10-K – 2025-11-25 – arwr-20250930.htm

Level 1    Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date.
Level 2    Pricing inputs are other than quoted prices in active markets, which are based on the following:
• Quoted prices for similar assets or liabilities in active markets;
• Quoted prices for identical or similar assets or liabilities in non-active markets; or
• Either directly or indirectly observable inputs as of the reporting date.
Level 3    Pricing inputs are unobservable and significant to the overall fair value measurement, and the determination of fair value requires significant management judgment or estimation.
In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.
The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. At September 30, 2025 and 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation techniques utilized by the Company:
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September 30, 2025
Level 1 Level 2 Level 3 Total
(in thousands)

Available-for-sale securities

U.S. government and agency securities $ —   $ 150,695   $ —   $ 150,695  

Certificate of deposits —   12,019   —   12,019  
Municipal securities —   7,046   —   7,046  
Commercial notes —   13,801   —   13,801  
Corporate debt securities —   509,257   —   509,257  
Total available-for-sale securities —   692,818   —   692,818  
Cash equivalents
Money market instruments 64,460   —   —   64,460  
Term deposit —   134,357   —   134,357  
Certificate of deposits —   3,001   —   3,001  
Corporate debt securities —   16,182   —   16,182  
Total cash equivalents 64,460   153,540   —   218,000  
Total financial assets $ 64,460   $ 846,358   $ —   $ 910,818  

September 30, 2024
Level 1 Level 2 Level 3 Total
(in thousands)

Available-for-sale securities

U.S. government and agency securities $ —   $ 160,723   $ —   $ 160,723  

Commercial notes —   179,714   —   179,714  
Corporate debt securities —   237,839   —   237,839  
Total available-for-sale securities —   578,276   —   578,276  
Cash equivalents
Money market instruments 66,966   —   —   66,966  
Total cash equivalents 66,966   —   —   66,966  
Total financial assets $ 66,966   $ 578,276   $ —   $ 645,242  

NOTE 11. INCOME TAXES
Income Tax Provision (Benefit)
The components of the income (loss) before income tax expense and noncontrolling interest are as follows:

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

Domestic
$ ( 42,573 ) $ ( 582,333 ) $ ( 194,639 )
Foreign
94,106   ( 30,127 ) ( 7,852 )
Total
$ 51,533   $ ( 612,460 ) $ ( 202,491 )

Income tax provision (benefit) consisted of the following components:

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Year Ended September 30,
2025 2024 2023
(in thousands)
Current:

Federal
$ 21,440   $ 148   $ 1,074  
State
( 56 ) 375   1,710  
Foreign
35   ( 3,290 ) —  
Total current tax
$ 21,419   $ ( 2,767 ) $ 2,784  

Deferred:

Federal
$ —   $ —   $ —  
State
—   —   —  
Foreign
—   —   —  
Total deferred tax
$ —   $ —   $ —  
Income tax provision $ 21,419   $ ( 2,767 ) $ 2,784  

The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations and comprehensive income (loss). A notional 21% tax rate was applied as follows:

September 30,
2025 2024 2023
U.S. federal statutory income tax 21.0   % 21.0   % 21.0   %
State income taxes, net of federal tax benefit ( 3.1 ) % 2.6   % 0.4   %
Tax credits ( 44.4 ) % 3.0   % 6.8   %
Permanent and other items ( 37.9 ) % 2.5   % ( 4.6 ) %
Non-deductible compensation 5.1   % ( 0.9 ) % ( 4.6 ) %
Foreign-derived intangible income deduction ( 16.2 ) % —   % 1.2   %
Other income 11.1   % —   % —   %
Stock compensation 10.7   % ( 0.7 ) % ( 1.1 ) %
Valuation allowance 95.4   % ( 27.0 ) % ( 20.5 ) %
Effective income tax rate 41.7   % 0.5   % ( 1.4 ) %

Deferred Income Taxes
The following table presents the significant components of the Company’s net deferred tax assets and liabilities:
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September 30,
2025 2024
(in thousands)
Deferred tax assets:
Net operating loss carryforwards $ 70,858   $ 102,716  
Capitalized research and development 232,360   156,015  
Tax credits 48,867   85,428  
Deferred revenue 171,262   81,556  
Lease liabilities 23,919   27,999  
Stock compensation 9,184   10,989  
Accrued compensation 4,254   4,078  
Intangible assets 1,034   1,384  
Other 948   2,843  
Total gross deferred tax assets $ 562,686   $ 473,008  

Valuation allowance $ ( 497,543 ) $ ( 448,867 )

Deferred tax liabilities:
Fixed assets $ ( 30,503 ) $ ( 13,155 )
Right-of-use assets ( 9,424 ) ( 10,792 )
Unrealized gains ( 630 ) ( 194 )
 Original Issue Discount ( 24,586 ) —  
Total gross deferred tax liability $ ( 65,143 ) $ ( 24,141 )
Net deferred tax assets (liabilities) $ —   $ —  

A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2025. Such objective evidence limits the ability to consider other subjective evidence such as its projections for future growth. On the basis of this evaluation at September 30, 2025 and 2024, a valuation allowance of $ 497.5 million and $ 448.9 million, respectively, has been recorded.
As of September 30, 2025, the Company had accumulated federal, state, and foreign net operating loss (“NOL”) carryforwards of $ 20.6 million, $ 815.5 million and $ 46.3 million, respectively. Of the $ 20.6 million in federal NOL carryforwards, $ 20.6 million was generated before January 1, 2018, and is subject to a 20-year carryforward period (“pre-Tax Act losses”), with expiration beginning in 2031. Of the $ 815.5 million in state NOL carryforwards, $ 2.7 million can be carried forward indefinitely, while the remaining balance begins to expire in 2031. The Company also has foreign NOL carryforwards totaling $ 46.3 million, which begin to expire in 2027. Additionally, the Company has federal and state income tax credits of $ 49.4 million and $ 26.3 million, respectively. The federal credits begin to expire in 2041. Of the state income tax credits, $ 13.6 million begins to expire in 2035, while the remaining credits can be carried forward indefinitely.
Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), the annual use of an entity’s NOL and research and development credit carryforwards may be limited if there is a cumulative ownership change of greater than 50% within a three-year period. The annual limitation is determined based on the entity’s value immediately prior to the ownership change. Future ownership changes could further affect the limitation. If a limitation is applied, the related tax asset would be removed from the deferred tax asset schedule, with a corresponding reduction in the valuation allowance. To date, the Company has completed an analysis pursuant to Sections 382 and 383 through September 30, 2024. Ownership Changes may have occurred since then, and future changes could potentially limit the Company’s ability to utilize these attributes.
Uncertainty in Income Taxes
The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more-likely-than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more-likely-than not that a tax position
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will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities.
The following table summarizes the Company’s gross unrecognized tax benefits:

Year Ended September 30,
2025 2024 2023
(in thousands)
Beginning balance of unrecognized tax benefits $ 16,613   $ 14,536   $ 3,481  
Gross increase for prior period tax positions 1,160   654   9,495  
Gross decrease for prior period tax positions —   —   ( 1,489 )
Gross increase for current period tax positions 4,379   3,415   3,049  
Lapse of statue of limitations —   ( 1,992 ) —  
Ending balance of unrecognized tax benefits $ 22,152   $ 16,613   $ 14,536  

The Company has recorded income tax (benefit) expense of $ 0 and $ 3.3 million for the years ended September 30, 2025 and 2024, respectively, related to uncertain tax positions inclusive of interest and penalties. The Company’s policy is to recognize potential interest and penalties related to unrecognized tax benefits associated with uncertain tax positions, if any, in the income tax provision. As of September 30, 2025, the Company has not accrued any interest or penalties.
If the unrecognized tax benefit as of September 30, 2025 is ultimately recognized, there would be no reduction in the Company’s income tax expense or effective tax rate, excluding the impact of U.S. Tax benefits netted against deferred taxes that are subject to a valuation allowance. The Company does not anticipate any changes in its unrecognized tax benefits over the next 12 months.
The Company is subject to taxation in the U.S. and various states along with other foreign countries. Due to the presence of NOL carryforwards, all of the income tax years remain open for examination. The Company is currently under audit by the IRS for September 30, 2023. California income tax examination has been closed. There are no other audits in any other jurisdictions.
The Company analyzes undistributed earnings of each foreign subsidiary and has determined that no withholding taxes are applicable to earnings which are currently available for distribution. No additional deferred tax liability has been recorded as the parent entity would not be required to include the distribution into income under the current law.
The Tax Cuts and Jobs Act subjects a U.S. shareholder to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5. Accounting for GILTI, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year that the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred.
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 the current year.

NOTE 12. EMPLOYEE BENEFIT PLANS
The Company sponsors a defined contribution retirement plan which is under Section 401(k) of the Internal Revenue Code and is designed to adhere to ERISA Fiduciary standards. All of the Company’s full-time employees are eligible to participate this plan. Under the terms of the plan, an eligible employee may elect to contribute a portion of their salary on a pre-tax basis, subject to federal statutory limitations. The plan allows for a discretionary match in an amount up to 100 % of each participant’s first 3 % of compensation contributed plus 50 % of each participant’s next 2 % of compensation contributed.
For the years ended September 30, 2025, 2024, and 2023, the Company recorded expenses for the matching contributions under this plan of $ 3.9 million, $ 3.4 million and $ 2.2 million, respectively.
The Company also provides certain employee benefit plans, including those which provide health and life insurance benefits to employees.
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NOTE 13. LIABILITY RELATED TO THE SALE OF FUTURE ROYALTIES
In November 2022, the Company and Royalty Pharma entered into the Royalty Pharma Agreement, pursuant to which Royalty Pharma agreed to pay up to $ 410.0 million in cash to the Company in consideration for the Company’s future royalty interest in olpasiran, a siRNA originally developed by the Company and licensed to Amgen in September 2016 under the Olpasiran Agreement.
Pursuant to the Royalty Pharma Agreement, Royalty Pharma paid $ 250.0 million upfront and agreed to pay up to an additional $ 160.0 million in aggregate one-time milestone payments due if and when the following milestone events occur: (i) $ 50.0 million on completion of enrollment in the OCEAN Phase 3 clinical trial for olpasiran, (ii) $ 50.0 million upon receipt of FDA approval of olpasiran for an approved indication (reduction in the risk of myocardial infarction, urgent coronary revascularization, or coronary heart disease death in adults with established cardiovascular disease and elevated Lp(a)), and (iii) $ 60.0 million upon Royalty Pharma’s receipt of at least $ 70.0 million of royalty payments under the Royalty Pharma Agreement in any single calendar year. During the third quarter of fiscal 2024, Amgen completed enrollment of the Phase 3 OCEAN(a) outcomes trial of olpasiran, which triggered a $ 50.0  million milestone payment that the Company received in the same quarter.
In consideration for the payment of the foregoing amounts 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 any milestone payments potentially payable by Amgen under the Olpasiran Agreement.
The Company has evaluated the terms of the Royalty Pharma Agreement and concluded in accordance with the relevant accounting guidance that the Company accounted for the transaction as debt and the funding of $ 250.0 million and $ 50.0  million from Royalty Pharma were recorded as liabilities related to the sale of future royalties on its consolidated balance sheets. The Company is not obligated to repay these funds received under the Royalty Pharma Agreement.
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 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. As of September 30, 2025, the estimated effective interest rate was 8.3 %.
The following table presents the activity with respect to the liability related to the sale of future royalties.

September 30,

2025 2024
(in thousands)
Beginning carrying value
$ 341,361   $ 268,326  
Upfront payment received
—   —  
Milestone payment received —   50,000  
Non-cash interest expense recognized 26,036   23,035  
Ending carrying value
$ 367,397   $ 341,361  

NOTE 14. FINANCING AGREEMENT
On August 7, 2024 (the “Closing Date”), the Company entered into a Financing Agreement with the guarantors party thereto, the lenders party thereto (the “Lenders”), and Sixth Street Lending Partners (“Sixth Street”), as the administrative agent and collateral agent for the Lenders (the “Financing Agreement”). The Financing Agreement establishes a senior secured term loan facility of $ 500.0  million (the “Credit Facility”), consisting of $ 400.0  million funded on the Closing Date and an additional $ 100.0  million available at the Company’s option, subject to mutual agreement with Sixth Street. The loans under the Credit Facility bear interest at an annual rate of 15.0 %, which is paid in kind and added to the outstanding principal balance of the Credit Facility each period. The outstanding principal balance of this Credit
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Facility, including amounts representing accrued but unpaid interest previously paid in kind, is due and payable on August 7, 2031.
The Company is permitted to use the net proceeds for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries.
The Company will have the right to prepay loans under the Credit Facility at any time. The Company is required to partially repay loans under the Credit Facility with proceeds from certain asset sales, condemnation events and extraordinary receipts, subject, in some cases, to reinvestment rights. If the Company repays in full the aggregate principal outstanding under the Credit Facility and such payment in full occurs on or prior to August 7, 2028, the Company will be required to make an additional payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve a two times multiple of invested capital (“MOIC”) of the aggregate principal amount funded on the Closing Date (the “MOIC Payment”). If such payment in full occurs after August 7, 2028, the Company will be required to make a payment to the lenders under the Credit Facility on such date in an amount necessary for the lenders to achieve the greater of the MOIC Payment and the present value of all interest payments that would have been payable from such date through the maturity date of the Credit Facility discounted at the Treasury Rate (as defined in the Financing Agreement) plus 0.5 %; provided that such payment amount in this instance will not exceed the amount necessary for the lenders to achieve a 2.5 times MOIC.
On November 26, 2024, the Company entered into an amendment to the Financing Agreement (the "Amendment") to modify, amongst other things, some of the prepayment terms of the loans under the Credit Facility, including, the prepayment terms related to the Sarepta Collaboration Agreement. The Amendment was effective on February 14, 2025, following the closing of the Sarepta Collaboration Agreement and receipt of the $ 500.0  million upfront payment from Sarepta. The Amendment added an additional prepayment clause that requires certain contractual prepayments of principle and MOIC payments throughout the life of the loans under the Credit Facility. Additionally, any prepayment will be split with 50 % of any such prepayment paying down the principle balance of the loans under the Credit Facility and the other 50 % being applied to prepay the MOIC Payment. In the event the prepayment amounts result in fees being prepaid in excess of the actual amounts required to be paid, the excess fees shall be reallocated and applied to reduce the amount of the principal balance upon repayment in full of the loans under the Credit Facility. As of September 30, 2025, the Company has paid $ 100.0  million in MOIC payments of which $ 25.3  million is expected to be applied to principal upon repayment in full. To date, the Company has paid $ 201.6  million of the loans under the Credit Facility during fiscal 2025.
The Amendment was accounted for as a debt modification under ASC 470-50, “Debt—Modification and extinguishments” since the Amendment did not result in substantially different terms. In connection with the Amendment, the Company did not incur significant third-party fees.
All obligations under the Financing Agreement are secured on a first-priority basis by security interests in substantially all assets of the Company and material subsidiaries of the Company, including its intellectual property, subject to certain exceptions, and is guaranteed by material subsidiaries of the Company, including foreign subsidiaries, subject to certain exceptions.
The Financing Agreement contains customary covenants, including, without limitation, a financial covenant to maintain liquidity (cash, cash equivalents and investments) of at least $ 100.0  million if the Company’s market capitalization is above $ 1.5 billion, and negative covenants that, subject to certain exceptions, restrict indebtedness, liens, investments (including acquisitions), fundamental changes, asset sales and licensing transactions, dividends, modifications to material agreements, payment of subordinated indebtedness, distributions from certain parties, and other matters customarily restricted in such agreements. The Company is subject to restrictions on sales and licensing transactions with respect to certain core intellectual property, subject to certain exceptions, including certain transactions related to areas outside the United States, United Kingdom, European Union, Japan and China.
The Financing Agreement contains certain embedded features that were identified and evaluated as not material to the consolidated financial statements.
On August 13, 2025, the Company entered into second amendment to the Financing Agreement (the "Second Amendment") that permitted the share repurchase of the Company's common stock from Sarepta and required the Company to pay a nominal administrative fee.
The outstanding balance of the Credit Facility consisted of the following:
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September 30,

2025 2024
(in thousands)

Initial Term Loan
$ 400,000   $ 400,000  
Accumulated interest on the Initial Term Loan 66,942   9,000  
Accumulated accretion of the MOIC Payment
3,478   —  
Less: Unamortized debt issuance costs ( 13,912 ) ( 15,817 )
Less: Current portion of credit facility ( 40,000 ) —  
Less: Payments ( 201,625 ) —  
Credit facility, net of current portion $ 214,883   $ 393,183  

The following table sets forth total interest expense recognized related to the Credit Facility:

Year Ended September 30,

2025 2024 2023
(in thousands)

Amortization of debt discount and issuance costs
$ 1,906   $ 317   $ —  
Accretion of the MOIC Payment 3,478   —   —  
Contractual interest expense
57,941   9,000   —  
 Total interest expense
$ 63,325   $ 9,317   $ —  

The amounts shown in the table below, related to the Credit Facility, represent the expected repayments of principle and accrued interest balance as of September 30, 2025 as well as any mandatory prepayments that the Company is obligated to make to the Lenders during the indicated periods. The principal balance will increase from accrued paid in kind interest and the table does not include MOIC payments beyond those contractually determined. Actual payments on current principal may vary from the amounts presented in the table.

Year
Amounts

(in thousands)

2026 $ 40,000  
2027 40,000  
2028 15,000  
2029 15,000  
2030 15,000  
Thereafter
214,990  
Total
$ 339,990  

In May 2025, Visirna entered into the Revolving Credit Agreement with Bank of Zhejiang. The maximum aggregate credit facility is 72.9  million Chinese Yuan ($ 10.3  million) bearing an annual interest rate of 4.1 %. The term of each loan is twelve months . The amount outstanding as of September 30, 2025 was 72.9  million Chinese Yuan ($ 10.3  million) on the credit facility which was classified as other current liabilities.

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NOTE 15. NET LOSS PER SHARE
The following table presents the computation of basic and diluted net loss per share for the years ended September 30, 2025, 2024 and 2023.

Year Ended September 30,
2025 2024 2023
(in thousands, except per share amounts)

Numerator:
Net loss attributable to Arrowhead Pharmaceuticals, Inc. $ ( 1,631 ) $ ( 599,493 ) $ ( 205,275 )

Denominator:
Weighted-average basic shares outstanding (1)
133,758   119,784   106,750  
Effect of dilutive securities —   —   —  
Weighted-average diluted shares outstanding (1)
133,758   119,784   106,750  

Basic net loss per share $ ( 0.01 ) $ ( 5.00 ) $ ( 1.92 )
Diluted net loss per share $ ( 0.01 ) $ ( 5.00 ) $ ( 1.92 )

(1) Includes shares of common stock into which the Avoro Pre-Funded Warrants may be exercised. See Note 6.
The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive.

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

Options 744   707   633  
Restricted stock units 4,276   4,030   3,420  
Total 5,020   4,737   4,053  

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NOTE 16. SEGMENT INFORMATION
We operate in a single segment dedicated to the discovery, development, manufacturing and commercialization of RNAi therapeutics. The Company's RNAi therapeutics are comprised of siRNAs that function upstream of conventional medicines by potently silencing messenger RNA (“mRNA”) that encode for proteins implicated in the cause or pathway of disease, thus preventing them from being made. Consistent with our operational structure, our Chief Executive Officer (“CEO”), as the CODM, manages and allocates resources on a consolidated basis at the global corporate level. Our global research and development and technical operations and quality organizations are responsible for the discovery, development, and supply of products. Commercial efforts that coordinate the marketing, sales and distribution of these products are organized by geographic region and therapeutic area. All of these activities are supported by corporate staff functions. Managing and allocating resources at the corporate level enables our CEO to assess the overall level of resources available and how to best deploy these resources in line with our overarching long-term, corporate-wide strategic goals. The determination of a single segment is consistent with the consolidated financial information regularly reviewed by the CODM for the purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.
Consistent with our management reporting, results of our operations are reported on a consolidated basis for purposes of segment reporting. The CEO evaluates performance and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statements of operations and comprehensive income (loss). The measure of segment assets is reported on the consolidated balance sheets as total assets. The CEO uses consolidated net loss to evaluate income generated from the Company’s business activities in deciding how to allocate company resources (such as pursuing clinical development or entering a strategic collaboration), monitoring budget versus actual results, and establishing management’s compensation. Please refer to the consolidated financial statements for further information related to these measures of segment performance. In addition, research and development and selling, general and administrative expenses are significant segment expenses regularly provided to the CEO with the following categories:
Research and Development

Year Ended September 30,
2025 2024 2023
(in thousands)
Candidate costs $ 347,571   $ 259,280   $ 162,459  
R&D discovery costs 66,788   74,150   55,586  
Salaries 109,085   96,418   73,668  
Facilities related 29,233   25,782   16,267  
Total research and development expense, excluding non-cash expense $ 552,677   $ 455,630   $ 307,980  
Stock compensation 32,582   33,586   34,332  
Depreciation and amortization 21,900   16,654   10,876  
Total research and development expense $ 607,159   $ 505,870   $ 353,188  

General & Administrative

Year Ended September 30,
2025 2024 2023
(in thousands)
Salaries $ 31,916   $ 27,589   $ 22,999  
Professional, outside services, and other 53,589   24,733   20,720  
Facilities related 5,625   4,116   3,415  
Total general and administrative expense, excluding non-cash expense $ 91,130   $ 56,438   $ 47,134  
Stock compensation 30,785   40,382   43,798  
Depreciation/amortization 2,028   1,941   1,617  
Total general and administrative expense $ 123,943   $ 98,761   $ 92,549  

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NOTE 17. SUBSEQUENT EVENTS

Novartis
On August 29, 2025, the Company entered into an Exclusive License and Collaboration Agreement (the “Novartis Collaboration Agreement”) with Novartis Pharma AG (“Novartis”) for the co-development and commercialization of multiple preclinical programs in rare, genetic diseases. Under the Novartis Collaboration Agreement, Novartis has received an exclusive worldwide license to the Company's ARO-SNCA preclinical stage program. The Novartis Collaboration Agreement closed on October 17, 2025 subsequent to clearance under the Hart-Scott-Rodino Antitrust Improvement Act. Under the terms of the Novartis Collaboration Agreement, the Company received $ 200.0  million as an upfront payment. The Company is also eligible to receive $ 30.0  million associated with certain target nominations. Further, for each of the 4 programs, the Company is eligible to receive development milestone payments between $ 175.0  million and $ 245.0  million per program and sales milestone payments between $ 285.0  million and $ 370.0  million per program. The Company is also eligible to receive tiered royalties on net sales of licensed products of up to the low double digits.

Sarepta DM1 Milestone
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.

REDEMPLO Commercial Launch
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, which was based on the results of the Phase 3 PALISADE clinical trial, was completed within the Prescription Drug User Fee Act (PDUFA) VI timeframe. This approval is a significant milestone for the Company, and the commercial launch of REDEMPLO is in progress. We expect to begin generating revenue from sales of REDEMPLO in the upcoming fiscal year.

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