10-K – 2025-11-25 – arwr-20250930.htm

• Homozygous familial hypercholesterolemia (HoFH) - zodasiran (formerly ARO-ANG3);
• Cardiovascular disease - olpasiran (formerly AMG 890 or ARO-LPA, out-licensed to Amgen);
• Mixed hyperlipidemia – ARO-DIMERPA (Greater China rights out-licensed to Sanofi);
• Inflammatory pulmonary conditions - ARO-RAGE;
• Idiopathic pulmonary fibrosis - SRP-1002 (formerly ARO-MMP7, out-licensed to Sarepta);
• Metabolic-dysfunction associated steatohepatitis (MASH) - GSK4532990 (formerly ARO-HSD, out
licensed to GSK and Visirna);
• 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);
• Myotonic Dystrophy Type 1 - SRP-1003 (formerly ARO-DM1 out-licensed to Sarepta; and
• Spinocerebellar ataxia 2 - SRP-1004 (formerly ARO-ATXN2, out-licensed to Sarepta).
• Parkinson’s disease – ARO-SNCA (out-licensed to Novartis)
• Alzheimer’s disease – ARO-MAPT
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.
2025 Business Highlights
During fiscal year 2025 and through the date of filing, the Company continued to develop and advance its pipeline and partnered candidates and expand its facilities to support its growing programs. The bullets below highlight some of these key developments; however, this list is not all-inclusive and is meant to be read in conjunction with the entirety of management’s discussion and analysis, the Company’s Consolidated Financial Statements and notes thereto, and all other items contained within this Annual Report on Form 10-K.
• On November 20, 2025, the Company earned a $200.0 million milestone payment from Sarepta. The milestone was earned when Arrowhead achieved the second development milestone event in a Phase 1/2 clinical study of ARO-DM1, also called SRP-1003, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1), the most common adult-onset muscular dystrophy. The second milestone event included the achievement of a patient enrollment target, drug safety committee review and subsequent authorization to dose escalate and proceed, and completion of day 105 study visit by at least one patient in the clinical trial;
• The FDA approved the Company's New Drug Application (NDA) for REDEMPLO (plozasiran) injection for Familial Chylomicronemia Syndrome (FCS), on November 18, 2025. This approval was supported by clinical data from the Phase 3 PALISADE study, a randomized, double-blind, placebo-controlled trial in adults with clinically diagnosed or genetically confirmed FCS. The PALISADE study met its primary endpoint and all multiplicity-controlled key secondary endpoints, including demonstrating significant reductions in triglycerides and APOC3. In PALISADE, 25 mg REDEMPLO achieved deep and durable reductions in triglycerides, with a median change from baseline of -80% versus -17% in the pooled placebo group, and a lower numerical incidence of acute pancreatitis compared with placebo;
• Filed a request for regulatory clearance to initiate a Phase 1/2a clinical trial of ARO-DIMER-PA, the Company’s investigational RNA interference (RNAi) therapeutic being developed as a potential treatment for atherosclerotic cardiovascular disease (ASCVD) due to mixed hyperlipidemia. ARO-DIMER-PA is designed to silence expression of the proprotein convertase subtilisin kexin 9 (PCSK9) and apolipoprotein C3
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(APOC3) genes. This represents an important step forward for the RNAi field as it is the first clinical candidate to target two genes simultaneously in one molecule, enabled by Arrowhead’s innovative and proprietary TRiM platform;
• Filed a request for regulatory clearance to initiate a Phase 1/2a clinical trial of ARO-MAPT, the Company’s investigational RNAi therapeutic being developed as a potential treatment for tauopathies including Alzheimer’s disease, a progressive neurodegenerative disease characterized by cognitive and functional decline. Alzheimer’s disease is the most common cause of dementia and is estimated to affect 32 million people worldwide and is part of a group of neurodegenerative diseases called tauopathies that are marked by the abnormal accumulation and formation of tau tangles in neurons.
• On August 29, 2025, the Company entered into a global licensing and collaboration agreement with Novartis for ARO-SNCA, Arrowhead’s preclinical stage siRNA therapy against alpha-synuclein for the treatment of synucleinopathies, such as Parkinson’s Disease, and for other additional collaboration targets that will utilize Arrowhead’s proprietary TRiM platform. 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 in October 2025, the Company received $200.0 million as an upfront payment and is eligible to receive up to $2.0 billion in potential milestone payments plus royalties on commercial sales.
• Triggered a $100.0 million milestone payment from Sarepta, which was achieved on July 27, 2025, when the Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1). Arrowhead received $53.2 million worth of Arrowhead common stock and $50.0 million in cash from Sarepta Therapeutics, satisfying the payment of the $100.0 million milestone owed to Arrowhead.
• Announced the signing of an asset purchase agreement between Sanofi and Visirna, a majority-owned subsidiary of the Company, created to develop and commercialize four of the Company’s investigational cardiometabolic candidates in Greater China. Under the terms of the agreement, Sanofi will acquire rights to develop and commercialize investigational plozasiran, the Company's first-in-class RNAi therapeutic candidate designed to reduce production of apolipoprotein C-III (APOC3) as a potential treatment for familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (sHTG), in Greater China;
• Initiated and dosed the first subject in the YOSEMITE Phase 3 clinical trial of zodasiran, the Company’s investigational RNAi therapeutic being developed as a potential treatment for homozygous familial hypercholesterolemia (HoFH), a rare genetic condition that leads to severely elevated LDL-cholesterol and early onset cardiovascular disease;

• Completed enrollment of SHASTA-3, SHASTA-4, and MUIR-3 Phase 3 clinical trials of REDEMPLO . The Company’s global Phase 3 clinical studies are designed to support regulatory submissions for approval of investigational REDEMPLO in the treatment of severe hypertriglyceridemia.
• Initiated a Phase 1/2a clinical trial of ARO-ALK7 for the treatment of obesity. ARO-ALK7 is the first RNAi-based therapy designed to silence adipocyte expression of the ACVR1C gene to reduce the production of Activin receptor-like kinase 7 (ALK7), which acts as a receptor in a pathway that regulates energy homeostasis in adipose tissue;
• Announced Topline results from Part 2 of a Phase 1/2 clinical study of ARO-C3, the Company’s investigational RNAi therapeutic designed to reduce liver production of complement component 3 (C3) as a potential therapy for various complement mediated diseases. ARO-C3 achieved reductions in alternative pathway complement activity and proteinuria;
• Entered into a global licensing and collaboration agreement with Sarepta on November 25, 2024, which closed on February 7, 2025. 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;
• 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;
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• Announced that the Company 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 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.
Critical Accounting Estimates
Management makes certain judgments and uses certain estimates and assumptions when applying U.S. generally accepted accounting principles (“GAAP”) in the preparation of the Company’s Consolidated Financial Statements. On an ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results may vary from what the Company anticipates and different assumptions or estimates about the future could change its reported results. The Company believes the following accounting policies are the most critical to it, in that they require its most difficult, subjective or complex judgments in the preparation of the Company’s Consolidated Financial Statements. For further information, see Note 1, Organization and Significant Accounting Policies of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15. Exhibits and Financial Statement Schedules.”
Revenue Recognition —The Company has adopted Financial Accounting Standards Board (“FASB”) Topic 606 – Revenue for Contracts from Customers. The Company has not yet achieved commercial sales of its drug candidates to date; however, this standard is applicable to its licensing and collaboration agreements. This is discussed further in Note 2, Collaboration and License Agreements of the Notes to the Company’s Consolidated Financial Statements in Part IV, “Item 15. Exhibits and Financial Statement Schedules.”
At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that it determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when (or as) each performance obligation is satisfied.
The Company recognizes the transaction price allocated to upfront license payments as revenue upon delivery of the license to the customer and resulting ability of the customer to use and benefit from the license, if the license is determined to be distinct from the other performance obligations identified in the contract. These other performance obligations are typically to perform research and development services for the customer, often times relating to the candidate that the customer is licensing. If the license is not considered to be distinct from other performance obligations, the Company assesses the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied at a point in time or over time. If the performance obligation is satisfied over time, the Company then determines the appropriate method of measuring progress for purposes of recognizing revenue from license payments. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition.
Typically, the Company’s collaboration agreements entitle it to additional payments upon the achievement of milestones or royalties on sales. The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a NDA in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas. The Company evaluates whether it is probable that the consideration associated with each milestone or royalty will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most-likely-amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and royalties, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in the Company’s consolidated statements of operations and comprehensive income (loss). Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or preclinical program. Milestones or royalties achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved. If a milestone payment is achieved during
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the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.
The revenue standard requires the Company to assess whether a significant financing component exists in determining the transaction price. The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment. Additionally, future royalty payments are not substantially within the control of the Company or the customer.
The revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated. The relative standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised good or service separately to a customer. If other observable transactions in which the Company has sold the same performance obligation separately are not available, the Company estimates the standalone selling price of each performance obligation. The estimates includes forecasted revenues and expenses, phase dates, probability of success, development timelines, and the discount rate. The estimates of the stand-alone selling price for research and development or other service-related performance obligations generally include forecasting the expected costs of satisfying a performance obligation at market rates.
Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using the input method. Labor hours, costs incurred or patient visits in clinical trials are typically used as the measure of performance. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on the Company’s consolidated balance sheets.
Collaborative Arrangements —The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. For collaborative arrangements that are within the scope of FASB Topic 808— Collaborative Arrangements , the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate.
Clinical Accruals —The Company accrues liabilities for products received or services incurred, particularly for ongoing clinical trials, where service providers have not yet billed or where billing terms do not align with the timing of the work performed as of the period-end. These costs mainly include third-party clinical management or clinical research organization (CRO), laboratory analysis, and investigator fees. Accrual estimates may be based on vendor communications to obtain pending invoices and/or estimates for services performed during the period. In some cases, these estimates require significant judgment, drawing on an understanding of research and development programs, services provided during the period, prior experience, and, where applicable, the expected duration of third-party contracts. Actual costs upon settlement may differ significantly from the accrued amounts in the Company’s consolidated financial statements, though historical estimates have not differed materially from actual costs.
Liability Related to the Sale of Future Royalties —Based on its evaluation of the agreement terms, the Company classifies the liability related to the sale of future royalties as a debt financing. The Company records the obligations at their carrying value using the effective interest method. In order to amortize the sale of future royalties, the Company utilizes the prospective method to estimate the future royalties to be paid by the Company to the counterparty over the life of the arrangement. Under the prospective method, a new effective interest rate is determined based on the revised estimate of remaining cash flows. The new rate is the discount rate that equates the present value of the revised estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize non-cash interest expense for the remaining periods. The Company periodically assesses the amount and the timing of expected royalty payments using a combination of internal projections and forecasts from external sources. The estimates of future net product sales (and resulting royalty payments) are based on key assumptions including population, penetration, probability of success and sales price, among others. To the extent such payments are greater or less than the Company’s initial estimates or the
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timing of such payments is different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the effective interest rate.

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

Year Ended September 30,
2025 2024 2023
(in thousands, except per share amounts)
Revenue $ 829,448  $ 3,551  $ 240,735 
Operating income (loss)
$ 98,346  $ (601,080) $ (205,002)
Net loss attributable to Arrowhead
$ (1,631) $ (599,493) $ (205,275)
Net loss per share (diluted) attributable to Arrowhead
$ (0.01) $ (5.00) $ (1.92)

Year Ended September 30, 2025 Compared to Year Ended September 30, 2024
Revenue
Total revenue for the year ended September 30, 2025 increased by $825.9 million, from the same period of 2024. The change was primarily driven by increased revenue recognition associated with the Sarepta, Sanofi, and GSK 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 IV, “Item 15. Exhibits and Financial Statement Schedules.”
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 fourth quarter of fiscal 2025, a $100.0 million milestone payment from Sarepta Therapeutics, Inc. was triggered, when the Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1). The Company received $53.2 million of Arrowhead common stock and $50.0 million cash from Sarepta to satisfy the milestone payment. During the year ended September 30, 2025 , the Company recorded $696.8 million in revenue.
Visirna : On August 1, 2025, Visirna Therapeutics HK Limited (“Visirna HK”), a wholly owned subsidiary of Visirna Therapeutics, Inc, a majority owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Genzyme Corporation (“Sanofi”), a wholly owned subsidiary of Sanofi S.A., pursuant to which Visirna HK sold all of its assets and rights in investigational plozasiran to Sanofi, which included an assignment of Visirna HK’s rights (as successor by assignment from Visirna) to develop and commercialize investigational plozasiran in Greater China pursuant to that certain License Agreement by and between the Company and Visirna dated, April 25, 2022 (the “Visirna License Agreement”). During the year ended September 30, 2025 , the Company recorded $130.0 million in revenue.
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 qu arter of fiscal 2025. During the year ended September 30, 2025 , the Company recorded $2.6 million revenue.
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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 years ended September 30, 2025 and 2024 are shown in the tables below.
Research and Development (R&D) Expenses
Research and development expenses consist of expenses for drug candidate and drug discovery 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 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 Company does not separately track research and development expenses by individual research and development projects, or by individual drug candidates.
The following table provides details of research and development expenses for the period indicated:

(in thousands) Year Ended
September 30, 2025 % of
Expense
Category Year Ended
September 30, 2024 % of
Expense
Category Increase (Decrease)
$ %
Candidate costs $ 347,571  57  % $ 259,280  51  % $ 88,291  34  %
R&D discovery costs 66,788  11  % 74,150  15  % (7,362) (10) %
Salaries 109,085  18  % 96,418  19  % 12,667  13  %
Facilities related 29,233  5  % 25,782  5  % 3,451  13  %
Total research and development expense, excluding non-cash expense $ 552,677  91  % $ 455,630  90  % $ 97,047  21  %
Stock compensation 32,582  5  % 33,586  7  % (1,004) (3) %
Depreciation and amortization 21,900  4  % 16,654  3  % 5,246  31  %
Total research and development expense $ 607,159  100  % $ 505,870  100  % $ 101,289  20  %

Candidate costs increased $88.3 million, or 34%, for the year ended September 30, 2025 compared to the same period of 2024. The 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 $7.4 million, or (10)%, for the year ended September 30, 2025 compared to the same period 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.
Salaries consist of salary, bonuses, payroll taxes, and related benefits for the Company’s R&D personnel. Salaries expense increased $12.7 million, or 13%, for the year ended September 30, 2025 compared to the same period of 2024. The increase was primarily due to an increase in 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 Madison and Verona, Wisconsin. These expenses increased $3.5 million, or 13%, for the year ended September 30, 2025 compared to the same period of 2024. The increase was primarily due to full-year expenses such as utilities and repair and maintenance charges associated with the new facilities in Verona, Wisconsin, which completed their build out during the first quarter of fiscal 2024.
Stock compensation expense, a non-cash expense, is primarily based on the valuation of restricted stock units granted to employees, which is based on the closing stock price on the grant date. Stock compensation expense decreased $1.0 million, or 3%, for the year ended September 30, 2025 compared to the same period 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. Depreciation and amortization expense increased $5.2 million, or 31% for the year ended September 30, 2025 compared to the same period of 2024. The increase was primarily attributable to completion of the build out of facilities in Verona, Wisconsin, and the commencement of depreciation.
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General & Administrative Expenses
The following table provides details of general and administrative expenses for the periods indicated:

(in thousands) Year Ended
September 30, 2025 % of
Expense
Category Year Ended
September 30, 2024 % of
Expense
Category Increase (Decrease)
$ %
Salaries $ 31,916  26  % $ 27,589  28  % $ 4,327  16  %
Professional, outside services, and other
53,589  42  % 24,733  25  % 28,856  117  %
Facilities related 5,625  5  % 4,116  4  % 1,509  37  %
Total general & administrative expense, excluding non-cash expense $ 91,130  73  % $ 56,438  57  % $ 34,692  61  %
Stock compensation 30,785  25  % 40,382  41  % (9,597) (24) %
Depreciation/amortization 2,028  2  % 1,941  2  % 87  4  %
Total general & administrative expense $ 123,943  100  % $ 98,761  100  % $ 25,182  25  %

Salaries expense increased $4.3 million, or 16%, for the year ended September 30, 2025 compared to the same period of 2024. The increase was driven by the combination of annual salary increases and an increase in headcount required to support the Company’s growth as the Company prepares for commercialization.
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. These expenses increased $28.9 million, or 117%, for the year ended September 30, 2025 compared to the same period of 2024. The increase was mainly due to professional services associated with commercialization and business development efforts as the Company prepares for a product launch, including costs for data analytics, marketing and commercial launch support.
Facilities related expense primarily includes rental costs and other facilities-related costs for the Company’s corporate headquarters in Pasadena, California. These expenses increased $1.5 million, or 37%, for the year ended September 30, 2025 compared to the same periods of 2024. The increase was primarily driven by higher common area maintenance charges, increased staff amenities expenses.
Stock compensation expense, a non-cash expense, is based on the valuation of restricted stock units granted to employees, which is based on the closing stock price on the grant date. This expense decreased by $9.6 million, or 24%, for the year ended September 30, 2025 compared to the same period 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.
Other (Expense) Income
Other (expense) income is primarily related to interest income and expense. Other expense increased $35.4 million for the year ended September 30, 2025 compared to the same period 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.
Net loss attributable to Arrowhead Pharmaceuticals, Inc. was $1.6 million for the year ended September 30, 2025 compared to a net loss attributable to Arrowhead Pharmaceuticals, Inc. of $599.5 million for the year ended September 30, 2024. Net loss per share – diluted was $0.01 for the year ended September 30, 2025 compared to net loss per share – diluted $5.00 for the year ended September 30, 2024. The decrease in net loss attributable to Arrowhead Pharmaceuticals, Inc. for the year ended September 30, 2025 compared to the same period of 2024 was primarily due to an increase in revenue from the Sarepta Collaboration Agreement, partially offset by higher research and development expenses, associated with the expansion of the Company's pipeline and progression through clinical trial phases.
Income Tax Expense (Benefit)
Income tax expense was $21.4 million for the year ended September 30, 2025, compared to an income tax benefit of $2.8 million for the same period in 2024. The change of $24.2 million was primarily due to higher taxable income in fiscal 2025
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resulting from the recognition of $696.8 million in revenue under the Sarepta Collaboration Agreement and $130.0 million in revenue recognized by Visirna.
Non-controlling Interest
Net income attributable to non-controlling interest was $31.7 million for the year ended September 30, 2025, compared to a loss attributable to non-controlling interest of $10.2 million for the same period in 2024. The change of $41.9 million was primarily due to Visirna’s recognition of $130.0 million in revenue during fiscal 2025, resulting in a significant increase in net income, whereas Visirna incurred a net loss in fiscal 2024.
Year Ended September 30, 2024 Compared to Year Ended September 30, 2023
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2024 for a discussion of changes in its results of operations from the year ended September 30, 2024 to the year ended September 30, 2023.
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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. For further information on the Company’s capital needs, see the section titled “Risks Related to Our Financial Condition” in “Item 1A. Risk Factors” of this Annual Report on Form 10-K.
The Company’s cash, cash equivalents and restricted cash was $226.5 million at September 30, 2025 compared to $102.7 million at September 30, 2024. Cash invested in available-for-sale securities was $692.8 million at September 30, 2025 compared to $578.3 million at 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 September 30, 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. During the fourth quarter of fiscal 2025, a $100.0 million milestone payment from Sarepta was triggered, when the Company reached the first of two prespecified enrollment targets and subsequent authorization to dose escalate in a Phase 1/2 clinical study of ARO-DM1, an investigational RNAi therapeutic for the treatment of type 1 myotonic dystrophy (DM1). The Company received $53.2 million of Arrowhead common stock and $50.0 million cash from Sarepta to satisfy the milestone payment. The Company is eligible to receive additional milestones of up to $250.0 million over the 12 months from the date of this report, inclusive of the second DM1 milestone payment of $200.0 million earned in November 2025.
On August 29, 2025, the Company entered into a licensing and collaboration agreement with Novartis. Upon closing in October 2025, the Company received $200.0 million as an upfront payment. The Company projects it will be eligible to receive additional milestones of up to $25.0 million over the 12 months from the date of this report.
Based upon the Company's current cash and investment resources and operating plan, the Company expects to have sufficient liquidity to fund its operations through at least the next twelve months from the date of the issuance of these consolidated financial statements.
The following table presents a summary of cash flows:

Year Ended September 30,
2025 2024 2023
(in thousands)
Cash Flow from:
Operating activities $ 179,552  $ (462,851) $ (153,890)
Investing activities (129,294) (420,072) (96,155)
Financing activities 74,006  870,520  253,053 
Net increase (decrease) in cash, cash equivalents and restricted cash
$ 124,264  $ (12,403) $ 3,008 

Cash, cash equivalents and restricted cash at end of period $ 226,548  $ 102,685  $ 110,891 

During the year ended September 30, 2025, cash flow provided by operating activities was $179.6 million, which was primarily due to $500.0 million upfront payment and $50.0 million milestone payment received as part of the Sarepta agreement, partially offset by the ongoing expenses related to the Company’s research and development programs and general and administrative expenses. Cash used in investing activities amounted to $129.3 million, which was primarily attributable to capital expenditures of $22.7 million and investment purchases of $796.3 million, partially offset by proceeds from sales and maturities of investments of $689.6 million. Cash provided by financing activities of $74.0 million was related to cash received from the issuance of common stock in the Sarepta agreement, pre-funded warrants, and stock
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option exercises. (See Note 6 — Stockholders' Equity of Notes to Consolidated Financial Statements of Part IV, “Item 15. Exhibits and Financial Statement Schedules.”), partially offset by $201.6 million repayments of the Credit Facility.
During the year ended September 30, 2024, cash flow used in operating activities was $462.9 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 amounted to $420.1 million, which was primarily attributable to capital expenditures of $141.5 million and investment purchases of $720.9 million, offset by proceeds from sales and maturities of investments of $442.3 million. Cash provided by financing activities of $870.5 million was related to cash received from the issuance of common stock, the Credit Facility, a milestone payment from Royalty Pharma, and stock option exercises.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-K for the year ended September 30, 2024 for a discussion of cash flows from the year ended September 30, 2023.

Contractual Obligations
Based on the Company’s current operating plan, it believes that cash, cash equivalents and short-term investments as of September 30, 2025 will be sufficient to satisfy its near-term capital and operating needs. Recent and expected working and other capital requirements include the items described below.
• For information related to the Company’s future commitments for its collaboration and licensing agreements, see Note 2 of Notes to the Company’s Consolidated Financial Statements of Part IV, “Item 15. Exhibits and Financial Statement Schedules.”
• Amounts related to future lease payments for operating lease obligations at September 30, 2025 totaled $111.4 million, with $7.3 million expected to be paid within the next 12 months.
• Cash outflows for capital expenditures related to the manufacturing facility build-out at Verona, Wisconsin were $12.5 million in 2025 and $136.9 million in 2024. The Company expects to spend an additional $0.1 million to complete the build out of the facilities.
• A 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 expects to make $40.0 million of prepayments on the facility within the next 12 months in additional to the $66.7 million prepayment made in November 2025 relating to the receipt of the upfront payment under the terms of the Novartis Collaboration Agreement. See Note 14 of Notes to the Company’s Consolidated Financial Statements of Part IV, “Item 15. Exhibits and Financial Statement Schedules.”
• Commitments related to the Company’s clinical, manufacturing and business operation related agreements totaled $665.5 million as of September 30, 2025. However, many of these agreements are cancellable.
• The Company has not entered into, nor does it currently have, any off-balance sheet arrangements (as defined under SEC rules).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk exposures primarily due to its investing activities. The primary market risk exposure is change in interest rates. Adverse changes to rates may occur due to changes in the liquidity of a market or to changes in market perceptions of creditworthiness and risk tolerance.
The Company’s investment criteria are governed by its Investment Policy. The Company primarily invests its excess cash in securities of reputable financial institutions, corporations, and US government agencies with strong credit ratings. On September 30, 2023, the Company changed the classification of its investment securities from held-to-maturity to available-for-sale. This change enables the Company to sell securities to diversify its portfolio, reduce exposure to market risks, and provide flexibility to meet cash flow needs and new investment opportunities. Due to the relatively short-term nature of the investments that the Company holds, a hypothetical 100 basis point change in interest rates during any of the periods presented would not have had a material impact on the Company’s investment portfolio as of September 30, 2025.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included in Item 15 of this Annual Report on Form 10-K.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A. CONTROLS AND PROCEDURES
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 period covered by this Annual Report on Form 10-K. 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.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its Consolidated Financial Statements for external purposes in accordance with GAAP.
This process includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the internal control over financial reporting to future periods are subject to risk that controls may become inadequate because either conditions change or the degree of compliance with policies or procedures may deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2025. In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2025.
KPMG LLP, the independent registered public accounting firm that audited the Consolidated Financial Statements included in this 2025 Annual Report on Form 10-K, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2025 , which is included herein.
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
73

design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

ITEM 9B. OTHER INFORMATION
(b) Trading Plans
During the fiscal quarter ended September 30, 2025, the following directors and officers (as defined in Exchange Act Rule 16a-1(f)) adopted certain trading plans intended to satisfy Rule 10b5-1(c):

Name Title Adoption or Termination Date Plan End Date Shares Vesting and Subject to Sell-To-Cover (1)
Other Shares Being Sold (Subject to Certain Conditions)

Adeoye Olukotun Board Member 09/04/2025 12/24/2025 n/a 10,000
Christopher Anzalone President and Chief Executive Officer 09/19/2025 12/24/2026 50,000 n/a
Daniel Apel Chief Financial Officer 09/16/2025 04/30/2026 25,000 n/a
James Hamilton Chief Medical Officer, Head of R&D 09/03/2025 01/16/2026 72,500 n/a
Mauro Ferrari Board Member 09/25/2025 12/31/2025 n/a 7,530
Patrick O'Brien Chief Operating Officer & General Counsel
09/03/2025 01/07/2026 77,500 20,000
Victoria Vakiener Board Member 09/03/2025 12/31/2025 n/a 10,040
William Waddill Board Member 09/03/2025 12/31/2025 n/a 8,367

(1) This column indicates the total number of shares vesting, but the 10b5-1 Plan provides for the sale of only those shares necessary to satisfy payment of applicable withholding taxes.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information called for by this Item will be incorporated by reference from the Company’s Definitive Proxy Statement, under the headings Proposal One — Election of Directors, Equity Compensation Plan Information, Corporate Governance, Environmental and Social Commitment, Executive Compensation, and, if applicable, Delinquent Section 16(a) Reports — to be filed for the Company’s 2026 Annual Meeting of Stockholders (the “Definitive Proxy Statement”).

ITEM 11. EXECUTIVE COMPENSATION
The information called for by this Item will be incorporated by reference from the Definitive Proxy Statement, under the heading Executive Compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information called for by this Item will be incorporated by reference from the Definitive Proxy Statement, under the heading Voting Securities of Principal Stockholders and Management.
74

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information called for by this Item will be incorporated by reference from the Definitive Proxy Statement, under the headings Review and Approval of Related-Party Transactions and Certain Relationships and Related Transactions, and Director Independence.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information called for by this Item will be incorporated by reference from the Definitive Proxy Statement, under the heading Audit Fees.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements.
See Index to Financial Statements and Schedule on page F-1.
(2) Financial Statement Schedules.
See Index to Financial Statements and Schedule on page F-1. All other schedules are omitted as the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements or notes thereto.
(3) Exhibits.
The following exhibits are filed (or incorporated by reference herein) as part of this Annual Report on Form 10-K:

Incorporated by Reference Herein
Exhibit
Number Description Form Date

2.1† Stock and Asset Purchase Agreement between Arrowhead Research Corporation and Roche entities, dated October 21, 2011
Annual Report on Form 10-K as Exhibit 2.1 December 20, 2011

2.2† Asset Purchase and Exclusive License Agreement between Arrowhead Research Corporation and Novartis Institutes for BioMedical Research, Inc., dated March 3, 2015
Quarterly Report on Form 10-Q, as Exhibit 2.1 May 11, 2015

3.1 Amended and Restated Certificate of Incorporation
Current Report on Form 8-K as Exhibit 3.3 April 6, 2016

3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Arrowhead Pharmaceuticals, Inc.
Quarterly Report on Form 10-Q, as Exhibit 3.2 May 2, 2023

3.3 Second Amended and Restated Bylaws
Current Report on Form 8-K as Exhibit 3.2 January 30, 2023

4.1 Form of Common Stock Certificate of Arrowhead Pharmaceuticals, Inc.
Current Report on Form 8-K, as Exhibit 4.1 April 6, 2016

4.2 Form of Indenture
Registration Statement on Form S-3, as Exhibit 4.2 December 2, 2019

4.3 Rights Agreement dated as of March 21, 2017, between the Company and Computershare Trust Company, N.A., as rights agent, which includes as Exhibit B the Form of Rights Certificate
Current Report on Form 8-K, as Exhibit 4.1 March 23, 2017

4.4 Description of Registrant’s Securities
Annual Report on Form 10-K, as Exhibit 4.4 November 25, 2019

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Incorporated by Reference Herein
Exhibit
Number Description Form Date

4.5 Registration Rights Agreement by and between Arrowhead Pharmaceuticals, Inc. and Johnson & Johnson Innovation-JJDC, Inc., dated October 3, 2018
Quarterly Report on Form 10-Q, as Exhibit 10.4 February 7, 2019

4.6 Form of Registration Rights Agreement by and between Company and Avoro Life Sciences Fund LLC (included as Exhibit B in Exhibit 10.49)
Annual Report on Form 10-K, as Exhibit 4.7
November 26, 2024

4.7 Form of Pre-Funded Warrant for Avoro Life Sciences Fund LLC
Annual Report on Form 10-K, as Exhibit 4.8
November 26, 2024

10.1** Arrowhead Research Corporation 2004 Equity Incentive Plan, as amended
Schedule 14C, as Annex B January 12, 2012

10.2** Arrowhead Research Corporation 2013 Incentive Plan
Schedule 14C, as Annex A December 20, 2013

10.3** Form of Stock Option Agreement for use with the 2013 Incentive Plan
Current Report on Form 8-K, as Exhibit 10.1 February 12, 2014

10.4** Form of Restricted Stock Unit Agreement for use with the 2013 Incentive Plan
Current Report on Form 8-K, as Exhibit 10.2 February 12, 2014

10.5** Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan
Schedule 14A, as Exhibit A
January 28, 2021

10.6** Form of RSU Agreement for Officers and Certain Other Employees (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan- Inducement Award)
Registration Statement on Form S-8, as Exhibit 99.1
December 22, 2021

10.7**
Form of RSU Agreement for Officers and Certain Other Employees (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)
Registration Statement on Form S-8, as Exhibit 99.1
February 28, 2024

10.8** Form of RSU Agreement for Employees (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan - Inducement Award)
Registration Statement on Form S-8, as Exhibit 99.2
December 22, 2021

10.9**
Form of RSU Agreement for Employees (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)
Registration Statement on Form S-8, as Exhibit 99.2
February 28, 2024

10.10** Form of Stock Option Grant (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan- Inducement Award)
Registration Statement on Form S-8, as Exhibit 99.3
December 22, 2021

10.11**
Form of Stock Option Grant (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)
Annual Report on Form 10-K, as Exhibit 10.11
November 29, 2023

10.12** Executive Incentive Plan, adopted December 12, 2006
Annual Report on Form 10-K, as Exhibit 10.11 December 14, 2006

10.13**
Arrowhead Pharmaceuticals, Inc. Inducement Plan
Quarterly Report on Form 10-Q, as Exhibit 10.1 May 9, 2024

10.14**
Employment Agreement between Arrowhead and Dr. Christopher Anzalone, dated June 11, 2008
Current Report on Form 8-K, as Exhibit 10.1 June 13, 2008

10.15**
Amendment to Employment Agreement between Arrowhead and Dr. Christopher Anzalone, effective May 12, 2009
Annual Report on Form 10-K, as Exhibit 10.8 December 22, 2009

10.16†
Collaboration Agreement by and among Alnylam Pharmaceuticals, Inc. and F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc., dated October 29, 2009
Annual Report on Form 10-K, as Exhibit 10.36 December 20, 2011

10.17†
Non-Exclusive License Agreement between Arrowhead Research Corporation and Roche entities, dated October 21, 2011
Annual Report on Form 10-K, as Exhibit 10.33 December 20, 2011

10.18†
License Agreement by and between Alnylam Pharmaceuticals, Inc., Arrowhead Research Corporation and Arrowhead Madison, Inc.
Quarterly Report on Form 10-Q, as Exhibit 10.1 August 12, 2014

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Incorporated by Reference Herein
Exhibit
Number Description Form Date
10.19†
Second Collaboration and Licensing Agreement between Arrowhead Pharmaceuticals, Inc. and Amgen Inc., dated September 28, 2016
Annual Report on Form 10-K, as Exhibit 10.19 December 14, 2016

10.20 Common Stock Purchase Agreement between the Company and Amgen Inc., dated September 28, 2016
Amendment No. 1 to the Registration Statement on Form S-3, as Exhibit 10.1) November 25, 2016

10.21†
License Agreement by and between Arrowhead Pharmaceuticals, Inc. and Janssen Pharmaceuticals, Inc., dated October 3, 2018
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 7, 2019

10.22†
Amendment No. 1 to License Agreement by and between Arrowhead Pharmaceuticals, Inc. and Janssen Pharmaceuticals, Inc., dated December 18, 2018
Annual Report on Form 10-K, as Exhibit 10.19 November 25, 2019

10.23†
Amendment No. 2 to License Agreement by and between Arrowhead Pharmaceuticals, Inc. and Janssen Pharmaceuticals, Inc., dated February 4, 2019
Annual Report on Form 10-K, as Exhibit 10.20 November 25, 2019

10.24†
Amended and Restated License Agreement by and between Arrowhead Pharmaceuticals, Inc. and GlaxoSmithKline Intellectual Property (No. 3) Limited, dated December 11, 2023
Quarterly Report on Form 10-Q, as Exhibit 10.1
August 8, 2024

10.25 Stock Purchase Agreement by and between Johnson & Johnson Innovation-JJDC, Inc. and Arrowhead Pharmaceuticals, Inc., dated October 3, 2018
Quarterly Report on Form 10-Q, as Exhibit 10.3 February 7, 2019

10.26†
Exclusive License and Co-Funding Agreement by and between Arrowhead Pharmaceuticals, Inc. and Takeda Pharmaceuticals U.S.A., Inc., dated October 7, 2020 †
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 4, 2021

10.27 First Amendment to Exclusive License and Co-Funding Agreement by and between Arrowhead Pharmaceuticals, Inc. and Takeda Pharmaceuticals U.S.A., Inc. dated March 15, 2022
Quarterly Report on Form 10-Q, as Exhibit 10.1 May 10, 2022

10.28†
Collaboration and License Agreement by and between Arrowhead Pharmaceuticals, Inc. and Horizon Therapeutics Ireland DAC, dated June 18, 2021
Quarterly Report on Form 10-Q, as Exhibit 10.4 August 5, 2021

10.29 Collaboration and License Agreement by and between Arrowhead Pharmaceuticals, Inc. and Glaxosmithkline Intellectual Property, dated November 22, 2021
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 2, 2022

10.30 Royalty Purchase Agreement, dated as of November 9, 2022, by and between Arrowhead Pharmaceuticals, Inc. and Royalty Pharma Investments 2019 ICAV
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 6, 2023

10.31 Lease Agreement between University Research Park, Incorporated and Arrowhead Madison, Inc., dated January 8, 2016
Quarterly Report on Form 10-Q, as Exhibit 10.1 February 9. 2016

10.32 Amendment No. 1 to Lease Agreement between Arrowhead Madison, Inc. and University Research Park, Incorporated, dated October 22, 2018
Annual Report on Form 10-K, as Exhibit 10.23 November 23, 2020

10.33 Amendment No. 2 to Lease Agreement between Arrowhead Madison, Inc. and University Research Park, Incorporated, dated January 10, 2019
Annual Report on Form 10-K, as Exhibit 10.24 November 23, 2020

10.34 Amendment No. 3 to Lease Agreement between Arrowhead Madison, Inc. and University Research Park, Incorporated, dated January 11, 2019
Annual Report on Form 10-K, as Exhibit 10.25 November 23, 2020

10.35 Amendment No. 4 to Lease Agreement between Arrowhead Madison, Inc. and University Research Park, Incorporated, dated September 19, 2019
Annual Report on Form 10-K, as Exhibit 10.26
November 23, 2020

10.36 Amendment No. 5 to Lease Agreement between Arrowhead Madison, Inc. and University Research Park, Incorporated, dated May 14, 2020
Annual Report on Form 10-K, as Exhibit 10.27
November 23, 2020

77

Incorporated by Reference Herein
Exhibit
Number Description Form Date
10.37 Amendment No. 6 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated November 23, 2020
Quarterly Report on Form 10-Q, as Exhibit 10.3 February 4, 2021

10.38 Amendment No. 7 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated December 9, 2020
Quarterly Report on Form 10-Q, as Exhibit 10.4 February 4, 2021

10.39 Amendment No. 8 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated August 26, 2022

10.40 Amendment No. 9 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated April 3, 2023

10.41 Amendment No. 10 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated June 28, 2023

10.42 Amendment No. 11 to Lease Agreement by and between Arrowhead Madison , Inc. and University Research Park, dated September 13, 2024

10.43 Amendment No. 1 2 to Lease Agreement by and between Arrowhead Madison, Inc. and University Research Park, dated June 11, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.6
August 7, 2025
10.44 Office Lease by and between 177 Colorado Owner LLC and Arrowhead Pharmaceuticals, Inc., dated April 17, 2019
Quarterly Report on Form 10-Q, as Exhibit 10.1 August 5, 2019

10.45 First Amendment to Office Lease by and between Arrowhead Pharmaceuticals, Inc. and 177 Colorado Owner LLC., dated October 23, 2020
Quarterly Report on Form 10-Q, as Exhibit 10.2 February 4, 2021

10.46 Lease Agreement by and between Arrowhead Pharmaceuticals, Inc. and ARE-SD Region No. 72, LLC, dated November 19, 2021
Quarterly Report on Form 10-Q, as Exhibit 10.2 February 2, 2022

10.47 First Amendment to Lease Agreement by and between Arrowhead Pharmaceuticals, Inc. and ARE-SD Region No. 72, LLC, dated September 26, 2023
Annual Report on Form 10-K, as Exhibit 10.39
November 29, 2023

10.48 Open Market Sale Agreement, dated as of December 2, 2022, by and between Arrowhead Pharmaceuticals, Inc. and Jefferies LLC
Current Report on Form 8-K as Exhibit 1.1 December 2, 2022
10.49 †
Financing Agreement by and between Company and Sixth Street Lending Partners, dated August 7, 2024
Annual Report on Form 10-K, as Exhibit 10.47
November 26, 2024

10.50 †
First Amendment to Financing Agreement by and between Company and Sixth Street Lending Partners, dated November 26, 2024
Quarterly Report on Form 10-Q, as Exhibit 10.4 February 10, 2025
10.51 †
Exclusive License and Collaboration Agreement by and between the Company and Sarepta Therapeutics, Inc., dated November 25, 2024
Quarterly Report on Form 10-Q, as Exhibit 10.3 February 10, 2025
10.52* †
Exclusive License and Collaboration Agreement by and between Arrowhead Pharmaceuticals, Inc. and Novartis Pharma AG, dated August 29, 2025

10.53
Severance and Change of Control Agreement by and between Company and Christopher Anzalone, dated May 9, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.1 May 12, 2025
10.54 Severance and Change of Control Agreement by and between Company and Daniel Apel, dated May 8, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.2 May 12, 2025
10.55 Severance and Change of Control Agreement by and between Company and Patrick O'Brien, dated May 9, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.3 May 12, 2025
10.56 Severance and Change of Control Agreement by and between Company and James Hamilton, dated May 8, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.4 May 12, 2025
10.57 CFO Retirement Letter by and between Company and Ken Myszkowski, dated May 9, 2025
Quarterly Report on Form 10-Q, as Exhibit 10.5 May 12, 2025

19.1 Arrowhead Pharmaceuticals, Inc. Insider Trading Policy
Annual Report on Form 10-K, as Exhibit 19.1
November 26, 2024

21.1* List of Subsidiaries

78

Incorporated by Reference Herein
Exhibit
Number Description Form Date
23.1* Consent of Independent Public Registered Accounting Firm

23.2*
Consent of Independent Public Registered Accounting Firm

31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*** Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*** Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97**
Arrowhead Pharmaceuticals, Inc. Compensation Recoupment (Clawback) Policy, dated November 20, 2023
Annual Report on Form 10-K, as Exhibit 97
November 29, 2023

101.INS* Inline XBRL Taxonomy Extension Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

104* The cover page from the Company’s Annual Report on Form 10-K for the year ended September 30, 2024, formatted in Inline XBRL (included as Exhibit 101)

*    Filed herewith
**    Indicates compensation plan, contract or arrangement.
***    Furnished herewith
†    Certain portions of this exhibit were redacted by means of marking such portions with asterisks because the identified portions are (i) not material and (ii) treated as private or confidential by the Company.

ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 25, 2025

ARROWHEAD PHARMACEUTICALS, INC.

By: /s/ Christopher Anzalone
Christopher Anzalone
Chief Executive Officer

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Christopher Anzalone and Daniel Apel, and each of them, as true and lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, to sign in any and all capacities (including, without limitation, the capacities listed below), this Annual Report on Form 10-K, any and all amendments thereto, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done to enable the registrant to comply with the provisions of the Securities Exchange Act and all the requirements of the Securities and Exchange Commission, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature Title Date

/s/ Christopher Anzalone Chief Executive Officer, President and Director, Chairman of the Board of Directors (Principal Executive Officer) November 25, 2025
Christopher Anzalone

/s/ Daniel Apel Chief Financial Officer (Principal Financial and Accounting Officer) November 25, 2025
Daniel Apel

/s/ Mauro Ferrari Director November 25, 2025
Mauro Ferrari

/s/ Douglass Ingram Director November 25, 2025
Douglass Ingram

/s/ Hongbo Lu Director November 25, 2025
Hongbo Lu

/s/ Adeoye Olukotun Director November 25, 2025
Adeoye Olukotun

/s/ Michael S. Perry Director November 25, 2025
Michael S. Perry

/s/ Victoria Vakiener Director November 25, 2025
Victoria Vakiener

/s/ William Waddill Director November 25, 2025
William Waddill

80

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185 )
F- 2

Report of Independent Registered Public Accounting Firm
F- 5

Consolidated Balance Sheets as of September 30, 202 5 and 202 4
F- 6

Consolidated Statements of Operations and Comprehensive Income ( Loss ) for the years ended September 30, 202 5 , 202 4 and 202 3
F- 7

Consolidated Statements of Stockholders’ Equity for the years ended September 30, 202 5 , 202 4 and 202 3
F- 8

Consolidated Statements of Cash Flows for the years ended September 30, 202 5 , 202 4 and 202 3
F- 9

Notes to Consolidated Financial Statements
F- 10

F-1

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Arrowhead Pharmaceuticals, Inc.:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Arrowhead Pharmaceuticals, Inc. and subsidiaries (the Company) as of September 30, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended September 30, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 25, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Sufficiency of audit evidence over valuation of future royalty sales liability
As discussed in Note 13 to the consolidated financial statements, the Company records the obligations under the Royalty Pharma Agreement with Royalty Pharma Investments (RPI) at carrying value using the effective interest method. The Company amortizes the sale of future royalties utilizing the prospective method to estimate future royalties to be paid by the Company to RPI over the life of the arrangement. The Company periodically assesses the amount and timing of expected royalty payments using a combination of internal projections and forecasts from external sources. To the extent such payments differ from the Company’s initial estimates, the Company will prospectively adjust the amortization of the royalty obligation and the effective interest rate. The estimate of the carrying value of the liability related to the sale of future royalties is derived from the estimate of future sales of olpasiran and the probability of success assumption. The estimate of future sales of olpasiran is based on key assumptions such as patient population, market penetration, olpasiran sales price, and the comparable guideline drug. The liability related to the sale of future royalties was $367,397 thousand as of September 30, 2025.
F-2

We identified the evaluation of the sufficiency of audit evidence over the determination of the carrying value of the liability related to the sale of future royalties as a critical audit matter. Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained because of the level of audit effort associated with evaluating the carrying value of the liability related to the sale of future royalties.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the evaluation of the carrying value of the liability related to the sale of future royalties. We evaluated the design and tested the operating effectiveness of certain internal controls related to management’s valuation process, including the determination of the key assumptions into the carrying value of the liability related to the sale of future royalties as described above. We assessed the patient population and market penetration assumptions by comparing to independently sourced external market and industry data. We performed sensitivity analyses over the estimated olpasiran sales price and probability of success using independently sourced external market and industry data and evaluated the impact of changes in those assumptions on the carrying value of the liability related to the sale of future royalties. We assessed the reasonableness of the comparable guideline drug by evaluating against drugs similar to olpasiran in the marketplace. We evaluated the sufficiency of audit evidence obtained by assessing the cumulative results of the audit procedures performed and potential bias in the accounting estimate, including the appropriateness of the nature and extent of such evidence.
Evaluation of distinct performance obligations related to the license and collaboration agreement with Sarepta Therapeutics, Inc
As discussed in Notes 1 and 2 to the consolidated financial statements, the Company entered into an Exclusive License and Collaboration Agreement with Sarepta Therapeutics, Inc. (Sarepta). At contract inception, the Company assesses whether the goods or services promised within the contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price and allocates it to each performance obligation. The Company identified 17 performance obligations under the license and collaboration agreement with Sarepta. Fixed consideration of $833.6 million and an estimated variable consideration of $71.2 million were allocated to all performance obligations based on their relative standalone selling price.
We identified the evaluation of distinct performance obligations, including understanding the nature and significance of the contractual obligations and their standalone selling prices, related to the license and collaboration agreement with Sarepta as a critical audit matter. Subjective and complex auditor judgment was required to assess the Company’s identification of distinct performance obligations, including evaluating the rights and obligations described in the agreement, their benefit to the customer, and the level of modification or customization among the performance obligations. In addition, subjective auditor judgment was required to evaluate certain significant assumptions in the discounted cash flow model used by management to determine the standalone selling prices of the distinct performance obligations, including the discount rate and certain forecasted expenses. The audit effort associated with assessing the discount rate assumption required specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue recognition process, including management’s identification of distinct performance obligations in the license and collaboration agreement and determination of the standalone selling prices. We evaluated management’s identification of distinct performance obligations and the significance of the contractual obligations by obtaining and reading the license and collaboration agreement to gain an understanding of the contractual terms and conditions and the commitments being made in the agreement. We conducted inquiries with personnel responsible for clinical development to understand the nature of the research and development activities specific to the clinical, preclinical, and discovery stage programs to evaluate the nature of the commitments made to the customer. We evaluated certain forecasted expenses within the discounted cash flow model by comparing such amounts to external market and industry data. We involved valuation professionals with specialized skills and knowledge, who assisted in the assessment of the discount rate within the discounted cash flow model by comparing it to a discount rate that was independently developed using publicly available market data for comparable companies.

KPMG LLP
We have served as the Company’s auditor since 2024.

San Diego, California
November 25, 2025

F-3

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Arrowhead Pharmaceuticals, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Arrowhead Pharmaceuticals, Inc. and subsidiaries' (the Company) internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended September 30, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated November 25, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

KPMG LLP
San Diego, California
November 25, 2025
F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Arrowhead Pharmaceuticals, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for period ended September 30, 2023 of Arrowhead Pharmaceuticals, Inc. and Subsidiaries (the Company), and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated results of the Company’s operations and cash flows for the period ended September 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Rose, Snyder & Jacobs LLP
We have served as the Company’s auditor from 2004 to 2023.
Encino, California
November 29, 2023
F-5

Arrowhead Pharmaceuticals, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)

September 30,
2025 2024
ASSETS
Current assets:
Cash, cash equivalents and restricted cash $ 88,706   $ 76,208  
Cash at variable interest entity 137,842   26,477  
Accounts receivable 6,824   —  
Available-for-sale securities, at fair value 692,818   578,276  

Prepaid expenses 10,933   9,537  
Other current assets 13,516   4,973  
Total current assets 950,639   695,471  
Property, plant and equipment, net 382,515   386,032  
Intangible assets, net 6,861   8,562  
Right-of-use assets 43,891   45,255  
Other assets 1,389   4,482  
Total Assets $ 1,385,295   $ 1,139,802  

LIABILITIES, NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 17,674   $ 11,388  
Accrued expenses 90,419   63,017  
Accrued payroll and benefits 26,895   21,989  
Lease liabilities 7,289   6,342  
Deferred revenue 2,399   —  
Credit facility 40,000   —  
Other liabilities 10,811   432  
Total current liabilities 195,487   103,168  
Long-term liabilities:
Lease liabilities, net of current portion 104,112   111,027  
Liability related to the sale of future royalties 367,397   341,361  
Credit facility, net of current portion 214,883   393,183  
Total long-term liabilities 686,392   845,571  
Commitments and contingencies (Note 7)
Noncontrolling interest and stockholders' equity:
Common stock, $ 0.001 par value:
Authorized 290,000 shares; issued and outstanding 135,702 and 124,376 shares at September 30, 2025 and 2024, respectively
231   217  
Additional paid-in capital 2,139,725   1,806,000  
Accumulated other comprehensive income 6,443   4,750  
Accumulated deficit ( 1,627,154 ) ( 1,625,523 )
Treasury stock; at cost; 2,661 and 0 shares of common stock at September 30, 2025 and 2024, respectively
( 53,193 ) —  
Total Arrowhead Pharmaceuticals, Inc. stockholders' equity 466,052   185,444  
Noncontrolling interest 37,364   5,619  
Total noncontrolling interest and stockholders' equity 503,416   191,063  
Total Liabilities, Noncontrolling Interest and Stockholders' Equity $ 1,385,295   $ 1,139,802  

The accompanying notes are an integral part of these consolidated financial statements.
F-6

Arrowhead Pharmaceuticals, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)

Year Ended September 30,
2025 2024 2023
Revenue $ 829,448   $ 3,551   $ 240,735  
Operating expenses:
Research and development 607,159   505,870   353,188  
General and administrative 123,943   98,761   92,549  
Total operating expenses 731,102   604,631   445,737  
Operating income (loss) 98,346   ( 601,080 ) ( 205,002 )

Other (expense) income:
Interest income 37,289   22,720   15,299  
Interest expense ( 89,361 ) ( 32,352 ) ( 18,326 )
Other, net 5,259   ( 1,748 ) 1,538  
Total other expense ( 46,813 ) ( 11,380 ) ( 1,489 )

Income (loss) before income tax expense and noncontrolling interest 51,533   ( 612,460 ) ( 206,491 )
Income tax expense (benefit) 21,419   ( 2,767 ) 2,784  
Net income (loss) including noncontrolling interest 30,114   ( 609,693 ) ( 209,275 )
Net income (loss) attributable to noncontrolling interest, net of tax 31,745   ( 10,200 ) ( 4,000 )
Net loss attributable to Arrowhead Pharmaceuticals, Inc. $ ( 1,631 ) $ ( 599,493 ) $ ( 205,275 )

Net loss per share attributable to Arrowhead Pharmaceuticals, Inc.:
Basic $ ( 0.01 ) $ ( 5.00 ) $ ( 1.92 )
Diluted $ ( 0.01 ) $ ( 5.00 ) $ ( 1.92 )
Weighted-average shares used in calculating
Basic 133,758   119,784   106,750  
Diluted 133,758   119,784   106,750  

Other comprehensive loss, net of tax:
Unrealized gains (losses) on available-for-sale securities 2,125   3,775   ( 2,964 )
Foreign currency translation adjustments ( 432 ) 4,197   ( 122 )
Comprehensive income (loss) attributed to noncontrolling interest 31,745   ( 10,200 ) ( 4,000 )
Other comprehensive income (loss) $ 31,807   $ ( 601,721 ) $ ( 212,361 )

The accompanying notes are an integral part of these consolidated financial statements.
F-7

Arrowhead Pharmaceuticals, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands)

Common
Stock Amount ($) Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Common Stock in Treasury Amount ($) Non-
controlling
Interest Totals
Balance at September 30, 2022 105,960   $ 198   $ 1,219,213   $ ( 136 ) $ ( 820,755 ) —   $ —   $ 19,819   $ 418,339  
Stock-based compensation —  —  78,130   —  —  —  —  —  78,130  
Exercise of stock options 439   1   3,053   —  —  —  —  —  3,054  
Common stock - restricted stock units vesting 913   1   ( 1 ) —  —  —  —  —  —  
Unrealized losses on available-for-sale securities —  —  —  ( 2,964 ) —  —  —  —  ( 2,964 )
Foreign currency translation adjustments —  —  —  ( 122 ) —  —  —  —  ( 122 )
Net loss —  —  —  —  ( 205,275 ) —  —  ( 4,000 ) ( 209,275 )
Balance at September 30, 2023 107,312   $ 200   $ 1,300,395   $ ( 3,222 ) $ ( 1,026,030 ) —   $ —   $ 15,819   $ 287,162  

Common
Stock Amount ($) Additional
Paid-In
Capital Accumulated
Other
Comprehensive
(Loss) Income Accumulated
Deficit Common Stock in Treasury Amount ($) Non-
controlling
Interest Totals
Balance at September 30, 2023 107,312   $ 200   $ 1,300,395   $ ( 3,222 ) $ ( 1,026,030 ) —   $ —   $ 15,819   $ 287,162  
Stock-based compensation —  —  73,968   —  —  —  —  —  73,968  
Exercise of stock options 226   —  2,389   —  —  —  —  —  2,389  
Common stock - restricted stock units vesting 1,048   1   ( 1 ) —  —  —  —  —  —  
Common stock issued, net of offering costs 15,790   16   429,249   —  —  —  —  —  429,265  
Unrealized gains on available-for-sale securities —  —  —  3,775   —  —  —  —  3,775  
Foreign currency translation adjustments —  —  —  4,197   —  —  —  —  4,197  
Net loss —  —  —  —  ( 599,493 ) —  —  ( 10,200 ) ( 609,693 )
Balance at September 30, 2024 124,376   $ 217   $ 1,806,000   $ 4,750   $ ( 1,625,523 ) —   $ —   $ 5,619   $ 191,063  

Common
Stock Amount ($) Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income Accumulated
Deficit Common Stock in Treasury Amount ($) Non-
controlling
Interest Totals
Balance at September 30, 2024 124,376   $ 217   $ 1,806,000   $ 4,750   $ ( 1,625,523 ) —   $ —   $ 5,619   $ 191,063  
Stock-based compensation —  —  63,366   —  —  —  —  —  63,366  
Exercise of stock options 535   —  3,983   —  —  —  —  —  3,983  
Common stock - restricted stock units vesting 1,526   2   —  —  —  —  —  —  2  
Common stock issued 11,926   12   241,376   —  —  —  —  —  241,388  
Common stock - repurchase —  —  —  —  —  ( 2,661 ) ( 53,193 ) —  ( 53,193 )
Issuance of pre-funded warrants —  —  25,000   —  —  —  —  —  25,000  
Unrealized gains on available-for-sale securities —  —  —  2,125   —  —  —  —  2,125  
Foreign currency translation adjustments —  —  —  ( 432 ) —  —  —  —  ( 432 )
Net (loss) income —  —  —  —  ( 1,631 ) —  —  31,745   30,114  
Balance at September 30, 2025 138,363   $ 231   $ 2,139,725   $ 6,443   $ ( 1,627,154 ) ( 2,661 ) $ ( 53,193 ) $ 37,364   $ 503,416  

The accompanying notes are an integral part of these consolidated financial statements.
F-8

Arrowhead Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(in thousands)

Year Ended September 30,
2025 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 30,114   $ ( 609,693 ) $ ( 209,275 )
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
Stock-based compensation 63,366   73,968   78,130  
Depreciation and amortization 23,928   18,595   12,493  
Accretion of note premiums/discounts ( 5,789 ) ( 3,244 ) ( 2,017 )
Non-cash interest expense on liability related to the sale of future royalties 26,036   23,035   18,326  
Non-cash interest expense on credit facility 63,325   9,317   —  
Non-cash gain on treasury stock received ( 3,193 ) —   —  

Realized loss on investments —   80   —  
Changes in operating assets and liabilities:
Accounts receivable ( 56,967 ) —   1,410  
Prepaid expenses and other current assets ( 9,939 ) ( 1,664 ) 11,603  
Accounts payable 6,286   ( 5,536 ) 32,998  
Accrued expenses 41,497   32,117   ( 14,965 )
Deferred revenue 2,399   ( 866 ) ( 129,183 )
Operating lease, net ( 4,605 ) 2,240   46,590  
Other 3,094   ( 1,200 ) —  
Net cash provided by (used in) operating activities 179,552   ( 462,851 ) ( 153,890 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ( 22,666 ) ( 141,469 ) ( 176,737 )
Purchases of investments ( 796,258 ) ( 720,947 ) ( 246,141 )
Proceeds from sales and maturities of investments 689,630   442,344   326,723  
Net cash used in investing activities ( 129,294 ) ( 420,072 ) ( 96,155 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercises of stock options 3,983   2,389   3,053  
Proceeds from the issuance of common stock, net of offering costs —  429,265   —  
Proceeds from the sale of future royalties —   50,000   250,000  
Proceeds from the issuance of warrants 25,000   —   —  
Payment of debt issuance costs ( 5,000 ) ( 3,134 ) —  
Proceeds from the issuance of common stock 241,388   —  — 
Proceeds from credit facility —   392,000   —  

Repayments of credit facility ( 201,625 ) —   —  
Proceeds from Visirna credit agreement 10,260   —   —  
Net cash provided by financing activities 74,006   870,520   253,053  

Net increase (decrease) in cash, cash equivalents and restricted cash 124,264   ( 12,403 ) 3,008  

Effect of exchange rate on cash, cash equivalents and restricted cash ( 401 ) 4,197   ( 122 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
BEGINNING OF PERIOD 102,685   110,891   108,005  
END OF PERIOD $ 226,548   $ 102,685   $ 110,891  

Supplementary disclosure of cash flows:
Interest paid $ ( 19 ) $ —   $ —  
Income taxes (refund) paid $ 814   $ ( 3,744 ) $ —  
Treasury stock received to settle accounts receivable $ 50,000   $ —   $ —  

Supplementary disclosure of non-cash investing activities:
Capital expenditures included in accrued expenses $ 277   $ 4,206   $ 14,044  

The accompanying notes are an integral part of these consolidated financial statements.
F-9

Arrowhead Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
General
Arrowhead Pharmaceuticals, Inc. and its subsidiaries (referred to herein collectively as the “Company”) are primarily engaged in developing 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 RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. RNA interference (“RNAi”) is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. The Company’s RNAi-based therapeutics may leverage this natural pathway of gene silencing to target and shut down specific disease-causing genes.
The following table presents the Company’s current pipeline:

Therapeutic Area Name Stage Product Rights
Cardiometabolic plozasiran
Phase 3 Arrowhead (1)

zodasiran Phase 3 Arrowhead

olpasiran Phase 3 Amgen
ARO-PNPLA3 Phase 1 Arrowhead
GSK4532990
Phase 2b GSK

ARO-INHBE Phase 1/2a Arrowhead
ARO-ALK7 Phase 1/2a Arrowhead
ARO-DIMERPA
Phase 1/2a Arrowhead

Pulmonary ARO-RAGE Phase 1/2a Arrowhead
SRP-1002 (ARO-MMP7) Phase 1/2a Sarepta
Liver fazirsiran Phase 3 Takeda and Arrowhead
daplusiran/tomligisiran
Phase 2 GSK
Neuromuscular SRP-1001 (ARO-DUX4) Phase 1/2a Sarepta
SRP-1003 (ARO-DM1) Phase 1/2a Sarepta
SRP-1004 (ARO-ATXN2) Phase 1/2a Sarepta
ARO-SNCA
Pre-clinical
Novartis

ARO-MAPT
Phase 1/2a
Arrowhead
Other ARO-C3 Phase 1/2a Arrowhead
ARO-CFB Phase 1/2a Arrowhead

(1) Greater China rights for plozasiran are out-licensed to Sanofi.
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 also operates an active pharmaceutical ingredient manufacturing and supporting laboratory facility in Verona, Wisconsin. The Company’s principal executive offices are located in Pasadena, California.
Consolidation and Basis of Presentation
The Consolidated Financial Statements include the accounts of Arrowhead Pharmaceuticals, Inc. and its subsidiaries (wholly-owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary). Subsidiaries refer to Arrowhead Madison, Inc., Arrowhead Australia Pty Ltd., Arrowhead Pharmaceuticals Ireland Limited, Arrowhead Pharmaceuticals NZ Limited, and Visirna Therapeutics, Inc. (“Visirna”). For subsidiaries in which the Company owns or is exposed to less than 100% of the economics, the Company records net loss attributable to noncontrolling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interests retained in such entity by the respective noncontrolling party.
The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions and balances have been eliminated.
F-10

The Company operates as a single segment as the chief operating decision maker, or CODM, reviews operating results on an aggregate basis and manages the operations as a single operating segment. Refer to Note 16, Segment Reporting , for further details on the segment information.
Liquidity
The Company’s primary sources of financing have been through the sale of its equity securities, credit facility, revenue from its licensing and collaboration agreements and the sale of certain future royalties. Research and development activities have required significant investment since the Company’s inception and are expected to continue to require significant cash expenditure in the future, particularly as the Company’s pipeline of drug candidates and its headcount have both expanded. Additionally, significant investment will be required as the Company’s pipeline matures into later stage clinical trials and commercialization efforts.
As of September 30, 2025, the Company had $ 226.5 million in cash, cash equivalents and restricted cash ($ 1.9 million in restricted cash) and $ 692.8 million in available-for-sale securities to fund operations. During the year ended September 30, 2025, the Company’s cash, cash equivalents and restricted cash and investments balance increased by $ 238.4 million, which was primarily due to the $ 500.0 million as an upfront payment under the Sarepta agreement and $ 325.0 million in the form of an equity investment under the Sarepta agreement, $ 100.0 million relating to the achievement of partnership milestone achievement of which $ 50.0 million was settled in cash and the remaining $ 50.0 million was settled through the repurchase of Company's common stock , $ 37.3 million interest income earned on investments, and $ 25.0 million in the form of pre-funded warrants, partially offset by ongoing expenses related to the Company’s research and development programs, $ 201.6 million payments on its credit facility and $ 22.7 million relating to capital expenditure.
In total, the Company is eligible to receive up to $ 13.4 billion in additional developmental, regulatory and sales milestones, and may receive various royalties on net sales from its licensing and collaboration agreements, subject to the terms and conditions of those agreements.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, judgments and assumptions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results could materially differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
All highly liquid interest-bearing investments are classified as cash equivalents. These investments mainly include term deposits, money market instruments, corporate debt securities, and certificate of deposits with maturities of three months or less when purchased. The carrying value of these cash equivalents approximate fair value.
There was $ 1.9 million and $ 3.5 million restricted cash at September 30, 2025 and 2024, respectively, that is primarily held as collateral associated with letters of credit for the Company’s facility leases.
Investments
The Company classified all of its investments in debt securities as available-for-sale and as current assets as they represent the investment of funds available for current operations as of September 30, 2025 and 2024. The available-for-sale investments may consist of investment-grade interest bearing instruments, primarily corporate debt securities, U.S. government and agency securities, commercial notes, certificate of deposits, and municipal securities, which are accounted for at fair value. Dividends from these funds were automatically re-invested. Changes in fair values are reported as unrealized gains or losses and are recorded in the Company’s consolidated statement of operations and comprehensive income (loss).
The Company evaluates its investments for impairment based on a security-specific analysis as of each balance sheet date. If the fair value of a security is below its amortized cost, the Company first assesses whether it intends to sell the security or is more likely than not required to sell it before recovery of its amortized cost. If neither condition is met, the Company evaluates whether a portion of the decline is attributable to credit loss. Any credit-related impairment is recorded as an allowance for credit losses through earnings, with non-credit-related unrealized losses recorded in other
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comprehensive income (loss). The Company did not recognize any credit loss relating to its investment for the years ended September 30, 2025, 2024, and 2023.
Concentration of Credit Risk
Financial instruments that potentially expose the Company to concentration of credit risk primarily consist of cash, cash equivalents and restricted cash and investments. As of September 30, 2025 and 2024, the Company’s investments were primarily invested in money market funds, U.S. Government, commercial paper, and corporate debt securities and term deposit through highly rated financial institutions. The Company has established guidelines relative to diversification and maturities that maintain safety and liquidity. The Company periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. The Company also maintains several bank accounts at two financial institutions for its operations. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per institution.
In addition, Visirna maintains several deposit and term accounts in mainland China, Hong Kong, and Singapore. Cash balances are held with various local and international financial institutions, which are subject to their respective jurisdictional deposit insurance programs. The Deposit Insurance Fund Management Corporation in China provides coverage of up to RMB 500,000 per depositor per institution, and the Hong Kong Deposit Protection Scheme provides protection of up to HKD 800,000 per depositor per bank, and the Singapore Deposit Insurance Corporation provides coverage of up to SGD 100,000 per depositor per member bank.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the asset life or lease term. Construction in progress reflects amounts incurred for construction or improvements of property, plant and equipment that have not been placed in service. Upon disposition, the cost and accumulated depreciation of assets retired or sold are removed from the respective asset category, and any gain or loss is recognized in the Company’s consolidated statement of operations and comprehensive income (loss).
The estimated useful lives of property, plant and equipment are as follows (in years):

Estimated Useful Lives
Buildings
39

Research equipment 5

Manufacturing equipment
7 to 10

Furniture 7

Computers and software 3 to 5

Leasehold improvements   Shorter of asset life or lease term

The Company periodically assesses long-lived assets or asset groups, including property, plant and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the Company identifies an indicator of impairment, the Company assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. There were no impairment charges during the years ended September 30, 2025, 2024, and 2023.
Intangible Assets Subject to Amortization
Intangible assets subject to amortization include certain patents and license agreements. The Company evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount of intangible assets may exceed their implied fair values. No impairment charges were recorded during the years ended September 30, 2025, 2024, and 2023.
Leases
The Company determines whether a contract is, or contains, a lease at inception. All of the Company’s leases are classified as operating leases. Leases with terms greater than one-year are recognized on the Company’s consolidated balance sheets as right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease term. As of September 30, 2025 and 2024, the Company is not reasonably certain that it will exercise renewal options for any lease facilities. Therefore, these options are not included in the right-of-use assets and liabilities.
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The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment. The Company records expense to recognize lease payments on a straight-line basis over the expected lease term. Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.
Clinical Accruals
The Company accrues liabilities for products received or services incurred, particularly for ongoing clinical trials, where service providers have not yet billed or where billing terms do not align with the timing of the work performed as of the period-end. These costs mainly include third-party clinical management or clinical research organization (CRO), laboratory analysis, and investigator fees. Accrual estimates may be based on vendor communications to obtain pending invoices and/or estimates for services performed during the period. In some cases, these estimates require significant judgment, drawing on an understanding of research and development programs, services provided during the period, prior experience, and, where applicable, the expected duration of third-party contracts. Actual costs upon settlement may differ significantly from the accrued amounts in the Company’s consolidated financial statements, though historical estimates have not differed materially from actual costs.
Revenue Recognition
The revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that it determines are within the scope of the revenue standard, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that it determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when (or as) each performance obligation is satisfied.
The Company recognizes the transaction price allocated to upfront license payments as revenue upon delivery of the license to the customer and resulting ability of the customer to use and benefit from the license, if the license is determined to be distinct from the other performance obligations identified in the contract. These other performance obligations are typically to perform research and development services for the customer, often times relating to the candidate that the customer is licensing. If the license is not considered to be distinct from other performance obligations, the Company assesses the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied at a point in time or over time. If the performance obligation is satisfied over time, the Company then determines the appropriate method of measuring progress for purposes of recognizing revenue from license payments. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition.
Typically, the Company’s collaboration agreements entitle it to additional payments upon the achievement of milestones or royalties on sales. The milestones are generally categorized into three types: development milestones, generally based on the initiation of toxicity studies or clinical trials; regulatory milestones, generally based on the submission, filing or approval of regulatory applications such as a New Drug Application (“NDA”) in the United States; and sales-based milestones, generally based on meeting specific thresholds of sales in certain geographic areas. The Company evaluates whether it is probable that the consideration associated with each milestone or royalty will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and royalties, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income in the Company’s consolidated statements of operations and comprehensive income (loss). Typically, milestone payments and royalties are achieved after the Company’s performance obligations associated with the collaboration agreements have been completed and after the customer has assumed responsibility for the respective clinical or preclinical program. Milestones or royalties achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or royalty was achieved. If a milestone payment is achieved during the performance period, the milestone payment would be
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recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.
The revenue standard requires the Company to assess whether a significant financing component exists in determining the transaction price. The Company performs this assessment at the onset of its licensing or collaboration agreements. Typically, a significant financing component does not exist because the customer is paying for a license or services in advance with an upfront payment. Additionally, future royalty payments are not substantially within the control of the Company or the customer.
Further, the revenue standard requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated. The relative standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised good or service separately to a customer. If other observable transactions in which the Company has sold the same performance obligation separately are not available, the Company estimates the standalone selling price of each performance obligation. Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines and costs, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.
Whenever the Company determines that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using the input method; Labor hours, costs incurred or patient visits in clinical trials are typically used as the measure of performance. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on its consolidated balance sheets.
Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term (less than one year) and long-term (over one year) deferred revenue based on its best estimate of when such revenue will be recognized. This estimate is based on the Company’s current operating plan and, the Company may recognize a different amount of deferred revenue over the next 12-month period if its plan changes in the future.
Collaborative Arrangements
The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of Financial Accounting Standards Board (“FASB”) Topic 808 - Collaborative Arrangements . For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Topic 606 - Revenue for Contracts from Customers . For units of account that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. For collaborative arrangements that are within the scope of Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate.
Research and Development Expenses
Research and development costs are charged to expense as incurred. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses.
Stock-Based Compensation
Share-based compensation expense for all stock grants are based on their estimated grant-date fair value. The fair value of stock option awards is estimated using the Black-Scholes option valuation model which requires the input of subjective assumptions to calculate the value of stock options. The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate for stock option awards. For restricted stock units, the value of the award is based on the Company’s stock price at the grant date. For performance-based restricted stock unit awards, the value of the award is based on the Company’s stock price at the grant date, with consideration given to the
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probability of the performance condition being achieved. Expense is recognized over the vesting period for all awards and commences at the grant date for time-based awards and upon the Company’s determination that the achievement of such performance conditions is probable for performance-based awards. This determination requires significant judgment by management.
Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting basis and the respective tax basis of the Company’s assets and liabilities, and expected benefits of utilizing net operating loss, capital loss, and tax-credit carryforwards. The Company assesses the likelihood that its deferred tax assets will be realized and, to the extent management does not believe these assets are more likely than not to be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in earnings in the period that includes the enactment date.
Variable Interest Entity (“VIE”)
A VIE is an entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) has equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.
On April 25, 2022, the Company entered into a license agreement with Visirna (Note 2) and consolidated Visirna’s financial statements in which the Company has a direct controlling financial interest based on the VIE model.
The Company considers all the facts and circumstances, including its role in establishing Visirna and its ongoing rights and responsibilities to assess whether the Company has the power to direct the activities of Visirna. In general, the parties that make the most significant decisions affecting a VIE and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
The Company also considers all of its economic interests to assess whether the Company has the obligation to absorb losses of Visirna or the right to receive benefits from it that could potentially be significant to Visirna. This assessment requires the Company to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to Visirna. Factors considered in assessing the significance include: the design of Visirna, including its capitalization structure, subordination of interests, payment priority, and the reasons why the interests are held by the Company.
At Visirna’s inception, the Company determined it was the primary beneficiary and that Visirna should be consolidated based on the facts and circumstances. The Company performs ongoing reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation conclusion is required. As of September 30, 2025, there were no events to be reconsidered in the consolidation.
Net Loss per Share
Net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and restricted stock units outstanding.
During the years ended September 30, 2025, 2024 and 2023, the calculation of the effect of dilutive stock options and restricted stock units excluded all stock options and restricted stock units outstanding during the period due to their anti-dilutive effect.
Foreign Currency Translation Adjustments
Three of the Company’s wholly-owned subsidiaries’ functional currencies is not the United States dollar, which is the Company’s reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included in the accumulated other comprehensive income (loss).
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Segment Information
The Company operates as a single segment because its CODM reviews operating results on an aggregate basis and manages its operations as a single operating segment.
Recent Accounting Pronouncements
In January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, in November 2024, and ASU 2025-01, Clarifying the Effective Date . These updates require entities to provide disaggregated disclosures of income statement expenses. The ASUs do not affect the expense captions presented on the face of the income statement but instead require the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements. The ASUs will become effective for the Company beginning October 1, 2027, and the Company is currently evaluating the impact on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to improve its income tax disclosure requirements. Under the guidance, entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. This guidance became effective for the Company beginning on October 1, 2025. The Company does not expect any material impact on its consolidated financial statements and related disclosures resulting from applying this ASU.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The guidance requires public companies with a single reportable segment to provide all disclosures required under ASC 280. In addition, the guidance requires public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. This ASU is applicable to the Company’s Annual Report on Form 10-K for the year ending September 30, 2025, and subsequent interim periods. Refer to Note 16, Segment Reporting , for further details on segment information.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted. The Company has implemented OBBBA in the fourth quarter of fiscal 2025. Refer to Note 11, Income Taxes , for further details.

NOTE 2. COLLABORATION AND LICENSE AGREEMENTS
The following table provides a summary of revenue recognized:

Year Ended September 30,
2025 2024 2023
(in thousands)
GSK $ 2,645   $ 2,685   $ 29,657  
Horizon —   —   23,206  
Takeda —   866   162,516  
Janssen —   —   356  
Amgen —   —   25,000  
Sarepta 696,803   —   —  
Sanofi $ 130,000   $ —   $ —  
Total $ 829,448   $ 3,551   $ 240,735  

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

September 30,
2025 2024
(in thousands)
Receivables included in accounts receivable $ 6,824   $ —  
Contract liabilities included in deferred revenue
$ 2,399   $ —  

GlaxoSmithKline Intellectual Property (No. 3) Limited (“GSK”)
GSK-HSD License Agreement
On November 22, 2021, GSK and the Company entered into an Exclusive License Agreement (the “GSK-HSD License Agreement”). Under the GSK-HSD License Agreement, GSK has received an exclusive license for GSK-4532990 (formerly ARO-HSD). The exclusive license is worldwide with the exception of greater China. GSK is wholly responsible for all clinical development and commercialization of GSK-4532990 in its territory.
The Company has completed its performance obligation related to this agreement, and the upfront payment of $ 120.0  million was fully recognized in the year ended September 30, 2022. Further, GSK dosed the first patient in a Phase 2b trial in March 2023 and paid a $ 30.0  million milestone payment to the Company in the third quarter of fiscal 2023.
The Company is eligible for an additional payment of $ 100.0  million upon achieving the first patient dosed in a Phase 3 trial. Furthermore, should the Phase 3 trial read out positively, and the potential new medicine receives regulatory approval in major markets, the deal provides for commercial milestone payments to the Company of up to $ 190.0  million at first commercial sale, and up to $ 590.0  million in sales-related milestone payments. The Company is further eligible to receive tiered royalties on net product sales in a range of mid-teens to twenty percent.
GSK-HBV Agreement
On December 11, 2023, the Company entered into an Amended and Restated License Agreement with GSK (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 amended 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. The Company is eligible to receive up to $ 830.0  million in development and sales milestone payments under the GSK-HBV Agreement.
There were no contract assets and liabilities recorded as of September 30, 2025.
Horizon Therapeutics Ireland DAC (“Horizon”)
In June 2021, Horizon and the Company entered into a collaboration and license agreement (the “Horizon License Agreement”). Under the terms of the Horizon License Agreement, Horizon received a worldwide exclusive license for HZN-457, a clinical-stage medicine being developed by Horizon as a potential treatment for people with uncontrolled gout.
On October 6, 2023, Amgen completed its acquisition of Horizon and subsequently notified the Company of Amgen’s intent to terminate the HZN-457 license. Horizon exercised its right to terminate the Horizon License Agreement for convenience, which took effect on December 21, 2023.
Takeda Pharmaceutical Company Limited (“Takeda”)
In October 2020, Takeda and the Company entered into an Exclusive License and Co-Funding Agreement (the “Takeda License Agreement”). Under the Takeda License Agreement, Takeda and the Company will co-develop the Company’s fazirsiran program (formerly TAK-999 and ARO-AAT), the Company’s second-generation subcutaneously administered RNAi therapeutic candidate being developed as a treatment for liver disease associated with alpha-1 antitrypsin deficiency. Within the United States, fazirsiran, if approved, will be co-commercialized under a 50/50 profit sharing structure. Outside the United States, Takeda received an exclusive license to commercialize fazirsiran and will lead the global commercialization strategy, while the Company will be eligible to receive tiered royalties of 20 % to 25 % on net sales.
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The Company determined that the key deliverables included the license and certain research and development services including the Company’s responsibilities to complete the initial portion of the SEQUOIA study, to complete the ongoing Phase 2 AROAAT2002 study, and to ensure certain manufacturing of fazirsiran drug product is completed and delivered to Takeda (the “Takeda R&D Services”). Due to the specialized and unique nature of these Takeda R&D Services and their direct relationship with the license, the Company determined that these deliverables represent one distinct bundle and, thus, one performance obligation. Takeda is responsible for managing clinical development and commercialization outside the United States. Within the United States, the Company and Takeda are responsible in the co-development and co-commercialization efforts. The Company considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of account within Topic 808, and as such, these co-funding amounts are recorded as research and development expenses or general and administrative expenses, as appropriate.
Under the terms of the Takeda License Agreement, the Company received $ 300.0  million as an upfront payment in January 2021 and an additional $ 40.0  million upon Takeda’s initiation of a Phase 3 REDWOOD clinical study of fazirsiran in March 2023, and is eligible to receive up to $ 527.5  million in additional potential development, regulatory and commercial milestones.
The Company 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. The Company has substantially completed its performance obligation under the Takeda License Agreement by December 31, 2023. As such, all revenue has been fully recognized as of December 31, 2023. There were no further deferred revenue and contract liabilities as of September 30, 2025.
The Company recorded $ 31.3  million as accrued expenses as of September 30, 2025 that was primarily driven by co-development and co-commercialization activities.
Janssen Pharmaceuticals, Inc. (“Janssen”)
On April 7, 2023, Janssen voluntarily terminated its collaboration agreement with the Company and the Company regained full rights to ARO-PNPLA3, formerly called JNJ-75220795. There are no currently active trials for ARO-PNPLA3.
Further, on December 11, 2023, the Company entered into the GSK-HBV Agreement, as discussed above, pursuant to which GSK received an exclusive license for JNJ-3989 (formerly ARO-HBV). JNJ-3989 had previously been licensed to Janssen in October 2018.
Amgen Inc. (“Amgen”)
In September 2016, Amgen and the Company entered into two collaboration and license agreements and a common stock purchase agreement. Under the Second Collaboration and License Agreement (the “Olpasiran Agreement”), Amgen received a worldwide, exclusive license to the Company’s novel RNAi olpasiran (previously referred to as AMG-890 or ARO-LPA) program. These RNAi molecules are designed to reduce elevated lipoprotein(a), which is a genetically validated, independent risk factor for atherosclerotic cardiovascular disease. Under the Olpasiran Agreement, Amgen is wholly responsible for clinical development and commercialization.
The Company has substantially completed its performance obligations under the Olpasiran Agreement. There were no contract assets and liabilities recorded as of September 30, 2025.
In November 2022, Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) and the Company entered into a Royalty Purchase Agreement with Royalty Pharma (the “Royalty Pharma Agreement”). In consideration for the payments under the Royalty Pharma Agreement, Royalty Pharma is entitled to receive all royalties otherwise payable by Amgen to the Company under the Olpasiran Agreement. The Company remains eligible to receive up to an additional $ 485.0 million in remaining development, regulatory and sales milestone payments payable from Amgen and Royalty Pharma. See Note 13.
Sarepta Therapeutics, Inc.
On November 25, 2024, the Company entered into an Exclusive License and Collaboration Agreement (the “Sarepta Collaboration 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. The Company concurrently entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Sarepta (see Note 6).
Under the Sarepta Collaboration Agreement, Sarepta received an exclusive sublicensable worldwide license to SRP-1001 (formerly ARO-DUX4), SRP-1003 (formerly ARO-DM1), SRP-1002 (formerly ARO-MMP7), and SRP-1004 (formerly ARO-ATXN2) clinical stage programs (the “C1” programs). Sarepta also received an exclusive sublicensable
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worldwide license to the Company’s ARO-HTT, ARO-ATXN1, and ARO-ATXN3 preclinical stage programs (the “C2” programs). The Company will perform certain research and development activities for the C1 and C2 programs.
Further, Sarepta may select up to six gene targets for which the Company will perform discovery, optimization and preclinical development activities to identify RNAi compounds against each selected target (the “C3” programs). Upon target acceptance, Sarepta will receive an exclusive license to the Company’s intellectual property rights to exploit compounds directed to those targets and is wholly responsible for clinical development and commercialization of each compound after the Company delivers a Clinical Trial Application ready data package (the "CTA package").
The Company identified 17 performance obligations under the Sarepta Collaboration Agreement. The four C1 licenses are distinct performance obligations from the four C1 research and development performance obligations since the customer can use and benefit from the licenses separately. The performance obligations for the licenses were satisfied in the second quarter of fiscal 2025 upon delivery and the research and development performance obligations will be satisfied as the work is performed. The remaining nine performance obligations include three C2 preclinical stage program licenses and research and development activities, and six C3 unidentified discovery target licenses and research and development activity. Each of the three C2 programs and the six C3 programs were determined to represent one performance obligation, as the customer cannot benefit from the use of the product license at the point of transfer until the specified research and development activities are performed. As such, each of the C2 and C3 product licenses and respective research and development work will be combined to form one performance obligation. For these nine performance obligations, revenue is recognized over time as the work is performed.
For performance obligations recognized over time, the estimated performance period over which revenue will be recognized is determined to be the period over which the Company estimates it will perform the research and development activities. The Company determined that the most appropriate method of measuring progress for these performance obligations is an input method based on research and development costs in the program budget. Accordingly, the Company has estimated the total cost required to complete its obligation and recognized an amount of revenue equal to the proportion of services performed, which is reassessed on an ongoing basis as the program progresses. In the period an agreement expires or is terminated, remaining deferred revenue, if any, is recognized as revenue.
Under the terms of the Sarepta Collaboration Agreement, the Company received an upfront payment of $ 500.0  million on February 14, 2025. In addition, on February 7, 2025, the Company received $ 325.0  million in the form of an equity investment under the Stock Purchase Agreement. Based upon the Company's share price on February 7, 2025, (the “Closing Date”), the difference between the $ 325.0  million and the fair value of the shares on the Closing date resulted in a premium of $ 83.6  million. The premium is included as part of the total consideration of the Sarepta Collaboration Agreement for revenue recognition purposes. The Company is entitled to receive $ 250.0  million to be paid in annual installments of $ 50.0  million over the first five years of the agreement. The Company is also eligible receive reimbursement of certain costs related to carrying out the research and development activities for the C1 programs. The fixed consideration of $ 833.6  million and an estimated variable consideration of $ 71.2  million for a total of $ 904.9  million were allocated to all performance obligations based on their relative standalone selling price. Standalone selling prices for the product licenses were determined using an adjusted market-based approach through the net present value of the expected future cash flows for each program. The standalone selling prices for the research and development work were determined based on an expected cost plus margin approach.
The Company estimates the stand-alone selling price for each distinct performance obligation, which involves assumptions that may require significant judgment. The Company’s estimates of the stand-alone selling price for license-related performance obligations includes forecasted revenues and expenses, phase dates, probability of success, development timelines, and the discount rate. The estimates of the stand-alone selling price for research and development performance obligations generally include forecasting the expected costs of satisfying a performance obligation at market rates. The Company identified a discount based on the difference between the aggregate stand-alone selling price and the transaction price for accounting revenue recognition purposes. The Company allocated the discount proportionally to each of the performance obligations based upon their standalone selling price.
The Company receives reimbursement of certain costs related to carrying out the research and development activities for the C1 programs and may receive development milestone payments of up to $ 300.0  million. Further, for each of the 13 programs, the Company is eligible to receive regulatory milestone payments between $ 110.0  million and $ 180.0  million per program. Variable consideration associated with the milestones that may be achieved will be allocated to the performance obligation to which it is determined to be related, which will be the respective development work that is being reimbursed and the respective programs to which the milestones relate. ARO-DM1 development milestones were allocated between the license and development work based on the allocation of the standalone selling price. The Company will recognize the ARO-DM1 development milestones and other development milestones as revenue in the periods the underlying milestone events are achieved as achievement of the milestone events are highly susceptible to factors outside of the entity's influence and therefore there is a possibility that the milestone event will not be achieved.
F-19

The Company is also eligible to receive sales milestone payments between $ 500.0  million and $ 700.0  million per program as well as tiered royalties on net sales of licensed products of up to the low double digits, subject to the terms and conditions of the Sarepta Collaboration Agreement. The Company has applied the sales-based scope exception to the sales milestones and the royalty-based payments.
The Sarepta Collaboration Agreement commenced in February 2025 and may be terminated by either party in the event of a material breach as defined therein. In addition, Sarepta may voluntarily terminate the Sarepta Collaboration Agreement with 30 days' written notice to the Company if terminated prior to any regulatory approval of a licensed product. Unless earlier terminated, the Sarepta Collaboration Agreement expires on a product-by-product and country-by-country basis, upon the date of expiration of the relevant royalty term for such product in such country.
In August 2025, the Company repurchased 2,660,989 shares of its common stock from Sarepta in connection with the $ 100.0  million DM1 first development milestone under the Sarepta Collaboration Agreement. The repurchase satisfied $ 50.0  million of the milestone payment through delivery of the Company’s common stock, with the remaining $ 50.0  million settled in cash. The shares were recorded as treasury stock at their fair value of $ 53.2  million, resulting in a $ 3.2  million gain on settlement. The repurchased shares are presented as a reduction to total stockholders’ equity in accordance with ASC 505-30.
As of September 30, 2025, the Company recorded $ 696.8  million in revenue from Sarepta and $ 6.8  million in accounts receivable. The recognition of the remaining revenue for the performance obligations is dependent upon the time it takes to complete the respective research and development activities and in consideration of the timing of the selection of the C3 programs.
Visirna Therapeutics Inc. (“Visirna”) and Genzyme Corporation (“Sanofi”)
On August 1, 2025, Visirna Therapeutics HK Limited (“Visirna HK”), a wholly owned subsidiary of Visirna Therapeutics, Inc, a majority owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Genzyme Corporation (“Sanofi”), a wholly owned subsidiary of Sanofi S.A., pursuant to which Visirna HK sold all of its assets and rights in investigational plozasiran to Sanofi, which included an assignment of Visirna HK’s rights (as successor by assignment from Visirna) to develop and commercialize investigational plozasiran in Greater China pursuant to that certain License Agreement by and between the Company and Visirna dated, April 25, 2022 (the “Visirna License Agreement”).
In connection with the Asset Purchase Agreement, the Company consented to the partial assignment of the Visirna License Agreement by Visirna HK to Sanofi (as so assigned, the “Sanofi License Agreement”), amongst other agreements between the Company and Visirna, effective as of the closing of the Asset Purchase Agreement. This agreement was not deemed a legal sale of intellectual property from the consolidated perspective of the Company. After giving effect to the Asset Purchase Agreement, Visirna HK retains rights to develop and commercialize in Greater China three other cardiometabolic drugs licensed to it pursuant to the Visirna License Agreement.
Upon closing of the Asset Purchase Agreement, Visirna received an upfront payment of $ 130.0  million from Sanofi and is eligible to receive further development milestone payments of up to $ 265.0  million upon approval of plozasiran across various indications in mainland China. The Company is also eligible to receive royalties from Sanofi on net commercial product sales in Greater China under the Sanofi License Agreement. During the year ended September 30, 2025, the Company recorded $ 130.0  million in revenue.
Visirna identified the licenses as defined in the agreement as the performance obligations under the Asset Purchase Agreement. The performance obligations for the licenses was satisfied in the fourth quarter of fiscal 2025 upon delivery. The fixed consideration of $ 130.0  million was allocated to the performance obligations. The Company will recognize the development milestones as revenue in the periods the underlying milestone events are achieved as achievement of the milestone events are highly susceptible to factors outside of the entity's influence and therefore there is a possibility that the milestone events will not be achieved. The Company has also applied the sales-based scope exception to the royalty-based payments.
The Sanofi License Agreement may be terminated by either party in the event of a material breach as defined therein. Unless earlier terminated, the Sanofi License Agreement expires on a product-by-product basis, upon the date of expiration of the relevant royalty term for such product in Greater China.
F-20

NOTE 3. BALANCE SHEET ACCOUNTS

Property, Plant and Equipment
The following table summarizes the Company’s major classes of property, plant and equipment:

September 30,
2025 2024
(in thousands)
Land $ 2,996   $ 2,996  
Buildings
251,317   75,988  
Research equipment 62,758   65,353  
Manufacturing equipment
18,588   —  
Furniture 5,594   5,594  
Computers and software 1,064   981  
Leasehold improvements 104,425   104,410  
Construction in progress 15,942   188,731  
462,684   444,053  
Less: Accumulated depreciation and amortization ( 80,169 ) ( 58,021 )
Property, plant and equipment, net $ 382,515   $ 386,032  

Depreciation and amortization expense for property, plant and equipment for the years ended September 30, 2025, 2024, and 2023 was $ 22.2 million, $ 16.9 million and $ 10.7 million, respectively.
During the first quarter of fiscal 2025, the Company substantially completed the build out of its manufacturing facility in Verona, Wisconsin, leading to the reclassification of $ 162.7 million from construction in progress to buildings and $ 2.6 million from construction in progress to manufacturing equipment. The Company subsequently incurred and capitalized $ 10.6 million to buildings and $ 16.0 million to manufacturing equipment during the remainder of fiscal 2025. Furthermore, the Company began depreciating the newly completed manufacturing facility over a 39 -year period and the manufacturing equipment over 7 - or 10 -year periods.
During the first quarter of fiscal 2024, the Company completed the build out of its laboratory and office facilities in Verona, Wisconsin, which resulted in the reclassification of $ 71.8 million from construction in progress to buildings. The Company subsequently incurred and capitalized $ 4.2 million from construction in progress to buildings in fiscal 2024.

Accrued Expenses
Accrued expenses consisted of the following:

September 30,
2025 2024
(in thousands)
Accrued research and development expenses
$ 30,330   $ 28,069  
Accrued research and development expenses; co-development
31,296   23,351  
Accrued capital expenditures 277   4,206  
Accrued income taxes (benefits)
20,799   —  
Other 7,717   7,391  
       Total accrued expenses $ 90,419   $ 63,017  

As of September 30, 2025, the Company’s accrued research and development expenses was primarily attributable to ongoing clinical trial operations, preclinical animal studies, and associated toxicology assessments. In addition, accrued research and development expenses; co-development relates to the co-development and co-commercialization activities under the Takeda License Agreement (see Note 2).
F-21

NOTE 4. INVESTMENTS
The Company’s investments consisted of the following:

As of September 30, 2025
(in thousands)
Adjusted Basis Gross
Unrealized Gains Gross
Unrealized Losses Fair Value

Available-for-sale securities $ 689,882   $ 2,956   $ ( 20 ) $ 692,818  
Total current investments $ 689,882   $ 2,956   $ ( 20 ) $ 692,818  

As of September 30, 2024
(in thousands)
Adjusted Basis Gross
Unrealized Gains Gross
Unrealized Losses Fair Value

Available-for-sale securities
$ 577,465   $ 837   $ ( 26 ) $ 578,276  
Total current investments $ 577,465   $ 837   $ ( 26 ) $ 578,276  

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

September 30, 2025 September 30, 2024
(in thousands)

Within one year $ 224,328   $ 578,276  
After one to two years 468,490   —  
After two to three years —   —  
Total $ 692,818   $ 578,276  

As of September 30, 2025, the gross unrealized losses were immaterial. The Company has determined that the available-for-sale securities that were in an unrealized loss position did not have any credit loss impairment as of September 30, 2025 and 2024.

F-22

NOTE 5. INTANGIBLE ASSETS
Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition in March 2015. The following table presents the components of intangible assets:

Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Useful Lives
(in thousands)
(in years)
As of September 30, 2025
Patents $ 21,728   $ 16,426   $ —   $ 5,302   14
License 3,129   1,570   —   1,559   21
Total intangible assets, net $ 24,857   $ 17,996   $ —   $ 6,861  

As of September 30, 2024
Patents $ 21,728   $ 14,873   $ —   $ 6,855   14
License 3,129   1,422   —   1,707   21
Total intangible assets, net $ 24,857   $ 16,295   $ —   $ 8,562  

Intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist. No impairment indicators were identified during fiscal 2025 and 2024.
Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. Intangible assets amortization expense in each of fiscal 2025, 2024, and 2023 was $ 1.7 million. None of the intangible assets with definite useful lives are anticipated to have a residual value.
The following table presents the estimated future amortization expense related to intangible assets as of September 30, 2025:

Amortization Expense
Year Ending September 30, (in thousands)
2026 $ 1,700  
2027 1,700  
2028 1,700  
2029 795  
2030 149  
Thereafter 817  
Total $ 6,861  

F-23

NOTE 6. STOCKHOLDERS’ EQUITY
The following table summarizes the Company’s shares of common stock and preferred stock:

Shares
Par Value Authorized Issued Outstanding
(in thousands)
As of September 30, 2025
Common stock (1)
$ 0.001   290,000   135,702   135,702  
Preferred stock $ 0.001   5,000   —   —  

As of September 30, 2024
Common stock $ 0.001   290,000   124,376   124,376  
Preferred stock $ 0.001   5,000   —   —  

(1) Does not include shares of common stock into which the Avoro Pre-Funded Warrants may be exercised.
As of September 30, 2025 and 2024, respectively, 9,851,400 and 11,492,293 shares of common stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under the Company’s 2013 and 2021 Incentive Plans, as well as for other inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

On November 25, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional and accredited investor for a private placement of pre-funded warrants to purchase shares of common stock with an exercise price of $ 0.001 per share (“Avoro Pre-Funded Warrants”). Pursuant to the Securities Purchase Agreement, the Company sold pre-funded warrants to purchase up to 917,441 shares of common stock at a purchase price of $ 27.25 per pre-funded warrant, for an aggregate value of approximately $ 25.0 million. The outstanding Avoro Pre-Funded Warrants are exercisable at any time and do not have an expiration date.
The Company determined that the Avoro Pre-Funded Warrants are freestanding financial instruments because they (i) are immediately exercisable, (ii) do not embody an obligation for the Company to repurchase its shares, (iii) permit the holders to receive a fixed number of shares of common stock upon exercise, and (iv) are indexed to the Company’s common stock. As such, the Company evaluated the Avoro Pre-Funded Warrants to determine whether they represent instruments that require liability classification pursuant to the guidance in ASC 480. However, the Company concluded that the Avoro Pre-Funded Warrants are not a liability within the scope of ASC 480 due to their characteristics. Further, the Company determined that the Avoro Pre-Funded Warrants do not meet the definition of a derivative under ASC 815 because they do not meet the criteria regarding no or little initial net investment. Accordingly, the Company assessed the Avoro Pre-Funded Warrants relative to the guidance in ASC 815-40, Contracts in Entity's Own Equity, to determine the appropriate treatment. The Company concluded that the Avoro Pre-funded Warrants are both indexed to its own stock and meet all other conditions for equity classification. Accordingly, the Company has classified the Avoro Pre-funded Warrants as permanent equity. As of September 30, 2025, no shares underlying the Avoro Pre-Funded Warrants had been exercised.
In connection with the Sarepta Collaboration Agreement, on November 25, 2024, the Company entered into the Stock Purchase Agreement with an affiliate of Sarepta for a private placement of shares of common stock of the Company (the “Private Placement”). Pursuant to the Stock Purchase Agreement, the Company sold 11,926,301 shares of common stock, at a price per share of $ 27.25 , for an aggregate value of approximately $ 325.0  million. The Private Placement closed on February 7, 2025. On August 13, 2025, the Company subsequently entered into an agreement with Sarepta to repurchase 2,660,989 common stock of the Company from Sarepta at a price per share of $ 18.79 for an aggregate value of approximately $ 50.0  million and approximately $ 50.0  million in cash to satisfy the milestone payment of $ 100.0  million due from Sarepta. The shares were recorded as treasury stock at their fair value of $ 53.2  million, resulting in a $ 3.2  million gain on settlement. As of the end of fiscal 2025, Sarepta no longer holds an equity position in the Company.
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 $ 250,000,000 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 (“ATM Offering”). The Company is not required to sell shares under the Open Market Sale Agreement. The Company will pay Jefferies LLC a commission of up to 3.0 % of the aggregate gross proceeds received from all sales of the common stock under the Open Market Sale Agreement. Unless otherwise terminated, the ATM Offering shall terminate upon the earlier of (i) the sale of all shares of common stock subject to the Open Market Sale Agreement and (ii) the termination of the Open Market Sale Agreement as permitted therein. The Company and Jefferies may each terminate the Open Market Sale Agreement at any time upon prior notice. As of September 30, 2025, no shares have been issued under the Open Market Sale Agreement.
F-24

NOTE 7. COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, the Company may be subject to various claims and legal proceedings in the ordinary course of business. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount is reasonably estimable, the Company will accrue a liability for the estimated loss. There were no contingent liabilities recorded as of September 30, 2025 and 2024.
On September 10, 2025, the Company filed a Complaint for Declaratory Judgment in the United States District Court for the District of Delaware against Ionis Pharmaceuticals, Inc. (“Ionis”) to declare that the United States Patent No. 9,593,333 (“the ’333 patent”) is invalid and not infringed by the Company’s planned commercialization of investigational plozasiran. On September 11, 2025, Ionis filed a Complaint for Patent Infringement against the Company in the United States District Court for the Central District of California alleging patent infringement of the ’333 patent by the Company’s planned commercialization of investigational plozasiran and seeking damages. There were no contingent liabilities recorded related to this litigation.
Commitments
The Company owns land in the Verona Technology Park in Verona, Wisconsin, where it has constructed an approximately 160,000 square foot drug manufacturing facility and an approximately 140,000 square foot laboratory and office facility to support the Company’s manufacturing, process development, and analytical activities.
As of September 30, 2025, the build-out of these facilities was substantially completed, with total costs incurred of $ 296.4 million. These costs included $ 173.4 million capitalized to building related to the drug manufacturing facility, $ 78.0 million capitalized to building related to the laboratory and office facility, $ 18.6 million capitalized to manufacturing equipment, $ 15.9 million in construction in progress and $ 7.9 million capitalized to research equipment and $ 2.6 million capitalized to furniture.

NOTE 8. LEASES
Pasadena, California : The Company leases 49,000 square feet of office space located at 177 East Colorado Blvd. for its corporate headquarters from 177 Colorado Owner, LLC, which lease expires on April 30, 2027. The lease contains an option to renew for one additional five-year term. The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of September 30, 2025.
San Diego, California : The Company leases 144,000 square feet of office and research and development laboratory space located at 10102 Hoyt Park from 11404 & 11408 Sorrento Valley Owner, LLC, which lease expires on April 30, 2038. Pursuant to the lease, within twelve months of the expiration of the initial 15 -year term, the Company has the option to extend the lease for up to one additional ten-year term, with certain annual increases in base rent. The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of September 30, 2025.
The lease agreement, as amended, granted the Company the right to receive an Additional Tenant Improvement Allowance (“ATIA”) funded by the lessor. The Company received $ 30.8  million in ATIA, including a final payment of $ 3.1 million during the first quarter of fiscal 2024. As a result, the Company remeasured its lease liability and right-of-use assets to reflect these additional allowances and the related increased lease payments. The Company has further concluded that these ATIAs have no effects on the classification of the lease.
Madison, Wisconsin : The Company leases 110,956 square feet space, which it increased from 107,000 square feet on June 30, 2025, located at 502 South Rosa Road for its office and laboratory facilities, which lease expires on September 30, 2031. The lease contains options to renew for two terms of five years . The Company is not reasonably certain that it will exercise this option and therefore it is not included in right-of-use assets and liabilities as of September 30, 2025.
F-25

The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

September 30,
Lease Assets and Liabilities Classification 2025 2024
(in thousands)

Operating lease assets Right-of-use assets $ 43,891   $ 45,255  
Current operating lease liabilities Lease liabilities 7,289   6,342  
Non-current operating lease liabilities Lease liabilities, net of current portion 104,112   111,027  

Year Ended September 30,
Lease Cost Classification 2025 2024 2023
(in thousands)

Operating lease cost Research and development $ 10,483   $ 11,035   $ 10,350  
General and administrative expense 1,952   2,006   1,730  

Variable lease cost (1)
Research and development 4,076   3,648   1,179  
General and administrative expense —   —   —  
Total $ 16,511   $ 16,689   $ 13,259  

(1) Variable lease cost is primarily related to operating expenses associated with the Company’s operating leases.
There was $ 0 , $ 0 and $ 1.4  million in short-term lease cost during the years ended September 30, 2025, 2024, and 2023, respectively.

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

Year Amounts
(in thousands)
2026 $ 15,873  
2027 15,050  
2028 13,696  
2029 13,985  
2030 14,282  
2031 and thereafter 100,672  
Total $ 173,558  
Less imputed interest ( 62,157 )
Total operating lease liabilities $ 111,401  

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

Year Ended September 30,
2025 2024 2023
(in thousands)
Cash received for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ —   $ 3,099   $ 48,391  
Right-of-use assets adjusted in exchange for new/amended operating lease liabilities $ —   $ ( 29 ) $ 17,071  
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 15,474   $ 11,038   $ 5,204  

Weighted-average remaining lease term (in years) 11.70 12.5 13.5
Weighted-average discount rate 8.0   % 8.0   % 8.0   %

F-26

NOTE 9. STOCK-BASED COMPENSATION
The Company has three plans that provide for equity-based compensation.
Under the 2013 Incentive Plan (the “2013 Plan”), 2,276,279 awards are granted and outstanding, relating to stock options and restricted stock awards to employees and directors as of September 30, 2025.
Under the 2021 Incentive Plan (the “2021 Plan”), 8,000,000 shares (subject to certain adjustments) of the Company’s common stock are authorized for grants of stock options, stock appreciation rights, restricted and unrestricted stock, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock. The maximum number of shares authorized under the 2021 Plan will be (i) reduced by any shares subject to awards made under the 2013 Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash. As of September 30, 2025, 6,231,559 shares have been granted under the 2021 Plan. The total number of shares available for issuance was 2,378,770 shares, which includes 170,898 and 439,431 shares that were forfeited under the 2013 and 2021 Plans, respectively.
Under the Company’s Inducement Plan (the “Inducement Plan”), 832,950 shares of the Company’s common stock are authorized for issuance pursuant to grants of stock options, stock appreciation rights, restricted and unrestricted stock, stock units (including restricted stock units), performance awards, cash awards, and other awards convertible into or otherwise based on shares of the Company’s common stock. Awards under the Inducement Plan may only be granted to new employees of the Company in accordance with the provisions of Rule 5635(c)(4) of the Nasdaq Listing Rules. As of September 30, 2025, 660,020 shares have been granted under the Inducement Plan. The total number of shares remaining available for issuance was 255,244 shares.
In addition, prior to adoption of the Inducement Plan, the Company previously granted stand-alone inducement awards in the form of stock options and restricted stock units outside of the Company’s equity plans to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules. As of September 30, 2025, there were 598,605 and 53,713 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.
The following table presents a summary of awards outstanding attributable to Arrowhead Pharmaceuticals, Inc.:

As of September 30, 2025
2013 Plan 2021 Plan Inducement Awards Total
Granted and outstanding awards:
Options 776,279   32,151   598,605   1,407,035  
Restricted stock units 1,500,000   3,750,071   560,280   5,810,351  
Total 2,276,279   3,782,222   1,158,885   7,217,386  

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

Year Ended September 30,
2025 2024 2023
(in thousands)
Research and development $ 27,320   $ 29,527   $ 34,332  
General and administrative 27,528   37,570   43,798  
Total $ 54,848   $ 67,097   $ 78,130  

F-27

Stock Option Awards
The following table presents a summary of the stock option activity for the year ended September 30, 2025:

Shares Weighted-
Average
Exercise
Price
Per Share Weighted-
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value
Outstanding at September 30, 2024 1,978,516   $ 23.39  
Granted —   —  
Cancelled or expired ( 36,341 ) 45.44  
Exercised ( 535,140 ) 7.41  
Outstanding at September 30, 2025 1,407,035   $ 28.90   3.4 $ 19,099,141  
Exercisable at September 30, 2025 1,407,035   $ 28.90   3.4 $ 19,099,141  

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options exercised during the years ended September 30, 2025, 2024, and 2023 was $ 6.4 million, $ 4.2 million and $ 12.2 million, respectively.
Stock-based compensation expense related to stock options outstanding for the years ended September 30, 2025, 2024, and 2023 was $ 0.1 million, $ 2.8 million and $ 8.4 million, respectively.
As of September 30, 2025, the pre-tax compensation expense for all outstanding unvested stock options is considered nominal.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. No options were granted during the years ended September 30, 2025 and 2024.
The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:

Year Ended September 30,
2025 (5)
2024 (5)
2023
Expected dividend yield (1)
—   —   —  
Risk-free interest rate (2)
N/A N/A 3.69 % – 4.57 %

Expected volatility (3)
N/A N/A 86.4   %
Expected term (in years) (4)
N/A N/A 6.25
Weighted-average grant date fair value per share N/A N/A 25.61

(1) The dividend yield is zero as the Company currently does not pay a dividend.
(2) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant.
(3) Volatility is estimated based on volatility average of the Company’s common stock price.
(4) The computation of expected term was determined based on safe harbor rules, considering the contractual terms of the awards and vesting schedules.
(5) No options were granted during the year ended September 30, 2025 and September 30, 2024.
Visirna ESOP : As of September 30, 2025, Visirna, a subsidiary of the Company, granted 14,612,000 stock options to its employees from the Employee Stock Option Plan (the “Visirna ESOP”), which authorizes 20,000,000 shares for issuance. The Visirna ESOP is independently managed by Visirna, including the valuation process. For the years ended September 30, 2025 and 2024, stock-based compensation expense related to the Visirna ESOP was $ 8.5 million and $ 6.9 million, respectively.
Restricted Stock Units
Restricted Stock Units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans, the Inducement Plan and as inducements awards granted outside of the Company’s equity-based compensation plans. At vesting, each outstanding RSU will be exchanged for one share of the
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Company’s common stock. RSU awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets.
The following table summarizes the activity of the Company’s RSUs:

Number of
RSUs Weighted-
Average
Grant
Date
Fair Value
Outstanding as of September 30, 2024 4,913,312   $ 49.61  
Granted 2,779,689   19.38  
Vested ( 1,525,693 ) 47.15  
Forfeited ( 356,957 ) 30.19  
Outstanding as of September 30, 2025 5,810,351   $ 36.97  

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.
For the years ended September 30, 2025, 2024 and 2023, the Company recorded stock-based compensation expense of $ 54.9 million, $ 64.3 million and $ 69.7 million, respectively, related to shares of RSUs. As of September 30, 2025, there was $ 73.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.7 years.
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NOTE 10. FAIR VALUE MEASUREMENTS
The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date using the exit price. Accordingly, when market observable data are not readily available, the Company’s own assumptions are used to reflect those that market participants would be presumed to use in pricing the asset or liability at the measurement date.
Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the level of judgment associated with inputs used to measure their fair values and the level of market price observability, as follows: