SEC EDGAR · 10-Q

10-Q – 2026-08-04 – arwr-20260630.htm

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 46
Lease liabilities 5,322 7,289 | Deferred revenue 94,596 2,399 | Credit facility 40,000 40,000
Lease liabilities, net of current portion 114,298 104,112 | Deferred revenue, net of current portion 31,743 — | Liability related to the sale of future royalties 392,512 367,397
2026 2025 2026 2025 | Revenue $ 75,253 $ 27,767 $ 413,023 $ 572,976 | Operating expenses:
Foreign currency translation adjustments — — — 990 — — — 990 | Unrealized losses on available-for-sales securities — — — ( 6,934 ) — — — ( 6,934 )
Foreign currency translation adjustments — — — 278 — — — 209 487 | Unrealized losses on available-for-sales securities — — — ( 2,254 ) — — — — ( 2,254 )
Accrued expenses ( 15,214 ) 7,956 | Deferred revenue 123,940 22,979 | Operating lease, net ( 3,556 ) ( 3,417 )
Purchases of available-for-sale securities ( 1,138,714 ) ( 774,616 ) | Proceeds from sales of available-for-sale securities 48,788 — | Proceeds from maturities of available-for-sale securities 224,152 587,880

Periodens resultat

Net (loss) income including noncontrolling interest $ ( 178,916 ) $ ( 178,652 ) $ ( 288,249 ) $ 13,993 | Net income (loss) attributable to noncontrolling interest, net of tax 15,364 ( 3,411 ) 7,956 ( 8,126 ) | Net (loss) income attributable to Arrowhead Pharmaceuticals, Inc. $ ( 194,280 ) $ ( 175,241 ) $ ( 296,205 ) $ 22,119
Dividends declared by variable interest entity to noncontrolling shareholders — — — — — — — ( 40,520 ) ( 40,520 ) | Net income (loss) — — — — 30,811 — — ( 2,569 ) 28,242 | Balance at December 31, 2025 140,052 $ 233 $ 2,211,026 $ 6,699 $ ( 1,596,343 ) ( 2,661 ) $ ( 53,193 ) $ ( 5,725 ) $ 562,697
Unrealized gains on available-for-sale securities — — — 653 — — — — 653 | Net income (loss) — — — — 370,445 — — ( 2,582 ) 367,863 | Balance at March 31, 2025 $ 138,062 $ 230 $ 2,106,864 $ 4,390 $ ( 1,428,163 ) — $ — $ 904 $ 684,225
Equity method investment | The Company accounts for investments over which it has significant influence but not control under the equity method. The investment is initially recorded at cost and subsequently adjusted for the Company’s proportionate share of the investee’s net income or loss and are included in other assets in the accompanying consolidated balance sheets. The Company presents income or losses from equity investments as loss on equity method investment on the consolidated statements of operations and compreh | Convertible debt
Net (Loss) Income | Net loss attributable to Arrowhead Pharmaceuticals, Inc. was $194.3 million and $296.2 million for the three and nine months ended June 30, 2026, respectively, compared to a net loss attributable to Arrowhead Pharmaceuticals, Inc. of $175.2 million and a net income attributable to Arrowhead Pharmaceuticals, Inc. of $22.1 million for the three and nine months ended June 30, 2025, respectively. Net loss per diluted share was $1.36 and $2.10 for the three and nine months ended June 30, 2026, respec

Kassaflöde

Net (loss) income $ ( 288,249 ) $ 13,993 | Adjustments to reconcile net (loss) income to net cash flow from operating activities | Stock-based compensation 50,913 44,279
Supplemental cash flow and other information related to leases was as follows:
(in thousands) | Cash Flow from: | Operating activities $ (79,546) $ 159,061
During the nine months ended June 30, 2026, cash flow used in operating activities was $79.5 million, which was primarily due to increase in ongoing expenses related to the Company’s research and development programs and selling, general and administrative expenses, partially offset by $200.0 million of cash received as part of the Novartis agreement, $200.0 million of the second DM1 milestone payment, $50.0 million payment for the first installment of the annual fee received as part of the Sare | During the nine months ended June 30, 2025, cash flow provided by operating activities was $159.1 million, which was primarily due to $500.0 million of cash received as part of the Sarepta agreement, partially offset by ongoing expenses related to the Company's research and development programs and selling, general and administrative expenses. Cash used in investing activities was $201.9 million, which was primarily attributable to capital expenditures of $15.2 million and investment purchases o
During the nine months ended June 30, 2026, cash flow used in operating activities was $79.5 million, which was primarily due to increase in ongoing expenses related to the Company’s research and development programs and selling, general and administrative expenses, partially offset by $200.0 million of cash received as part of the Novartis agreement, $200.0 million of the second DM1 milestone payment, $50.0 million payment for the first installment of the annual fee received as part of the Sare | During the nine months ended June 30, 2025, cash flow provided by operating activities was $159.1 million, which was primarily due to $500.0 million of cash received as part of the Sarepta agreement, partially offset by ongoing expenses related to the Company's research and development programs and selling, general and administrative expenses. Cash used in investing activities was $201.9 million, which was primarily attributable to capital expenditures of $15.2 million and investment purchases o | Contractual Obligations

Nettoskuld

Net (loss) income $ ( 288,249 ) $ 13,993 | Adjustments to reconcile net (loss) income to net cash flow from operating activities | Stock-based compensation 50,913 44,279
Other ( 2,453 ) 3,128 | Net cash (used in) provided by operating activities ( 79,546 ) 159,061
Proceeds from maturities of available-for-sale securities 224,152 587,880 | Net cash used in investing activities ( 874,341 ) ( 201,913 )
Dividends paid by variable interest entity to noncontrolling shareholders ( 38,434 ) — | Net cash provided by financing activities 780,518 70,337

Eget kapital

Consolidated Statements of Stockholders’ Equity | 3
Total Assets $ 2,112,013 $ 1,385,295 | LIABILITIES, NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | Current liabilities:
Commitments and contingencies (Note 7) | Noncontrolling interest and stockholders’ equity: | Common stock, $ 0.001 par value:
( 53,193 ) ( 53,193 ) | Stockholders’ equity 465,529 466,052 | Noncontrolling interest 512 37,364
Noncontrolling interest 512 37,364 | Total noncontrolling interest and stockholders’ equity 466,041 503,416 | Total Liabilities, Noncontrolling Interest and Stockholders’ Equity $ 2,112,013 $ 1,385,295
Total noncontrolling interest and stockholders’ equity 466,041 503,416 | Total Liabilities, Noncontrolling Interest and Stockholders’ Equity $ 2,112,013 $ 1,385,295
Arrowhead Pharmaceuticals, Inc. | Consolidated Statements of Stockholders’ Equity | (in thousands)
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 expira | 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. T | During the second quarter of fiscal 2026, Sarepta exercised its contractual step‑in right under the Sarepta Collaboration Agreement with respect to certain C1 programs, pursuant to which Sarepta will assume responsibility for ongoing clinical trials for such programs on mutually agreed transition dates. Sarepta’s exercise of the step‑in right represents a contract modification under ASC 606, as it reduces both the scope of the Company’s remaining obligations and the amount of variable considerat

Antal aktier

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x | The number of shares of the registrant’s common stock outstanding as of July 30, 2026 was 141,254,467 .
Under the 2013 Incentive Plan (the “2013 Plan”), 1,580,277 awards are granted and outstanding, relating to stock options and restricted stock awards to employees and directors as of June 30, 2026. | Under the 2021 Incentive Plan (the “2021 Plan”), 18,500,000 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 a | 23
taxes in connection with any such awards) or settled in cash. As of June 30, 2026, 7,955,754 shares have been granted under the 2021 Plan, and the total number of shares available for issuance was 11,372,310 shares, which includes 170,898 and 657,166 shares that were forfeited under the 2013 and 2021 Plans, respectively. This reflects an amendment and restatement of the 2021 Plan approved by the Company’s stockholders on March 19, 2026 to increase the total number of authorized shares by 10,500, | Under the Company’s Inducement Plan (the “Inducement Plan”), which was amended and restated in May 2026 to increase the total number of authorized shares and to extend the term of the plan to May 2036, 3,000,000 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 otherw
taxes in connection with any such awards) or settled in cash. As of June 30, 2026, 7,955,754 shares have been granted under the 2021 Plan, and the total number of shares available for issuance was 11,372,310 shares, which includes 170,898 and 657,166 shares that were forfeited under the 2013 and 2021 Plans, respectively. This reflects an amendment and restatement of the 2021 Plan approved by the Company’s stockholders on March 19, 2026 to increase the total number of authorized shares by 10,500, | Under the Company’s Inducement Plan (the “Inducement Plan”), which was amended and restated in May 2026 to increase the total number of authorized shares and to extend the term of the plan to May 2036, 3,000,000 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 otherw | 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 June 30, 2026, there were 326,934 and 41,225 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.
initial conversion price of the Notes and an initial cap price of $ 119.33 per share, subject to adjustment under the terms of the Capped Call confirmations. The Capped Calls are intended to reduce or offset potential dilution to the Company’s common stock upon conversion of the Notes, with such reduction or offset subject to the applicable cap price. The Capped Calls cover, subject to anti‑dilution adjustments, the number of shares of the Company’s common stock underlying the Notes. | The Capped Calls are separate transactions that are not part of the terms of the Notes and do not affect the rights of holders of the Notes. The Company paid $ 47.9 million in connection with the Capped Call transactions, which was recorded as a reduction to additional paid‑in capital in the consolidated balance sheets. As the Capped Calls meet the applicable equity classification criteria under ASC 815, Derivatives and Hedging , they are recorded within stockholders’ equity and are not subseque
Denominator: | Weighted-average basic shares outstanding (1) | 143,378 139,039 141,331 132,385
Effect of dilutive securities — — — 967 | Weighted-average diluted shares outstanding (1) | 143,378 139,039 141,331 133,352
(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. | 46

Antal anställda

(1) Does not include shares of common stock into which the 2024 and 2026 Avoro Pre-Funded Warrants may be exercised. | As of June 30, 2026 and September 30, 2025, respectively, 20,161,210 and 9,851,400 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 (“2024 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-fun
The Company has three plans that provide for equity-based compensation. | Under the 2013 Incentive Plan (the “2013 Plan”), 1,580,277 awards are granted and outstanding, relating to stock options and restricted stock awards to employees and directors as of June 30, 2026. | Under the 2021 Incentive Plan (the “2021 Plan”), 18,500,000 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 a
taxes in connection with any such awards) or settled in cash. As of June 30, 2026, 7,955,754 shares have been granted under the 2021 Plan, and the total number of shares available for issuance was 11,372,310 shares, which includes 170,898 and 657,166 shares that were forfeited under the 2013 and 2021 Plans, respectively. This reflects an amendment and restatement of the 2021 Plan approved by the Company’s stockholders on March 19, 2026 to increase the total number of authorized shares by 10,500, | Under the Company’s Inducement Plan (the “Inducement Plan”), which was amended and restated in May 2026 to increase the total number of authorized shares and to extend the term of the plan to May 2036, 3,000,000 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 otherw | 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 June 30, 2026, there were 326,934 and 41,225 shares underlying outstanding stand-alone inducement options and restricted stock units, respectively.
Under the Company’s Inducement Plan (the “Inducement Plan”), which was amended and restated in May 2026 to increase the total number of authorized shares and to extend the term of the plan to May 2036, 3,000,000 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 otherw | 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 June 30, 2026, there were 326,934 and 41,225 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.:
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 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 variabl | Visirna ESOP : Through June 30, 2026, Visirna, a subsidiary of the Company, granted an aggregate of 16,400,000 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 three months ended June 30, 2026 and 2025, stock-based compensation expense related to the Visirna ESOP was $ 0 and $ 1.1 million, respectively. For the nin | Restricted Stock Units
Facilities-related expense includes lease costs for the Company’s research and development facilities in San Diego, California and in Madison, Wisconsin. These expenses increased $0.6 million, or 9%, for the three months ended June 30, 2026 and $1.8 million or 8%, for the nine months ended June 30, 2026 compared to the same period of 2025. The increase was primarily due to expenses, such as utilities, repair and maintenance charges, associated with the expanded manufacturing facilities in Verona | 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 increased $0.5 million, or 7%, for the three months ended June 30, 2026 compared to the same period of 2025, primarily driven by the annual issuance of RSU grants to employees in January 2026. Stock compensation expense decreased $0.2 million, or 1% for the nine months ended June | Depreciation and amortization expense, a non-cash expense, relates to depreciation on buildings, lab equipment and leasehold improvements. These expenses increased $0.4 million, or 8%, for the three months ended June 30, 2026 and $1.9 million, or 12%, for the nine months ended June 30, 2026 compared to the same periods of 2025. The increase was primarily attributable to the transfer of additional manufacturing equipment following the completion of certification, qualification and validation to s
Facilities related expense primarily includes rental costs and other facilities-related costs for the Company’s corporate headquarters in Pasadena, California. These expenses increased $0.4 million, or 17%, for the three months ended June 30, 2026 and $1.2 million, or 26%, for the nine months ended June 30, 2026 compared to the same periods of 2025. The increase was primarily driven by higher staff amenities expenses driven by higher headcount. | 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. These expenses increased $1.3 million, or 24%, for the three months ended June 30, 2026 and $6.9 million, or 32%, for the nine months ended June 30, 2026 compared to the same periods of 2025. The increase was primarily due to recognition of compensation expense related to a performance-based restricted stock unit aw | Depreciation and amortization expense, a noncash expense, was primarily related to amortization of leasehold improvements for the Company’s corporate headquarters.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________________________
FORM 10-Q
_____________________________________
(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          
Commission file number 001-38042
_____________________________________
ARROWHEAD PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
_____________________________________

Delaware 46-0408024
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

177 E. Colorado Blvd , Suite 700
Pasadena , California 91105
( 626 ) 304-3400
(Address and telephone number of principal executive offices)
Former name, former address, and former fiscal year, if changed since last report: N/A
_____________________________________
Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share ARWR
The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer
x Accelerated Filer o

Non-Accelerated Filer o
Smaller Reporting Company o

Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of the registrant’s common stock outstanding as of July 30, 2026 was 141,254,467 .

Page(s)
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
1

Consolidated Balance Sheets
1

Consolidated Statements of Operations and Comprehensive (Loss) Income
2

Consolidated Statements of Stockholders’ Equity
3

Consolidated Statements of Cash Flows
5

Notes to Consolidated Financial Statements
7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
34

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
44

ITEM 4. CONTROLS AND PROCEDURES
44

PART II — OTHER INFORMATION
46

ITEM 1. LEGAL PROCEEDINGS
46

ITEM 1A. RISK FACTORS
46

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
46

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
46

ITEM 4. MINE SAFETY DISCLOSURES
46

ITEM 5. OTHER INFORMATION
46

ITEM 6. EXHIBITS
47

SIGNATURE
48

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

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

June 30, 2026 September 30, 2025
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash $ 19,685   $ 88,706  
Cash at variable interest entity 35,074   137,842  
Accounts receivable 8,556   6,824  
Available-for-sale securities, at fair value 1,547,201   692,818  
Prepaid expenses 25,373   10,933  
Other current assets 35,522   13,516  
Total current assets 1,671,411   950,639  
Property, plant and equipment, net 373,301   382,515  
Intangible assets, net 5,586   6,861  
Right-of-use assets 55,667   43,891  
Other assets 6,048   1,389  
Total Assets $ 2,112,013   $ 1,385,295  
LIABILITIES, NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable 27,776   $ 17,674  
Accrued expenses 86,174   90,419  
Accrued payroll and benefits 23,455   26,895  
Lease liabilities 5,322   7,289  
Deferred revenue 94,596   2,399  
Credit facility 40,000   40,000  
Other liabilities 6,023   10,811  
Total current liabilities 283,346   195,487  
Long-term liabilities:
Lease liabilities, net of current portion 114,298   104,112  
Deferred revenue, net of current portion 31,743   —  
Liability related to the sale of future royalties 392,512   367,397  
Credit facility, net of current portion 141,366   214,883  
Convertible Notes, Net 682,707   —  
Total long-term liabilities 1,362,626   686,392  
Commitments and contingencies (Note 7)
Noncontrolling interest and stockholders’ equity:
Common stock, $ 0.001 par value:
Authorized 290,000 shares; 143,796 shares issued and 141,135 outstanding as of June 30, 2026 and 138,363 shares issued and 135,702 outstanding as of September 30, 2025
237   231  
Additional paid-in capital 2,443,074   2,139,725  
Accumulated other comprehensive (loss) income ( 1,234 ) 6,443  
Accumulated deficit ( 1,923,355 ) ( 1,627,154 )
Treasury stock; at cost; 2,661 shares of common stock at June 30, 2026 and September 30, 2025
( 53,193 ) ( 53,193 )
Stockholders’ equity 465,529   466,052  
Noncontrolling interest 512   37,364  
Total noncontrolling interest and stockholders’ equity 466,041   503,416  
Total Liabilities, Noncontrolling Interest and Stockholders’ Equity $ 2,112,013   $ 1,385,295  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
1

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
Revenue $ 75,253   $ 27,767   $ 413,023   $ 572,976  
Operating expenses:
Research and development 198,223   162,368   548,679   432,472  
Selling, general and administrative 47,123   30,949   134,888   86,264  
Total operating expenses 245,346   193,317   683,567   518,736  
Operating (loss) income ( 170,093 ) ( 165,550 ) ( 270,544 ) 54,240  

Other income (expense):
Interest income 16,935   11,019   43,496   28,236  
Interest expense ( 24,562 ) ( 24,382 ) ( 70,913 ) ( 67,667 )
Loss on equity method investment ( 2,470 ) —   ( 9,190 ) —  
Gain on VIE's sale of IPR&D assets —   —   19,000   —  
Other, net 1,285   ( 176 ) ( 52 ) 603  
Total other (expense) income ( 8,812 ) ( 13,539 ) ( 17,659 ) ( 38,828 )
 (Loss) income before income tax expense (benefit) and noncontrolling interest ( 178,905 ) ( 179,089 ) ( 288,203 ) 15,412  
Income tax expense (benefit) 11   ( 437 ) 46   1,419  
Net (loss) income including noncontrolling interest $ ( 178,916 ) $ ( 178,652 ) $ ( 288,249 ) $ 13,993  
Net income (loss) attributable to noncontrolling interest, net of tax 15,364   ( 3,411 ) 7,956   ( 8,126 )
Net (loss) income attributable to Arrowhead Pharmaceuticals, Inc. $ ( 194,280 ) $ ( 175,241 ) $ ( 296,205 ) $ 22,119  

Net (loss) income per share attributable to Arrowhead Pharmaceuticals, Inc.:
Basic $ ( 1.36 ) $ ( 1.26 ) $ ( 2.10 ) $ 0.17  
Diluted $ ( 1.36 ) $ ( 1.26 ) $ ( 2.10 ) $ 0.17  
Weighted-average shares used in calculating
Basic 143,378   139,039   141,331   132,385  
Diluted 143,378   139,039   141,331   133,352  

Comprehensive (loss) income:
Net (loss) income including noncontrolling interest $ ( 178,916 ) $ ( 178,652 ) $ ( 288,249 ) $ 13,993  
Other comprehensive (loss) income, net of tax:
Unrealized gains (losses) on available-for-sale securities, net ( 2,254 ) 876   ( 9,042 ) 1,022  
Foreign currency translation adjustments 487   91   1,588   ( 415 )
Total other comprehensive income (loss) ( 1,767 ) 967   ( 7,454 ) 607  
Comprehensive (loss) income ( 180,683 ) ( 177,685 ) ( 295,703 ) 14,600  
Comprehensive income (loss) attributable to noncontrolling interest 15,573   ( 3,411 ) 8,609   ( 8,126 )
Comprehensive (loss) income attributable to Arrowhead Pharmaceuticals, Inc. $ ( 196,256 ) $ ( 174,274 ) $ ( 304,312 ) $ 22,726  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
2

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

Common
Stock
Amount ($) Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Common Stock in Treasury Treasury Amount ($) Non-
controlling Interest Total
Balance at September 30, 2025 138,363   $ 231   $ 2,139,725   $ 6,443   $ ( 1,627,154 ) ( 2,661 ) $ ( 53,193 ) $ 37,364   $ 503,416  
Stock-based compensation —  —  19,371   —  —  —  —  —  19,371  
Exercise of stock options 296   —  5,098   —  —  —  —  —  5,098  
Common stock - restricted stock units vesting 704   1   1   —  —  —  —  —  2  
Issuance of common stock under at-the-market offering, net of issuance costs
689   1   46,831   —  —  —  —  —  46,832  
Foreign currency translation adjustments —  —  —  110   —  —  —  —  110  
Unrealized gains on available-for-sale securities, net
—  —  —  146   —  —  —  —  146  
Dividends declared by variable interest entity to noncontrolling shareholders —  —  —  —  —  —  —  ( 40,520 ) ( 40,520 )
Net income (loss) —  —  —  —  30,811   —  —  ( 2,569 ) 28,242  
Balance at December 31, 2025 140,052   $ 233   $ 2,211,026   $ 6,699   $ ( 1,596,343 ) ( 2,661 ) $ ( 53,193 ) $ ( 5,725 ) $ 562,697  
Stock-based compensation —  —  16,670   —  —  —  —  —  16,670  
Exercise of stock options 121   —  1,968   —  —  —  —  —  1,968  
Common stock - restricted stock units vesting 1,043   1   —  —  —  —  —  —  1  
Issuance of common stock in follow-on offering, net of issuance costs 2,016   2   116,605   —  —  —  —  —  116,607  
Issuance of pre-funded warrants —  —  99,998   —  —  —  —  —  99,998  
Purchase of Capped Calls related to the 2026 Convertible Note —  —  ( 47,880 ) —  —  —  —  —  ( 47,880 )
Foreign currency translation adjustments —  —  —  990   —  —  —  990  
Unrealized losses on available-for-sales securities —  —  —  ( 6,934 ) —  —  —  ( 6,934 )

Change in ownership interest in consolidated VIE —  —  ( 3,120 ) ( 13 ) —  —  —  3,133   —  
Gain on VIE's sale of IPR&D assets —  —  —  —  —  —  —  ( 7,629 ) ( 7,629 )
Net loss —  —  —  —  ( 132,732 ) —  —  ( 4,840 ) ( 137,572 )
Balance at March 31, 2026 143,232   $ 236   $ 2,395,267   $ 742   $ ( 1,729,075 ) ( 2,661 ) $ ( 53,193 ) $ ( 15,061 ) $ 598,916  
Stock-based compensation —  —  14,872   —  —  —  —  —  14,872  
Exercise of stock options 149   —  5,697   —  —  —  —  —  5,697  
Common stock - restricted stock units vesting 48   —  —  —  —  —  —  —  —  
Issuance of common stock under at-the-market offering, net of issuance costs 367   1   27,238   —  —  —  —  —  27,239  

Foreign currency translation adjustments —  —  —  278   —  —  —  209   487  
Unrealized losses on available-for-sales securities —  —  —  ( 2,254 ) —  —  —  —  ( 2,254 )

Net (loss) income —  —  —  —  ( 194,280 ) —  —  15,364   ( 178,916 )
Balance at June 30, 2026 143,796   $ 237   $ 2,443,074   $ ( 1,234 ) $ ( 1,923,355 ) ( 2,661 ) $ ( 53,193 ) $ 512   $ 466,041  

3

Common
Stock
Amount ($) Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Common Stock in Treasury Treasury Amount ($) Non-
controlling Interest Total
Balance at September 30, 2024 124,376   $ 217   $ 1,806,000   $ 4,750   $ ( 1,625,523 ) —   $ —   $ 5,619   $ 191,063  
Stock-based compensation —  —  15,209   —  —  —  —  —  15,209  
Exercise of stock options 70   —  634   —  —  —  —  —  634  
Common stock - restricted stock units vesting 209   —  —  —  —  —  —  —  —  
Issuance of pre-funded warrants —  —  25,000   —  —  —  —  —  25,000  
Foreign currency translation adjustments —  —  —  ( 106 ) —  —  —  —  ( 106 )
Unrealized losses on available-for-sale securities, net —  —  —  ( 507 ) —  —  —  —  ( 507 )
Net loss —  —  —  —  ( 173,085 ) —  —  ( 2,133 ) ( 175,218 )
Balance at December 31, 2024 124,655   $ 217   $ 1,846,843   $ 4,137   $ ( 1,798,608 ) —   $ —   $ 3,486   $ 56,075  
Stock-based compensation —  —  16,027   —  —  —  —  —  16,027  
Exercise of stock options 353   —  2,619   —  —  —  —  —  2,619  
Common stock - restricted stock units vesting 1,128   1   —  —  —  —  —  —  1  
Common stock issued 11,926   12   241,375   —  —  —  —  —  241,387  
Foreign currency translation adjustments —  —  —  ( 400 ) —  —  —  —  ( 400 )
Unrealized gains on available-for-sale securities —  —  —  653   —  —  —  —  653  
Net income (loss) —  —  —  —  370,445   —  —  ( 2,582 ) 367,863  
Balance at March 31, 2025 $ 138,062   $ 230   $ 2,106,864   $ 4,390   $ ( 1,428,163 ) —   $ —   $ 904   $ 684,225  
Stock-based compensation —  —  13,043   —  —  —  —  —  13,043  
Exercise of stock options 36   —  223   —  —  —  —  —  223  
Common stock - restricted stock units vesting 46   —  —  —  —  —  —  —  —  
Foreign currency translation adjustments —  —  —  91   —  —  —  —  91  
Unrealized gains on available-for-sale securities —  —  —  876   —  —  —  —  876  
Net loss —  —  —  —  ( 175,241 ) —  —  ( 3,411 ) ( 178,652 )
Balance at June 30, 2025 $ 138,144   $ 230   $ 2,120,130   $ 5,357   $ ( 1,603,404 ) —   $ —   $ ( 2,507 ) $ 519,806  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
4

Arrowhead Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended June 30,
2026 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ ( 288,249 ) $ 13,993  
Adjustments to reconcile net (loss) income to net cash flow from operating activities
Stock-based compensation 50,913   44,279  
Depreciation and amortization 19,417   17,542  
Accretion of available-for-sale securities premiums/discounts ( 4,122 ) ( 4,545 )
Amortization of convertible notes issuance costs 1,423   —  
Realized gain on investments
( 36 ) —  
Non-cash interest expense on liability related to the sale of future royalties 25,115   18,893  
Non-cash interest expense on credit facility 44,374   48,774  
Loss on equity method investment 9,190   —  
Gain on VIE's sale of IPR&D assets ( 19,000 ) —  
Non-cash transfer of property and equipment to affiliate 579   —  
Changes in operating assets and liabilities:
Accounts receivable ( 1,907 ) ( 9,841 )
Prepaid expenses and other current assets
( 29,940 ) ( 22,342 )
Accounts payable 9,980   21,662  
Accrued expenses ( 15,214 ) 7,956  
Deferred revenue 123,940   22,979  
Operating lease, net ( 3,556 ) ( 3,417 )
Other ( 2,453 ) 3,128  
Net cash (used in) provided by operating activities ( 79,546 ) 159,061  

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
( 8,567 ) ( 15,177 )
Purchases of available-for-sale securities ( 1,138,714 ) ( 774,616 )
Proceeds from sales of available-for-sale securities 48,788   —  
Proceeds from maturities of available-for-sale securities 224,152   587,880  
Net cash used in investing activities ( 874,341 ) ( 201,913 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercises of stock options 12,763   3,476  
Proceeds from issuance of warrants 99,998   25,000  
Proceeds from issuance of convertible notes 700,000   —  
Payments of debt issuance costs ( 18,716 ) ( 5,000 )
Purchase of capped calls ( 47,880 ) —  
Proceeds from issuance of common stock related to ATM offering 76,109   241,388  
Payments of issuance costs of common stock related to ATM offering ( 2,038 ) —  
Proceeds from issuance of common stock related to follow-on offering 130,000   —  
Payments of issuance costs of common stock related to follow-on offering ( 13,393 ) —  
Repayments of credit facility ( 117,891 ) ( 201,625 )
Proceeds from Visirna credit agreement —   7,098  
Dividends paid by variable interest entity to noncontrolling shareholders ( 38,434 ) —  
Net cash provided by financing activities 780,518   70,337  

Net (decrease) increase in cash, cash equivalents and restricted cash ( 173,369 ) 27,485  

Effect of exchange rate on cash, cash equivalents and restricted cash 1,580   ( 377 )

5

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
BEGINNING OF PERIOD 226,548   102,685  
END OF PERIOD $ 54,759   $ 129,793  

Supplemental disclosure of cash flows:
Interest paid $ —   $ ( 19 )
Income taxes paid $ ( 21,587 ) $ ( 81 )
Supplemental disclosure of non-cash investing activities:
Capital expenditures included in accrued expenses $ 1,084   $ 346  
Supplemental disclosure of non-cash financing activities:

      ROU assets obtained in exchange for new lease liabilities $ 13,410   $ —  

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

Arrowhead Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
(unaudited)

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
General and Recent Developments
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.
Approved Products

REDEMPLO ® (plozasiran) is approved by the U.S. Food and Drug Administration (“FDA”) as an adjunct to diet to reduce triglycerides for adults with Familial Chylomicronemia Syndrome (“FCS”). REDEMPLO is also approved by the European Commission, Chinese National Medical Products Administration (“NMPA”), Health Canada, and the Australian Therapeutic Goods Administration (TGA) for the same indication.

REDEMPLO is a small interfering RNA (“siRNA”) therapeutic designed to suppress the production of apolipoprotein C-III (APOC3), a protein produced in the liver that raises triglyceride levels by slowing their breakdown and clearance. By targeting the APOC3 gene with sustained silencing, REDEMPLO delivers significant reductions in triglyceride levels. REDEMPLO is the first and only FDA-approved siRNA treatment studied in both genetically confirmed and clinically diagnosed patients living with FCS.

Consolidation and Basis of Presentation
The interim 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). Wholly-owned subsidiaries refer to Arrowhead Madison, Inc., Arrowhead Australia Pty Ltd., Arrowhead Pharmaceuticals Ireland Limited and Arrowhead Pharmaceuticals NZ Limited. The Company’s variable interest entity is 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 interim Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). The financial data of the Company included herein are unaudited. In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position as of June 30, 2026 and the results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform with the current period presentation.
Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted from the accompanying interim consolidated financial statements and related notes. Readers are urged to review the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025 for more complete descriptions and discussions. Operating results and cash flows for the nine months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026.
The Company operates as a single segment as the chief operating decision maker (“CODM”), reviews operating results on an aggregate basis and manages the operations as a single operating segment. Refer to Note 16, Segment Information, for further details on the segment information.

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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, the sale of certain future royalties and issuance of convertible debt. 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 a growing commercial-stage Company and as the Company’s pipeline matures into later stage clinical trials.
As of June 30, 2026, the Company had $ 54.8 million in cash, cash equivalents and restricted cash ($ 4.1 million in restricted cash) and $ 1,547.2 million in available-for-sale securities to fund operations.
In total, the Company is eligible to receive up to $ 16.2 billion in additional developmental, regulatory and sales milestones based on programs that have been partnered, 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
There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2025, other than below:
Equity method investment
The Company accounts for investments over which it has significant influence but not control under the equity method. The investment is initially recorded at cost and subsequently adjusted for the Company’s proportionate share of the investee’s net income or loss and are included in other assets in the accompanying consolidated balance sheets. The Company presents income or losses from equity investments as loss on equity method investment on the consolidated statements of operations and comprehensive (loss) income. If the share of losses exceeds the carrying value of the Company’s investment, the Company will suspend recognizing additional losses and will continue to do so unless it commits to providing additional funding or commits to guarantee investee liabilities. As of June 30, 2026, the Company had an equity method investment in Bisirna Therapeutics, Inc. (“Bisirna”). Refer to Note 8, Equity Method Investment, for further details.
Convertible debt
The Company accounts for its convertible debt instrument as a single unit of accounting, classified as a liability, as the conversion features do not require bifurcation as a derivative under ASC 815-15 and the convertible debt instrument was not issued at a substantial premium. The Company records debt issuance costs as contra-liabilities in the consolidated balance sheets at issuance, and amortizes them over the contractual term of the convertible debt instrument based on the effective interest method.
The balance of the convertible notes presented in the consolidated balance sheets represents the principal balance of the convertible debt instrument less the unamortized portion of the debt issuance costs.
As of June 30, 2026, the Company had outstanding convertible notes, which mature on January 15, 2032. Refer to Note 14, Convertible Notes, for further details.
Recent Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326) : Measurement of Credit Losses for Accounts Receivable
and Contract Asset. This ASU allows companies to elect a practical expedient to assume that conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when estimating the expected credit losses of the asset. The ASU will become effective for the Company beginning October 1, 2026, and the Company is currently evaluating the impact on its consolidated financial statements and related disclosures.
In January 2025, the FASB issued 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.

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In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20) , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 will become effective for the Company beginning October 1, 2026, and the Company is currently evaluating the impact on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued 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 is currently evaluating the impact of this new ASU on its financial statements and plans to adopt ASU 2023-09 on a prospective basis during this fiscal year.
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NOTE 2. COLLABORATION AND LICENSE AGREEMENTS
The following table provides a summary of revenue recognized from our collaboration and license agreements:

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
GSK $ —   $ 143   $ —   $ 2,646  
Sarepta 26,395   27,624   297,594   570,330  
Novartis 20,232   —   74,945   —  
Sanofi 1,241   —   11,983   —  
Madrigal 25,000   —   25,000   —  
Total $ 72,868   $ 27,767   $ 409,522   $ 572,976  

The following table summarizes the balance of receivables, contract assets and contract liabilities related to the Company’s collaboration and license agreements, which, as of June 30, 2026, relate solely to the Company’s agreements with Sarepta, Novartis and Sanofi:

June 30, 2026 September 30, 2025
(in thousands)
Receivables included in accounts receivable $ 5,799   $ 6,824  
Contract assets included in other current assets
$ 10,231   $ —  
Contract liabilities included in deferred revenue, current $ 94,596   $ 2,399  
Contract liabilities included in deferred revenue, non-current
$ 31,743   $ —  

Deferred revenue consisted of the following:

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Balance at beginning of period
$ 157,159   $ 43,268   $ 2,399   $ —  
Deferred revenue additions
545   7,335   481,217   593,309  
Revenue recognized
( 46,627 ) ( 27,624 ) ( 372,539 ) ( 570,330 )
Balance at end of period
111,077   22,979   111,077   22,979  
Plus receivables included in accounts receivable; and contract assets included in other current assets 15,262   —   15,262   —  
Less deferred revenue, current
( 94,596 ) ( 22,979 ) ( 94,596 ) ( 22,979 )
Deferred revenue, non-current
$ 31,743   $ —   $ 31,743   $ —  

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 the upfront payment under the GSK-HSD License Agreement, and accordingly the $ 120.0  million upfront payment 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.
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As of June 30, 2026, the Company had no contract assets and liabilities recorded.
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.
As of June 30, 2026, the Company had no contract assets and liabilities recorded.
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.
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 selling, 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 June 30, 2026.
As of June 30, 2026, the accrued expense balance is $ 36.4  million that was primarily driven by co-development and co-commercialization activities.
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 June 30, 2026.
In November 2022, Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) and the Company entered into a
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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 12.
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 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 (a "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 discovery target licenses and research and development activities. 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 to receive reimbursement of certain costs related to carrying out the research and development activities for the C1 programs. At contract inception, the transaction price was determined to be $ 904.9  million, consisting of fixed consideration of $ 833.6  million and estimated variable consideration of $ 71.2  million. The fixed consideration was allocated to all performance obligations based on their relative standalone selling price. The variable consideration was allocated to the performance obligation to which it is determined to be related, which is the respective development work that is being reimbursed. 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. Standalone selling prices for the research and development work were determined based on an expected cost plus margin approach. During the fourth quarter of fiscal 2025, the Company earned the first of two ARO-DM1 development milestone payment of $ 100.0  million, of which $ 50.0  million was settled in cash and the remaining $ 50.0  million was settled through the repurchase of Company's
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common stock. In November 2025, the Company earned the second of two $ 200.0 million ARO-DM1 development milestone payments and received the milestone payment in January 2026. In February 2026, the Company earned and received the first installment of the annual fee payment of $ 50.0 million.
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.
For each of the 13 programs, the Company is also 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 programs to which the milestones relate. The Company will recognize the regulatory 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.
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.
During the second quarter of fiscal 2026, Sarepta exercised its contractual step‑in right under the Sarepta Collaboration Agreement with respect to certain C1 programs, pursuant to which Sarepta will assume responsibility for ongoing clinical trials for such programs on mutually agreed transition dates. Sarepta’s exercise of the step‑in right represents a contract modification under ASC 606, as it reduces both the scope of the Company’s remaining obligations and the amount of variable consideration related to reimbursable research and development costs for the affected C1 programs. The Company evaluated the modification and determined that the remaining research and development activities to be performed after the modification are not distinct from those performed prior to the modification and, accordingly, the modification is accounted for as part of the original performance obligation through a cumulative catch‑up adjustment. The scope of the modification, including the associated transition terms, was finalized during the third quarter of fiscal 2026, and the Company recorded the related cumulative catch‑up adjustment to revenue in that period, consistent with the timing of finalization. The contract modification did not impact revenue previously recognized related to the four C1 licenses, which were delivered as distinct performance obligations.
In December 2025, pursuant to the Sarepta Collaboration Agreement, the Company entered into a clinical supply agreement with Sarepta (the “Sarepta Clinical Supply Agreement”), whereby the Company is responsible for manufacturing and supplying certain materials to Sarepta for specified activities. For the three and nine months ended June 30, 2026, the Company recorded $ 26.0  million and $ 292.8  million in revenue under the Sarepta Collaboration Agreement, respectively. For the three and nine months ended June 30, 2026, the Company recorded $ 0.4  million and $ 4.7  million in revenue under the Sarepta Clinical Supply Agreement, respectively. As of June 30, 2026, the Company held $ 5.0  million in accounts receivable and $ 10.2  million in contract assets, relating to the Sarepta Collaboration Agreement and the Sarepta Clinical Supply Agreement. Revenue recognized that are not invoiced to the customer as a result of recognizing revenue over time are recorded as a contract asset included in other current assets in the consolidated balance sheet. Upon invoicing to the customer, the balance is recorded in accounts receivable in the consolidated balance sheet. The recognition of the remaining revenue for the performance obligations is dependent upon the time it takes to complete the
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respective research and development activities and in consideration of the timing of the selection of the rest of the targets within the C3 programs.
Novartis Pharma AG
On August 29, 2025, the Company entered into an Exclusive License and Collaboration Agreement (the “Novartis Collaboration Agreement”) with Novartis for the development and commercialization of multiple preclinical programs in rare, genetic diseases of the central nervous system.
Under the Novartis Collaboration Agreement, Novartis received an exclusive sublicensable worldwide license to the Company’s ARO-SNCA preclinical stage program. The Company will perform certain research and development activities for the program.
Further, Novartis has selected additional gene targets (“Collaboration Target”) for which the Company has accepted and will perform discovery, optimization and preclinical development activities to identify RNAi compounds against each selected target. Novartis has received an exclusive license to the Company’s intellectual property rights to exploit compounds directed to those targets (the “CT” programs) and is wholly responsible for clinical development and commercialization of each compound after the Company delivers a CTA package.
The Company identified multiple performance obligations under the Novartis Collaboration Agreement. They include the ARO-SNCA preclinical stage program licenses and research and development activities, and CT programs licenses and research and development activities. Each of the 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 product licenses and respective research and development work will be combined to form one performance obligation. For these 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 Novartis Collaboration Agreement, the Company received an upfront payment of $ 200.0  million on October 23, 2025. The Company is also eligible to receive research milestone payments of up to $ 30.0  million and reimbursement of certain costs related to carrying out the research, development and manufacturing activities for the programs. The fixed consideration of $ 200.0  million and an estimated variable consideration of $ 32.0  million for a total of $ 232.0  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, 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 premium based on the difference between the aggregate stand-alone selling price and the transaction price for accounting revenue recognition purposes. The Company allocated the premium proportionally to each of the performance obligations based upon their standalone selling price.
Further, for each of the programs, the Company is eligible to receive regulatory milestone payments between $ 175.0  million and $ 245.0  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 programs to which the milestones relate. The Company will recognize the regulatory 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.
The Company is also eligible to receive sales milestone payments between $ 285.0  million and $ 370.0  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 Novartis Collaboration Agreement. The Company has applied the sales-based scope exception to the sales
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milestones and the royalty-based payments.
The Novartis Collaboration Agreement commenced in October 2025 and may be terminated by either party in the event of a material breach as defined therein. In addition, Novartis may voluntarily terminate the Novartis Collaboration Agreement with 30 days' written notice to the Company if terminated prior to any regulatory approval of a licensed product, or with 180 days' written notice to the Company if terminated after any regulatory approval of a licensed product. Unless earlier terminated, the Novartis 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.
For the three and nine months ended June 30, 2026, the Company recorded $ 20.2  million and $ 74.9  million in revenue from Novartis. As of June 30, 2026, the Company held $ 94.6  million in current deferred revenue and $ 31.7  million in non-current deferred revenue, related to the Novartis Collaboration Agreement. 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.
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 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. In the second quarter of fiscal 2026, Visirna received a $ 10.0  million milestone payment as a result of the NMPA’s approval of REDEMPLO (plozasiran) for the reduction of triglyceride levels in adult patients with FCS. Visirna is eligible to receive further development milestone payments of up to $ 255.0  million upon approval of plozasiran across various indications in mainland China.
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 recognizes approval 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.
Under the Sanofi License Agreement, Sanofi has the option to purchase clinical and commercial product supply from the Company. In addition, the Company is eligible to receive royalties from Sanofi on net commercial product sales in Greater China. For the three and nine months ended June 30, 2026, the Company recorded $ 1.2  million and $ 12.0  million in revenue, respectively under the Sanofi License Agreement. As of June 30, 2026, the Company held $ 0.8  million in accounts receivable under the Sanofi License Agreement.
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.
Madrigal Therapeutics Inc. (“Madrigal”)
On May 4, 2026, the Company entered into a Licensing Agreement with Madrigal (the “Madrigal License Agreement”), under which Madrigal received an exclusive global license to develop, manufacture, and commercialize ARO-PNPLA3, a clinical stage program.
Under the terms of the Madrigal License Agreement, the Company received an upfront payment of $ 25.0  million on June 2, 2026. The Company is eligible to receive milestone payments of up to $ 975.0  million, and further eligible to
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receive tiered royalties on commercial sales ranging from high-single digits to the mid-teens.
The Company identified a single performance obligation comprising the combined license, know-how and technology transfer, which was satisfied upon delivery in the third quarter of fiscal 2026. The fixed consideration of $ 25  million was fully allocated to this performance obligation and recognized in the third quarter of fiscal 2026.
As of June 30, 2026, the Company had no contract assets and liabilities recorded.
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NOTE 3. BALANCE SHEET ACCOUNTS
Property, Plant and Equipment
The following table summarizes the Company’s major classes of property, plant and equipment:

June 30, 2026 September 30, 2025
(in thousands)
Land $ 2,995   $ 2,996  
Buildings 254,859   251,317  
Research equipment 61,447   62,758  
Manufacturing equipment 34,182   18,588  
Furniture 5,813   5,594  
Computers and software 971   1,064  
Leasehold improvements 104,462   104,425  
Construction in progress 5,811   15,942  
Property, plant and equipment, gross 470,540   462,684  
Less: Accumulated depreciation and amortization ( 97,239 ) ( 80,169 )
Property, plant and equipment, net $ 373,301   $ 382,515  

Depreciation and amortization expense for property, plant and equipment for the three months ended June 30, 2026 and 2025 was $ 6.2  million and $ 5.8  million, respectively. Depreciation and amortization expense for property, plant and equipment for the nine months ended June 30, 2026 and 2025 was $ 18.1  million and $ 16.2  million, respectively.

Accrued Expenses
Accrued expenses consisted of the following as of:

June 30, 2026 September 30, 2025
(in thousands)
Accrued research and development expenses
$ 35,648   $ 30,330  
Accrued research and development expenses; co-development 36,368   31,296  
Accrued capital expenditures 1,084   277  
Accrued income taxes —   20,799  
Dividends declared by variable interest entity to noncontrolling shareholders 2,110   —  
Other 10,964   7,717  
Total accrued expenses $ 86,174   $ 90,419  

As of June 30, 2026, the Company’s accrued research and development expenses were primarily attributable to ongoing clinical trial operations, preclinical animal studies, and associated toxicology assessments. Research and development expenses related to co-development and co-commercialization activities per the Takeda License Agreement are reported as accrued research and development expenses; co-development in the table above (see Note 2).
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NOTE 4. INVESTMENTS
The Company’s investments consisted of the following:

As of June 30, 2026
(in thousands)
Adjusted Basis Gross
Unrealized Gains Gross
Unrealized Losses Fair Value

Available-for-sale securities $ 1,553,308   $ 433   $ ( 6,540 ) $ 1,547,201  

Total current investments $ 1,553,308   $ 433   $ ( 6,540 ) $ 1,547,201  

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  

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

June 30, 2026 September 30, 2025
(in thousands)

Within one year
$ 605,489   $ 224,328  
After one to two years
669,500   468,490  
After two to three years 272,212   —  
Total
$ 1,547,201   $ 692,818  

As of June 30, 2026 and 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 June 30, 2026 and 2025.
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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 June 30, 2026
Patents $ 21,728   $ 17,589   $ —   $ 4,139   14
License 3,129   1,682   —   1,447   21
Total intangible assets, net $ 24,857   $ 19,271   $ —   $ 5,586  
As of
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  

Intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist. No impairment indicators were identified during the nine months ended June 30, 2026 and 2025.
Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. Intangible assets amortization expense was $ 0.4 million for the three months ended June 30, 2026 and 2025, and $ 1.3 million for each of the nine months ended June 30, 2026 and 2025. 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 June 30, 2026:

Amortization Expense
Year Ending September 30, (in thousands)
2026 (remainder)
$ 425  
2027 1,700  
2028 1,700  
2029 795  
2030 149  
Thereafter 817  
Total $ 5,586  

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

Shares
Par Value Authorized Issued Outstanding
As of (in thousands)
As of June 30, 2026
Common stock (1)
$ 0.001   290,000   143,796   141,135  
Preferred stock $ 0.001   5,000   —   —  

As of September 30, 2025
Common stock (1)
$ 0.001   290,000   138,363   135,702  
Preferred stock $ 0.001   5,000   —   —  
    (1) Does not include shares of common stock into which the 2024 and 2026 Avoro Pre-Funded Warrants may be exercised.
As of June 30, 2026 and September 30, 2025, respectively, 20,161,210 and 9,851,400 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 (“2024 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 2024 Avoro Pre-Funded Warrants are exercisable at any time and do not have an expiration date.
The Company concluded that the 2024 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 2024 Avoro Pre-funded Warrants as equity and recorded within additional paid-in capital. As of June 30, 2026, no shares underlying the 2024 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 to partially satisfy the milestone payment of $ 100.0  million due from Sarepta (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. 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”) with Jefferies LLC (“Jefferies”). On December 10, 2025, the Company entered into an Amended and Restated Open Market Sale Agreement (the “Amended and Restated Sale Agreement”) with Jefferies, which amended and restated the Open Market Sale Agreement in its entirety. Under the Amended and Restated Sale Agreement, the Company may, from time to time, sell up to $ 500.0  million in shares of the Company’s common stock through Jefferies, acting as the sales agent and/or principal, in an at-the-market offering (“ATM Offering”). The Amended and Restated Sale Agreement continues to provide for the sale, from time to time, of shares of the Company’s common stock up to the maximum program amount permitted under the Company’s shelf registration statement and subject to continued compliance with the terms of the Amended and Restated Sale Agreement, including the delivery of issuance notices, prospectus supplements, and periodically updated representations, warranties, and deliverables. The Company pays Jefferies a commission of up to 3.0 % of the aggregate gross proceeds received from all sales of the common stock under the ATM Offering. The Amended and Restated Sale Agreement may be terminated by either party upon written notice.
For the three months ended June 30, 2026, the Company sold approximately 367,000 shares of common stock under the ATM Offering, generating gross proceeds of $ 28.0  million and net proceeds of $ 27.2  million, after deducting underwriting commissions and offering costs. For the nine months ended June 30, 2026 , the Company sold approximately
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1,056,000 shares of common stock under the ATM Offering, generating gross proceeds of $ 76.1  million and net proceeds of $ 74.1  million, after deducting underwriting commissions and offering costs.
On January 7, 2026, the Company entered into an underwriting agreement with Jefferies and J.P. Morgan Securities, LLC (“J.P. Morgan”) for an underwritten public offering (the “2026 Offering”) of: (i) 2,015,505 shares of common stock with $ 0.001 par value per share, at a public offering price of $ 64.50 per share, and (ii) pre‑funded warrants (“2026 Avoro Pre-Funded Warrants”) to purchase 1,550,387 shares of common stock, at a public offering price of $ 64.499 per share, which represents the per share public offering price for the common stock less the $ 0.001 per share exercise price for each pre-funded warrant. The 2026 Offering closed on January 9, 2026, generating gross proceeds of $ 230 million and net proceeds of $ 216.6 million after deducting the underwriting discounts and commissions and other offering expenses. The Company concluded that the 2026 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 2026 Avoro Pre-funded Warrants as equity and recorded within additional paid-in capital. As of June 30, 2026, no shares underlying the 2026 Avoro Pre-Funded Warrants had been exercised.
On January 2, 2026, option holders of Visirna, the Company's consolidated variable interest entity, exercised 14,000,000 stock options. As a result, the Company’s ownership interest in Visirna decreased from 66.25 % to 56.38 %. Because the Company retained its controlling financial interest in Visirna, the change in ownership was accounted for as an equity transaction in accordance with ASC 810-10-45-22 through 45-24.
The noncontrolling interest was increased by $ 3.1  million to reflect the change in ownership resulting from exercise of 14,000,000 stock options by Visirna option holders. The decrease of $ 3.1  million was recorded to additional paid‑in capital attributable to Arrowhead.
During the first quarter of fiscal 2026, Visirna declared a cash dividend of $ 100.0  million to its shareholders. As of December 31, 2025, the portion of the dividend declared payable to the Company’s noncontrolling shareholders totaled $ 40.5  million and was included in the accompanying consolidated statements of equity. In March 2026, Visirna paid cash dividends totaling $ 94.8  million, consisting of $ 56.4  million paid to the Company and $ 38.4  million paid to the Company’s noncontrolling shareholders. The remaining $ 3.1  million of the declared dividend represents exercise prices paid by certain noncontrolling shareholders in connection with the exercise of their stock options, which were netted against the dividend otherwise payable to those shareholders. As of June 30, 2026, Visirna had a remaining dividend payable of $ 2.1  million to the Company’s noncontrolling shareholder, which was included in accrued expenses in the accompanying consolidated balance sheets.

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 June 30, 2026.
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. The Company disputes the allegations of wrongdoing and intends to vigorously defend itself.
Commitments
As of June 30, 2026, the Company did not have any material commitments other than lease related commitments disclosed in Note 9 and debt related commitments disclosed in Note 13.

NOTE 8. EQUITY METHOD INVESTMENT
On January 15, 2026, the Company, through its consolidated variable interest entity, Visirna, entered into and closed an Asset Transfer Agreement (the “Asset Transfer Agreement”) with Bisirna, pursuant to which the Company received 26,500,000 ordinary shares and 6,625,000 Series A preferred shares in exchange for in‑process research and development (“IPR&D”) assets transferred from Visirna to Bisirna. As a result of the asset transfer, the Company recognized a gain of $ 19.0 million in other income in the accompanying consolidated statements of operations and comprehensive (loss) income for the nine months ended June 30, 2026.
The Company evaluated whether there was a basis difference between the carrying value and fair value of its
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proportionate share of Bisirna’s underlying net assets. As Bisirna was not deemed a business as defined in ASC 805, Business Combinations , the Company immediately expensed the basis difference to the extent it related to acquired IPR&D assets.
As of June 30, 2026, the Company held a 25.29 % voting interest in Bisirna and one seat on Bisirna’s board of directors. The Company accounts its ownership in Bisirna under the equity method. As of June 30, 2026, the carrying value of the Company’s investment in Bisirna was $ 2.2 million, which was included in other assets in the accompanying consolidated balance sheets.

NOTE 9. LEASES
Pasadena, California : The Company leases office space located at 177 East Colorado Blvd. for its corporate headquarters from 177 Colorado Owner, LLC. In April 2026, the Company entered into a lease amendment (the “2026 Pasadena Lease Amendment”) to extend the lease term for its office located in Pasadena, California and to add additional office space, increasing the total leased office space from approximately 49,576 square feet to approximately 98,444 square feet. The 2026 Pasadena Lease Amendment commenced for a portion of the building in May 2026, with the remainder expected to commence in the fourth fiscal quarter of 2026. The 2026 Pasadena Lease Amendment has a lease term of seven years and eight months and provides two consecutive options to renew for two terms of five years . 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 June 30, 2026.

The 2026 Pasadena Lease Amendment granted the Company the right to receive a tenant improvement allowance funded by the lessor for $ 9.1 million. The Company has further concluded that this tenant improvement allowance has no effects on the classification of the lease.
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 June 30, 2026.
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 June 30, 2026.
The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

Lease Assets and Liabilities Classification June 30, 2026 September 30, 2025
(in thousands)

Operating lease assets Right-of-use assets $ 55,667   $ 43,891  
Current operating lease liabilities Lease liabilities 5,322   7,289  
Non-current operating lease liabilities Lease liabilities, net of current portion 114,298   104,112  

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Three Months Ended June 30, Nine Months Ended June 30,
Lease Cost Classification 2026 2025 2026 2025
(in thousands)

Operating lease cost Research and development $ 2,808   $ 2,233   $ 8,326   $ 7,754  
Selling, general and administrative 737   449   1,745   1,442  

Variable lease cost (1)
Research and development 620   893   2,710   2,830  
Selling, general and administrative —   —   —   —  

Total $ 4,165   $ 3,575   $ 12,781   $ 12,026  

(1) Variable lease cost is primarily related to operating expenses associated with the Company’s operating leases.
There was no short-term lease cost during the three and nine months ended June 30, 2026 and 2025, respectively.
The following table presents maturities of operating lease liabilities on an undiscounted basis as of June 30, 2026:

Year Amounts
(in thousands)
2026 (remainder) $ 4,007  
2027 15,267  
2028 16,594  
2029 19,468  
2030 19,929  
2031 and thereafter 126,624  
Total $ 201,889  
Less imputed interest ( 82,269 )
Total operating lease liabilities (includes current portion) $ 119,620  

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)

Operating cash flows from operating leases $ 4,089   $ 3,875   $ 11,976   $ 11,554  
June 30,
2026 2025
Weighted-average remaining lease term (in years) 10.7 11.9
Weighted-average discount rate 8.2   % 8.0   %

NOTE 10. STOCK-BASED COMPENSATION
The Company has three plans that provide for equity-based compensation.
Under the 2013 Incentive Plan (the “2013 Plan”), 1,580,277 awards are granted and outstanding, relating to stock options and restricted stock awards to employees and directors as of June 30, 2026.
Under the 2021 Incentive Plan (the “2021 Plan”), 18,500,000 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
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taxes in connection with any such awards) or settled in cash. As of June 30, 2026, 7,955,754 shares have been granted under the 2021 Plan, and the total number of shares available for issuance was 11,372,310 shares, which includes 170,898 and 657,166 shares that were forfeited under the 2013 and 2021 Plans, respectively. This reflects an amendment and restatement of the 2021 Plan approved by the Company’s stockholders on March 19, 2026 to increase the total number of authorized shares by 10,500,000 shares and extend the term of the plan to January 21, 2036.
Under the Company’s Inducement Plan (the “Inducement Plan”), which was amended and restated in May 2026 to increase the total number of authorized shares and to extend the term of the plan to May 2036, 3,000,000 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 June 30, 2026, 835,930 shares have been granted, net of cancellations, under the Inducement Plan. The total number of shares remaining available for issuance was 2,164,070 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 June 30, 2026, there were 326,934 and 41,225 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.:

June 30, 2026
2013 Plan 2021 Plan Inducement Awards Total
Granted and outstanding awards:
Options 480,277   22,965   326,934   830,176  
Restricted stock units 1,100,000   4,011,324   683,330   5,794,654  
Total 1,580,277   4,034,289   1,010,264   6,624,830  

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Research and development $ 8,187   $ 6,898   $ 23,003   $ 21,008  
Selling, general and administrative 6,787   5,095   28,129   20,242  
Total $ 14,974   $ 11,993   $ 51,132   $ 41,250  

Stock Option Awards
The following table presents a summary of the stock option activity for the nine months ended June 30, 2026:

Shares Weighted-
Average
Exercise
Price
Per Share Weighted-
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value
Outstanding at September 30, 2025
1,407,035 $ 28.90  
Granted — —  
Cancelled or expired — —  
Exercised ( 576,859 ) 22.88  
Outstanding at June 30, 2026
830,176 $ 32.97   3.0 $ 40,293,644  
Exercisable at June 30, 2026
830,176 $ 32.97   3.0 $ 40,293,644  

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 three months ended June 30, 2026
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and 2025 was $ 11.2 million and $ 0.3 million, respectively. The total intrinsic value of the options exercised during the nine months ended June 30, 2026 and 2025 was $ 23.8 million and $ 4.9 million, respectively.
There was no stock-based compensation expense related to stock options outstanding for the three months ended June 30, 2026 and 2025. Stock-based compensation expense related to stock options outstanding for the nine months ended June 30, 2026 and 2025, was $ 0 and $ 0.1 million, respectively.
As of June 30, 2026, 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 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 nine months ended June 30, 2026 and 2025.
Visirna ESOP : Through June 30, 2026, Visirna, a subsidiary of the Company, granted an aggregate of 16,400,000 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 three months ended June 30, 2026 and 2025, stock-based compensation expense related to the Visirna ESOP was $ 0 and $ 1.1 million, respectively. For the nine months ended June 30, 2026 and 2025, stock-based compensation expense related to the Visirna ESOP was $ 0 and $ 3.0 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 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
Per Share
Outstanding at September 30, 2025
5,810,351 $ 36.97  
Granted 2,049,141 66.42  
Vested ( 1,794,793 ) 41.69  
Forfeited ( 270,045 ) 31.55  
Outstanding at June 30, 2026
5,794,654 $ 49.69  

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 three months ended June 30, 2026 and 2025, the Company recorded $ 15.0 million and $ 11.9 million of expense related to RSUs, respectively. For the nine months ended June 30, 2026 and 2025, the Company recorded $ 51.1 million and $ 41.1 million of expense related to RSUs, respectively. As of June 30, 2026, there was $ 158.8  million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 2.5 years.

NOTE 11. FAIR VALUE MEASUREMENTS
The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Note 10 - Fair Value Measurements of Notes to Consolidated Financial Statements of Part IV, “Item 15. Exhibits and Financial Statement Schedules” of its Annual Report
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on Form 10-K for the fiscal year ended September 30, 2025.
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. .
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

June 30, 2026
Level 1 Level 2 Level 3 Total
(in thousands)

Available-for-sale securities

U.S. government and agency securities $ —   $ 251,437   $ —   $ 251,437  

Commercial notes —   111,916   —   111,916  
Corporate debt securities —   1,183,848   —   1,183,848  
Total available-for-sale securities —   1,547,201   —   1,547,201  

Cash equivalents

Money market instruments 15,635   —   —   15,635  
Term deposit —   16,586   —   16,586  

Total cash equivalents
15,635   16,586   —   32,221  
Total financial assets $ 15,635   $ 1,563,787   $ —   $ 1,579,422  

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  

Convertible Notes

The Company's Convertible Notes (see Note 14) are carried at amortized cost and is not measured at fair value on a recurring basis. As of June 30, 2026, the carrying value of the Convertible Notes was $ 682.7 million, and its estimated fair value was $ 843.7 million. We determine the fair value of the Convertible Notes based on quoted market prices for these notes, which are Level 2 measurements because the Convertible Notes do not trade regularly.

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Credit Facility

The Company’s credit facility (see Note 13) is carried at amortized cost and is not measured at fair value on a recurring basis. As of June 30, 2026, the aggregate carrying amount of the current and noncurrent portions of the facility was $ 181.4 million, and its estimated fair value was approximately $ 416.0 million.
The estimated fair value was determined using an income approach based on the present value of expected cash flows associated with the facility’s contractual terms, including its scheduled repayments, paid-in-kind interest and multiple-on-invested-capital provisions. Because the valuation included significant unobservable inputs, the estimated fair value was categorized within Level 3 of the fair value hierarchy.

NOTE 12. 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. As of June 30, 2026, up to $ 110.0  million of additional milestone payments remain payable in the future, contingent upon the achievement of the remaining regulatory and royalty-based milestones.
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.
During the three months ended June 30, 2026, the Company updated its estimates of future royalty payments based on revised assumptions related primarily to expected pricing, product launch timing, and projected sales. These revisions resulted in changes to the expected amount and timing of future cash flows and, accordingly, an increase in the effective interest rate. As a result, the estimated effective interest rate increased from 8.3 % as of September 30, 2025 to 9.0 % as of June 30, 2026.
The following table presents the activity with respect to the liability related to the sale of future royalties.
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Nine Months Ended June 30,
2026 2025
(in thousands)
Beginning carrying value $ 367,397   $ 341,361  

Non-cash interest expense recognized 25,115   18,893  
Ending carrying value $ 392,512   $ 360,254  

NOTE 13. 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 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 principal 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 principal 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 June 30, 2026, the Company has paid $ 158.9  million in MOIC payments of which $ 33.3  million is expected to be applied to principal upon repayment in full. To date, the Company has paid $ 319.5  million of the loans under the Credit Facility.
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 $ 250.0  million if the Company ’ s market capitalization is above $ 2.0 billion, and negative covenants that, subject to certain exceptions, restrict indebtedness, liens,
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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. As of June 30, 2026, the Company was in compliance with all covenants under the Financing Agreement. Pursuant to the terms of the Financing Agreement, the Company and its subsidiaries are not permitted to have an aggregate principal amount of convertible indebtedness outstanding at any one time in excess of the greater of $ 300.0  million and 10 % of the market capitalization of the Company (based on the closing price of the common stock of the Company on the trading date immediately prior to the incurrence of such indebtedness), but in no event greater than $ 700.0  million in the aggregate. 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 a 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:

June 30, 2026 September 30, 2025
(in thousands)
Initial Term Loan $ 400,000   $ 400,000  
Accumulated interest on the Initial Term Loan 106,205   66,942  
Accumulated accretion of the MOIC Payment
7,455   3,478  
Less: Unamortized debt issuance costs ( 12,778 ) ( 13,912 )
Less: Current portion of credit facility ( 40,000 ) ( 40,000 )
Less: Payments ( 319,516 ) ( 201,625 )
Credit facility, net of current portion $ 141,366   $ 214,883  

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Amortization of debt issuance costs
$ 385   $ 420   $ 1,133   $ 1,533  
Accretion of the MOIC Payment 1,515   2,218   3,977   2,787  
Contractual interest expense
13,212   13,766   39,264   44,454  
 Total interest expense
$ 15,112   $ 16,404   $ 44,374   $ 48,774  

The amounts shown in the table below, related to the Credit Facility, represent the expected repayments of principal and accrued interest balance as of June 30, 2026 inclusive of scheduled 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 prepayments beyond those contractually scheduled. Actual payments on current principal may vary from the amounts presented in the table.

Year
Amounts

(in thousands)
2026 (remainder)
$ —  
2027 40,000  
2028 15,000  
2029 15,000  
2030 15,000  
Thereafter
260,634  
Total
$ 345,634  

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 ($ 10.7  million) bearing an annual interest rate of 4.1 %. The term of each loan is
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twelve months . The amount outstanding as of June 30, 2026 was 22.1  million Chinese Yuan ($ 3.2  million) on the credit facility which was classified as other current liabilities.

NOTE 14. CONVERTIBLE NOTES
In January 2026, the Company issued 700.0  million aggregate principal amount of 0.00 % Convertible Notes (the “Notes”) due January 15, 2032. The initial conversion rate is 11.4844 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 87.07 per share, subject to adjustment upon the occurrence of certain specified events. The Notes are convertible into an aggregate of approximately 8,039,080 shares of the Company’s common stock. The conversion rate is subject to adjustment, including in the case of conversions in connection with a make-whole fundamental change as defined in the indenture for the Notes or a redemption of the Notes.
The Notes are convertible at the option of the holders upon the occurrence of certain events prior to October 15, 2031, and thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Prior to October 15, 2031, holders may convert the Notes only upon the occurrence of one of the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending March 31, 2026, if the last reported sale price of the Company’s common stock exceeds 130 % of the conversion price for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading‑day period ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five business days immediately following any ten consecutive trading‑day period in which the trading price per $1,000 principal amount of the Notes for each trading day of such ten consecutive trading-day period is less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; (iii) upon the occurrence of certain specified corporate events or distributions on the common stock; or (iv) if the Company calls the Notes for redemption. Upon conversion, the Company may, at its election, settle the Notes in cash, shares of the Company’s common stock, or a combination thereof.
The Company may not redeem the Notes prior to January 16, 2029. On or after January 16, 2029 and on or before the 30 th scheduled trading day immediately preceding the maturity date, the Company may redeem for cash all or any portion of the Notes, at its option, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading‑day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.
Upon the occurrence of a fundamental change, which includes certain change-of-control transactions, a delisting of the Company’s common stock, or a liquidation event, holders may require the Company to repurchase their Notes for cash at a price equal to 100 % of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The outstanding balance of the Notes consisted of the following:

June 30, 2026 September 30, 2025
(in thousands)
Outstanding principal balance
$ 700,000   $ —  
Less: Unamortized debt issuance costs
( 17,293 ) —  
Convertible notes, net $ 682,707   $ —  

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Amortization of debt issuance costs
$ 767   $ —   $ 1,423   $ —  
 Total interest expense
$ 767   $ —   $ 1,423   $ —  

Capped Call Transactions
In connection with the issuance of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls have an initial strike price corresponding to the
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initial conversion price of the Notes and an initial cap price of $ 119.33 per share, subject to adjustment under the terms of the Capped Call confirmations. The Capped Calls are intended to reduce or offset potential dilution to the Company’s common stock upon conversion of the Notes, with such reduction or offset subject to the applicable cap price. The Capped Calls cover, subject to anti‑dilution adjustments, the number of shares of the Company’s common stock underlying the Notes.
The Capped Calls are separate transactions that are not part of the terms of the Notes and do not affect the rights of holders of the Notes. The Company paid $ 47.9  million in connection with the Capped Call transactions, which was recorded as a reduction to additional paid‑in capital in the consolidated balance sheets. As the Capped Calls meet the applicable equity classification criteria under ASC 815, Derivatives and Hedging , they are recorded within stockholders’ equity and are not subsequently remeasured to fair value.

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NOTE 15. NET (LOSS) INCOME PER SHARE
The following table presents the computation of basic and diluted net (loss) income per share for the three and nine months ended June 30, 2026 and 2025.

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands, except per share amounts)

Numerator:
Net (loss) income attributable to Arrowhead Pharmaceuticals, Inc. $ ( 194,280 ) $ ( 175,241 ) $ ( 296,205 ) $ 22,119  

Denominator:
Weighted-average basic shares outstanding (1)
143,378   139,039   141,331   132,385  
Effect of dilutive securities —   —   —   967  
Weighted-average diluted shares outstanding (1)
143,378   139,039   141,331   133,352  

Basic net (loss) income per share $ ( 1.36 ) $ ( 1.26 ) $ ( 2.10 ) $ 0.17  
Diluted net (loss) income per share $ ( 1.36 ) $ ( 1.26 ) $ ( 2.10 ) $ 0.17  

(1) Include shares of common stock into which the 2024 and 2026 Avoro Pre-Funded Warrants may be exercised. See Note 6.
The following table sets forth the number of potentially dilutive securities that have been excluded from the calculation of diluted net (loss) income per share because to include them would be anti-dilutive.

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Options 830   768   830   756  
Restricted stock units 5,795   5,178   5,795   4,770  
If-converted common stock from convertible notes 8,039   —   8,039   —  
Total 14,664   5,946   14,664   5,526  

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 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. 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) income that is reported on the consolidated statements of operations and comprehensive (loss) income. The measure of segment assets is reported on the consolidated balance sheets as total assets. The CEO uses consolidated net (loss) income to evaluate loss or 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
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development and selling, general and administrative expenses are significant segment expenses regularly provided to the CEO with the following categories:
Research and Development

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Candidate costs $ 126,595   $ 95,007   $ 331,035   $ 243,094  
Discovery costs
18,320   21,043   58,645   48,785  
Salaries 31,978   26,531   95,563   80,583  
Facilities related 7,016   6,457   22,713   20,944  
Total research and development expense, excluding non-cash expense $ 183,909   $ 149,038   $ 507,956   $ 393,406  
Stock compensation 8,149   7,612   22,804   23,049  
Depreciation and amortization 6,165   5,718   17,919   16,017  
Total research and development expense $ 198,223   $ 162,368   $ 548,679   $ 432,472  

Selling, General & Administrative

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
Salaries $ 14,083   $ 7,964   $ 38,457   $ 23,152  
Professional, outside services, and other 23,274   14,869   61,116   35,811  
Facilities related 2,549   2,180   5,708   4,546  
Total selling, general and administrative expense, excluding non-cash expense
$ 39,906   $ 25,013   $ 105,281   $ 63,509  
Stock compensation 6,723   5,431   28,109   21,230  
Depreciation/amortization 494   505   1,498   1,525  
Total selling, general and administrative expense
$ 47,123   $ 30,949   $ 134,888   $ 86,264  

NOTE 17. SUBSEQUENT EVENTS
On July 31, 2026, the Company entered into an asset purchase agreement pursuant to which the Company agreed to purchase a rare pediatric disease priority review voucher ( “ PRV ” ) issued by the U.S. Food and Drug Administration (the “ FDA ” ) for aggregate consideration of $ 215.0  million upon closing. A PRV entitles its holder to priority review of a single new drug application or biologics license application, which is designed to shorten the FDA’s target review period, and may be sold or transferred to another party. The Company currently expects to use the PRV in connection with its upcoming Supplemental New Drug Application for plozasiran to seek approval for the treatment of patients with severe hypertriglyceridemia. Closing is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company expects the transaction to close in the fourth fiscal quarter of 2026 and intends to fund the purchase price from existing cash, cash equivalents and investments.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Quarterly Report on Form 10-Q except for historical information may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “goal,” “endeavor,” “strive,” “intend,” “plan,” “project,” “could,” “estimate,” “target,” “might,” “forecast,” “potential,” or “continue” or the negative of these words or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements include, but are not limited to, statements about the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; our expectations regarding the timing and potential benefits of the partnership, licensing and/or collaboration arrangements and other strategic arrangements and transactions we have entered into or may enter into in the future, including our pending acquisition of a rare pediatric disease priority review voucher; our beliefs and expectations regarding the amount and timing of future milestone, royalty or other payments that could be due to or from third parties under existing agreements; and our estimates regarding future revenues, sales of REDEMPLO (plozasiran), our expectations regarding regulatory approval for and commercial launch of plozasiran, operating income, research and development expenses, cash flows, capital requirements and payments to third parties.
The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately, and many of which are beyond our control. As such, our actual results or outcomes and timing of certain events may differ materially from those discussed, projected, anticipated or indicated in any forward-looking statements. Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and cash flows may differ materially. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” of Part I and “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q as well as “Item 1. Business” and “ Item 1A. Risk Factors” of Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II of our most recent Annual Report on Form 10-K. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Except as may be required by law, we disclaim any intent to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

OVERVIEW
The Company develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and modes of delivery, the Company’s therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. RNAi is a mechanism present in living cells that inhibits the expression of a specific gene, thereby affecting the production of a specific protein. RNAi-based therapeutics seek to leverage this natural pathway of gene silencing to target and shut down specific disease-causing genes.
The Company believes that TRiM TM enabled therapeutics offer several potential advantages over prior generations and competing technologies, including: simplified manufacturing and reduced costs; multiple routes of administration including subcutaneous injection and inhaled administration; the ability to target multiple tissue types including liver, lung, skeletal muscle, central nervous system (CNS), adipose tissue, ocular, and cardiomyocytes; and the potential for improved safety and reduced risk of intracellular buildup, because there are fewer metabolites from smaller, simpler molecules.
The Company's products:
• REDEMPLO ® , indicated as an adjunct to diet to reduce triglycerides in adults with Familial Chylomicronemia Syndrome (FCS), which has received regulatory approvals in the United States, European
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Union, Canada, Australia and China (Greater China rights out-licensed to Sanofi).

The following table presents selected programs from the Company’s pipeline:

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

zodasiran Phase 3 Arrowhead
olpasiran Phase 3 Amgen
GSK4532990 Phase 2b GSK
ARO-PNPLA3 Phase 1 Madrigal
ARO-INHBE Phase 1/2a Arrowhead
ARO-ALK7 Phase 1/2a Arrowhead
ARO-DIMER-PA Phase 1/2a Arrowhead (1)

Pulmonary ARO-RAGE Phase 2 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
SRP-1005 (ARO-HTT) Phase 1 Sarepta
ARO-MAPT Phase 1/2a Arrowhead
ARO-SNCA Pre-clinical Novartis
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’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, clinical trials, and commercial products are either manufactured internally or contracted to third-party manufacturers. The Company engages third-party contract research organizations (CROs) to manage clinical trials and works cooperatively with such organizations on all aspects of clinical trial management, including plan design, patient recruiting, and follow up. These outside costs, including toxicology/efficacy testing and manufacturing costs, as well as the preparation for and administration of clinical trials, are referred to as “candidate costs.” As clinical candidates progress through clinical development, candidate costs will increase.
The First Three Quarters of Fiscal 2026 Business Highlights
The bullets below highlight key developments in our business during the first three quarters of fiscal year 2026:
• Announced an exclusive worldwide license agreement with Madrigal Pharmaceuticals for ARO-PNPLA3, Arrowhead’s clinical stage RNA interference (RNAi) therapeutic designed to reduce liver expression of patatin-like phospholipase domain containing 3 (PNPLA3) as a potential treatment for patients with metabolic dysfunction-associated steatohepatitis (MASH):
◦ Under the terms of the agreement, Madrigal made a $25 million upfront payment to Arrowhead. Arrowhead is also eligible to receive development, regulatory, and sales milestone payments of up to $975 million. Arrowhead is further eligible to receive tiered royalties on commercial sales ranging from high-single digits to the mid-teens.
◦ In a Phase 1 single-ascending dose clinical study, ARO-PNPLA3 achieved encouraging results,
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including a dose-dependent mean reduction in liver fat of up to 40% in patients homozygous for the I148M mutation, no apparent treatment emergent increases in triglycerides or LDL-cholesterol, and a positive safety and tolerability profile at all doses studied.
• Announced that the Australian Therapeutic Goods Administration (TGA) has approved REDEMPLO® (plozasiran) as an adjunct to diet to reduce triglyceride levels for adult patients with familial chylomicronaemia syndrome (FCS) in Australia.
• Announced that the European Commission (EC) formally granted marketing authorization for REDEMPLO, a small interfering RNA (siRNA) medicine, as an adjunct to diet to reduce triglyceride levels in adult patients with familial chylomicronemia syndrome (FCS). REDEMPLO is the first and only siRNA medicine authorized by the EC for adults with FCS diagnosed either by the presence of clinical criteria or genetic testing.
• Presented interim results from a Phase 1/2a clinical trial of ARO-INHBE, the Company’s investigational RNA interference (RNAi) therapeutic being developed as a potential treatment for obesity and metabolic dysfunction-associated steatohepatitis (MASH).
◦ The data presented at the European Association for the Study of the Liver Congress (EASL 2026) demonstrate that ARO-INHBE treatment led to clinically meaningful reductions in liver fat as a monotherapy and in combination with low-dose tirzepatide, a GLP-1/GIP receptor co-agonist, in adults with obesity.
• Presented new positive clinical data for plozasiran supporting its use in patients with moderate-to-severe renal impairment or moderate hepatic impairment without the need for dose adjustment, and a case report suggesting that preconception exposure to plozasiran may be associated with sustained lowering of fasting triglyceride (TG) levels through the term of a pregnancy.
◦ The data were presented in two oral presentations at the 94th European Atherosclerosis Society (EAS) Congress.
• Presented new long-term efficacy and safety data for plozasiran across a spectrum of hypertriglyceridemia at the American College of Cardiology’s 75th Annual Scientific Session and Expo.
◦ Patients with severe hypertriglyceridemia (sHTG) achieved an 83% median reduction in triglycerides (TG), with 96% of patients achieving TG levels below 500 mg/dL, a threshold associated with increased risk of acute pancreatitis.
◦ No adjudicated acute pancreatitis events occurred in any patient receiving plozasiran during the 2-year Phase 2b Open-Label Expansion (OLE) Study.
◦ Favorable and durable improvements in atherogenic lipoproteins, including remnant cholesterol, non-high-density lipoprotein (HDL) cholesterol, and Apolipoprotein B (ApoB), were observed, with a safety profile consistent with earlier trials.
• Initiated and dosed the first subjects in a Phase 1/2a clinical trial of ARO-DIMER-PA, the Company’s investigational 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 both proprotein convertase subtilisin kexin 9 (PCSK9) and apolipoprotein C3 (APOC3) genes.
◦ This represents an important step forward for the field of RNAi therapeutics, as it is the first clinical candidate to target two genes simultaneously in one molecule, enabled by Arrowhead’s innovative and proprietary Targeted RNAi Molecule (TRiM ™ ) platform.
• Completed upsized offerings of convertible senior notes, common stock, and pre-funded warrants with gross proceeds of $930.0 million, which strengthened the Company’s balance sheet.
• Announced that the Chinese National Medical Products Administration (NMPA) has approved REDEMPLO (plozasiran) for the reduction of triglyceride levels in adult patients with familial chylomicronemia syndrome (FCS).
◦ REDEMPLO will be marketed in Greater China by Sanofi under an agreement between Sanofi and Arrowhead.
• Announced interim results from two Phase 1/2a clinical trials of ARO-INHBE and ARO-ALK7, the
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Company’s investigational RNAi therapeutics being developed as potential treatments for obesity and metabolic dysfunction-associated steatohepatitis (MASH), showing for patients enrolled in the study that:
◦ ARO-INHBE in combination with tirzepatide, a GLP-1/GIP receptor co-agonist, nearly doubled weight loss at week 16 and roughly tripled reductions in visceral fat, total fat, and liver fat versus tirzepatide alone in obese patients with type 2 diabetes mellitus at those same endpoints at week 12.
◦ ARO-ALK7, the first RNAi-therapeutic to show adipocyte gene target silencing in a clinical trial, achieved dose dependent reductions in adipose ALK7 messenger (mRNA) with a mean reduction of -88% at the 200 mg dose at week 8 with a maximum reduction of -94%.
◦ ARO-INHBE monotherapy at 200mg or greater reduced liver fat content (LFC) by 44% compared to placebo in subjects with obesity and baseline liver fat content greater than 8%.
• Announced that Health Canada has issued a Notice of Compliance (NOC) authorizing REDEMPLO™ (plozasiran) as an adjunct to diet to reduce triglycerides in adults with familial chylomicronemia syndrome (FCS) for whom standard triglyceride lowering therapies have been inadequate.
◦ REDEMPLO is the first and only Health Canada-approved siRNA medicine to be studied in patients with genetically confirmed and clinically diagnosed FCS.
◦ The Health Canada approval is based on positive results from the Phase 3 PALISADE study where REDEMPLO significantly reduced triglycerides from baseline and lowered the numerical incidence of acute pancreatitis compared to placebo.
• Initiated and dosed the first subjects in 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.
• Announced that the FDA has granted Breakthrough Therapy designation to investigational plozasiran as an adjunct to diet to reduce triglyceride (TG) levels in adults with severe hypertriglyceridemia (SHTG) (TG levels greater than or equal to 500 mg/dL).
• On November 20, 2025, the Company earned a $200.0 million milestone payment from Sarepta Therapeutics, Inc., which was triggered on November 20, 2025, when the Company reached the second 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 FDA approved the Company's New Drug Application (NDA) for REDEMPLO 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.
• Entered into a global licensing and collaboration agreement with Novartis Pharma AG ("Novartis") on August 29, 2025, which closed on October 17, 2025. Closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. Upon closing, the Company received $200.0 million as an upfront payment on October 23, 2025. Additionally, the Company is eligible to receive up to $2.0 billion in potential milestone payments plus royalties on commercial sales.
The bullets below highlight other key developments in our business subsequent to the third quarter of fiscal year 2026:
• Announced topline results for the global Phase 3 SHASTA-3 and SHASTA-4 clinical studies of plozasiran in patients with severe hypertriglyceridemia (sHTG).
◦ SHASTA-3 and SHASTA-4 successfully met the primary endpoint of triglyceride reduction versus placebo and met all prespecified secondary endpoints in both studies.
◦ Deep, durable, and consistent median triglyceride reductions of 79% and 81% from baseline in SHASTA-3 and SHASTA-4, respectively.
◦ Statistically significant 78% reduction in acute pancreatitis events versus placebo across the entire
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sHTG study population, with an unprecedented 100% event reduction in patients with triglycerides above 880 mg/dL and a prior medical history of AP, widely considered to be at the highest risk for acute pancreatitis.
◦ Continued and consistent safety and tolerability profile with no new safety signals and a favorable liver safety profile.
◦ Detailed results will be presented as a HOT LINE Late Breaker at the European Society of Cardiology (ESC) Congress on August 30, 2026
• Announced that the Company completed enrollment in the global Phase 3 YOSEMITE 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 low-density lipoprotein cholesterol (LDL-C) and early-onset cardiovascular disease.
◦ The Company anticipates that YOSEMITE will be completed in mid-2027 and, pending successful clinical results, intends to seek regulatory approval in multiple geographies thereafter.
◦ The YOSEMITE Phase 3 study was initially designed to enroll 60 participants with HoFH; however, strong global HoFH patient and physician interest led to an increased total of 70 patients enrolled.
There have been no significant changes to the Company’s critical accounting estimates disclosed in the most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

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

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands, except per share amounts)

Revenue $ 75,253  $ 27,767  $ 413,023  $ 572,976 
Operating (loss) income $ (170,093) $ (165,550) $ (270,544) $ 54,240 
Net (loss) income attributable to Arrowhead $ (194,280) $ (175,241) $ (296,205) $ 22,119 
Net (loss) income per diluted share attributable to Arrowhead $ (1.36) $ (1.26) $ (2.10) $ 0.17 

Revenue
Total revenue for the three and nine months ended June 30, 2026 increased by $47.5 million and decreased by $160.0 million, respectively, as compared to the same periods of 2025. The change was primarily driven by revenue recognition associated with the Sarepta, Novartis, Madrigal and Sanofi collaboration and license agreements, and partially driven by commercial revenue from REDEMPLO.
The following table provides a summary of revenue recognized from our collaboration and license agreements:

Three Months Ended June 30, Nine Months Ended June 30,
2026 2025 2026 2025
(in thousands)
GSK $ —  $ 143  $ —  $ 2,646 
Sarepta 26,395  27,624  297,594  570,330 
Novartis 20,232  —  74,945  — 
Sanofi 1,241  —  11,983  — 
Madrigal 25,000  —  25,000  — 
Total $ 72,868  $ 27,767  $ 409,522  $ 572,976 

The Company has evaluated each agreement in accordance with FASB Topic 808– Collaborative Arrangements and Topic 606- Revenue for Contracts from Customers . See Note 2 — Collaboration and License Agreements of the Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements” for more information on revenue recognized under the collaboration and license agreements.
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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. On December 16, 2025, the Company entered into the Sarepta Clinical Supply Agreement, whereby the Company is responsible for manufacturing and supplying certain materials to Sarepta for specified activities. During the three and nine months ended June 30, 2026, the Company recorded $26.4 million and $297.6 million in revenue associated with these Sarepta agreements, respectively.
Novartis : On August 29, 2025, the Company entered into the Novartis Collaboration Agreement with Novartis for the development and commercialization of multiple preclinical programs in rare, genetic diseases of the central nervous system. During the three and nine months ended June 30, 2026, the Company recorded $20.2 million and $74.9 million in revenue associated with this transaction, respectively.
Visirna and Sanofi : On August 1, 2025, Visirna HK, a wholly owned subsidiary of Visirna Therapeutics, Inc, a majority owned subsidiary of the Company, entered into an Asset Purchase Agreement with Sanofi, 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 three and nine months ended June 30, 2026, the Company recorded $1.2 million and $12.0 million in revenue associated with this transaction, respectively.
Madrigal : On May 4, 2026, the Company entered into the Madrigal Licensing Agreement with Madrigal. Under the terms of the agreement, Madrigal received an exclusive global license to develop, manufacture, and commercialize ARO-PNPLA3, a clinical stage program. During the three and nine months ended June 30, 2026, the Company recorded $25.0 million and $25.0 million in revenue associated with this transaction, respectively.

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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 three and nine months ended June 30, 2026 and 2025 are shown in the tables below.
Research and Development (“R&D”) Expenses
Research and development expenses consist of expenses for drug candidate and 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 fully 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 periods indicated:

(in thousands) Three Months Ended
June 30, 2026 % of
Expense
Category
Three Months Ended
June 30, 2025 % of
Expense
Category
Increase (Decrease)
$ %
Candidate costs $ 126,595  64  % $ 95,007  58  % $ 31,588  33  %
Discovery costs 18,320  9  % 21,043  13  % (2,723) (13) %
Salaries 31,978  16  % 26,531  16  % 5,447  21  %
Facilities related 7,016  4  % 6,457  4  % 559  9  %
Total research and development expense, excluding non-cash expense $ 183,909  93  % $ 149,038  91  % $ 34,871  23  %
Stock compensation 8,149  4  % 7,612  5  % 537  7  %
Depreciation and amortization 6,165  3  % 5,718  4  % 447  8  %
Total research and development expense $ 198,223  100  % $ 162,368  100  % $ 35,855  22  %

(in thousands) Nine Months Ended
June 30, 2026 % of
Expense
Category
Nine Months Ended
June 30, 2025 % of
Expense
Category
Increase (Decrease)
$ %
Candidate costs $ 331,035  61  % $ 243,094  56  % $ 87,941  36  %
Discovery costs 58,645  11  % 48,785  11  % 9,860  20  %
Salaries 95,563  17  % 80,583  19  % 14,980  19  %
Facilities related 22,713  4  % 20,944  5  % 1,769  8  %
Total research and development expense, excluding non-cash expense $ 507,956  93  % $ 393,406  91  % $ 114,550  29  %
Stock compensation 22,804  4  % 23,049  5  % (245) (1) %
Depreciation and amortization 17,919  3  % 16,017  4  % 1,902  12  %
Total research and development expense $ 548,679  100  % $ 432,472  100  % $ 116,207  27  %

Candidate costs increased $31.6 million, or 33%, for the three months ended June 30, 2026 and $87.9 million, or 36%, for the nine months ended June 30, 2026 compared to the same periods of 2025. 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 outsourced clinical trial costs and manufacturing costs.
Discovery costs decreased $2.7 million, or 13%, for the three months ended June 30, 2026 compared to the same period of 2025, primarily driven by timing of R&D discovery activity associated with ongoing discovery efforts. Discovery costs increased $9.9 million, or 20%, for the nine months ended June 30, 2026 compared to the same period of 2025, primarily driven by increased R&D discovery activity associated with ongoing discovery efforts and expansion 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 $5.4 million, or 21%, for the three months ended June 30, 2026 and $15.0 million, or 19%, for the nine
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months ended June 30, 2026 compared to the same periods of 2025. The increase was primarily due to an increase in headcount that has occurred as the Company has expanded its pipeline of candidates and worked to prepare for the manufacture of commercial material at the Verona facility, as well as annual salary increases.
Facilities-related expense includes lease costs for the Company’s research and development facilities in San Diego, California and in Madison, Wisconsin. These expenses increased $0.6 million, or 9%, for the three months ended June 30, 2026 and $1.8 million or 8%, for the nine months ended June 30, 2026 compared to the same period of 2025. The increase was primarily due to expenses, such as utilities, repair and maintenance charges, associated with the expanded manufacturing facilities in Verona, Wisconsin to support manufacturing operations.
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 increased $0.5 million, or 7%, for the three months ended June 30, 2026 compared to the same period of 2025, primarily driven by the annual issuance of RSU grants to employees in January 2026. Stock compensation expense decreased $0.2 million, or 1% for the nine months ended June 30, 2026 compared to the same period of 2025, primarily driven by stock options award expense incurred in the second fiscal quarter 2025 related to Visirna, our variable interest entity, that did not repeat in the second fiscal quarter 2026.
Depreciation and amortization expense, a non-cash expense, relates to depreciation on buildings, lab equipment and leasehold improvements. These expenses increased $0.4 million, or 8%, for the three months ended June 30, 2026 and $1.9 million, or 12%, for the nine months ended June 30, 2026 compared to the same periods of 2025. The increase was primarily attributable to the transfer of additional manufacturing equipment following the completion of certification, qualification and validation to support manufacturing operations.
Selling, General and Administrative Expenses
The following table provides details of selling, general and administrative expenses for the periods indicated:
(in thousands) Three Months Ended
June 30, 2026 % of
Expense
Category
Three Months Ended
June 30, 2025 % of
Expense
Category
Increase (Decrease)
$ %
Salaries $ 14,083  30  % $ 7,964  26  % $ 6,119  77  %
Professional, outside services, and other 23,274  49  % 14,869  47  % 8,405  57  %
Facilities related 2,549  5  % 2,180  7  % 369  17  %
Total selling, general and administrative expense, excluding non-cash expenses
$ 39,906  85  % $ 25,013  80  % $ 14,893  60  %
Stock compensation 6,723  14  % 5,431  18  % 1,292  24  %
Depreciation and amortization 494  1  % 505  2  % (11) (2) %
Total selling, general and administrative expenses
$ 47,123  100  % $ 30,949  100  % $ 16,174  52  %

(in thousands) Nine Months Ended
June 30, 2026 % of
Expense
Category Nine Months Ended
June 30, 2025 % of
Expense
Category Increase (Decrease)
$ %
Salaries $ 38,457  29  % $ 23,152  27  % $ 15,305  66  %
Professional, outside services, and other 61,116  45  % 35,811  41  % 25,305  71  %
Facilities related 5,708  4  % 4,546  5  % 1,162  26  %
Total selling, general and administrative expense, excluding non-cash expenses
$ 105,281  78  % $ 63,509  73  % $ 41,772  66  %
Stock compensation 28,109  21  % 21,230  25  % 6,879  32  %
Depreciation and amortization 1,498  1  % 1,525  2  % (27) (2) %
Total selling, general and administrative expenses
$ 134,888  100  % $ 86,264  100  % $ 48,624  56  %

Salaries expense increased $6.1 million, or 77%, for the three months ended June 30, 2026 and $15.3 million, or 66% for the nine months ended June 30, 2026 compared to the same periods of 2025. The increase was driven by higher headcount required to support the Company’s commercialization of REDEMPLO, as well as annual salary increases.
Professional, outside services, and other expenses include costs related to commercial activities, legal, consulting, patent filings, business insurance, other external services, as well as travel, communication, and technology expenses. These expenses increased $8.4 million, or 57%, for the three months ended June 30, 2026 and $25.3 million, or 71%, for
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