# Arrowhead Pharmaceuticals, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Arrowhead Pharmaceuticals, Inc.](/companies/arwr.md) (CIK 879407)
- Form: 10-Q
- Filed: 2025-05-12
- Accepted by EDGAR: May 12, 2025, 16:07 ET
- Period: 2025-03-31
- Accession: 0001628280-25-024666
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/879407/000162828025024666/arwr-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/879407/000162828025024666/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $542.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-10-01 to 2025-03-31 | $545.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $381.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-10-01 to 2025-03-31 | $219.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $21.6m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-10-01 to 2025-03-31 | $43.3m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $1.8m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-10-01 to 2025-03-31 | $1.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $370.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-10-01 to 2025-03-31 | $197.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $2.75 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-10-01 to 2025-03-31 | $1.52 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $2.78 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-10-01 to 2025-03-31 | $1.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 134,484,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-10-01 to 2025-03-31 | 130,265,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-10-01 to 2025-03-31 | $313.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-10-01 to 2025-03-31 | $12.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Current assets | at 2025-03-31 | $1.14bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $1.57bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $220.5m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-03-31 | $683.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,236 characters.

### FORWARD-LOOKING STATEMENTS

*This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Quarterly Report on Form 10-Q except for historical information may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “might,” “will,” “expect,” “believe,” “anticipate,” “goal,” “endeavor,” “strive,” “intend,” “plan,” “project,” “could,” “estimate,” “target,” “might,” “forecast,” “potential,” or “continue” or the negative of these words or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements include, but are not limited to, statements about the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs, our expectations regarding regulatory approval for and commercial launch of plozasiran; our expectations regarding the potential benefits of the partnership, licensing and/or collaboration arrangements and other strategic arrangements and transactions we have entered into or may enter into in the future; our beliefs and expectations regarding the amount and timing of future milestone, royalty or other payments that could be due to or from third parties under existing agreements; and our estimates regarding future revenues, research and development expenses, capital requirements and payments to third parties.*

*The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately, and many of which are beyond our control. As such, our actual results or outcomes and timing of certain events may differ materially from those discussed, projected, anticipated or indicated in any forward-looking statements. Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and cash flows may differ materially. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” of Part I and “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q as well as “Item 1. Business” and “Item 1A. Risk Factors” of Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II of our most recent Annual Report on Form 10-K. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Except as may be required by law, we disclaim any intent to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.*

### OVERVIEW

The Company develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and efficient modes of delivery, the Company’s therapies trigger the RNAi interference mechanism to induce rapid, deep and durable knockdown of target genes. RNAi is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. RNAi-based therapeutics may leverage this natural pathway of gene silencing to target and shut down specific disease-causing genes.

The Company believes that TRiMTM enabled therapeutics offer several potential advantages over prior generations and competing technologies, including: simplified manufacturing and reduced costs; multiple routes of administration including subcutaneous injection and inhaled administration; the ability to target multiple tissue types including liver, lung, central nervous system (CNS), muscle, and adipose tissue; and the potential for improved safety and reduced risk of intracellular buildup, because there are fewer metabolites from smaller, simpler molecules.

The Company’s pipeline includes:

- Hypertriglyceridemia - plozasiran (formerly ARO-APOC3);
- Homozygous familial hypercholesterolemia (HoFH) - zodasiran (formerly ARO-ANG3);
- Cardiovascular disease - olpasiran (formerly AMG 890 or ARO-LPA, out-licensed to Amgen);
- Inflammatory pulmonary conditions - ARO-RAGE;
- Idiopathic pulmonary fibrosis - SRP-1002 (formerly ARO-MMP7, out-licensed to Sarepta);
- Metabolic-dysfunction associated steatohepatitis (MASH) - GSK-4532990 (formerly ARO-HSD, out

licensed to GSK);

- Alpha-1 antitrypsin deficiency (AATD) - fazirsiran (formerly ARO-AAT, a collaboration with Takeda);
- Chronic Hepatitis B virus - daplusiran/tomligisiran - GSK5637608 (formerly JNJ-3989 and ARO-HBV, out-licensed to GSK);
- Complement mediated diseases - ARO-C3 and ARO-CFB;
- Metabolic-dysfunction associated steatohepatitis (MASH) - ARO-PNPLA3 (formerly JNJ-75220795 or ARO-JNJ1);
- Obesity - ARO-INHBE and ARO- ALK7
- Facioscapulohumeral muscular dystrophy -SRP-1001 (formerly ARO-DUX4, out-licensed to Sarepta);
- Dystrophia myotonica protein kinase (DMPK) - SRP1003 (formerly ARO-DM1 out-licensed to Sarepta; and
- Spinocerebellar ataxia 2 -SRP-1004 (formerly ARO-ATXN2, out-licensed to Sarepta).

The Company operates lab facilities in California and Wisconsin, where its research and development activities, including the development of RNAi therapeutics, take place. The Company’s principal executive offices are located in Pasadena, California.

The Company continues to develop other clinical candidates for future clinical trials. Clinical candidates are tested internally and through Good Laboratory Practice (GLP) toxicology studies at outside laboratories. Drug materials for such studies and clinical trials are either manufactured internally or contracted to third-party manufacturers. The Company engages third-party contract research organizations (CROs) to manage clinical trials and works cooperatively with such organizations on all aspects of clinical trial management, including plan design, patient recruiting, and follow up. These outside costs, including toxicology/efficacy testing and manufacturing costs, as well as the preparation for and administration of clinical trials, are referred to as “candidate costs.” As clinical candidates progress through clinical development, candidate costs will increase.

### The First Half of Fiscal 2025 Business Highlights

Key recent developments through fiscal 2025 included the following:

- Announced Topline results from Part 2 of a Phase 1/2 clinical study of ARO-C3, the Company’s investigational RNAi therapeutic designed to reduce liver production of complement component 3 (C3) as a potential therapy for various complement mediated diseases. ARO-C3 achieved reductions in alternative pathway complement activity and proteinuria;
- Showcased preclinical data supporting the advancement of two first-in-class clinical stage, RNAi-based investigational therapeutics being developed by the Company for the treatment of obesity and metabolic diseases;
- Announced preclinical results on ARO-ALK7, which is the first RNAi-based therapy designed to silence adipocyte expression of the ACVR1 to reduce the production of Activin receptor-like kinase 7 (ALK7), which acts as a receptor in a pathway that regulates energy homeostasis in adipose tissue. Arrowhead received regulatory clearance to initiate a Phase 1/2a clinical trial of ARO-ALK7 in New Zealand, which the company anticipates will begin dosing in the second quarter of 2025;
- Entered into a global licensing and collaboration agreement with Sarepta Therapeutics, Inc (“Sarepta”) on November 25, 2024, which closed on February 7, 2025. Closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. Upon closing, the Company received $325.0 million through the purchase of 11,926,301 shares of Company common stock by Sarepta, at a price per share of $27.25, and received $500.0 million as an upfront payment on February 24, 2025. The Company will also receive $250.0 million to be paid in equal installments over five years and is eligible to receive an additional $300.0 million in near-term payments. Additionally, the Company is eligible to receive royalties on commercial sales and up to approximately $10.0 billion in future potential milestone payments;
- Submitted a New Drug Application (NDA) to the U.S. 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; and
- Presented interim results from a Phase 1/2a clinical study of ARO-CFB at the 8th Complement-Based Drug Development Summit. The study resulted in multiple promising findings including: (1) ARO-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.

Net income attributable to Arrowhead Pharmaceuticals, Inc. was $370.4 million for the three months ended March 31, 2025 and net loss attributable to Arrowhead Pharmaceuticals, Inc. was $125.3 million for the three months ended March 31, 2024. Net income attributable to Arrowhead Pharmaceuticals, Inc. was $197.4 million for the six months ended March 31, 2025 and net loss attributable to Arrowhead Pharmaceuticals, Inc. was $258.2 million for the six months ended March 31, 2024. Net income per diluted share was $2.75 for the three months ended March 31, 2025 and net loss per diluted share was $1.02 for the three months ended March 31, 2024. Net income per diluted share was $1.52 for the six months ended March 31, 2025 and net loss per diluted share was $2.24 for the six months ended March 31, 2024.

The increase in net income for the three and six months ended March 31, 2025 was due to an increase in revenue from the Company's Sarepta Collaboration Agreement partially offset by research and development expenses, which have continued to increase as the Company's pipeline of candidates has expanded and progressed through clinical trial phases.

The Company had $185.7 million of cash, cash equivalents and restricted cash and $911.7 million in available-for-sale securities as of March 31, 2025, as compared to $102.7 million of cash, cash equivalents and restricted cash and $578.3 million in available-for-sale securities as of September 30, 2024. Based upon the Company’s current cash and investment resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months from the date of the issuance of these unaudited consolidated financial statements.

### Critical Accounting Estimates

There have been no significant changes to the Company’s critical accounting estimates disclosed in the most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

### RESULTS OF OPERATIONS

The following data summarizes the Company’s results of operations for the following periods indicated:

*(in thousands, except per share amounts)*

|  | Three Months Ended March 31, 2025 | 2024 | Six Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $542,709 | $— | $545,209 | $3,551 |
| Operating income (loss) | $381,202 | $(126,191) | $219,790 | $(262,736) |
| Net income (loss) attributable to Arrowhead Pharmaceuticals, Inc. | $370,445 | $(125,300) | $197,360 | $(258,164) |
| Net income (loss) per diluted share attributable to Arrowhead Pharmaceuticals, Inc. | $2.75 | $(1.02) | $1.52 | $(2.24) |

### Revenue

Total revenue for the three months ended March 31, 2025 increased by $542.7 million from the same periods of 2024. Total revenue for the six months ended March 31, 2025 increased by $541.7 million from the same periods of 2024. The change was primarily driven by the revenue recognition associated with GSK and Sarepta license agreements as discussed below.

The Company has evaluated each agreement in accordance with FASB Topic 808–*Collaborative Arrangements* and Topic 606-*Revenue for Contracts from Customers*. See Note 2 — Collaboration and License Agreements of the Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements” for more information on revenue recognized under the collaboration and license agreements.

**GSK**: On December 11, 2023, the Company entered into the GSK-HBV Agreement pursuant to which GSK received a worldwide, exclusive license to develop and commercialize daplusiran/tomligisiran (GSK5637608, formerly JNJ-3989), the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection.

Under the terms of the GSK-HBV Agreement, the Company received $2.7 million in December 2023, upon signing the GSK-HBV Agreement. Further, GSK dosed the fifth patient in a Phase 2 trial in December 2024, triggering a $2.5 million milestone payment to the Company which was paid in the second quarter of fiscal 2025. During the six months ended March 31, 2025, the Company recorded $2.5 million revenue.

**Takeda**: In October 2020, Takeda and the Company entered into the Takeda License Agreement. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the fazirsiran license and the associated Takeda R&D Services. Revenue was recognized using the input method (based on actual patient visits completed versus total estimated visits completed for the ongoing SEQUOIA and AROAAT2002 clinical studies). The Phase 2 study visits for patients in the SEQUOIA and AROAAT2002 studies concluded by December 31, 2023, and the Company has substantially completed its performance obligation under the Takeda License Agreement. As such, all revenue has been fully recognized as of December 31, 2023. During the six months ended March 31, 2024, the Company recorded $0.9 million revenue.

**Sarepta**: On November 25, 2024, the Company entered into the Sarepta Collaboration Agreement and Stock Purchase Agreement with Sarepta for the development and commercialization of multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system, and lungs. During the six months ended March 31, 2025, the Company recorded $542.7 million in revenue. As of March 31, 2025, no revenue was recorded for the milestone payments or royalties, as none had been achieved.

### Operating Expenses

The analysis below details the operating expenses and discusses the expenditures of the Company within the major expense categories. For purposes of comparison, the amounts for the three and six months ended March 31, 2025 and 2024 are shown in the tables below.

### Research and Development (R&D) Expenses

R&D expenses are related to the Company’s research and development discovery efforts and related candidate costs, which are comprised primarily of outsourced costs related to the manufacturing of clinical supplies, toxicity/efficacy studies and clinical trial expenses. Internal costs primarily relate to discovery operations at the Company’s research facilities in California and Wisconsin, including facility costs and laboratory-related expenses. The Company does not separately track R&D expenses by individual research and development projects, or by individual drug candidates. The Company operates in a cross-functional manner across projects and does not separately allocate facilities-related costs, candidate costs, discovery costs, compensation expenses, depreciation and amortization expenses, and other expenses related to research and development activities.

The following tables provide details of research and development expenses for the periods indicated:

*(in thousands)*

|  | Three Months Ended March 31, 2025 | % of Expense Category | Three Months Ended March 31, 2024 $% | % of Expense Category | Increase (Decrease) |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Candidate costs | $71,191 | 54% | $41,129 | 41% | $30,062 | 73% |
| R&D discovery costs | 14,806 | 11% | 17,562 | 17% | (2,756) | (16)% |
| Salaries | 26,907 | 20% | 24,921 | 25% | 1,986 | 8% |
| Facilities related | 6,737 | 5% | 5,923 | 6% | 814 | 14% |
| Total research and development expense, excluding non-cash expense | $119,641 | 90% | $89,535 | 89% | $30,106 | 34% |
| Stock compensation | 7,888 | 6% | 7,487 | 7% | 401 | 5% |
| Depreciation and amortization | 5,573 | 4% | 4,100 | 4% | 1,473 | 36% |
| Total research and development expense | $133,102 | 100% | $101,122 | 100% | $31,980 | 32% |

26

*(in thousands)*

|  | Six Months Ended March 31, 2025 | % of Expense Category | Six Months Ended March 31, 2024 $% | % of Expense Category | Increase (Decrease) |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Candidate costs | $148,087 | 55% | $94,085 | 43% | $54,002 | 57% |
| R&D discovery costs | 27,742 | 10% | 39,102 | 18% | (11,360) | (29)% |
| Salaries | 54,052 | 20% | 47,516 | 22% | 6,536 | 14% |
| Facilities related | 14,487 | 5% | 12,465 | 6% | 2,022 | 16% |
| Total research and development expense, excluding non-cash expense | $244,368 | 90% | $193,168 | 89% | $51,200 | 27% |
| Stock compensation | 15,437 | 6% | 16,494 | 7% | (1,057) | (6)% |
| Depreciation and amortization | 10,299 | 4% | 7,951 | 4% | 2,348 | 30% |
| Total research and development expense | $270,104 | 100% | $217,613 | 100% | $52,491 | 24% |

Candidate costs increased $30.1 million, or 73%, for the three months ended March 31, 2025 and $54.0 million, or 57%, for the six months ended March 31, 2025 compared to the same periods of 2024. This increase was primarily due to the additional progression of the Company’s pipeline of candidates into and through clinical trials, which resulted in higher manufacturing, outsourced clinical trial, and toxicity study costs.

R&D discovery costs decreased $2.8 million, or 16%, for the three months ended March 31, 2025 and $11.4 million, or 29%, for the six months ended March 31, 2025 compared to the same periods of 2024. This decrease was primarily driven by strategic shifts toward clinical development and commercial launch. R&D discovery costs are influenced by the Company’s ongoing discovery efforts, continued advancements into novel therapeutic areas and tissue types, and increasing costs related to CNS studies and lab supplies.

Salaries consist of salary, bonuses, payroll taxes, and related benefits for the Company’s R&D personnel. Salaries expense increased $2.0 million, or 8%, for the three months ended March 31, 2025 and $6.5 million, or 14%, for the six months ended March 31, 2025 compared to the same periods of 2024. The increase was primarily due to an increase in R&D headcount that has occurred as the Company has expanded its pipeline of candidates, in addition to annual salary increases.

Facilities-related expense includes lease costs for the Company’s research and development facilities in San Diego, California and in Madison and Verona, Wisconsin. These expenses increased $0.8 million, or 14%, for the three months ended March 31, 2025 and $2.0 million, or 16%, for the six months ended March 31, 2025 compared to the same periods of 2024. This increase was primarily due to property taxes charged to the laboratory and office facilities in Verona, Wisconsin, which completed their build out during the first quarter of fiscal 2024.

Stock compensation expense, a non-cash expense, is based up the valuation of stock options and restricted stock units granted to employees. Stock compensation expense increased $0.4 million, or 5%, for the three months ended March 31, 2025, which was primarily due to an increase in R&D headcount. Stock compensation decreased $1.1 million, or 6%, for the six months ended March 31, 2025 compared to the same periods of 2024. The decrease was primarily due to the cancellation of awards upon the departure of employees.

Depreciation and amortization expense, a non-cash expense, relates to depreciation on buildings, lab equipment and leasehold improvements. These expenses increased $1.5 million, or 36% for the three months ended March 31, 2025 and $2.3 million, or 30%, for the six months ended March 31, 2025 compared to the same periods of 2024. The increase was primarily attributed to completion of the build out of facilities in Verona, Wisconsin, and the commencement of depreciation.

The Company anticipates these R&D expenses to continue to increase as its pipeline of candidates grows and progresses to later phase clinical trials, in addition to inflationary pressure on goods and services and the labor market.

### General & Administrative Expenses

The following tables provide details of general and administrative expenses for the periods indicated:

*(in thousands)*

|  | Three Months Ended March 31, 2025 | % of Expense Category | Three Months Ended March 31, 2024 $% | % of Expense Category | Increase (Decrease) |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries | $7,857 | 28% | $7,088 | 28% | $769 | 11% |
| Professional, outside services, and other | 10,815 | 37% | 6,278 | 25% | 4,537 | 72% |
| Facilities related | 1,082 | 4% | 1,015 | 4% | 67 | 7% |
| Total general & administrative expense, excluding non-cash expenses | $19,754 | 69% | $14,381 | 57% | $5,373 | 37% |
| Stock compensation | 8,140 | 29% | 10,263 | 41% | (2,123) | (21)% |
| Depreciation and amortization | 511 | 2% | 425 | 2% | 86 | 20% |
| Total general & administrative expenses | $28,405 | 100% | $25,069 | 100% | $3,336 | 13% |

*(in thousands)*

|  | Six Months Ended March 31, 2025 | % of Expense Category | Six Months Ended March 31, 2024 $% | % of Expense Category | Increase (Decrease) |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries | $15,188 | 27% | $13,347 | 27% | $1,841 | 14% |
| Professional, outside services, and other | 20,941 | 38% | 11,500 | 24% | 9,441 | 82% |
| Facilities related | 2,367 | 4% | 2,040 | 4% | 327 | 16% |
| Total general & administrative expense, excluding non-cash expense | $38,496 | 69% | $26,887 | 55% | $11,609 | 43% |
| Stock compensation | 15,799 | 29% | 20,950 | 43% | (5,151) | (25)% |
| Depreciation and amortization | 1,020 | 2% | 837 | 2% | 183 | 22% |
| Total general & administrative expense | $55,315 | 100% | $48,674 | 100% | $6,641 | 14% |

Salaries expense increased $0.8 million, or 11%, for the three months ended March 31, 2025 and $1.8 million, or 14%, for the six months ended March 31, 2025 compared to the same periods of 2024. The increase was driven by the combination of annual salary increases and increased headcount required to support the Company’s growth.

Professional, outside services, and other expenses include costs related to legal, audit, consulting, patent filings, business insurance, other external services, as well as travel, communication, and technology expenses. This expense increased $4.5 million, or 72%, for the three months ended March 31, 2025 and $9.4 million, or 82%, for the six months ended March 31, 2025 compared to the same periods of 2024. The increase was mainly due to professional services associated with commercialization and business development efforts.

Facilities related expense primarily includes rental costs and other facilities-related costs for the Company’s corporate headquarters in Pasadena, California.

Stock compensation expense, a non-cash expense, is based on the valuation of stock options and restricted stock units granted to employees. This expense decreased $2.1 million, or 21%, for the three months ended March 31, 2025 and $5.2 million, or 25%, for the six months ended March 31, 2025 compared to the same periods of 2024. The decrease was primarily due to lower compensation costs related to performance awards, as the timing of these expenses can vary based on the achievement of related performance targets.

Depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company’s corporate headquarters.

The Company anticipates these general and administrative expenses to continue to increase as its pipeline of candidates grows and progresses to later phase clinical trials including commercialization efforts, in addition to inflationary pressure on goods and services and the labor market.

### Other Income (Expense)

Other income (expense) is primarily related to interest income and expense. Other expense increased $10.8 million and $22.3 million for the three and six months ended March 31, 2025 compared to the same periods of 2024. The increase was primarily due to non-cash interest expense associated with the liability related to the sale of future royalties and the Credit Facility, partially offset by higher income from increased investment yields due to higher average cash balance.

### LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations through the sale of its equity securities, credit facility, revenue from its licensing and collaboration agreements, and the sale of certain future royalties. Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure as the Company’s pipeline continues to expand and matures into later stage clinical trials, including commercialization efforts.

The Company’s cash, cash equivalents and restricted cash was $185.7 million as of March 31, 2025 compared to $102.7 million as of September 30, 2024. Cash invested in available-for-sale securities was $911.7 million as of March 31, 2025 compared to $578.3 million as of September 30, 2024.

On December 2, 2022, the Company entered into an open market sale agreement (the “Open Market Sale Agreement”), pursuant to which the Company may, from time to time, sell up to $250.0 million in shares of the Company’s common stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering. As of March 31, 2025, no shares have been issued under the Open Market Sale Agreement.

In August 2024, the Company entered into the Credit Facility, which provides for a senior secured term loan facility of $500.0 million, which includes $400.0 million funded on the closing date with an additional $100.0 million at the Company’s option during the seven-year term of the agreement. The Company received net proceeds of $388.9 million, after issuance costs as of September 30, 2024.

On November 25, 2024, the Company entered into a licensing and collaboration agreement with Sarepta. Upon closing, the Company received $325.0 million for the purchase of 11,926,301 shares of common stock, at a price per share of $27.25, and received $500.0 million as an upfront payment on February 24, 2025.

The Company believes its current financial resources are sufficient to fund its operations through at least the next twelve months from the date of the issuance of these unaudited consolidated financial statements.

The following table presents a summary of cash flows:

*(in thousands)*

| Cash Flow from: | Six Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Operating activities | $313,781 | $(210,217) |
| Investing activities | (343,303) | (204,098) |
| Financing activities | 113,016 | 431,044 |
| Net increase in cash, cash equivalents and restricted cash | $83,494 | $16,729 |
| Cash, cash equivalents and restricted cash at end of period | $185,709 | $127,704 |

During the six months ended March 31, 2025, cash flow provided by operating activities was $313.8 million, which was primarily due to $500.0 million of cash received as part of the Sarepta agreement, partially offset by ongoing expenses related to the Company's research and development programs and general and administrative expenses. Cash used in investing activities amounted to $343.3 million, which was primarily attributable to capital expenditures of $12.8 million and investment purchases of $677.9 million, offset by proceeds from maturities of investments of $347.4 million. Cash provided by financing activities of $113.0 million was primarily related to cash received from the issuance of common stock in the Sarepta agreement and pre-funded warrants and stock option exercises (See Note 6 — Stockholders’ Equity of Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements”).

During the six months ended March 31, 2024, cash flow used in operating activities was $210.2 million, which was primarily due to the ongoing expenses related to the Company’s research and development programs and general and administrative expenses. Cash used in investing activities was $204.1 million, which was primarily attributable to capital expenditures of $102.7 million and investment purchases of $310.0 million, partially offset by proceeds from sales and maturities of investments of $208.6 million. Cash provided by financing activities of $431.0 million was primarily related to cash received from the issuance of common stock as well as stock option exercises.

### Contractual Obligations

There has been no material change in the Company’s contractual obligations from that described in Item 7 of its Annual Report on Form 10-K for the year ended September 30, 2024.

## Market risk

As filed, 178 characters.

There has been no material change in the Company’s exposure to market risk from that described in Item 7A of its Annual Report on Form 10-K for the year ended September 30, 2024.

## Controls and procedures

As filed, 2,105 characters.

### Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in its reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the quarter covered by this Quarterly Report on Form 10-Q. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company regularly evaluates its controls and procedures and makes improvements in the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

## Risk factors

As filed, 465 characters.

The Company’s business, results of operations and financial conditions are subject to various risks. These risks are described elsewhere in this Quarterly Report on Form 10-Q and in the Company’s other filings with the SEC, including the Company’s Annual Report on Form 10-K for the year ended September 30, 2024. There have been no material changes from the risk factors identified in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024.

Filed May 12, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-024666. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.