Arrowhead Research's CEO Hosts Alvos Acquisition Conference Call (Transcript)

Arrowhead Research Corporation (ARWR)

Alvos Acquisition Conference Call

April 11, 2012 4:30 PM ET

Executives

Brooks Rahmer – IR

Christopher Anzalone – CEO

Analysts

Todd Ulrich

Ted Tenthoff – Piper Jaffray

Presentation

Operator

Good day and welcome to the Arrowhead Alvos Therapeutics Acquisition conference call and webcast. All participants will be in a listen-only mode.

(Operator Instructions)

Please also note that today’s event is being recorded. I would now like to turn the conference call over to Christopher Anzalone. Mr. Anzalone, please go ahead.

Christopher Anzalone

Thanks operator. Good afternoon everyone and thank you for joining us on the call today. With us – Brooks Rahmer?

Brooks Rahmer

Hi, guys. Think I will say a few words. Thanks everybody for joining the call today. On the call with us are President and CEO Dr. Christopher Anzalone, COO Dr. Bruce Given, and CFO Ken Myszkowski.

Management will provide a brief overview of the acquisition and will then open the call up to your questions.

Before we begin, I would like to remind you that comments made during today's call may contain certain forward-looking statements within the meaning of Section 27(A) of the Securities Act of 1933 and Section 21(E) of the Securities Exchange Act of 1934.

All statements other than statements of historical fact, including without limitation those with respect to Arrowhead's goals, plans, and strategies are forward-looking statements. Without limiting the generality of the foregoing, words such as may, will, expect, believe, anticipate, intend, could, estimate, or continue, or the negative or other variations thereof, or comparable terminology, are intended to identify forward-looking statements.

In addition, any statements that refer to projections of Arrowhead's future financial performance, trends in its businesses, or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements represent management's current expectations and are inherently uncertain.

You should also refer to the discussions under risk factors in Arrowhead's annual report on Form 10-K and the company’s quarterly reports on Form 10-Q for additional matters to be considered in this regard. Thus, actual results may differ materially. Arrowhead undertakes no duty to update any of the forward-looking statements discussed on today's call.

With all that being said, I'd like to turn over the call to Dr. Christopher Anzalone, President and CEO of the company. Chris?

Christopher Anzalone

Thank you, Brooks. Good afternoon everyone and thank you for joining us on our call today. We are very pleased to announce that Arrowhead has acquired Alvos Therapeutics, Inc., formerly known as Mercator Therapeutics. Alvos is a privately-held company that licensed a large platform of proprietary human-derived Homing Peptides from MD Anderson Cancer Center. This technology is designed to direct therapeutic agents to primary and metastatic tumors and associated vasculature and shuttle the agents into target cells. As such, it holds the promise of: (a) hunting down and destroying tumors that are known as well as hunting down and destroying metastases that are not yet known; and (b) converting therapeutics that interact with most cells in the body to “smart” drugs that accumulate primarily at tumor sites to affect only cancer cells. This would be a large step away from the collateral damage and side effects of traditional cancer drugs and toward therapeutics that are invisible to healthy cells while being deadly to cancer cells.

This platform is powerful in the exquisite specificity of the targeting sequences, the huge number of unique sequences, the fact that they were derived from human screening therefore are immediately applicable to man, and the proprietary nature of the library. As you know, we have always seen great value in targeted therapeutics, and both our RONDEL and DPC siRNA delivery platforms are targetable. What we have now is a proprietary library of literally thousands of unique sequences that we can now use with our own platforms as well as with small molecule drugs.

We feel quite confident in the new library because MD Anderson has achieved clinical proof of concept in targeting metastatic prostate cancer with the first sequence tested in man, and our targeted obesity program grew out of the same methods and in fact, the same lab at MD Anderson. One could say that we saw so much value in the obesity technology that we wanted the entire platform.

Let’s now take a closer look at the technology and how it has been developed. Drs. Renata Pasqualini and Wadih Arap run a large, well funded, and well respected laboratory at MD Anderson. Their focus is discovering novel cell-surface receptors on tumor sites and peptide sequences that will bind those receptors as well as other known receptors. Importantly, their method identifies peptides that are rapidly internalized into cells. The rationale is that if we can identify receptors that are specific to tumor sites and peptides that will bind them, we can use those peptides as chaperones to shuttle payloads directly into tumor sites and nowhere else. These payloads can be drugs or targetable delivery vehicles.

Drs. Pasqualini and Arap refer to the novel receptors and peptides as zip codes. If you can provide a drug with the right zip code, it will only go to tumor cells. From a medical standpoint, this would solve some of the great problems with current cancer therapeutics by limiting side effects and increasing efficacy. Rather than having the majority of a drug interact with non-cancer cells as is the case with current treatments, we would be able to direct the majority of administered drug into our target cancer cells. From a business standpoint, if a company owns the zip codes, it could create highly effective and safe drugs itself and help others make their drugs better. Regarding the latter, the company with the zip codes could provide a substantial portion of the value of the final drug.

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