Operator

Our next question comes from Madhu Kumar with Goldman Sachs.

Madhu Kumar -- Goldman Sachs -- Analyst

Hey, thanks for taking our questions. So, one on AAT and one on the pulmonary program. So on AAT, I guess kind of the question we get a lot from people is, what do you think is the effective placebo rate of fibrosis improvement? And to what extent, do you think you can use the fraction of patients who had a worsening of fibrosis in the phase 2 open-label extension study as an effective proxy for kind of sampling variability style placebo effects on kind of liver fibrosis improvement and worsening? And then on the pulmonary programs, you mentioned the idea of biomarker changes in healthy volunteers and in patients. I guess one question we get from people is, when do you expect to see kind of assessments of clinical benefit in the MUC5AC and RAGE programs as kind of clinical proof-of-concept metrics for those pulmonary RNAi programs?

Christopher Anzalone -- President and Chief Executive Officer

Javier, you want to address AAT?

Javier San Martin -- Chief Medical Officer

Sure. Yeah. So, as you know, liver biopsies, the histology is very viable, particularly the fibrosis core systems and you normally require two pathologies within the biopsies and then an [Inaudible] which is what we did in both 2002 and SEQUOIA study. So it is -- so based on this -- the increasing variability and the data from some natural history studies is about 20% of people may have a regression without any treatment and about 20% could have or 30% can have progression in about two to three years' time.

That's what at least one relatively small study show. When you look at NASH, the numbers are kind of similar. You see a 20% decrease without -- that's why sometimes it's difficult to power those studies. And I think the second part of your question has to do with how many people have an increased score in the 2002 study.

And two of the 15 patients have an increase of 1 point. Both of them have a very significant reduction in Z protein in the liver, globule burden. Actually, both of them went to zero, one of which started with nine, which is the highest score. So the [Inaudible] exactly what was designed to do across the board.

Those patients decrease in installation and yet they have a 1-point progression in February. So, I think that speaks to a reality fact, which is liver biopsy is challenging and the consequence of that, but you need to do the appropriate study with the appropriate methodology versus histology, and that's what we're doing.

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

And then on the pulmonary front, I think for MUC5AC, if you look at the levels of MUC5AC expression in patients in the asthmatic versus expression in healthy volunteer, you probably need significant knockdown. So to start to see a change in phenotype based on MUC5AC knockdown, you're probably looking at 70% plus knockdown. And there is not the similar correlation for RAGE based on our animal data in the two different rodent models. Again, you need to achieve significant knockdown, a good magnitude of knockdown.

So probably better than 70% to 75% knockdown, but I think the more is better for both of those.

Madhu Kumar -- Goldman Sachs -- Analyst

Well, my question is more on timing. Like when can we expect data to testing like force vital capacity and things and the ASCO trials and the kind of mucociliary disease trials?

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

Of course, we'll look at that in our current study, but that's not the focus of the current study. These are really more focused on biomarkers. So, no, I don't know we've talked timing on functional readouts like that.

Christopher Anzalone -- President and Chief Executive Officer

Yeah. We have not. My expectation is to really look at those functional changes. You have to align on the phase 2 studies.

And so I don't think you'll -- as James said, we'll be looking for those things, but my expectation is that we don't really see those until phase 2.

Madhu Kumar -- Goldman Sachs -- Analyst

Yeah. Thank you very much, guys.

Operator

Our next question comes from Patrick Trucchio with H.C. Wainwright.

Patrick Trucchio -- H.C. Wainwright and Company -- Analyst

Thanks. Hi. Good afternoon and congrats on all the progress. I have a couple of follow-up questions.

So first is on ARCHES-2. The top-line data is expected in the first half of next year. I'm wondering if you can discuss what you'd be looking for in this data and discuss the anticipated differentiation from ANG3 from vupanorsen and why we should not expect ANG3 to have a similar outcome that came from that phase 2b TRANSLATE trial.

Javier San Martin -- Chief Medical Officer

So the first part of the question, yes, we are expecting to have the data in the first half of next year. That means that we are hard to work on the next step at the end of phase 2. So, this will enable a phase 3 study. So, I think I want to emphasize the relevance of this data in the first half of next year.

So the comparison, I don't think is possible. Two different drugs, two different technologies. We haven't seen in our phase 1 study any of this. I mean it's not very clear yet reported from them.

So, at this point, we have no concern with regards to seeing any unexpected safety finding. We'll know that very soon.

Patrick Trucchio -- H.C. Wainwright and Company -- Analyst

Got it. And then just with the GATEWAY program with HoFH, the study is fully enrolled with the data to follow in 2023. I'm wondering if you can discuss the anticipated path to approval in HoFH, and what you would need to demonstrate in this GATEWAY program from a safety and efficacy perspective. And is there a potential for an accelerated review? And finally, what would the potential commercialization look like in this patient population? Would you look to launch this on your own or with a partner? And just lastly, I guess, how large of an indication could this ultimately be?

Javier San Martin -- Chief Medical Officer

Well -- so HoFH is a rare condition. There is a drug approved with a similar pathway or the same pathway with an antibody. We're doing our first study, proof of concept. Of course, that will be our point of reference, how we compare with the antibody to ANGPTL3.

We know that we do have an advantage there because the dosing will be every three months or six months, who knows, subcutaneously. So, we do have an advantage there. So, we need to see, and we will compare that data with them and say, are we competitive to the antibody in terms of efficacy, safety and tolerability, dose-ranging and so forth. So, we'll see.

We're going to look at that data. As you know, the marker is terribly small. It will be competition against the antibody. And I think we feel that we have a very good profile to compete against them.

We're going to move forward. The development process or program for this indication is well established. So it would be a relatively small study, placebo-controlled. And we, like I said, the profile is as good as we expected, competitive to the Regeneron antibody.

Then we are going to move forward because we think that there is a very unmet medical need, and this can offer a more friendly approach to this treatment.

Christopher Anzalone -- President and Chief Executive Officer

And also, I want to say that the GATEWAY is not fully enrolled. So, we said we were enrolling efficiently, but it is not yet fully enrolled.

Javier San Martin -- Chief Medical Officer

By the end of the year.

Patrick Trucchio -- H.C. Wainwright and Company -- Analyst

Got it. OK. That's helpful. Thank you very much.

Operator

Our next question comes from Keay Nakae with Chardan. Please go ahead.

Keay Nakae -- Chardan Capital Markets -- Analyst

Yes. Thank you. A question about PALISADE. Last quarter, you talked about some trouble with some of the planned sites in Eastern Europe.

Just wondering now what the outlook is in terms of how you're set up to enroll these patients. Again, how difficult are they to find?

Javier San Martin -- Chief Medical Officer

So we -- the only reason that we -- we didn't have any trouble in Europe other than this is a phase 3 study with no phase 2 study. So regulatory agencies and some ERBs raised that concern. They were, how do you know that there may be gaps in data to move from where you are to a phase 3 study? And we addressed all those comments and questions, and I think we're in a very good shape now, getting many countries around the world approved to run this study. And it's important to recognize, and we said that to regulatory agencies that by the time that the phase 3 study, the PALISADE study will be done, we're going to have two relatively large phase 2 studies that will be part of that regulatory process.

So, I think the good news is, yes, we got some pushback from regulatory agencies, and all of them so far accepted and understood the plan and the study is getting approved around the world, including Japan, where we had several meetings with them and the study is now approved in final negotiation with the sites and ready to start enrollment in Japan within a month or so. So not any unexpected delay other than more regulatory work to justify that we weren't ready for the phase 3 study.

Christopher Anzalone -- President and Chief Executive Officer

And I just want to say to your point about sites in Eastern Europe. Look, our clinical and regulatory teams have done incredible work here. We had a number of sites that were planned for Belarus, Ukraine, and Russia. And in one fell swoop, we lost all those, of course.

But we've done a great job finding additional sites, and we are on track with all of those studies, thanks to their work.

Keay Nakae -- Chardan Capital Markets -- Analyst

OK. Thanks.

Operator

Our next question comes from Mani Foroohar with SVB Securities. Please go ahead.

Mani Foroohar -- SVB Securities-- Analyst

Thank you for taking the question. I wanted to revisit the topic of [Inaudible] a couple of times around the pulmonary platform. The clarity you've given around the macrophage overload is really helpful. As you pursue more effective, more potent approaches to allow a lower absolute dose, what metrics will you be tracking? And what will your bar be to disclose further evidence of macrophage activation? Any additional toxicology signals the pop-up as you track how effectively or effectively you're threading the needle on delivered dose in macrophage activation?

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

Yeah. I think we will run -- I think we've already discussed the acute tox results at the Analyst Day a while back. And as a reminder, in the acute IND-enabling or CTA-enabling studies that the top dose was the NOAEL for MUC5AC and for RAGE, and there were no adverse findings in either of those tox studies. And then we will, in the near future, initiate chronic tox studies.

As also described during the Analyst Day event, I think we can really spread the doses out in those chronic tox studies. So just overall less exposure, those studies compared to what we did in ENaC. And then in terms of results of those studies, I don't know if we've guided on timing to disclose chronic tox study results.

Christopher Anzalone -- President and Chief Executive Officer

And it's not generally our -- we generally don't disclose tox results. But as those come in, we will know more about what sort of TI to expect. But we had, I think, some good slides in the Pulmonary R&D Day, where we showed what we believe now is sort of the threshold above which we don't want to go for -- in terms of volume of material. And we feel good that MMP7, MUC5AC, and RAGE are substantially below that line.

If you look -- if you compare what our expected dosing is, for instance, MUC and RAGE, which are in the clinic now, as you know, compare that to ARO-ENaC, so not only are we providing less drug, but we're also providing it less frequently. That was three consecutive days every two weeks, and now we're looking at one dose every month or less frequently and a lower dose on top of that. So, we feel good that we can thread this needle. And frankly, I don't think the eye of that needle is terribly narrow.

But look, we'll know more as we start to see knockdown and as we see chronic tox data.

Mani Foroohar -- SVB Securities-- Analyst

Thanks, guys. It was really clear.

Operator

Our next question comes from Mayank Mamtani with B. Riley FBR.

Mayank Mamtani -- B. Riley Financial -- Analyst

Good afternoon. Thanks for taking our questions. So just a strategic question for ARO-ANG3. So will you wait for the GATEWAY study results before determining next steps for ANG3 on the dyslipidemia indication based on AAT? And the reason I ask is that Lilly has a similar study like AAT listed on clinicaltrials.gov that could make it a very competitive situation now that earlier forms like the antibody or the less safe modality has cleared out.

So just curious, will you wait out for your retro fetch results?

Christopher Anzalone -- President and Chief Executive Officer

Yes. Look, we have some ideas about what phase 3 will look like. But of course, we need to see what those data look like before we design those studies. We feel -- with respect to the competitive question, we feel good about where we sit competitively in terms of our lead with RNAi and certainly over antisense, as well as antibody competitors.

But anyway, I guess the short answer is yes. We have a lot of ideas about what a phase 3 is going to look like, but we're not going to make any real decisions until we could sit through with the data. But my expectation is that -- well, expectation is a too strong word. We're curious to see if pockets of populations present themselves as a result of this.

Do we find certain populations that respond better than others? There's just no substitute for data. So, we'll wait to see that.

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

And I would add also that we wouldn't have -- we're not going to have to wait for GATEWAY. So GATEWAY and ARCHES should read out right around the same time. So GATEWAY is an open-label study. ARCHES-2 is fully enrolled, and it will complete right around the end of the year.

So, we should have both of those available at the same time.

Mayank Mamtani -- B. Riley Financial -- Analyst

Got it. Thank you. And then on ARO-RAGE, have you disclosed the specific dose levels you're going up during the MAD? Because you say three times lower than ENaC, but I don't know how that cuts across absolute dose level and frequency.

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

I don't think we've disclosed the actual dose levels yet.

Javier San Martin -- Chief Medical Officer

At the Analyst Day, we presented the study design. So --

Christopher Anzalone -- President and Chief Executive Officer

We showed -- there was a --

Javier San Martin -- Chief Medical Officer

I think we did.

Christopher Anzalone -- President and Chief Executive Officer

There was a slide that showed kind of the magnitude of dose levels in the tox studies, but I don't think there was -- the exact doses weren't disclosed. Yeah.

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

In any case, the dose frequency is certainly less than what we were doing with ENaC.

Javier San Martin -- Chief Medical Officer

Yeah. Remember, ENaC was day one, two, three, every two weeks. And here, it's just one day, every two or four weeks, right?

Christopher Anzalone -- President and Chief Executive Officer

Yeah. Either the single dose for day one, day 29.

Javier San Martin -- Chief Medical Officer

Day 29, so very different.

Mayank Mamtani -- B. Riley Financial -- Analyst

OK. And then my final question. Just curious about the milestone payment structure with the Amgen Lp(a). Is there anything specifically structured around them initiating or along the way of executing a CV outcome study? Is there any milestones associated there?

Christopher Anzalone -- President and Chief Executive Officer

Unfortunately, we can't give you any guidance on magnitude in milestones or individual triggers. Although I think it would -- I think it's quite common that there is a milestone payment for phase 3 initiations.

Mayank Mamtani -- B. Riley Financial -- Analyst

Got it. Looking forward to learning more about that. Thanks, team, for taking our questions.

Christopher Anzalone -- President and Chief Executive Officer

Sure. Thank you.

Operator

Our next question comes from Prakhar Agrawal with Cantor.

Prakhar Agrawal -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking my question. So, I had two. First, a clarification on AAT.

Is the biopsy sampling and the reading protocol between 202 and phase 2 protocol trial similar? Or are there any changes that we should be aware of? And second, on the long-term strategy for the CV portfolio, Chris, recent CV launches continue to be slow even for companies with strong existing infrastructure in this space. Inclisiran had $35 million in sales in first half and Novartis is still working through some of the logistical hurdles. So how much of these are these slow CV launches shaping your view about keeping the different assets in-house versus looking for partners who already have the infrastructure? Thank you.

Javier San Martin -- Chief Medical Officer

So the AAT program, the biopsy assessment is identical for both studies as the two pathologists that were trained together to read this. If they agree that at the end of the process, if they disagree, there is a third pathologist to decide which one of the two reads is the one that is considered the final read. So that's the procedure. The process is exactly the same.

The pathologies are the same. So, I expect a consistent output out of this study.

Christopher Anzalone -- President and Chief Executive Officer

And regarding our confidence or our willingness to commercialize our CV assets on our own, that hasn't changed for us. Look, we think these are -- we think these are drugs. The data have been consistent. They've been good.

I think there are clear places for both of these drug candidates. If you look at triglycerides, look, I think there's increasing evidence that elevated triglycerides at least for some patients are going to affect outcomes and there historically hasn't been a way to modulate triglycerides very much. If you look at fish oils, maybe 18% to maybe 30% reduction, when you compare that to, for instance, APOC3, where we're seeing reductions as high as 90%, sometimes even more than that, where we really move the needle. I think these are big opportunities for us.

And I think that -- I think these will have a lot of patients. And so we are as willing as ever to commercialize these on our own.

Prakhar Agrawal -- Cantor Fitzgerald -- Analyst

Thank you.

Christopher Anzalone -- President and Chief Executive Officer

Welcome.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Chris Anzalone for closing remarks.

Christopher Anzalone -- President and Chief Executive Officer

Thanks, everyone, for joining today. We look forward to talking to you again next quarter.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Vincent Anzalone -- Vice President of Investor Relations

Christopher Anzalone -- President and Chief Executive Officer

Javier San Martin -- Chief Medical Officer

James Hamilton -- Senior Vice President of Discovery and Translational Medicine

Ken Myszkowski -- Chief Financial Officer

Luca Issi -- RBC Capital Markets -- Analyst

Unknown speaker

Ted Tenthoff -- Piper Sandler -- Analyst

Ellie Merle -- UBS -- Analyst

Joel Beatty -- Baird -- Analyst

Madhu Kumar -- Goldman Sachs -- Analyst

Patrick Trucchio -- H.C. Wainwright and Company -- Analyst

Keay Nakae -- Chardan Capital Markets -- Analyst

Mani Foroohar -- SVB Securities-- Analyst

Mayank Mamtani -- B. Riley Financial -- Analyst

Prakhar Agrawal -- Cantor Fitzgerald -- Analyst

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