Arrowhead Pharmaceuticals (NASDAQ:ARWR) Q4 2020 Earnings Call

0:01 Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

0:23 Thank you, Chris. Good afternoon, everyone, and thank you for joining us today to discuss Arrowhead's results for its fiscal year ended September 30th, 2020. With us today for management are President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter, Dr. Javier San Martin, Chief Medical Officer, who will discuss our clinical programs, and Ken Muskowski, our Chief Financial Officer, who will give a review of the financials. In addition, James Hazard, our Chief Commercial Officer, and Dr. James Hamilton, who was recently promoted to Senior Vice President and Head of Discovery in Translational Medicine, will both be available during the Q&A session of today's 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 fact including, without limitation, those with respect to Arrowhead's goals, plans, and strategies, our forward-looking statements.

1:26 These include statements regarding our expectations around the development, safety and efficacy of our drug candidates, projected cash runway, and expected future development and commercialization activities. These statements represent management's current expectations and are inherently uncertain. Thus, actual results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward-looking statements discussed on today's call. You should refer to the discussions on the risk factors in Arrowhead's annual report on Form 10-K and the company's subsequent quarterly reports on Form 10-Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call.

2:13 With that said, I'd like to turn the call over to Chris Anzalone, President and CEO of the company. Chris. Thanks, Vince.

2:20 Good afternoon, everyone. And thank you for joining us today. This is our final earnings call of 2020. So in addition to discussing our progress for the quarter and plans for 2021, I would also like to speak a bit more broadly about our philosophy and model. We're building a different kind of biotech company. We are not focused on a single therapeutic area, but rather on any disease with unmet medical need that is addressable with our technology. We are not focused solely on rare diseases, but rather address large and small populations. We do not rely solely on partners for late-stage clinical development and commercialization, but rather we use partnering strategically and judiciously to enable us to build substantial value by commercializing our own drugs. We are fast, probably the fastest in the business from idea to the clinic, and we intend to remain fast as we grow.

3:09 That devotion to speed also applies to pipeline expansion I believe we have the fastest growing pipeline in our field, and we do not intend to slow that input just because we are entering later stage clinical studies. We are not in the me too product business where we only provide incremental benefit to patients. Rather, we seek to be pioneers.

3:27 We believe that everything in our clinical pipeline represents the first RNAi approach to each target in humans.

3:33 We don't operate like a normal pharmaceutical company. We are not burdened by endless gating committees, but rather empower our people to make decisions. Operationally, think of us as a startup in $7 billion market cap clothing, and we intend to continue in this nimble and creative fashion, even as we become a substantially larger and more valuable company. We see this as the most effective way to build a business, and most importantly, to serve our patients. Every day that we can shave off the development process puts our patients one day closer to a new treatment they need. This is a powerful motivator indeed for us, because the value of our work depends on the number of lives we touch. I mention all of this now because we are at a moment of transition for our company. We have created a lot of value to this point by building what we believe will soon be the largest RNAi-based clinical pipeline in BioPharma.

4:24 As we move into later stage clinical studies, our focus needs to expand to include commercial planning. Ultimately, this is the reason we're in this business, and we need to do that well. However, we also need to continue to do the things in discovery and early development that have made us successful while we build our commercial presence. On average, we expect to continue to introduce three new drug candidates into the clinical studies every year, and we expect to be able to address a new cell type every 18 to 24 months. Think of the potential value embedded in those statements. I expect that we will have 10 clinical programs by summer, spanning four different cell types.

5:01 That could grow to 20 clinical programs, spanning five or six cell types just four years from now. We expect this to drive substantial value because we expect some of those to become products that we will commercialize ourselves and some can be partnered to fund development and commercial endeavors. Our ability to rapidly grow our pipeline enables this hybrid model of establishing a limited number of partnerships in order to fund wholly owned programs. We see this as a powerful model because it allows for the rapid value creation associated with commercializing wholly owned drugs while financing this expensive endeavor largely through non-dilutive capital from partner programs. So even as we approach and ultimately expand our commercial presence, our pipeline strategy should continue to be an important part of our value proposition.

5:47 This is not only due to the brute force of the large numbers of potential drugs in our clinical studies, but should also reflect our expectations of success.

5:56 There are two components to this.

5:58 First, we seek to choose only well-validated targets. These are gene targets where a consensus of experts agree that reducing expression will likely have positive therapeutic benefits. By focusing on this, we believe we enter clinical studies with reduced biology and target risk relative to other candidates. Second, the RNAi mechanism and experience with the TRMM platform can provide additional wind at our back. As we continue to treat more patients with drug candidates built on the TRMM platform and see consistent activity and positive safety profile, Our confidence increases that other candidates targeting different genes will also be successful. RNAi doesn't care what gene is being silenced. Once we validate our ability to reduce expression of a given gene in a given cell type, we have confidence that we can replicate that in other gene targets.

6:48 We believe this is a powerful and scalable concept that gives us confidence that a larger percentage of our candidates entering the clinic will ultimately become drugs compared to traditional small molecules. We hope that as we approach and become a commercial company, the market will properly value our growing pipeline. As I mentioned, it will continue to be an important part of our value proposition, and we expect it to remain a substantial differentiator versus our competitors. With that, let's move into an overview of the last quarter. During the last few months, our accomplishments included the following. One, we hosted a KOL seminar on aeroenac, our first lung targeted candidate to treat cystic fibrosis. and we initiated dosing in a Phase I-II clinical study. Two, we earned a $20 million milestone payment from Amgen following the start of a Phase II study of AMG-890, now called Olpaceran, which is a partner program targeting Lp to treat cardiovascular disease.

7:45 Three, we initiated a Phase I-B study for ArrowHIV-2, our first tumor-targeted candidate to treat renal cell carcinoma. We presented new data on Phase 1-2 studies of both of our wholly-owned cardiometabolic candidates, AeroApoC3 and AeroAM3, at multiple medical meetings, including the European Society of Cardiology and the American Heart Association meetings, and subsequently hosted KOL webinars to discuss the data and our plans for their future development. We presented Phase 2 data at AASLD on AeroAAT, our candidate against liver disease, Associated with Alpha-1 Antitrypsin Deficiency, showing that AeroAAT strongly reduced the production of mutant Z-AAT protein and led to improvements in multiple biomarkers of Alpha-1 liver disease. And six, we signed an agreement with Takeda to co-develop and co-commercialize AeroAAT, which includes $300 million up front, $740 million in milestone payments, a 50-50 profit-sharing agreement in the U.S., and 20-25% royalties on sales outside the U.S., This is a lot of progress in a short period of time and even more impressive with the backdrop of disruptions caused by COVID-19.

8:59 Let's take a look at the Takeda deal. It's a good example of our selective partnering strategy. We expect Arrow AAT to benefit from Takeda's global footprint, existing infrastructure, expertise, and 18-year history in the AAT market to enable a rapid launch. If approved, Arrow AAT will join Takeda's global commercially available products, including Erlast, Intibio, and their growing GI pipeline. Decada is clearly invested and committed to these areas and has a proven track record of success. The deal is also important in terms of capital. In addition to the $300 million up front, we have potential access to substantial capital in the near, mid, and long term with a possible stream of milestone payments, profit sharing, and royalties.

9:47 When this is added to the potential milestone payments and royalties from our partnerships with Amgen and Janssen, we feel our balance sheet is in very strong position. This allows us to confidently move our wholly owned programs into later stage development and ultimately commercialization. This deal is also a step in an ongoing process toward rationalizing our growing pipeline, where we look to build commercial infrastructure in areas where we expect multiple drugs, such as cardiometabolic and pulmonary. We will look for synergy and leverage when deciding where to focus commercial build-out.

10:20 So let's take a look at the cardiometabolic pipeline. We presented data recently at AHA and also held two KOL webinars to discuss these programs.

10:28 Javier will discuss these specifically in a moment, but I want to talk about where we are with these programs at a high level. The data across single and multiple doses and in healthy volunteers as well as various patient populations has been very strong and highly consistent. In addition, AeroApoC3 and AeroAng3 are showing unique profiles. What I mean by that is that we believe each drug may ultimately give cardiologists more tools to tailor their treatments to the specific lipid profiles of their patients. We also think they will fill holes in the current treatment paradigm and may potentially address lipid targets that have not been adequately addressed. For instance, there are more than 4 million patients in the U.S. with severe hypertriglyceridemia and given published data, we would expect the overwhelming majority of them would not reach normal triglyceride levels with currently available treatments.

11:21 There are also approximately 30 to 40 million addressable patients in the U.S. with mixed dyslipidemia, which is elevated triglycerides and elevated LDL cholesterol. We have become increasingly competent in these programs and in our ability to move them to commercialization. We've also been able to move forward in our other clinical programs. AeroHSD, our drug candidate against NASH and alcoholic hepatitis, is now in the patient portion of the Phase 1-2 study. AeroHIF-2, our candidate against renal cell carcinoma, and AeroENAC, our candidate against cystic fibrosis, are both being dosed in patients as well. Progress in AeroHIF-2 and AeroENAC is particularly important because it has been our goal to gain clinical proof of concept and then move into a rapid pipeline expansion phase for tumor and pulmonary tissue types.

12:13 We think we are just on the cusp of that phase now. To that end, we continue to work in parallel on multiple additional targets in tumor and pulmonary and also to expand our reach into new tissue types beyond these. Before I move on to 2021, I'd like to say a few words about the novel coronavirus. As with the rest of the world, we were excited to see the interim results from some of the COVID-19 vaccine studies. Multiple safe and effective vaccines will be a humanitarian triumph, and we applaud the impressive work done by several companies. From an Arrowhead standpoint, some may ask if progress on the vaccines affects our internal program. The answer is not really. We continue to make progress on an antiviral approach that is designed to work across different coronaviruses.

12:59 The history of SARS, MERS, and now the current coronavirus suggests that the world should expect some type of coronavirus outbreak approximately every seven years. As such, we are studying conserved regions in known coronaviruses with the goal of creating an inhalable antiviral that could be applied to future outbreaks, as well as the current virus should there be blind spots with the vaccines. We are still in early animal studies, but I hope that we will have an idea about the feasibility of this approach in 2021. Moving to the future, there's a lot you should expect from us during the final month of the year and into 2021. Our expectations include the following. One, we are on track to file a CTA for arrow lung two at the end of this year. This is the second program in our pulmonary franchise and is designed to treat COPD by inhibiting an undisclosed target in pulmonary epithelia.

13:52 Two, we are on pace to potentially have preliminary data readouts by the middle of 2021 for arrow HSD AeroHIF-2, and AeroENAC.

14:02 Three, during the first half of 2021, we also intend to engage with the FDA and other regulators to discuss pivotal trial study design and endpoints for AeroAAT. Based on the impressive data that came out of our 2002 open-label study, it appeared that patients had large reductions in ZAAT monomer, which we expected, but also had improvements in other downstream markers, such as polymer, globules, LFTs, and others. Thank you for joining us today. a Phase IIb dose-finding study in patients with triglycerides ranging from 150 to 499, a Phase IIb dose-finding study in patients with triglycerides over 500, and a Phase III study in patients with familial chylomicronemia syndrome, or FCS.

15:18 In the second half of 2021, we intend to file a CTA for our first muscle-targeted RNAi therapeutic That program has moved forward very nicely, and we are eager to talk more about that and what the data look like. Six, for our partnered programs with Amgen and Janssen, we can't provide specific guidance on timing, but we continue to be pleased with their progress and look forward to additional future progress. Seven, lastly, we are working on several other undisclosed programs and will likely have another CTA filed for another program in 2021. With that overview, I'd now like to turn the call over to Dr. Javier San Martín. Javier?

15:57 Thank you, Chris, and good afternoon to everybody on the call. I want to highlight data from the ARO AAT, ARO APOC3, and ARO H3 programs since we have important readouts for each during the last quarter. Before I do that, I will give a very quick review of the status of the earlier stage clinical program. ARO HST is our investigational candidate for the potential treatment of alcohol and non-alcohol-related liver disease. The genetic validation is strong for inhibiting the target HSD17B13 in NASH cirrhosis, alcoholic hepatitis, and cirrhosis patients. We're conducting a Phase I-II single and multiple-dose escalating study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamic effect of aeroHSD in normal healthy volunteers, as well as in patients with NASH, or suspected NASH.

16:51 We have complete single-dose escalation in healthy volunteers and are currently enrolling the multiple-dose patient portion of the study in NASH or suspected NASH patients. This study includes liver biopsies to assess drug activity. AeroHIF-2 is designed to treat clear-cell renal cell carcinoma and we're currently dosing patients in the Phase 1b dose-finding clinical study in up to 18 patients with advanced renal cell carcinoma. The study is designed to evaluate the safety of AeroHIF-2 and to determine the recommended Phase II dose, but also assessing pharmacokinetics and preliminary efficacy based on resist and post-dose tumor expression of HIF-2-alpha and HIF-associated genes.

17:37 Our last early stage clinical program is AeroENAC, designed to treat cystic fibrosis. AeroENAC is in a Phase I-II dose escalating study to evaluate the safety Tolerability and Pharmacokinetic Effect of AeroENAC in up to 24 normal healthy volunteers and to evaluate safety, tolerability, and efficacy in up to 30 patients with cystic fibrosis. We had those escalated multiple times as planned in healthy volunteers and so far we're pleased with the safety and tolerability results. This is always an important finding for a new investigational drug and even more so for a new platform. We're now enrolling 65 patients in the multiple-dose portion of the study. Now I will move on to the recent data readouts.

18:23 For ARO-AAT, our investigation on RNAi therapeutic being developed as a treatment for the rare genetic liver disease associated with Alpha-1 antidepressant deficiency. We presented data at ASLD on our 2002 open-label study. To review, the study is fully enrolled with 16 participants in three cohorts. Four patients in Cohort 1 received 200 mg of ARO-AAT and will have a repeat biopsy after 6 and 18 months of treatment. Cohort 1B is the same, but patients received the 100 mg dose. And eight patients in Cohort 2 received 200 mg of ARO-AAT and will have a repeat biopsy after 12 and 24 months of treatment.

19:08 At HLD, we reported on six months' results from Cohort 1. We think the data strongly suggests that ARO-AAT is doing what it's designed to do, which is reduce the production of the misfolded mutant Z-AAT protein. The results also indicate that the liver may have the ability to clear out accumulated Z-AAT and begin to heal itself faster than anticipated. Importantly, we saw the following, 86 to 93% reduction in serum Z-AAT protein, all patients demonstrated greater than 80% reduction in liver CAAT monomers. Three or four patients had decrease in liver global involvement and three or four patients demonstrated reduction in CAAT polymers with a range of 68 to 97%.

19:57 All patients showed ALT reduction ranging from 36 to 66%. So we think that these are all positive indication of a strong pharmacodynamic response and improvement in liver health. following just three doses of ARO-AAT. As Chris mentioned, we are currently preparing to engage with FDA and other regulatory agencies in the first half of 2021 to discuss areas where the ARO-AAT program may potentially be streamlined and accelerated. Let's now move to our cardiometabolic programs, ARO-ApoC3 and ARO-AH3. We held two KOL webinars last week to discuss the data and these programs in some depth. We were fortunate to have Dr. Christy Valentine from Baylor College of Medicine and Dr.

20:46 Ira Goldberg from the NYU School of Medicine join us and provide their perspective and viable insights. Replays of these events are available on the investor section of our website for those who missed the late presentation. Let's start with AeroApoC3, our candidate targeting apolipoprotein C3 being developed as a potential treatment for patients with hyperplasticity. The current clinical study is in Phase 1-2, single and multiple-dose study to evaluate safety, tolerability, pharmacokinetics, and pharmacodynamic effects of AeroApoC3. There is a single-dose and a multiple-dose portion of the study in adult healthy volunteers and a multi-dose proportion of the study in patients with hypertriglyceridemia, including ECHOHOR and rolling up to 20 chylomicronymia patients.

21:36 At the American Heart Association, we reported data from the multiple-dose patient's portion of the study. The results were very impressive and highly encouraging to us as we prepared to begin the next stage of development for the program in the first half of next year. In patients with hyperplasia theridemia, ARO-ApoC-3 treatment resulted in robust and sustained reduction in triglycerides and non-HDL cholesterol with increase in HDL cholesterol. Specifically, we observed maximum mean reduction of 80 to 99% in ApoC-3 Maximal Mean Reduction of 74 to 92% in TG or triglycerides and 39 to 62% reduction in non-HDL cholesterol. And Maximal Mean Increase of 95 to 116% in HDL cholesterol.

22:25 In patients with chylomyconemia, 50 mg of ApoC3 achieved similar levels of reduction of ApoC3 and changes in key lipid parameters. We observed Maximal Mean Reduction of 98% in ApoC3 maximum mean reduction of 88% in TG and 59% in non-HDL cholesterol, and a maximum increase of 120% in HDL cholesterol. Importantly, the effect of AeroApoC3 were maintained for greater than 12 weeks post-second dose regardless of the patient population. We think this indicates that once quarterly or less frequent dosing might be possible. Our other wholly-owned cardiometabolic candidate is AeroAng3, targeting angiopoietin-like protein 3, or ANGE-PTL3, and is being developed as a potential treatment for patients with mixed dyslipidemia.

23:18 The current clinical study is a Phase I-II single and multiple-dose study to evaluate safety, tolerability, pharmacokinetics, and pharmacodynamics effects. At the American Heart Association and the recent webinar, we also presented data on the multiple-dose patient portion of the ARO-ANGE-3 study. As with ARO-APOC-3, we were thrilled with the clinical results and move forward with a program with a lot of confidence in its potential to help patients with mixed-dyslipidemia. The data shows that in heterozygous-familial hypercholesterolemia in patients with non-FH, and non-FH patients, 80H3 resulted in mean reduction of 78 to 90% of HPTL3, reduction of 29 to 47% in triglycerides, 29 to 35% in LDL cholesterol, and a reduction of 31% to 35% on non-HDL cholesterol.

24:13 In high triglyceride patients, AeroAge3 resulted in a mean reduction of 83% for HPTL3, 75% for triglycerides and 56% for non-HDL cholesterol. As with AeroApoC3, the effect of AeroAge3 was maintained for greater than 12 weeks post-second dose regardless of patient population. We believe this indicates that once quarterly or less frequent doses might be possible. These results provide further support that the RNAi mechanism in general, and more specifically, therapeutically developed using our CLEAN platform, tend to perform very consistently regardless of the gene type. So far, we have experienced very good translation of preclinical data to human clinical data with respect to safety, tolerability, and activity.

25:03 This gives us great confidence in each new program we develop, even at very early stages. The next steps are to study in larger and larger clinical trials where the inhibition of the respective genes' targets leads to the desired clinical benefit in specific patient populations. As Chris mentioned earlier, we try to select targets at the discovery stage with generally well understood biology and strong support from human genetic studies. This provides us with even more confidence that we're reducing risk to the extent possible and maximizing our probability of success. I will now turn the call over to Ken Miszkowski, Arrowhead's Chief Financial Officer. Ken.

25:47 Thank you, Javier, and good afternoon, everyone. As we reported today, our net loss for fiscal 2020 was 84.6 million, or 84 cents per share, based on 100.7% and others. This compares with net income of 68 million or 69 cents per share based on 98.6 million weighted average diluted shares outstanding for fiscal 2019. Revenue for fiscal 2020 was 88 million compared to 168.8 million for fiscal 2019. Revenue in both periods primarily relates to the recognition of a portion of the upfront payments and milestones for our license and collaboration agreements with Janssen.

26:33 Revenue from the Janssen agreement is being recognized based on our estimate of the proportion of effort expended towards fulfilling our performance obligations, primarily overseeing the completion of the Phase 1-2 HPV clinical trial. We expect the remaining $19 million of deferred revenue to be recognized in the first half of fiscal 2021. Any additional milestones achieved with Janssen or Amgen would be additive to this projection. In addition, current period revenue also included the $20 million milestone payment we received from Amgen upon the initiation of their Phase II clinical trial for AMG 890, which is now referred to as Alpacerin. Total operating expenses for the year ended September 30, 2020, were $181.1 million.

27:25 and others. This increase is primarily due to increased non-cash stock compensation expense. Stock compensation expense has increased because the valuation of new stock option and restricted stock award grants has increased with the growth of our stock price. Stock compensation expense increased due to the timing of the achievement of certain performance-based awards in each period. The increase in total operating expenses was also driven by increased clinical trial costs as our pipeline of clinical candidates has increased and increased personnel costs in both R&D and G&A as our headcount continues to grow.

28:12 Net cash used by operating activities in fiscal 2020 was $95.4 million. compared with net cash provided by operating activities of $173 million in fiscal 2019. The operating cash generated in fiscal 2019 reflects the $175 million upfront payment and two $25 million milestone payments received from Janssen offset by cash used for operations. Turning to our balance sheet, our cash and investment balances totaled $453 million at September 30, 2020, compared to $302.9 million at September 30, 2019. The increase in our cash and investments was primarily due to the December 2019 equity financing we completed, which generated $250.5 million in net cash proceeds to the company.

29:10 In addition to the cash and investments assets discussed as of September 30, 2020, We also anticipate receiving $300 million from the upfront payment from Takeda by the end of this calendar year or shortly thereafter. Similar to our agreement with Janssen, we anticipate recognizing this upfront payment as revenue over the course of completing our performance obligations within the deal, which primarily consists of managing the ongoing ARO-AAT clinical studies and providing certain manufacturing services. Looking ahead to 2021, we expect our full year cash burn to be in the range of $200 to $250 million. This increase is due to growth throughout the company.

30:01 Our program costs are expected to increase as Aero Ang3 and Aero ApoC3 begin larger Phase II clinical trials, and our newer programs continue to advance. Our headcount increased in 2020, and we expect continued increases in 2021, which drives increases in payroll, related facility costs, discovery R&D, and G&A expenses. Our common shares outstanding at September 30, 2020 were 102.4 million. With that brief overview, I will now turn the call back to Chris.

30:36 Thanks, Ken. There's no question we've had a productive recent period. The more clinical experience we gain with the TRMM system, the more confident we become that we are on the path to providing physicians with potentially transformational therapies that may make a big difference in the lives of millions of patients. That's important and gratifying. We also feel confident that we have the right strategy. We believe the combination of focusing on well-validated targets, our speed from idea to the clinic, our ability to address a new cell type every 18 to 24 months, The rapid nature of our pipeline expansion and our selective partnering model together provide our shareholders with the potential for rapid value creation. So what's next for us? We think our initial commercial focus on cardiometabolic and pulmonary will allow us to build out the necessary infrastructure over the coming years in a focused and effective manner, but also in a way that is ever conscious of capital efficiency.

31:32 That has been an arrowhead hallmark, and we intend for that to continue.

31:36 And lastly, We are eager to gain clinical validation for our trim platform's ability to target tissues outside the liver. This includes lung, tumor, muscle, and other tissue types that we have not yet disclosed. RNAi works well in hepatocytes. We know that.

31:53 But our goal has never been simply to address liver-based disease.

31:57 Rather, we have always worked to bring RNAi wherever it is needed, and we are on the brink of demonstrating that right now. We are indeed building a different kind of biotech company. and we look forward to continuing to share our progress. Thanks again for joining us today. I would now like to open the call to your questions. Operator. Thank you. Ladies and gentlemen, if you have a question at this time, please press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from the line of Sean Egan with Citi. Your line is now open. Hi, guys. Thank you for the updates today and for taking my questions. As investors start to do work for 2021, can you maybe set expectations for the ENAC program in regards to what data endpoints there'll be? I know FEV1 has come up a few times.

32:49 I guess what level of benefit there would give you confidence? And do you guys also plan to test for ENAC knockdown, or are there any other approaches you can use to validate proof of concept?

33:01 Sure. Javier, would you like to address that?

33:03 Yeah, so let me start with the comment about by when we're going to have data next year, 2021. And it's likely to be either at the end of the first half or maybe early Q3 of 2021. With regard to what we think will be success, well, as you know, one of the key efficacy endpoints is FEV1. and we have a study that is large enough that hopefully we'll be able to see a change from baseline in the range of anywhere between, I would say, five and 15%. The first drug that was approved in this disease was with an increase in FEV1 of approximately 5%. The more current drugs approved, as you know, is more in the range of 10 or 13%.

33:51 So we're looking for that proof of concept. Seeing a movement in FEV1 in a phase one study, I think will be considered success in our mind.

34:00 and let me also expand upon that. So when we look at our FEV1 results, we are not comparing those to Trikafta. At least our initial patient populations that we're going after will be those patients who are not eligible for Trikafta. Either they are null null patients and so they have no CFTR to correct or they are refractory to Trikafta and the like. So the bar here is really nothing, right? You know, these patients have very limited therapeutic options. And so I think that if we can show a 5% improvement in FV1, that's a big thing for those patients. And I think that suggests that we've got a drug.

34:52 Great. Maybe one follow-up question. on the AeroENAC program. When you consider the physical barriers present in CF patients, I guess what gives you confidence that the drug will get to the target epithelial cells?

35:07 Well, so, of course, we don't have preclinical data in this model, so we cannot answer the question definitively. One of the things that we're doing to prevent that to happen is the approach to dosing that we will dose or we are dosing patients with three consecutive days So that allow us to hopefully see that the drug reach out to the anatomical areas in the land where it's necessary. So I think that is one of the things that we're doing to really try to maximize that the drug will reach the target tissue.

35:42 And when we first got into pulmonary, our first question or among our first questions was whether or not we're able to get through the mucus. And our KOLs were nonplussed by that. They said, you know what, given the size and charge of the molecule, we don't expect any problem to get to the mucus. And sure enough, in animal models, You know, whether it be rodents or NHPs or sheep, we found out to be the case. And so that was heartening. We then asked, what about CF mucus? We know that's dehydrated. We know that that's a bit different. Unfortunately, as Javier says, there's not a good animal model for that. However, we have done in vitro analysis using actual CF mucus, and it does appear that we are able to get through that. So we're optimistic. You never know until you know. And so, look, this first study will tell us an awful lot about the translatability of this platform. But we go into this reasonably competent given our good preclinical data.

36:39 Great. Thank you so much. You're welcome. Thank you. And our next question comes from the line of Mario Raycroft with Jeffrey. Your line is now open. Hi, everyone. Congrats on the progress, and thanks for taking my questions. First one is also on ENAC and HIF-2 Alpha also. So for both programs, can you provide more specifics on where you're at with dosing? Are you at a therapeutically relevant dose? And is there anything else you can say on safety at this point?

37:14 Yeah, so there's not so much we can say on that. You know, it's been our policy, as you know, Maury, Not to give blow-by-blow. We have given some interim data before, but in a different sort of environment. So we can tell you that we are dosing patients in the Air Enoch study. We are at that portion of the study, so that is encouraging. Give to Alpha, of course, we're dosing patients. There's not much else I can tell you at this point, I don't think. With Arrow HIF-2, we have not seen any data yet. Those data are batched. And so at some point, I hope in the near future, we will see some early data that will indicate whether or not we're seeing knockdown at these first doses.

38:00 But at this point, we just don't even know internally with Arrow ENAC. We have just begun the patient portion, and so we don't have data there yet to know if we are in a therapeutic range. That's the big unknown for both of these. We have a good idea about what the therapeutic range would be in animal models, but we'll just see how this translates. And this really is uncharted territory for us. You know, we have a good idea about how things translate from rodents to NHPs to humans in hepatocytes. This, of course, is our first foray into solid tumors and pulmonary epithelial cells. So we'll learn a heck of a lot over the next few months. Got it. That's a helpful perspective. And then for the initial data updates mid-year 21, have you decided if you're going to report at a conference or in a press release?

38:49 And then any thoughts on the amount of patients that you're going to include in those initial data updates?

38:55 Yeah, it's really too early to tell there, unfortunately. You know, when we look at the calendar, it appears that we will have some at least preliminary data by the middle of the year. But how much we're going to have is not clear. And therefore, what sort of What sort of venue we can share these data are not clear. And so, unfortunately, I can't give you a good a good answer for that at this point. Okay, understood. Thanks.

39:22 You're welcome. Ladies and gentlemen, if you would like to ask a question, that is stored on your telephone.

40:05 We appear to be having some technical difficulties and the question queue has disappeared. So we'll give everyone a few minutes to get back into that queue because right now it seems to be to be gone. Okay, it's now reconstituting itself. Go ahead, operator. You can move on to the next question. Our next question comes from the line of Alicia Young with Kantor. Your line is now open. Hey, guys. Thanks for taking my question. I thought the whole thing went dead for a second, but I'm glad to see that we're all back up and running.

40:52 You know, I just wanted to talk a little bit about, and it's a little bit big picture, just, you know, how you're kind of and others. What are some inherent big picture differences and things that you think about? Many companies say this is something they are pursuing. You guys are pursuing it in a very robust way. I have gotten this question before so I just wanted to pose it to you guys. Can you talk a little bit about your confidence on going after HIF as those studies get going? I know it has sometimes been a little tricky in RNA. kind of in that world of PMOC, but just wanted to get kind of your perspective with your technology.

41:35 Sure. So the first question, let's see. We have been thinking about, as you know, Luisa, you have followed us for a bit. We've been thinking about and working on bringing RNAi outside the liver for probably a decade now. You know, this spans, you know, even our prior We always knew this was going to be an important value inflection point, so we wanted to be there. A lot of this is just brute force. We've been working on this for a decade now, and so we look like an overnight success, except for it's been a 10-year overnight success. So that's more broadly. More specifically, of course, part of that is building a library of linker chemistries that we can use to optimize delivery.

42:26 It involves establishing a library of targeting varieties that we can use. And maybe most importantly, it involves Our ability to design these very potent RNAI triggers. Again, as you've heard us talk about in the past, Alethea, we have a set of algorithms and rules that are proprietary that enable us to design triggers that may not be potent in vitro but will be potent in vivo. And look, that's important. as it relates to getting to hepatocytes because it does allow us to make more potent hepatocyte-directed constructs. Look at the LP little a data that Amgen showed. That was a very potent, appears to be a very potent sequence. But it's absolutely critical when you're looking at going outside the liver because we know that there's no GalNac analog, if you will, in other cell types.

43:18 There's nothing, there's no front door like that in other cells that we've ever found. And so we need to squeeze all the potency we can out of these constructs So that ability has been just critical in our ability to rapidly expand into lung and solid tumor and next year muscle cells. We hope to continue that as we talked about. This is a big part of a value proposition. This is a big part of a model. Now, the next question was around HIF-2-alpha. So are you asking about what we need to show vis-a-vis the Peloton Merck drug. Is that what you're curious about? Well, a little bit, yeah, kind of just to get a flavor and context of that, yes.

43:58 Sure, sure. So, look, so, you know, that's been a great program. You know, the data have looked pretty good, and that has helped to further validate a target that we've been excited about also for, gosh, almost a decade.

44:15 There is an opening, however.

44:16 You know, they have seen some anemia that we may see less of. You know, it's too early to tell, but we may see less of because we're targeted. But at the end of the day, you know, I think we just need to show, you know, a well-tolerated and active response. That's a big enough market that there's plenty of room for a couple of us. Program has value for us in two ways. One, we think it's a good drug, and we think it could be a helpful drug in renal cell carcinoma. We think it could play well with others because we don't expect a lot of overlapping AEs.

45:02 So that is exciting to us. But second, it's a good proof of concept. If we can show that we can knock down HIP2-alpha in these metastases, it will suggest to us that we have a platform, that we have a franchise. And then we can go after other gene targets and potentially other solid tumor types. As we said in the past, Our targeting strategy here is not specific to RCC metastases, but rather we believe it could allow us to get into solid tumors more broadly. Great, thanks. Sure, thank you. Thank you. And our next question comes from Salvin Richter with Goldman Sachs. Your line is now open.

45:48 Thank you. Just another question here on extrahepatic tissues you plan on targeting. Could you just walk us through your thoughts beyond lung and muscle with your strategy and on the skeletal muscle targeted asset, which is entering the clinic in mid-21, when we might get to see preclinical data here and any thoughts you could provide us on the initial indications that you may be targeting?

46:14 Boy, I apologize. You asked a lot of questions there, and I really can't answer any of those. Again, we've talked about solid tumor, of course, and skeletal muscle and lung. We are working on other cell types. We've not disclosed any of those yet. And so we're not prepared to disclose any of those at this point. But we clearly have others that we're working on. As we talked about, this is a big part of our growth strategy. What we have done for hepatocytes, we want to do for lung and solid tumor and muscle and for fill in the blank number of additional cell types. With respect to, gosh, I'm sorry, what was the other question? Targeted Muscles, sorry, yeah, right.

46:58 Again, you know, we haven't talked about that yet. You know, we gave some, we have mentioned some early data, I think at our R&D day last year. We haven't really shared any non-clinical data since then. I do expect that we will do it, but we're just not prepared to do it quite yet. And I'm not being coy. I don't know when we're going to do it. We feel confident that sometime in the summer, I believe, we will be filing a CTA for that asset. And so somewhere upstream of that, we'll talk about it in more depth. But at this point, we're just not quite prepared to do that yet. Thank you. Sure. Thank you. Our next question comes from the line of Ted Tinto with Piper Sandler.

47:48 Your line is now open. Great. Thanks, guys, and congrats on all the progress. Really exciting just to see how far the platform has come along and to see the recognition. My question's really had to do with the cardiovascular program, so it was interesting to see Imgen mention LpA, little a on a on a press release this morning. I'm trying to get a sense for what the costs of these phase three and phase two Bs could be appreciating that you gave the guidance of 200 to 250 million next year. You know, when it comes to an outcome study, what kind of cost should we be thinking? Thanks so very much.

48:34 Yeah, again, I apologize, Ted. These are important questions. but I can't answer them. We've not given guidance on what we think those costs are going to be. You know, at this point, you know, we've talked about how large we think those studies could be, the Phase IIb studies, you know, for the large outcome study for ARROW ANG3, it's not even clear what the number of those patients are going to be yet. You know, they probably range anywhere from 8,000 if you look at Ameren studies or medicines company studies all the way up to maybe 15,000. And so, you know, we need to see what our Phase IIb data look like before we determine how large that study is going to have to be. And then at that point, we might be able to give you a bit of guidance on what we think that's going to cost. You know, for your model right now, you know, I think you could plug in, you know, what those costs generally are for a company like us, you know, for the Ameren-type study or the medicines company-type study.

49:28 But I can't give you better guidance than that, unfortunately. I apologize. No, that's okay. I think that makes sense with the proteins here, the molecule. Great. Thank you very much. Looking forward to exciting 2021.

49:38 You're welcome. Thanks, Ted. Thank you. And our next question comes from the line of Mani Puhar with SVB Learning. Your line is now open. Hey, guys. Thanks for taking the question. I guess building off of what Ted asked earlier, so I know you can't give specific guidance around the cost of some of these trials, some of which are a few years away. So, of course, pretty tough to make estimates that far out. But you've got a lot of trials going through early, mid, late stages. As you think about some of these assets moving forward, give us a sense of what your metrics are in terms of gating to move assets forward as opposed to de-prioritizing or shutting down programs.

50:23 And how do you think about that at each stage of development?

50:28 Sure. So I think the real question there is strategic, right? I don't think that we're considering shutting down any of the programs right now. I think the question is, do we partner these programs or do we hold on to them internally? Right now, it feels like we can build out a commercial infrastructure for pulmonary and cardiometabolic. We have a good line of sight, I think, on half a dozen potential pulmonary drugs that we can develop. There are 16,000 pulmonologists in the U.S., and so we like that leverage of addressing a fairly large market with only about 16,000 touch points where we can sell any number of drugs into it. That makes sense to us.

51:14 Cardiometabolic as well. Look, we think AeroAng3 and AeroApoC3 are potentially big drugs, and we could see ourselves building a sales force addressing cardiologists and lipid clinics to sell those two drugs. That makes sense to us. As we go forward, Those will not be the last two areas that we're going to build commercial infrastructure around. I think that's for sure. But right now, given our current clinical pipeline, we can make that forecast. As we bring in additional candidates into the clinic and as we address new cell types, we can expand that going forward. But right now, that makes sense to us. So then when you look at our assets outside of that, it doesn't mean that we're going to partner all those.

51:55 It just means that we've got... We've got a little bit of a higher bar, I suppose, when we think about building another sales force there. So, say, take, for instance, HIF-2-alpha. If that's our only oncology drug, it makes no sense for us to build a whole sales force to sell one drug. If that becomes a franchise like we think it could, that could make sense for us to add on a commercial franchise there. It could also make sense to do a hybrid approach of finding the right oncology partner to help us build that out and also establish commercial partnerships. Chops. It's a bit too early to tell at this point. Thanks, guys. You're welcome. Thank you. And our next question comes from the line of Luca Izzi with RBC Capital.

52:44 Your line is now open. Oh, terrific. Thanks for taking my question. Just two quick ones. The first one, I think I saw on clinicaltrial.gov that the size of the HIP2-alpha trial has been recently reduced from 40 patients to 18 patients. So, wondering if you have any color there and maybe more broadly thoughts on partnering. I think you just articulated, but any thoughts there or big picture thoughts would be helpful. And then the second is, I think we've seen some data for Ionis on the ENAC, of course, antisense oligonucleotides. Again, wondering if you have any thoughts on that data set. Thank you.

53:21 Sure. Javier, do you want to take the clinical trials as well as the ENAC, and then I'll

53:27 circle back? Sure. So the HIF-2 study, correct. We changed an amended protocol early this year, I think it was March or April. And the reason was to reassess really what we wanted to learn from that study. And there's two really things that we care about. Number one, safety. And number two, if we're able to get into the cells and knock down HIF-2. In order to do that, we didn't need really 40 patients. Initially, it was, I guess, very ambitious program to really evaluate different doses of sequences and then we made the decision to say, let's do the first thing first, which is prove the concept that we get to the tumor and we knock down the gene as we done with all the liver targets. So that's the reason to do that. Get to proof of concept and safety rate as early as possible.

54:15 Okay, and so I'll piggyback on that for the HIP2 partnering. So we're excited about that franchise and about that platform. Having said that, oncology is hard.

54:28 And so in a perfect world, we can achieve proof of concept for HIF-2-alpha to show that we can do this and then bring in the right oncology partner to help us prioritize our next set of targets and then do some with that partner and then maybe some by ourselves. That's where we are right now. Do we have to partner HIF to the candidate itself? Not necessarily, but I do hope that the data will be compelling enough to enable us to blow out that platform, if you will. And the best way to do that would be at least in part with a partner. And so, Javier, you want to talk about the ENAC with the IONIS?

55:07 Yeah. So we look at that data carefully when they disclosed that a month or so ago. and you know my opinion on the data is that it's not as consistent as initially I think we thought because it is four dose groups and only one showed a movement within about 50 percent note down and that wasn't the highest dose, it was the second highest dose. So I think first glance it's interesting, it got our attention and we're working on it. We decided to really work on see if we can replicate that and show our data So we're in that process to think about or work on the development of the proper assay, and we're thinking about how to do this in the clinical trial, whether it's going to be normal healthy volunteers or patients.

55:54 So we're working on it. It was interesting. But again, as I said, I had my question mark about that data at this point. Terrific. Thank you. You're welcome. Thank you. Our next question comes from the line of Madhu Kumar with Baird. Your line is now open. Hey, everyone. Thanks for taking our questions. I guess our first one is kind of the elephant in the room, which is the REAF-1 trial with J&J and hepatitis B. So kind of by our back of the envelope calculations, near the end of last year is when we might expect kind of the 48 weeks of treatment from that trial to kind of conclude, plus some degree of number crunching. Do we expect to get visibility from J&J about the kind of timing for the release of at least the 48-week treatment data from Reef One?

56:45 Like, how do you think about any kind of data cadence from that hepatitis B trial?

56:51 Thanks, buddy. It's funny. So you asked about, you mentioned the elephant in the room, and I was thinking, which elephant is that? And the Reef One was not, didn't even come to my mind. Okay, so I can't give you any guidance on that. You'll have to look to J&J for that. As I recall, it was 48 weeks of treatment and then six months of follow-up. And so that's the best I can give you at this point. I can tell you, and we've talked about it in the past, we're really excited about that drug candidate. We're really excited about J&J. We think that they have been extraordinarily fast and thoughtful about all these trials that they're starting. So all that makes us really excited to be their partner, but I can't give you any guidance on when those data might come out.

57:39 Okay. And then moving on to AAT. So you mentioned here, you mentioned before this idea of streamlining kind of clinical development of AAT based on the effects you've seen in the older label extension. So, I mean, how are you thinking about that? Are there some kind of like nominal precedents we should be looking at for kind of endpoint comparisons or kind of So Javier is probably dying to answer that question, but I can't let him answer it at this point.

58:12 Here's the deal. You know, we were so excited about those data.

58:16 for a lot of reasons, not the least of which is that they suggest that this drug is doing what we wanted it to do, in fact, doing it a bit faster than we expected. And so we are going with those data and probably some additional data to the FDA to talk about changing implants and changing size and maybe changing the duration of the study Until we have those discussions, it's probably not appropriate for us to speculate on the specifics of what those changes could be. I don't want to get out in front of this conversation. We've had a very good collaborative relationship with the FDA as it relates to this program. We expect this to continue to be collaborative, and I just don't want to jeopardize that. I want to have that discussion, an open discussion with them, and then come back to you and tell you what we have decided together.

59:06 Okay, then stepping back on the macro, so you mentioned at the beginning of the call the idea of going after targets where there is kind of validation from the outside scientific community. So what does that exactly mean? Like are we talking kind of genetic validation? Are we talking like earlier kind of iterations of therapy? And like how do you think with that moving forward kind of what you need for a given target to get you all excited about it?

59:33 Yeah, I think it's all those things, right? I think it is early data. from some other drugs that looked good, but because of safety reasons, you know, off-target safety reasons, they couldn't go forward. I think a GWAS analysis, you know, with all of the increasing amount of GWAS data that are coming out, there's an awful lot of important genetic data that can, you know, validate a target. You know, think HSD. Think to a lesser extent, but still, you know, ENAC. And also experimental data. You know, there are a number of targets that have been studied, you know, in animal models, but for one reason or another, you couldn't be druggable in humans. So, look, we're just looking, you know, this is a very, as you know, you know, this is a business full of risk, and we're just looking where we can lop off risk.

1:00:24 And we think if we can remove or at least limit target risk, that's a good thing for us. And so, you know, we don't – you've heard me say this before – We should not be in the target validation business. When we are, you need to shake me by the lapels and remind me of that because I think this is an important luxury that we have, at least at this point, especially given that we can go outside the liver. We've got all these new tissues now, and so we can go through an awful lot of validated targets before we have to start taking target risk, I think. Okay, and one last one. How do you think about multi-organ targeting and what the opportunity space is where you could go after targets that are expressed from more than one tissue type?

1:01:10 Multi-organ targeting? So with one construct addressing different cell types? Is that the question? Maybe not one. Maybe it would be the same target but targeting but going after knockdown of that gene across multiple different tissue types at once.

1:01:30 Sure. You know, we're not doing that. Not right now. But yes, you know, for some diseases, certainly that would be of interest. That's, you know, we try to limit complexity. What you talk about is elegant, but complex. And so I don't think that, again, I think that there are enough good targets out there right now that we don't have to introduce that level of complexity. That may change at some point, but right now, that's not a real focus of ours. Gotcha. Okay, thanks very much. Thank you. And our next question comes from the line of Mayank Mamtani with B. Riley Securities. Your line is now open.

1:02:15 Hey, good afternoon, Dean. Thanks for taking our question and congrats on a productive quarter. So if I may ask another elephant in the room type of question. So Chris, which program do you think is going to be the first to market in your view? And how does Zain think about building a commercial organization across cardiometabolic and pulmonary franchises? Which program are you thinking would cross the finish line first, given all the different Gantt charts you guys are looking at?

1:02:51 Yeah, that's a good question. So APOSC3 against FCS could be a relatively near, or relatively speaking, near-term market opportunity. As we talked about on the KOL webinar, we're thinking that could be a 60 or so patient pivotal study. We're a bit ahead of ourselves now because we haven't even started that study yet, but that feels to me like that could be near-ish term. A wild card here could be AeroENAC. Again, I don't want to get out over my skis because we haven't seen any data yet, but should those data be exciting? Should the data in this Phase 1-2 study suggest that we have something here? It could be that we could move directly into a Phase 2-3 study. The earliest that could be would be the end of next year because we don't have tox coverage until then, but that's a possibility.

1:03:57 The other wildcard here would be partnered programs.

1:04:00 Of course, AAT. A big possibility here is we'll see how good Javier is. But once we have those discussions with the FDA and other regulators, we'll have a good idea about whether or not we can shorten up that time to market. I think that we can make a very compelling argument as to why we could do that. And so that's another possible one. I don't know if you're talking only about wholly owned or more broadly speaking, but I guess that runs the gamut of partnered and wholly owned. and also how you build the commercial organization. I guess the data and some of these inflection points will drive a lot of that. Is that kind of fair?

1:04:45 Is the question about when we start to build the commercial organization? Yeah, essentially. I'm thinking more about the spend, right? How to think about when you want to move. GMA, and how should we think about that?

1:05:06 Yeah, I can't give any guidance on that at this point. Let us get into the Phase 3 study with FCS. Let's see how fast that can enroll, and then we can have a better idea about what we're looking at. Of course, AAT, we're not going to build a commercial organization there. We'll be working with the Cadence Commercial Organization. and then Enoch again. It's just a bit too early. Give us a bit of time. Hopefully next year we can have a better idea about timeframe and then have a better idea about spend for the commercial build-out. Understood. And then just two quick follow-ups. Could you address the ARO-HSD trial progress and urine patient cohort? But I'm assuming you're seeing some liver enzyme data at the minimum. What is the data cadence disclosure and confirm if only NASH cirrhosis patients are in there, there's no alcoholics, cirrhotics? And my final question, if you've narrowed down your three-pronged R&D effort in COVID to just direct antiviral, or are you doing other approaches also in COVID? Thanks for taking my question.

1:06:21 Sure. Thanks for those questions. Let me start with COVID and go backwards. So we are still interrogating some anti-inflammatory strategies, in large part because that coincides with developing these anti-inflammatory medicines for other disease areas. And so that just works well.

1:06:45 And so we're still pursuing that as we pursue the antiviral approach for hopefully broader coronaviruses.

1:06:55 Now, son of a gun, what was the first question? HST. HST, sorry, you're right. Okay, so HST, that's a tough one. As you may know, there's no known circulating biomarker. And so we are really, so we have to rely on biopsies and we're just looking for gene knockdown. You know, this, you know, in most of our, as you know, most of our phase one, two studies, we're looking for biopsies. for not just safety and finding a dose, but we're looking for other activity measures. Here, we're just looking to find a dose. And so we'll be taking biopsies and looking at knockdown. And then based on that, we will take a dose or two forward into a patient study.

1:07:41 And for enrollment, that's just NASH, suspected NASH, no alcoholic hepatitis. Right. Thank you. Great. Thank you. You're welcome. Thank you. And we have time for one more question. So our last question comes from the line of Patrick Trucio with HC Wainwright. The line is now open. Thanks. Good afternoon. I have a few follow-ups. First one is on NASH. So just regarding the Phase 1-2 trial in NASH, can you remind us if participants in this study are expected to be confirmed NAFLD or NASH patients, and if it is to be confirmed by FibroScan or biopsy or some other methodology? And then secondly, can you tell us how you think about the regulatory bar in NASH, specifically as it regards the 2018 guidance in Phase 2B and 3 trials against the backdrop of some of these recent challenges in drug development in the space?

1:08:40 And then finally, you know, can you talk about what mechanisms do you believe, if any, could be synergistic with ROHSD in potential combination treatment of NASH?

1:08:54 Can I repeat the first one of the three questions? Yeah, the first one is just on the Phase 1-2 trial in NASH. If you can remind us if the participants in the study are expected to be confirmed NAFLD or confirmed NASH patients.

1:09:10 Got it. So, thank you. We are involving patients that we have suspected NASH, and that's a broad definition that includes the MRI, so the MRI Data in Terms of Liver Fat and Metabolic Syndrome and Baseline LFT. So it's a combination of those three things, but we're not required to have confirmed an FLD or NASH. But most of people who have those clinical features are likely to have an FLD. If someone had a biopsy prior to the study that's defined as NASH, then that patient will be enrolled in the study. Well, the broader question about clinical development in NASH, of course, is a very complex situation. And as you know, many, many large pharma companies or mid-size pharma companies are working on this. The development of the guidance took easily a year, 10 years or so to get to where they are right now.

1:10:06 And it is complex. The whole endpoint that they are asking for to be approved, you know, it's complex because the way people read this biopsy, the category of fibrosis level, and all those complexities. So we're at the very beginning of our journey. We're looking at the proof of concept that HST is doing what it's supposed to. And at that point, we need to think carefully how to develop a drug for NASH. And as we understand better, perhaps the The last question is on synergy with other mechanisms or agents. You know, NASH seems to be a disease that can start at a different starting point and evolve via different mechanisms. And when you look at broadly all the drugs in development, you can try to target different aspects of the disease, those who are more metabolic oriented, more inflammation oriented, or more fibrotic oriented.

1:11:22 Where are we in that mix? We don't know. We don't think that maybe we're in the metabolic side. So that could be an interesting and clinically In my opinion, like a scenario, how to go about this. But I think we need to wait. We need to learn more about our own drug and how the field of NASH evolves in the next couple of years. Yeah, if I may, just one follow-up on the imaging and biopsy and evaluation of patients for NASH. Can you talk about the advances in evaluation of non-invasive imaging or biomarkers that can enable potentially quicker enrollment of mid and later stage NASH studies as compared to what we've been accustomed to historically and where we are in that process.

1:12:15 James, would you like to address that question? Sure, sure. I can take a stab at that. Certainly, if there is another option, an alternative to liver biopsy, something like MRI, PDFF, or MRE that would be preferable. Those, at least in the setting of MRE, that may not be something that's quite ready for prime time as an approvable endpoint. But looking down the road, I mean, MRI, PDFF is already used a lot in clinical studies, phase two clinical studies. And I would suspect that MRE will become more commonly looked at as a key endpoint in NASH studies or other studies of liver disease broadly down the road.

1:13:08 That's helpful. Thank you very much. Thank you. And this does conclude today's question and answer session. I would now like to turn the call back to Chris Anzalone for any closing remarks.

1:13:21 Okay. Well, thanks, everyone, for participating today and listening to the call. I hope that you all have a happy and safe Thanksgiving weekend Ladies and gentlemen, this concludes today's conference call You may now disconnect Thank you for participating