Arrowhead Pharmaceuticals Inc

NASDAQ:ARWR

Earnings Call Transcript 2018-Q3

[Operator]

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions.

I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

[Vincent Anzalone, Vice President, Head of Investor Relations]

Thank you, Gerome. Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal 2018 third quarter ended June 30, 2018.

With us today from management are President and CEO, Dr. Christopher Anzalone, who will provide an overview of the quarter; Dr. Bruce Given, our Chief Operating Officer and Head of R&D, who will discuss our clinical programs; and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to your questions.

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

All statements other than statements of historical fact, including without limitation, those with respect to Arrowhead's goals, plans and strategies are forward-looking statements.

These include statements regarding our expectations around the development, safety and efficacy of our drug candidates, projected cash runway and expected future development activities. These statements represent management's current expectations and are inherently uncertain. Thus actual results may differ materially.

Arrowhead disclaims any intent and undertakes no duty to update any of the forward-looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's annual report on Form 10-K and the company's subsequent quarterly reports on Form 10-Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call.

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

[Christopher Anzalone, President and Chief Executive Officer]

Thanks, Vince. Good afternoon, everyone, and thank you for joining us today. Our goal with respect to our pipeline of RNAi therapeutics in the broader TRiM platform that enables it is to be best in the field. We seek to develop effective medicines to work within timelines that others cannot, to have a validated platform that provides a level of derisking before clinical studies even begin, to have the ability to target many cell types and therefore wide varieties of diseases, and to be the partner of choice for RNAi therapeutics.

We have made important progress on all these fronts and our accomplishments during the prior quarter and the period since our last conference call include the following. One, we made multiple presentations at the EASL International Congress. This included preclinical data for both ARO-AAT, our second generation candidate for the treatment of alpha-1 antitrypsin deficiency and liver disease. And ARO-HBV, our third generation clinical candidate for the treatment of chronic hepatitis B infection, and additional clinical data on ARC-520, our prior generation compound for HBV.

Two, we presented preclinical data on our growing pipeline at several medical meetings, including data on our cardiometabolic candidates ARO-APOC3 and ARO-ANG3 and our first candidate targeting the lung, ARO-ENaC.

Three, we completed enrollment in dosing of the single ascending dose portion of the ongoing Phase 1/2 study of ARO-HBV, and began dosing HBV patients in our multiple ascending dose portion of the study.

Four, we completed enrollment of the Phase 1 study of ARO-AAT. Five, we received a positive EMA opinion on orphan designation for ARO-AAT. This follows orphan designation that was previously granted by the U.S. FDA. Six, we presented early clinical data on ARO-AAT at the Alpha-1 National Education Conference. This was the first clinical data presented on our TRiM platform. Seven, and most recently, we announced that Amgen had administered the first doses of AMG 890 in a Phase 1 clinical study, which earned us a $10 million milestone payment. We have continued to execute at high level, and we feel well positioned for some key events during the second half of this year and into 2019.

Let’s drill down on a few of the events during the quarter. Last week we announced that we earned a $10 million milestone from Amgen, following the administration of the first dose of AMG 890, formerly referred to as ARO-LPA, in a clinical study. Amgen is evaluating AMG 890 in a Phase 1 study in approximately 90 subjects to assess safety, tolerability, pharmacokinetics and pharmacodynamic effects. The study will be performed in two phases, a single ascending dose phase and a multiple ascending dose phase in subjects with elevated LPA. The estimated primary completion date of the Phase 1 study is in the second half of 2019.

Following the primary completion, Amgen will share the data in the appropriate scientific forums. AMG 890 is the third drug candidate enabled by TRiM to enter clinical development this year, following ARO-AAT and ARO-HBV. We view this step and our collaboration with Amgen generally, as further validation of our proprietary TRiM platform. Under the terms of the two cardiovascular agreements with Amgen announced in September 2016, Arrowhead is eligible to receive up to $617 million in option payments, development, regulatory and sales milestone payments.

Arrowhead is further eligible to receive up to low double-digit royalties for sales of products under the AMG 890 agreement and single-digit royalties for sales of products against an undisclosed target.

In addition to the progress on this partner program, we continue to advance our wholly-owned candidates ARO-HBV and ARO-AAT through first-in-human studies very rapidly. Bruce will give you specific details in a moment about where we are in each study, but I want to talk briefly about our strategy, execution, and early evidence of activity and tolerability.

Both the ARO-HBV and ARO-AAT studies include a single ascending dose phase and a multiple-ascending dose phase that are intended to rapidly get meaningful readouts on safety and tolerability as well as a robust view of the drugs activity.

For RNAi drugs in general and for our TRiM enabled drugs, specifically the duration of effect can be quite long. It’s conceivable that in humans we may see 60 or even 90 days of duration. So in the cohorts of our first-in-human studies that are receiving three monthly doses, we may see activity that lasts as long as 6 months. It is rare to generate that much meaningful data in a first-in-human study. So how are the studies progressing? We believe our execution has been best-in-class. Both studies started in March, and by the middle of May, we were well in to the SAD portion of the ARO-HBV study and began dosing HBV patients in the MAD portion.

Then at the end of May, we completed enrollment in dosing of the entire SAD portion of the study in healthy volunteers. Two weeks later, in the middle of June, we announced that we had completed enrollment in both the SAD and MAD portions of the ARO-AAT study.

I want to thank our program management and clinical operations groups, who continue to work tirelessly to maintain this pace. I would also like to acknowledge the clinical investigators who have been equally motivated and extremely successful at enrolling these studies. Our long standing relationships and experience from studies of prior generation compounds, makes the process quite reliable and, to date, has yielded highly streamlined studies.

So what do the data look like so far? We've presented a quick snapshot of some initial clinical data from the ARO-AAT study at an Alpha-1 patient meeting at the end of June, and the data were very encouraging. At a somewhat low dose of 100 milligrams, which equates to between 1.0 mg/kg and 1.6 mg/kg in the subjects studied, we achieved a maximum serum AAT knockdown of 93%, and a mean maximum knockdown of 87% after a single dose. Based on our experience in prior human clinical studies, we believe this represents near complete suppression of the liver production of AAT.

In addition, at 8 weeks post-dose, the mean serum AAT knockdown remained at 83%. ARO-AAT has been generally well tolerated at all doses studied with no serious or severe adverse events. These are great data, and we are excited to see what the rest of the study looks like.

Importantly, these are very encouraging for the Alpha-1 community that has no treatment options for serious liver disease associated with alpha-1 antitrypsin deficiency, short of liver transplant. We have not presented any data from the ARO-HBV study, but to date, 63 subjects have received at least 1 dose. 30 healthy volunteers and 33 patients with chronic HBV infection have received a total of 104 injections of ARO-HBV. It has been generally well tolerated at all doses studied, with no serious or severe adverse events.

In addition, early data in patients indicate that the drug is clearly active. Importantly, we believe these data suggest that ARO-HBV is active in silencing s-antigen production from both HBV cccDNA through viral DNA that has integrated into host DNA. This would represent the large step forward from our first generation candidate, ARC-520, which did not address s-antigen transcripts from integrated DNA.

Our plan is to submit late-breaker abstracts for ARO-AAT and ARO-HBV and, if accepted, to present at the AASLD Liver Meeting in November. As I mentioned, the studies are moving forward rapidly, so we should have robust datasets at that time.

During the last quarter, we presented some clinical data on our prior generation HBV compound, ARC-520, at the EASL International Liver Congress. These data included follow up for 8 patients that received up to 9 monthly doses of 4 mg/kg ARC-520 with daily entecavir in the Heparc-2001 multi-dose extension study.

As I mentioned, a key limitation of this candidate was that it only targeted HBV cccDNA and did not address s-antigen transcribed from integrated DNA. We discovered that this can be a substantial source, and sometimes the primary source, of circulating s-antigen. Even so, half of these patients experienced a sustained host response, where it appears that ARC-520 triggered something that enabled the body to fight the virus. This was the intended mode of action for ARC-520 and is the intended mode of action for ARO-HBV.

It has been our theory that if an RNAi therapeutic can reduce viral antigens sufficiently and decrease immune suppressive forces, the immune system may [indiscernible] reel wagon to control the virus and enable a durable functional cure. One e-antigen negative patient that received ARC-520 treatment, while remaining on entecavir, serocleared for all measurable viral markers including s-antigen, core-related antigen, HBV RNA, and HBV DNA. We believe this will represent a functional cure. Two additional patients that experienced sustained host responses, but have not yet serocleared, appeared poised to potentially seroclear if the trends in the decrease of viral markers continues.

We and many key opinion leaders in HBV, see these data as the first proof-of-concept that an RNAi compound can potentially lead to an awakening of the immune system in HBV patients and eventual functional cures. This has long been our belief and it is highly encouraging than our previous generation HBV candidate has provided what we think is the first clinical evidence supporting this. This gives us additional confidence in ARO-HBV as we move forward from the Phase 1/2 study this year and then our planned Phase 2b study next year.

With our clinical programs progressing well, our confidence in a broader pipeline grows. We have several candidates that we expect to enter the clinic over the next 18 months, so make sense for us to have a broad R&D Day to discuss these candidates are rationales for pursuing them in our anticipated clinical timelines. I’m pleased to announce our plan to hosting and R&D Day on October 16th in Ney York. The event will be opened to analysts and institutional investors by indication and there will also be a live webcast. So those unable to attend in person can view the presentations. Including the R&D Day at presentation, there'll be ARO-APOC3 and ARO-ANG3 on most events wholly-owned preclinical candidates. They are targeting apolipoprotein CIII or apo-CIII and angiopoietin-like protein 3 or ANGPTL3 respectively.

They are designed to address multiple cardio metabolic diseases and may offer various development paths targeting both mass-market and/or orphan indications. These candidates are moving ahead according to plan and we continued to be excited about the opportunities that they represent. We are on schedule to file CTAs for both candidates around the end of the year.

Our ability to efficiently target solid tumors has grown substantially over the past year. So we will also discuss this in some depth. We will also present data on ARO-ENaC, our first inhaled lung targeted candidate for the treatment of cystic fibrosis. We have been presenting select data on this candidate at the various medical meetings throughout 2018. We have made great stride recently in optimizing the TRiM based pulmonary delivery platform, which has led to a greater than twofold improvement in potency over our prior recent contrast, and solid improvements in the safety profile.

In addition, we have started using [indiscernible] that have distinctive advantages and have discovered ways to eliminate the use of PK enhancing structure, which makes for a smaller and more structurally simple molecule. Because of these improvements, the ARO-ENaC CTA is being pushed into 2019 to allow more time to fully optimize the compound. We view the pulmonary programs as substantial value drivers over the long-term. So we are being a bit less aggressive on the timeframe to the clinic for the first product and focusing more on identifying the optimal structures. Our goal is to ensure that we move forward with the best drug possible and our recent advancements have dramatically improved the next generation of ARO-ENaC.

With that overview, I’d now like to turn the call over to Bruce Given, our COO and Head of R&D. Bruce?

[Bruce Given, Chief Operating Officer]

Thank you, Chris. Good afternoon, everyone. On our last quarterly call, I described the design of our two clinical studies for ARO-AAT and ARO-HBV. They both continued to move forward rapidly. To review from both studies the primary outcome measures are safety and tolerability. For ARO-AAT, secondary outcome measures include pharmacokinetics percent change in serum alpha-1 antitrypsin levels and duration of response.

For ARO-HBV, secondary outcome measures include pharmacokinetics and an assessment of the change in all measurable viral markers, including s-antigen, DNA, RNA, e-antigen and core-related antigen.

I thought it would be helpful today to go through the reviews of, specifically where we are with each study and what data maybe available for the AASLD and late-breaker abstract submission deadline is September and then what data maybe available to present at the meeting in November, should our abstracts be accepted.

Let's start with ARO-AAT. The Phase 1 study, called ARO-AAT1001, started enrolling and dosing subjects around the middle of March. In the middle of June, we announced that the study had been fully enrolled and all subjects had received at least their first dose. We also announced at that time that two planned cohorts at a dose of 400 milligram were eliminated because maximal activity appeared to occur at lower doses than expected.

So where are we today? 45 subjects have been enrolled and dosed across all cohorts with 20 in the single-dose cohorts and 25 in the multiple-dose cohorts. The single-dose cohorts, at doses of 35, 100, 200, and 300 milligrams, will have as much as 6 months of follow-up for the earliest cohort and approximately 3 months of follow-up for the last cohort at the time of the late-breaker deadline. By the November meeting, there will be approximately 5 to 8 months of follow-up for the single-dose cohorts.

We are scheduled to complete the third and final dose for the final subject in the multiple-dose portion of ARO-AAT1001 over the next 10 days. The earliest multiple-dose cohort received a final dose during the second week of June. So by the late-breaker deadline, we will have up to 3 months of follow-up for the earliest cohort and 1 month of follow-up for the last subject.

By the November meeting, there will be approximately 3 to 5 months of follow-up for the multiple-dose cohorts. We anticipate, based on the data that we presented for the 100 milligram cohort at the Alpha-1 patient meeting that 3 months may not be long enough to see a full recovery of serum AAT back to baseline levels. So there were likely still be additional follow-up needed.

However, this will be a helpful dataset, and should show what peak knockdown levels are and what the duration of effect and recovery curves look like for the different dose levels. This will help to inform our decision about what dose level or levels to select for the Phase 2 study and what the dosing interval should be.

Moving on to ARO-HBV and the Phase 1/2 study, called ARO-HBV1001, 63 subjects have been enrolled and dosed across all cohorts, with 30 healthy volunteers in the single-dose portion and 33 chronic HBV patients in the multiple-dose portion. The single-dose portion of the study completed dosing at the end of May, so we will have a full dataset on safety and tolerability for that group in time for the late-breaker deadline. The multiple-dose portion of the study is a little more complicated, because we have cohorts that are opened to all comers, cohorts that are specific to e-antigen status, and cohorts for new treatment experienced versus not on new treatment.

While most cohorts receive three monthly doses, we are also investigating by weekly and weekly loading dose schedules. Designed to explore dose response, three of the four monthly dosing interval all-comer cohorts, at doses of 100, 200, and 300 milligrams, have already received their third and final dose. And the fourth cohort at 400 milligrams is scheduled to receive their final dose over the next 10 days. We anticipate that all remaining subjects in the other cohorts will have received all doses by mid to late September. By the November AASLD meeting, we anticipate that data showing multi-month post-dose levels of s-antigen, e-antigen and HBV DNA, where applicable, should be available for all cohorts.

In addition, multi-dose HBV RNA and core-related antigen data, where measurable, should also be available for all cohorts.

Similar to ARO-AAT, we will not have data for all the final study visits for all patients, so there were still be additional follow-up in data collection after November. This is, however, an impressive amount of data for a first-in-human study. And we look forward to giving the highly anticipated first readout for ARO-HBV, should our abstract be accepted at AASLD.

With that brief review of our clinical programs, I'd like to turn the call over to Ken Myszkowski, Arrowhead's Chief Financial Officer. Ken?

[Ken Myszkowski, Chief Financial Officer]

Thank you, Bruce, and good afternoon, everyone. As we reported today, our net loss for the quarter ended June 30, 2018 was $15.6 million, or $0.18 per share, based on $87.6 million weighted average shares outstanding. This compares with the net loss of $5.5 million, or $0.07 per share, based on $74.8 million weighted average shares outstanding, for the quarter ended June 30, 2017.

Revenue for the quarter ended June 30, 2018 was $700,000 compared with $9.3 million for the quarter ended June 30, 2017. Revenue was lowered because revenue from the $30 million upfront payment received from Amgen for the ARO-LPA, now AMG 890 agreement was fully recognized in October 2017.

Revenue in the current period primarily relates to the recognition of a portion of the $5 million upfront payment received from Amgen for the ARO-AMG1 agreement. Of the total upfront payments of $35 million, all but $600,000 has been recognized as revenue to date. The remainder is estimated to be recognized in the next quarter.

Total operating expenses for the quarter ended June 30, 2018, were $16.6 million compared to $15.1 million for the quarter ended June 30, 2017. This increase primarily is due to toxicity study costs for our ARO-AAT and ARO-HBV candidates.

Net cash used an operating activity during the quarter ended June 30, 2018, was $14.4 million, compared with net cash used by operating activities of $10.4 million during the quarter ended June 30, 2017. This increase was due to the progression of our ARO-AAT and ARO-HBV candidates into Phase 1 clinical studies as well as for manufacturing payments related to our other candidates.

Turning to our balance sheet, our cash and investments totaled $78.2 million at June 30, 2018, compared to $65.6 million at September 30, 2017. Our common shares outstanding at June 30, 2018, were $87.9 million.

With that brief overview, I will now turn the call back to Chris.

[Christopher Anzalone, President and Chief Executive Officer]

Thanks Ken. At the outset of the call, I said that our goal for our drug candidates and underlying platform is to be the best in the field. I mentioned several parameters that we are focused on within this goal, and we have clear evidence for progress in each. Let's review them. One, develop effective medicines. We have a good start in both ARO-AAT and ARO-HBV, and are optimistic that they could eventually become powerful medicines. Two, work within timelines that others cannot. We started developing TRiM based ARO-HBV and ARO-AAT in the fourth quarter of 2016. If we are accepted at AASLD, we will have gone from concept through presentation of meaningful clinical data in just 2 years for two different programs. We believe is virtually unheard of, and we have several additional candidates to follow. Three, have a validated platform that provides a level of de-risking before clinical studies even begin. This is an area that just requires time. But given the safety and activity profile thus far with ARO-AAT and ARO-HBV, we feel increasingly confident about future and parasite targeted TRiM based candidates. Four, we have been willing to target many cell types and therefore a wide variety of diseases. In addition to parasite targeted candidates, we have good proof of concept in TRiM based lung targeting and solid tumor targeting now and continues to work toward the additional cell types. Five, be the partner of choice for RNAi therapeutics.

Everything we have discussed today from our development speed to our encouraging early clinical data and ability to target a variety of tissues reinforces our belief that we can be a powerful partner in RNAi. In addition, we believe that our continued progress with the Amgen partnership, serves as a good proof of concept for this aspect of our business strategy.

We believe Arrowhead is on solid footing today and has much more on the horizon. We think we are just in the early stages of a period where we see substantial opportunities to build value through rapid pipeline growth, key data readouts in near-term and midterm, and by exploring opportunities to expand our reach through business developments and partnering.

We look forward to giving meaningful update on our progress and plans for our emerging pipeline, including ARO-APOC3, ARO-ANG3, our TRiM enabled inhaled pulmonary platform, including ARO-ENaC and our TRiM enabled solid tumor platform including ARO-HIF2 at our R&D Day in October.

Thanks again for joining us today. And I’d now like to open the call for questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from the line of Ted Tenthoff with Piper Jaffray. Your line is now open.

[Ted Tenthoff, Piper Jaffray]

Thanks for the update and excited to see the progress and looking forward to lot of good data readouts in the back half. I want to focus in on HBV, if I may, just with respect to what we could be expecting in terms of readout? And then also how quickly we could move to combination studies that may be a preliminary glimmer of what that might look like?

[Unidentified Company Representative]

Bruce you want to take that?

[Bruce Given, Chief Operating Officer]

Sure, well, Ted, as we laid out there -- by AASLD will have pretty significant multi-dose data. Our first-in-human trial here only allows a maximum of three doses. But most of the patients will have received three doses maybe we got -- actually, we predict all of them will have received three doses. And we could have significant follow-up for the early cohorts. So there is potentially a lot of data at AASLD assuming they accept the abstract. With respect to going into combination trials, we think the plan would be to go right into long-term combination trials with the goal of trying to find recipes that could start showing some seroclearance. And the only thing holding us back from that right now is the need for a long-term tax. So our six-month rat and our nine-month monkey studies, for both ARO-HBV and ARO-AAT, are ongoing right now and we will finish basically around the end of the year. So with respect to when we could start combination therapy trials in HBV, with the intent of finding regimens that can actually give seroclearance, we would expect that would be in the first half of next year.

[Operator]

Thank you. Our next question comes from the line and Maury Raycroft with Jefferies. Your line is now open.

[Maury Raycroft, Jefferies]

First, Chris, you commented that ARO-HBV is clearly active in s-antigen suppression from CCC and integrated DNA. I think I heard that correctly. And so I’m wondering if you can contextualize this observation and say if what you’re seeing is anecdotal from a few patients, the magnitude of changes of s-antigen and potentially the kinetics around that as well?

[Christopher Anzalone, President and Chief Executive Officer]

I don’t want to go in depth from that. You can have to wait to see the fuller data sets hopefully ahead AASLD. I didn’t want to be clear that we are seeing activity and we feel good about the drug. But we’re not going to go in depth on midstream data at this point.

[Maury Raycroft, Jefferies]

And for both HBV and AAT, based on what you’re seeing so far, any thoughts on how potential dosing could work for other program?

[Unidentified Company Representative]

[Indiscernible]

[Christopher Anzalone, President and Chief Executive Officer]

Yes. Well, I think, clearly monthly is frequent enough, I think it’s possible that we could be looking at every other month or even quarterly and I don’t want to speculate beyond that, but we’re getting very good duration with this TRiM platform. It really gives us good durability and we just -- we haven't been able to follow these patients out long enough yet to know just how good that durability is going to turn out to be. But it won’t shock me at all if we wide-up with quarterly dosing.

[Unidentified Company Representative]

And just on ARO-HBV. As Bruce mentioned in the prepared remarks, we have a couple cohorts where we’re testing weekly dosing as well as biweekly dosing in both those still just three doses because that’s we have talked coverage for. But we were interested in that not necessarily because we didn’t have confidence in the durability of that drug. But we were interested to see what happens if you just crushed the virus out of the gate. Because since we don’t know what the best strategy is to get to seroclearance, it’ll be interesting to see what happens with that frequent dosing compared to less frequent dosing.

[Maury Raycroft, Jefferies]

And last question is just AAT, and what your thoughts are on potential endpoints that could be used for potential approval?

[Christopher Anzalone, President and Chief Executive Officer]

We still think the most likely situation is that will be using a biopsy endpoint similar to what people are doing in diseases like Nash. There are some other potential ideas that we have, that we’re thinking about. But I think the most likely situation and certainly the first trial that we’re contemplating doing next involves biopsies to look at the ability to change the liver histology. But that’s, I think the most likely case of where the endpoint is going to wind up

[Maury Raycroft, Jefferies]

Got it. Okay. Congrats again.

[Operator]

Thank you. Our next question comes from the line of Madhu Kumar with B. Riley. Your line is now open.

[Unidentified Analyst]

Hi, thanks. This is Jennifer on for Madhu. I have two questions for you guys. One, based on these Phase 1 healthy volunteer data for ARO-AAT, should we expect similar circulating AAT results from AAT patients in the potential data at AASLD? And second question, can you provide visibility on the timing of IND filings for additional internal cardiovascular programs beyond LPA other way? And third, in light of data to date from ARC-520, what are your expectations for ARO-HBV activities in the potential HBV patient data at AASLD? Thanks.

[Christopher Anzalone, President and Chief Executive Officer]

Okay. So there is a lot of questions. So what was the first again?

[Unidentified Analyst]

Sure. The first one was on that just based on the Phase 1 healthy voluntary data from ARO-AAT? Should we expect similar circulating AAT results from the AAT patients in that potential AASLD?

[Christopher Anzalone, President and Chief Executive Officer]

Right. So to be clear, in this Phase 1 study, we are, for AAT, we're not treating patients, we're only treating healthy volunteers. And so the only data you'll see at AASLD will be healthy volunteer data. The reason for that is that what we found in our prior generation AAT program, the knockdown profile was essentially the same between patients and healthy volunteers. So in other words, 90% knockdown or 80% knockdown in healthy volunteers, was generally equate to 80% or an excellent knockdown patients even though the absolute values, of course, were different. So we do that as predictive and it make sense just to run quickly through this Phase 1 healthy volunteers, and then use patients for the more meaningful Phase 2/3 study. So we expect that value to start in the first quarter or so of in 2019 once we have start coverage for us. So, again, we won't have any patient data this year.

[Unidentified Company Representative]

Yes, that was for both depth and duration. They really, at the same dose, the curves really overlap each other remarkably well for the patients versus the normal volunteers. So we felt quite comfortable on that regard.

[Christopher Anzalone, President and Chief Executive Officer]

Your second question had1 to do with filing CTAs for our cardiovascular drugs. We expect to file CTAs for both ARO-APOC3 and ARO-ANG3 around the end of the year. Our guidance hasn't changed on that. And third, you asked about ARC-520, and what we're going to see at AASLD. So here's what was important about the ARC-520 data -- the extension data. It was important that we're starting to prove this theory that field that had that if you can remove or substantially decrease these immunosuppressive forces through RNAi that you could reawaken the new system and enable the body to control the virus and enable dysfunctional cure.

So that was a very important study from that standpoint. Our hope has been that ARO-HBV is going to be more complete and more powerful drug in ARC-520, in part, because it is -- it's not only silencing or its designed not only to silence the cccDNA, but also it's designed to silence the integrated DNA or that the viral DNA integrated to the host DNA.

So think of surface antigen is coming out of two spigots ARC-520 turned off one spigot, but did not turn off the other, ARO-HBV, should turn off those spigots. And so our hope is that we can see -- what we saw with the s-antigens [indiscernible] by ARC-520 with ARO-HBV, but hopefully in a more consistent manner and maybe in a faster timeframe given that we expect this to be more complete and powerful drug.

[Unidentified Company Representative]

And across a broader patient population.

[Unidentified Company Representative]

That’s right.

[Unidentified Company Representative]

ARC-520 was really limited in the patient population of conserved. We tried to design ARO-HBV to really be relatively agnostic as to the patient's subgroup. And we designed this first study to actually give us information across all of those various patient populations. That's what's really going to be fund to DNA AASLD. And it's hard to forecast exactly how that's going to look because we're really only just started dosing patients not so many weeks ago. So we have enough data now to have come to the conclusion that the drug is active. I don’t think we have enough data now to know exactly what things are going to look like in November. So that's something we really can't forecast.

[Operator]

Our next question comes from the line of Keay Nakae with Chardan. Your line is now open.

[Keay Nakae, Chardan]

Yes, just wondering if you can give us a little more info on the design changes you're seeing with ARO-ENaC. Is it -- in terms of the delivery system, the ability to achieve better PK, better tolerability? And is that allowing for design changes in the payload that may be which associate lower doses? Can you just help us to understand that a little better? Thanks.

[Christopher Anzalone, President and Chief Executive Officer]

Yes, I’ll answer that broadly because we have not disclosed the base -- the specifics of the structure at this point. So all of those changes that we've made -- we've really made sort of [indiscernible] supportive over the last few months. All of those changes have been in that increasing potency. Our goal here is to use as little amount of material as we can. It would be for any drug, but even more so for an inhaled drug. So we have made great strides in potency. And we've been able to achieve good knockdown without using PK enhancer. So it just makes the molecules more structurally simple, easier to manufacture and potentially safer. So we have seen -- again, good [indiscernible] in both in potency and safety profile.

[Keay Nakae, Chardan]

So, say in 2019, can you be any more specific to that first half or second half to start that?

[Christopher Anzalone, President and Chief Executive Officer]

It's not just point. We can give -- we will give more granular guidance at the R&D Day.

[Operator]

[Operator Instructions] Our next question comes from the line of Elemer Piros with Cantor. Your line is now open.

[Elemer Piros, Cantor]

A lot of questions have been answered. Thank you for that. Maybe I have a housekeeping question to Ken, and a strategic question as well. So I’m almost certain that you will recognize the $10 million milestone payment from Amgen next quarter, but I just wanted to verify that.

[Ken Myszkowski, Chief Financial Officer]

That’s where we expect to recognize the $10 million of revenue next quarter.

[Elemer Piros, Cantor]

And on the operating expense side, Chris or Ken, if you could comment on, how -- to what extent do you see it accelerating beginning in 2019 when you have multiple events stage programs in the clinic and from new one as well?

[Ken Myszkowski, Chief Financial Officer]

So our expenses will go up, but they’re not can go crazy, because these are still relatively early stage programs. So I think, we’ve been -- we have generally been in between -- bringing between $12 million and $15 million a quarter. I think, we stay pretty close to that.

[Elemer Piros, Cantor]

Thank you. And Chris, how do you think at this stage on partnering opportunities, which of these programs is maybe more suitable for a larger company that has broader reach to eventual markets?

[Christopher Anzalone, President and Chief Executive Officer]

Yes, that’s a harder question. We can go through them individually. So ARO-ENaC that's something that we would be happy to commercialize ourselves; ARO-AAT, we would be happy to commercialize that ourselves; ARO-APOC3, we will be happy to commercialize that ourselves, we think they’re good orphan opportunities there. But it could also be a mass marketed product. And so we can go either way on that. ARO-ANG3 similar, we could go either way on that. It’s that with the slight bias towards larger markets that really could be addressed maybe better with the larger partner. And then HBV, HBV is probably, at least geographically, is a partner play. We’re not going to go Salesforce in China to go commercialize that. So at the very least, and that makes sense to partner geographically and maybe worldwide. We’ll just see how that goes.

[Operator]

Thank you. There are no further questions at this time. I would now like to turn the call back to Chris Anzalone for any further remarks.

[Christopher Anzalone, President and Chief Executive Officer]

Thanks very much everyone. We look forward to seeing you in October for the R&D Day.

[Operator]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day.