Former name, former address, and former fiscal year, if changed since last report: N/A

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 ☒ No ☐

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 ☒ No ☐

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”,~~filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of ~~August 2, 2021~~May 5, 2022 was ~~104,259,256.~~105,736,200.

	(unaudited) June 30, 2021			September 30, 2020			(unaudited) March 31, 2022			September 30, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	325,981		$	143,583		$	86,408		$	184,434
Accounts receivable		671			845			1,317			10,255
Prepaid expenses		7,276			4,250			6,622			4,362
Other current assets		1,696			1,782			7,796			2,191
Marketable securities		126,407			85,020			122,575			126,728
Short term investments		63,924			86,890			192,912			56,627
TOTAL CURRENT ASSETS		525,955			322,370			417,630			384,597
Property and equipment, net		47,786			30,881			54,888			48,675
Intangible assets, net		14,088			15,363			12,813			13,663
Long term investments		128,376			137,487			201,590			245,595
Operating Lease - Right-of-use assets		18,450			16,138
Right-of-use assets								16,379			17,346
Other assets		272			265			275			272
TOTAL ASSETS	$	734,927		$	522,504		$	703,575		$	710,148
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	10,037		$	6,829		$	10,603		$	9,457
Accrued expenses		29,525			5,405			23,710			14,001
Accrued payroll and benefits		3,648			8,061			3,765			9,773
Lease liabilities		1,290			1,095			2,910			2,250
Deferred revenue		150,934			19,291			97,869			111,055
TOTAL CURRENT LIABILITIES		195,434			40,681			138,857			146,536
LONG-TERM LIABILITIES
Lease liabilities, net of current portion		22,854			20,044			22,698			23,295
Deferred revenue, net of current portion		79,749			-			89,754			131,495
TOTAL LONG-TERM LIABILITIES		102,603			20,044			112,452			154,790
Commitments and contingencies (Note 7)
STOCKHOLDERS’ EQUITY
Arrowhead Pharmaceuticals, Inc. stockholders’ equity:
Common stock, $0.001 par value; 145,000 shares authorized; 104,209 and 102,376 shares issued and outstanding as of June 30, 2021 and September 30, 2020, respectively		197			195
Common stock, $0.001 par value; 145,000 shares authorized; 105,702 and 104,327 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively								198			197
Additional paid-in capital		1,017,949			965,410			1,115,373			1,053,386
Accumulated other comprehensive income		62			18
Accumulated other comprehensive loss								(107	)		(69	)
Accumulated deficit		(581,318	)		(503,844	)		(663,198	)		(644,692	)
TOTAL STOCKHOLDERS’ EQUITY		436,890			461,779			452,266			408,822
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	734,927		$	522,504		$	703,575		$	710,148

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

	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,					Six Months Ended March 31,
	2021			2020			2021			2020			2022		2021			2022			2021
REVENUE	$	45,891		$	27,376		$	100,004		$	80,359		$	151,805	$	32,811		$	179,244		$	54,113
OPERATING EXPENSES
Research and development		59,325			32,573			140,576			85,390			75,985		44,697			141,750			81,251
General and administrative expenses		18,434			10,749			43,581			38,009			34,267		16,346			59,262			25,147
TOTAL OPERATING EXPENSES		77,759			43,322			184,157			123,399			110,252		61,043			201,012			106,398
OPERATING INCOME (LOSS)		(31,868	)		(15,946	)		(84,153	)		(43,040	)		41,553		(28,232	)		(21,768	)		(52,285	)
OTHER INCOME (EXPENSE)
Interest income, net		1,280			2,335			4,972			6,920			1,054		1,524			2,210			3,692
Other income (expense)		664			-			1,707			-			1,759		(110	)		1,052			1,043
TOTAL OTHER INCOME (EXPENSE)		1,944			2,335			6,679			6,920			2,813		1,414			3,262			4,735
INCOME (LOSS) BEFORE INCOME TAXES		(29,924	)		(13,611	)		(77,474	)		(36,120	)		44,366		(26,818	)		(18,506	)		(47,550	)
Provision for income taxes		-			-			-			-			-		-			-			-
NET INCOME (LOSS)		(29,924	)		(13,611	)		(77,474	)		(36,120	)		44,366		(26,818	)		(18,506	)		(47,550	)
NET INCOME (LOSS) PER SHARE - BASIC	$	(0.29	)	$	(0.13	)	$	(0.75	)	$	(0.36	)	$	0.42	$	(0.26	)	$	(0.18	)	$	(0.46	)
NET INCOME (LOSS) PER SHARE - DILUTED	$	(0.29	)	$	(0.13	)	$	(0.75	)	$	(0.36	)	$	0.41	$	(0.26	)	$	(0.18	)	$	(0.46	)
Weighted average shares outstanding - basic		104,099			101,843			103,569			100,184			105,545		103,867			105,034			103,303
Weighted average shares outstanding - diluted		104,099			101,843			103,569			100,184			107,929		103,867			105,034			103,303
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation adjustments		(40	)		454			44			216			1		(96	)		(38	)		84
COMPREHENSIVE INCOME (LOSS)	$	(29,964	)	$	(13,157	)	$	(77,430	)	$	(35,904	)	$	44,367	$	(26,914	)	$	(18,544	)	$	(47,466	)

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

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Non-controlling Interest			Totals			Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals
Balance at March 31, 2020		101,748	$	194	$	936,354		$	(629	)	$	(441,800	)	$	(555	)	$	493,564
Balance at December 31, 2020																					103,194	$	195	$	978,655		$	198		$	(524,576	)	$	454,472
Stock-based compensation		-		-		10,046			-			-			-			10,046			-		-		15,359			-			-			15,359
Exercise of stock options		303		-		2,133			-			-			-			2,133			282		-		2,632			-			-			2,632
Common stock - restricted stock units vesting		200		-		(1	)		-			-			-			(1	)		544		1		(1	)		-			-			-
Foreign currency translation adjustments		-		-		-			454			-			-			454			-		-		-			(96	)		-			(96	)
Net income (loss) for the three months ended June 30, 2020		-		-		-			-			(13,611	)		-			(13,611	)
Balance at June 30, 2020		102,251	$	194	$	948,532		$	(175	)	$	(455,411	)	$	(555	)	$	492,585
Net income (loss) for the three months ended March 31, 2021																					-		-		-			-			(26,818	)		(26,818	)
Balance at March 31, 2021																					104,020	$	196	$	996,645		$	102		$	(551,394	)	$	445,549

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals						Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals
Balance at March 31, 2021		104,020	$	196	$	996,645		$	102		$	(551,394	)	$	445,549
Balance at December 31, 2021																					104,798	$	197	$	1,080,035		$	(108	)	$	(707,564	)	$	372,560
Stock-based compensation		-		-		18,549			-			-			18,549						-		-		33,802			-			-			33,802
Exercise of stock options		161		1		2,755			-			-			2,756						237		-		1,537			-			-			1,537
Common stock - restricted stock units vesting		28		-		-			-			-			-						667		1		(1	)		-			-			-
Foreign currency translation adjustments		-		-		-			(40	)		-			(40	)					-		-		-			1			-			1
Net income (loss) for the three months ended June 30, 2021		-		-		-			-			(29,924	)		(29,924	)
Balance at June 30, 2021		104,209	$	197	$	1,017,949		$	62		$	(581,318	)	$	436,890

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Non-controlling Interest			Totals
Balance at September 30, 2019		95,506	$	187	$	664,086		$	(391	)	$	(419,291	)	$	(555	)	$	244,036
Stock-based compensation		-		-		27,510			-			-			-			27,510
Exercise of stock options		989		1		6,463			-			-			-			6,464
Common stock - restricted stock units vesting		1,156		1		(1	)		-			-			-			-
Common stock - issued for cash		4,600		5		250,474			-			-			-			250,479
Foreign currency translation adjustments		-		-		-			216			-			-			216
Net income (loss) for the nine months ended June 30, 2020		-		-		-			-			(36,120	)		-			(36,120	)
Balance at June 30, 2020		102,251	$	194	$	948,532		$	(175	)	$	(455,411	)	$	(555	)	$	492,585

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals
Balance at September 30, 2020		102,376	$	195	$	965,410		$	18		$	(503,844	)	$	461,779
Stock-based compensation		-		-		42,051			-			-			42,051
Exercise of stock options		981		1		10,489			-			-			10,490
Common stock - restricted stock units vesting		852		1		(1	)		-			-			-
Foreign currency translation adjustments		-		-		-			44			-			44
Net income (loss) for the nine months ended June 30, 2021		-		-		-			-			(77,474	)		(77,474	)
Balance at June 30, 2021		104,209	$	197	$	1,017,949		$	62		$	(581,318	)	$	436,890
Net income (loss) for the three months ended March 31, 2022																					-		-		-			-			44,366			44,366
Balance at March 31, 2022																					105,702	$	198	$	1,115,373		$	(107	)	$	(663,198	)	$	452,266

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals
Balance at September 30, 2020		102,376	$	195	$	965,410		$	18		$	(503,844	)	$	461,779
Stock-based compensation		-		-		23,502			-			-			23,502
Exercise of stock options		820		-		7,734			-			-			7,734
Common stock - restricted stock units vesting		824		1		(1	)		-			-			-
Common stock - issued for cash		-		-		-			-			-			-
Foreign currency translation adjustments		-		-		-			84			-			84
Net income (loss) for the six months ended March 31, 2021		-		-		-			-			(47,550	)		(47,550	)
Balance at March 31, 2021		104,020	$	196	$	996,645		$	102		$	(551,394	)	$	445,549

	Common Stock		Amount ($)		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Totals
Balance at September 30, 2021		104,327	$	197	$	1,053,386		$	(69	)	$	(644,692	)	$	408,822
Stock-based compensation		-		-		58,306			-			-			58,306
Exercise of stock options		444		-		3,682			-			-			3,682
Common stock - restricted stock units vesting		931		1		(1	)		-			-			-
Foreign currency translation adjustments		-		-		-			(38	)		-			(38	)
Net income (loss) for the six months ended March 31, 2022		-		-		-			-			(18,506	)		(18,506	)
Balance at March 31, 2022		105,702	$	198	$	1,115,373		$	(107	)	$	(663,198	)	$	452,266

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

	Nine Months Ended June 30,						Six Months Ended March 31,
	2021			2020			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(77,474	)	$	(36,120	)	$	(18,506	)	$	(47,550	)
Stock-based compensation		42,051			27,510			58,307			23,502
Depreciation and amortization		5,763			4,168			5,167			3,766
Unrealized (gains) losses on marketable securities								4,153			(773	)
Amortization/(accretion) of note premiums/discounts		142			653			329			193
Changes in operating assets and liabilities:
Accounts receivable		174			(21,031	)		8,938			(109	)
Prepaid expenses and other current assets		(2,895	)		(863	)		(7,914	)		(2,213	)
Deferred revenue		211,392			(56,530	)		(54,926	)		247,118
Accounts payable		3,208			(3,576	)		1,146			(1,530	)
Accrued expenses		13,682			(54	)		3,699			2,271
Other		(702	)		1,302			990			276
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		195,341			(84,541	)		1,383			224,951
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(15,368	)		(10,067	)		(10,530	)		(11,437	)
Purchases of investments		(95,195	)		(193,964	)		(148,391	)		(40,000	)
Proceeds from sale of investments		87,130			29,148			55,781			47,545
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(23,433	)		(174,883	)		(103,140	)		(3,892	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercises of stock options		10,490			6,464			3,731			7,735
Proceeds from the issuance of common stock		-			250,479
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		10,490			256,943
NET CASH PROVIDED BY FINANCING ACTIVITIES								3,731			7,735
NET INCREASE (DECREASE) IN CASH		182,398			(2,481	)		(98,026	)		228,794
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		143,583			221,804			184,434			143,583
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	325,981		$	219,323		$	86,408		$	372,377

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

Unless otherwise noted, (1) the term “Arrowhead” refers to Arrowhead Pharmaceuticals, Inc., a Delaware corporation and its Subsidiaries, (2) the terms “Company,” “we,” “us,” and “our,” refer to the ongoing business operations of Arrowhead and its Subsidiaries, whether conducted through Arrowhead or a subsidiary of Arrowhead, (3) the term “Subsidiaries” refers to Arrowhead Madison Inc. (“Arrowhead Madison”) and Arrowhead Australia Pty Ltd (“Arrowhead Australia”), (4) the term “Common Stock” refers to Arrowhead’s Common Stock, par value $0.001 per share, (5) the term “Preferred Stock” refers to Arrowhead’s Preferred Stock, par value $0.001 per share, and (6) the term “Stockholder(s)” refers to the holders of ~~Arrowhead~~Arrowhead’s Common Stock.

Arrowhead Pharmaceuticals, Inc. develops medicines that treat intractable diseases by silencing the genes that cause them. Using a broad portfolio of RNA chemistries and efficient modes of delivery, Arrowhead 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. Arrowhead’s RNAi-based therapeutics leverage this natural pathway of gene silencing. The Company’s pipeline includes ARO-APOC3 for hypertriglyceridemia, ARO-ANG3 for dyslipidemia, ~~ARO-HSD for liver disease, ARO-ENaC~~ARO-ENaC2 for cystic fibrosis, ~~ARO-HIF2 for renal cell carcinoma,~~ ARO-DUX4 for facioscapulohumeral muscular dystrophy, ~~ARO-LUNG2 for chronic obstructive pulmonary disorder, and~~ ARO-COV for the coronavirus that causes COVID-19 and other possible future pulmonary-borne ~~pathogens.~~pathogens, ARO-C3 for complement mediated diseases and ARO-RAGE and ARO-MUC5AC for various muco-obstructive or inflammatory pulmonary conditions. ARO-HSD for liver disease was out-licensed to Glaxosmithkline Intellectual Property (No. 3) Limited (“GSK”) in November 2021. ARO-XDH is being developed for uncontrolled gout under a collaboration agreement with Horizon Therapeutics Ireland DAC (“Horizon”). ~~ARO-JNJ1, ARO-JNJ2 and ARO-JNJ3 are~~JNJ-75220795 (ARO-JNJ1) is being developed by Janssen as a potential treatment for ~~undisclosed liver-expressed targets under a collaboration agreement~~patients with ~~Janssen Pharmaceuticals, Inc. (“Janssen”)~~non-alcoholic steatohepatitis (NASH). ARO-AAT for liver disease associated with alpha-1 antitrypsin deficiency (“AATD”) was out-licensed to Takeda Pharmaceuticals U.S.A., Inc. (“Takeda”) in October 2020. ~~JNJ3989~~JNJ-3989 (formerly referred to as ARO-HBV) for chronic hepatitis B virus was out-licensed to Janssen in October 2018. Olpasiran (formerly referred to as AMG 890 or ARO-LPA) for cardiovascular disease was out-licensed to Amgen Inc. (“Amgen”) in 2016.While the Company believes that initial ARO-HIF2 Phase 1 clinical data provides proof of concept for the ability to deliver siRNA to RCC tumors, the Company has decided not to pursue further clinical development of ARO-HIF2 based on a number of factors including the evolving competitive landscape for HIF2 inhibitors.

Arrowhead operates lab facilities in Madison, Wisconsin and San Diego, California, where the Company’s research and development activities, including the development of RNAi therapeutics, take place. The Company’s principal executive offices are located in Pasadena, ~~California.~~California.

During the first half of fiscal ~~year 2021,~~2022, the Company continued to develop and advance its pipeline and partnered ~~candidates. The Company announced positive interim clinical data on (i) AROAAT2002, an open-label Phase 2 clinical study of ARO-AAT,~~candidates and expanded its facilities to support the Company’s second-generation investigational RNAi therapeutic being co-developed with Takeda as a treatment for the rare genetic liver disease associated with AATD, (ii) AROHSD1001, a Phase 1/2 clinical study of ARO-HSD, the Company’s investigational RNAi therapeutic being developed as a treatment for patients with alcohol-related and nonalcohol related liver diseases, such as nonalcoholic steatohepatitis (NASH), and (iii) AROHIF21001, a Phase 1b dose-finding clinical study of ARO-HIF2, the Company’s investigational RNAi therapeutic being developed as a treatment for patients with clear cell renal cell carcinoma. The Company also presented preclinical data on the development of ARO-DUX4, the Company’s investigational RNAi therapeutic being developed as a treatment for patients with facioscapulohumeral muscular dystrophy (FSHD), at the 28th Annual FSHD Society International Research Congress. The Company hosted agrowing pipeline. Several key opinion leader webinar on its cardiometabolic candidates, ARO-APOC3 and ARO-ANG3, and presented positive clinical data from the Phase 1/2 clinical studies of ARO-APOC3 and ARO-ANG3 at the American Heart Association Scientific Sessions 2020. The Company filed two Investigational New Drug Applications with the United States Food and Drug Administration (the “FDA”) to begin a Phase 2b clinical study of ARO-APOC3 in patients with severe hypertriglyceridemia and a Phase 2b clinical study of ARO-ANG3 in patients with mixed dyslipidemia, and initiated these two Phase 2b clinical studies in the third quarter of fiscal year 2021. In July 2021, the Company voluntarily paused AROENaC1001, a Phase 1/2 clinical study of ARO-ENaC, the Company’s investigational RNAi therapeutic being developed as a treatment for patients with cystic fibrosis, after receiving a preliminary update from an ongoing chronic toxicology study in rats that contained unexpected signals of local lung inflammation. New screening, enrollment and any further dosing of investigational ARO-ENaC have been paused pending additional data from ongoing nonclinical toxicology studies. The Company announced two collaborations during the first three quarters of fiscal year 2021: a collaboration with Takeda to co-develop and co-commercialize ARO-AAT for alpha-1 antitrypsin-associated liver disease and a collaboration with Horizon to develop ARO-XDH, an investigational RNAi therapeutic for uncontrolled gout. In July 2021, the Company received Breakthrough Therapy designation from the FDA for ARO-AAT, which is a process designed to expedite the development and review of drugs that are intended to treat a serious life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The Company also earned a $10 million payment in connection with Janssen’s exercise of its option right for ARO-JNJ1 in May 2021, which option grants Janssen all rights, including licenses, and obligations to develop and commercialize ARO-JNJ1. See Note 2 for more information regarding the Company’s collaboration and license agreements.recent developments include:

The Company is actively monitoring the ongoing COVID-19 pandemic. The financial results for the three and ~~nine~~six months ended ~~June 30, 2021~~March 31, 2022 were not significantly impacted by COVID-19. ~~During fiscal year 2020,~~Operationally, the Company ~~had temporarily paused~~has experienced delays in its earlier stage programs due to a shortage in non-human primates, which are critical to the Company’s preclinical programs. Additionally, the Company has experienced delays in enrollment in its two ARO-AAT studies, SEQUOIA and the ARO-AAT 2002 study, but resumed the process of screening and enrolling patients. During the pause in enrollment, patients already enrolled in these studies continued to be dosed per protocol and continued to come in for their follow up visits. Additional delays have occurred in the Company’s earlier stage programs. Additionally, theclinical trials. The Company’s operations at its research and development facilities in Madison, Wisconsin and San Diego, California, and its corporate headquarters in Pasadena, California have continued ~~to operate~~ with limited impact, other than for enhanced safety measures, including work from home ~~policies.~~policies and intermittent lab supply shortages. However, the Company cannot predict the impact the progression of COVID-19 will have on future financial and operational results due to a variety of factors, including the ability of the Company’s clinical sites to continue to enroll subjects, the ability of the Company’s suppliers to continue to operate, the continued good health and safety of the Company’s employees and ~~ultimately~~ the length and severity of the COVID-19 pandemic.

The Consolidated Financial Statements have been prepared in conformity with the accounting principles generally accepted in the United States of America (“GAAP”), which contemplate the continuation of the Company as a going concern. Historically, the Company’s primary sources of financing have been through the sale of its securities and revenue from its licensing and collaboration agreements. Research and development activities have required significant capital investment since the Company’s ~~inception. The Company expects its operations~~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 significantly. Additionally, significant capital investment ~~to pursue its research and development goals, including~~will be required as the Company’s pipeline matures into later stage clinical trials, as well as with the Company’s plans to increase its internal manufacturing capabilities, as well as expand its footprint in Verona, Wisconsin and ~~related drug manufacturing.~~San Diego, California.

At ~~June 30, 2021,~~March 31, 2022, the Company had $~~326.0~~$86.4 million in cash and cash equivalents (including ~~$2.4~~$7.9 million in restricted cash), ~~$63.9~~$192.9 million in short-term investments, $~~126.4~~$122.6 million in marketable securities and ~~$128.4~~$201.6 million in long-term investments to fund operations. During the ~~nine~~six months ended ~~June 30, 2021,~~March 31, 2022, the Company’s cash and investments balance ~~increased~~decreased by ~~$191.7~~$9.9 million, which was primarily ~~the result of the $300.0~~ ~~million upfront payment from the Takeda License Agreement, partially offset by~~due to cash being used to fund the Company’s ~~research~~operations, partially offset by the $120.0 million upfront payment received from GSK.

In total, the Company remains eligible for $4.9 billion in developmental, regulatory and ~~development operations~~sales milestones and ~~general~~various royalties on net sales from its licensing and ~~administrative expenses.~~ collaboration agreements. The revenue recognition for these collaboration agreements is discussed further in Note 2 below.

There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K.

In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-18 Collaborative Arrangements (Topic 808). This update provides clarificationThere have been no recent accounting pronouncements that have significantly impacted this Quarterly Report on the interaction between Revenue Recognition (Topic 606) and Collaborative Arrangements (Topic 808) including the alignment of unit of account guidance between the two topics. ASU 2018-18 became effective for the Company on October 1, 2020 and did not have a material impact on its Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard requires that certain implementation costs for cloud computing arrangements are capitalized and amortized over the term of the associated hosted cloud computing arrangement service. Capitalized implementation costs are classified in prepaid expenses and other assets. The amortization of the capitalized asset is presentedForm 10-Q, beyond those disclosed in the ~~same line~~Company’s most recent Annual Report on the statement of operations and comprehensive loss as the fees for the associated hosted cloud computing arrangement service and not included with depreciation or amortization expense related to property and equipment or intangible assets. Cash flows related to capitalized implementation costs are presented in cash flows used in operating activities. ASU 2018-15 became effective for the Company on October 1, 2020 and did not have a material impact on its Consolidated Financial Statements. Form 10-K.

On September 28, 2016, the Company entered into 2 collaboration and license agreements and a common stock purchase agreement with Amgen. Under the Second Collaboration and License Agreement ~~or Olpasiran Agreement,~~(the “Olpasiran Agreement”), Amgen has received a worldwide, exclusive license to Arrowhead’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 ~~other~~prior collaboration and license agreement (the “First Collaboration and License Agreement” or the “ARO-AMG1 Agreement”), Amgen received an option to a worldwide, exclusive license for ARO-AMG1, an RNAi therapy for an undisclosed genetically validated cardiovascular target. InUnder both agreements, Amgen is wholly responsible for clinical development and commercialization. Under the terms of the agreements taken together, the Company has received $35.0 million in upfront payments, $21.5 million in the form of an equity investment by Amgen in the Company’s Common Stock, and $30.0 million in milestone payments, and may receive up to an additional $400.0 million in remaining development, regulatory and sales milestone payments. The Company is further eligible to receive up to low double-digit royalties for sales of products under the Olpasiran Agreement. In July 2019, Amgen informed the Company that it would not be exercising its option for an exclusive license for ARO-AMG1, and as such, there will be no further milestone or royalty payments under the ARO-AMG1 Agreement.

The Company has evaluated these agreements in accordance with FASB Topics 808 – Collaboration Arrangements and 606 - Revenue for Contracts from Customers. The Company has substantially completed its performance obligations under the Olpasiran Agreement and the ARO-AMG1 Agreement. Future milestones and royalties achieved will be recognized in their entirety when earned. In July 2020, Amgen initiated a Phase 2 clinical study of Olpasiran, which resulted in a $20.0 million milestone payment to the Company. During the three and six months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized $0 and ~~$20.0~~$0 of revenue ~~respectively. During the nine months ended June 30, 2021 and 2020, the Company recognized $0 and $20.0 million of revenue,~~associated with its agreement with Amgen, respectively. As of ~~June 30, 2021,~~March 31, 2022, there were $0 in contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance Sheets.

RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection. Beyond the Company’s Phase 1/2 study of JNJ-3989 (ARO-HBV), which the Company iswas responsible for completing, Janssen is wholly responsible for clinical development and commercialization of JNJ-3989. Under the Janssen Collaboration Agreement, Janssen ~~will be~~was able to select three new targets against which Arrowhead ~~will~~would develop clinical candidates. These candidates ~~are~~were subject to certain restrictions and do not include candidates that already were in the Company’s pipeline. The Company ~~will~~was obligated to perform discovery, optimization and preclinical research and development, entirely funded by Janssen, which on its own or in combination with Janssen development work, iswould have been sufficient to allow the filing of a U.S. Investigational New Drug Application or equivalent, at which time Janssen ~~will~~would have the option to take an exclusive license. If the option iswas exercised, Janssen ~~will be~~would have been wholly responsible for clinical development and commercialization of each optioned candidate. Under the terms of the agreements taken together, the Company has received $175.0 million as an upfront payment, $75.0 million in the form of an equity investment by JJDC in Arrowhead Common Stock under the JJDC Stock Purchase Agreement, and ~~three~~ milestone and option payments totaling $~~60.0~~$73.0 million, and the Company may receive up to $1.6 billion in development and sales milestones payments for the Janssen License Agreement, and up to ~~$1.9~~$0.6 billion in development and sales milestone payments for the ~~3 additional targets~~remaining target covered under the Janssen Collaboration Agreement. The Company is further eligible to receive tiered royalties on product sales up to mid-teens under the Janssen License Agreement and up to low teens under the Janssen Collaboration Agreement. During the three months ended March 31, 2022, Janssen’s option period expired unexercised for two of the three candidates (ARO-JNJ2 and ARO-JNJ3) under the Janssen Collaboration Agreement.

The Company has evaluated these agreements in accordance with FASB ~~Topic~~Topics 808 – Collaboration Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of these agreements, the Company identified 1 distinct performance obligation. Regarding the Janssen License Agreement, the Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibility to complete the Phase 1/2 study of JNJ-3989 (ARO-HBV) and the Company’s responsibility to ensure certain manufacturing of JNJ-3989 (ARO-HBV) drug product is completed and delivered to Janssen (the “Janssen R&D Services”). Due to the specialized and unique nature of these Janssen 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. The Company also determined that Janssen’s option to require the Company to develop up to three new targets is not a material right and, thus, not a performance obligation at the onset of the agreement. The consideration for this option is accounted for separately.

The Company determined the transaction price totaled approximately $252.7 million, which includes the upfront payment, the premium paid by JJDC for its equity investment in the Company, two $25.0 million milestone payments related to JNJ-3989 (ARO-HBV), and estimated payments for reimbursable Janssen R&D Services to be performed. The Company has allocated the total $252.7 million initial transaction price to its one distinct performance obligation for the JNJ-3989 (ARO-HBV) license and the associated Janssen R&D Services. ~~This revenue~~The Company has recognized this transaction price in its entirety as of September 30, 2021, as its performance obligations were substantially completed. Future milestones and royalties achieved will be recognized ~~using a proportional performance method (based on actual costs incurred versus total estimated costs incurred) beginning~~ in ~~October 2018 and ending as the Company’s efforts in overseeing the Phase 1/2 clinical trial are completed.~~their entirety when earned. During the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized approximately $0 ~~million~~ and ~~$6.9~~$7.5 million of revenue associated with this performance obligation, respectively. During the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized approximately ~~$20.2 million~~$0 and ~~$57.9~~$20.2 million of revenue associated with this performance obligation, respectively. As of ~~June 30, 2021,~~March 31, 2022, there were ~~$0.4 million~~$0 in contract assets recorded as accounts receivable, and $0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance Sheets.

The Company has ~~begun to conduct~~conducted its discovery, optimization and preclinical research and development of ~~ARO-JNJ1,~~JNJ-75220795 (ARO-JNJ1), ARO-JNJ2, and ARO-JNJ3 under the Janssen Collaboration Agreement. All costs and labor hours spent by the Company ~~will be~~have been entirely funded by Janssen. During the three months ended ~~June 30,~~March 31, 2022, Janssen’s option period expired unexercised for two of the three candidates (ARO-JNJ2 and ARO-JNJ3) under the Janssen Collaboration Agreement. During the three months ended March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized ~~$0.2~~$0.1 million and ~~$0.4~~$0.1 million of revenue associated with these efforts, respectively. During the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized ~~$0.5~~$0.1 million and ~~$2.4~~$0.3 million of revenue associated with these efforts, respectively. In May 2021, Janssen exercised its option right for ARO-JNJ1, which resulted in a $10.0 million milestone payment to the Company. This $10 million milestone payment was recognized entirely during the three months ended June 30, 2021. As of ~~June 30, 2021,~~March 31, 2022, there were ~~$0.3~~$0.1 million of contract assets recorded as accounts receivable and $0$0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance Sheets. ~~Sheets.~~

On October 7, 2020, the Company entered into ~~the Takeda~~an Exclusive License ~~Agreement~~and Co-funding agreement (the “Takeda License Agreement”) with Takeda. Under the Takeda License Agreement, Takeda and the Company will co-develop the Company’s ARO-AAT program, 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, ARO-AAT, if approved, will be co-commercialized under a 50/50 profit sharing structure. Outside the United States, Takeda will lead the global commercialization strategy and will receive an exclusive license to commercialize ARO-AAT, ~~with~~while the Company will be eligible to receive tiered royalties of 20% to 25% on net sales. In January 2021, the Company received $300.0 million as an upfront payment and is eligible to receive potential development, regulatory and commercial milestones of up to $740.0 million.

The Company has evaluated the Takeda License Agreement in accordance with FASB ~~Topic~~Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of the Takeda License Agreement, the Company identified 1 distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D 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 ARO-AAT 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 1 distinct bundle and, thus, one performance obligation. Beyond the Takeda R&D Services, which are the responsibility of the Company, Takeda will be responsible for managing future clinical development and ~~commercialization.~~commercialization outside the United States. Within the United States, the Company will also participate in co-development and co-commercialization efforts and will co-fund these efforts with Takeda as part of the 50/50 profit sharing structure within the United States. The Company ~~will co-fund certain~~considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of ~~the development~~account within Topic 808, and ~~commercialization costs that Takeda manages, and~~as such, these co-funding amounts will be recorded as Research and Development Expenses or General and Administrative Expenses, as appropriate.

The Company determined the initial transaction price totaled ~~approximately~~ $300.0 million, which includes the upfront payment. The Company has excluded any future ~~estimated~~ milestones ~~royalties,~~ or ~~profit-sharing payments~~royalties from this transaction price to date. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the ARO-AAT license and the associated Takeda R&D Services. Revenue will be recognized using a proportional performance method (based on actual ~~costs incurred~~patient visits completed versus total estimated ~~costs incurred~~visits completed for the ~~Takeda R&D Services)~~ongoing SEQUOIA and AROAAT2002 clinical studies). Revenue for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$35.7~~$20.8 million and ~~$0,~~$25.4 million, respectively. Revenue for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$69.3~~$41.6 million and ~~$0,~~$33.6 million, respectively. As of ~~June 30, 2021,~~March 31, 2022, there were $0 in contract assets recorded as accounts receivable, ~~$150.9~~$77.9 million in contract liabilities recorded as deferred revenue and ~~$79.7~~$89.8 million in contract liabilities recorded as deferred revenue, net of the current ~~portion.~~portion, and $5.0 million in contract liabilities recorded as accrued expenses. The $5.0 million in accrued expenses was primarily driven by co-development and co-commercialization activities.

On June 18, 2021, the Company entered into the Horizon License Agreement with Horizon. Under the Horizon License Agreement, Horizon ~~has~~ received a worldwide exclusive license for ARO-XDH, a previously undisclosed discovery-stage investigational RNAi therapeutic being developed by the Company as a potential treatment for people with uncontrolled gout. The Company will

conduct all activities through the preclinical stages of development of ARO-XDH, and Horizon will be wholly responsible for clinical development and commercialization of ARO-XDH. In July 2021, the Company received $40 million as an upfront payment and is eligible to receive up to $660 million in potential development, regulatory and sales milestones. The Company is also eligible to receive royalties in the low- to mid-teens range on net product sales.

The Company has evaluated the Horizon License Agreement in accordance with FASB ~~Topic~~Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of ARO-XDH (the “Horizon R&D Services”). Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables ~~represent~~represented 1 distinct bundle and, thus, 1 performance obligation. Beyond the Horizon R&D Services, which are the responsibility of the Company, Horizon will be responsible for managing future clinical development and commercialization of ARO-XDH.

The Company determined the initial transaction price totaled ~~approximately~~ $40.0 million, ~~which includes~~including the upfront payment. The Company ~~will exclude~~has excluded any future estimated milestones ~~royalties,~~ or ~~profit-sharing payments~~royalties, from this transaction price to date. The Company will allocate the total $40.0 million initial transaction price to its 1 distinct performance obligation for the ARO-XDH license and the associated Horizon R&D Services. Revenue will be recognized ~~using~~on a ~~proportional~~straight-line basis over the estimated timeframe for completing the Horizon R&D Services. The Company determined that the straight-line basis was appropriate as its efforts will be expended evenly over the course of completing its performance ~~method. At June 30,~~obligation. Revenue for the three months ended March 31, 2022 and 2021 ~~no amounts~~was $6.7 million and $0, respectively. Revenue for the six months ended March 31, 2022 and 2021 was $13.3 million and $0, respectively. As of March 31, 2022, there were $0 million in contract assets recorded as accounts receivable, $20.0 million in contract liabilities recorded as deferred revenue.

The Company has manufactured ARO-XDH material for Horizon in furtherance of the research plan entered into pursuant to the Horizon License Agreement, for which the Company has been reimbursed for its costs. During the three and six months ended March 31, 2022 and 2021, the Company recognized $1.3 million and $0 with these efforts, respectively. As of March 31, 2022, there were $1.3 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance ~~Sheets or Consolidated Statements~~ Sheets.

On November 22, 2021, the Company entered into an Exclusive License Agreement (the “GSK License Agreement”) with GSK. Under the GSK License Agreement, GSK has received an exclusive license for ARO-HSD, the Company’s investigational RNAi therapeutic being developed as a treatment for patients with alcohol-related and nonalcohol related liver diseases, such as nonalcoholic steatohepatitis (NASH). The exclusive license is worldwide with the exception of ~~Operations~~greater China, for which the Company retained rights to develop and ~~Comprehensive Income (Loss)~~commercialize. Beyond the Company’s Phase 1/2 study of (ARO-HSD), aswhich the Company is responsible for completing, GSK is wholly responsible for clinical development and commercialization of ARO-HSD in its territory. Under the terms of the agreement, the Company has ~~not performed~~received an upfront payment of $120 million and is eligible for additional payments of $30 million at the start of Phase 2 and $100 million upon achieving a successful Phase 2 trial readout and 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 million at first commercial sale, and up to $590 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.

The Company has evaluated the GSK License Agreement in accordance with FASB Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from Customers. At the inception of the GSK License Agreement, the Company identified 1 distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study, (the “GSK R&D Services”). Due to the specialized and unique nature of these GSK R&D Services and their direct relationship with the license, the Company determined that these deliverables represented 1 distinct bundle and, thus, one performance obligation. Beyond the GSK R&D Services, which are the responsibility of the Company, GSK will be responsible for managing future clinical development and commercialization in its territory.

The Company determined the initial transaction price totaled $120.0 million, including the upfront payment. The $120.0 million upfront payment was collected in January 2022. The Company has excluded any ~~substantive Horizon~~future estimated milestones or royalties from this transaction price to date. The Company has allocated the total $120.0 million initial transaction price to its one distinct performance obligation for the ARO-HSD license and the associated GSK R&D Services. As the Company has completed its performance obligation related to this agreement, the upfront payment of $120.0 million will be fully recognized as of the three and six months ended March 31, 2022. Revenue for the three and six months ended March 31, 2022 and 2021 was $120.0 million and $0, respectively. As of March 31, 2022, there were $0 in contract assets recorded as accounts receivable, $0 in contract liabilities recorded as deferred revenue.

The following table summarizes the Company’s major classes of property and equipment:

	June 30, 2021			September 30, 2020			March 31, 2022			September 30, 2021
	(In thousands)						(In thousands)
Computers, office equipment and furniture	$	1,163		$	662
Computers, software, office equipment and furniture							$	2,272		$	2,170
Research equipment		23,972			20,654			28,370			27,500
Software		509			631
Leasehold improvements		42,934			25,238			42,017			41,524
Construction in Progress								6,414			345
Land								2,996			-
Total gross fixed assets		68,578			47,185			82,069			71,539
Less: Accumulated depreciation and amortization		(20,792	)		(16,304	)		(27,181	)		(22,864	)
Property and equipment, net	$	47,786		$	30,881		$	54,888		$	48,675

Depreciation and amortization expense for property and equipment for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$1.6~~$2.2 million and ~~$1.1~~$1.5 million, respectively. Depreciation and amortization expense for property and equipment for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$4.5~~$4.3 million and $2.9 million, respectively. Construction in Progress relates to the Company’s Verona and San Diego research facilities. Land relates to the Company’s Verona, Wisconsin research facility.

Investments at ~~June 30, 2021~~March 31, 2022 primarily consisted of corporate bonds that have maturities of less than 36 months, a certificate of deposit and marketable equity securities. The Company’s corporate bonds consist of both short-term and long-term bonds and are classified as “held-to-maturity” on the Company’s Consolidated Balance Sheets. The Company’s certificate of deposit matures in less than 2412 months and is classified as “held-to-maturity” on the Company’s Consolidated Balance ~~Sheet.~~Sheet, or classified as cash and cash equivalents if the corporate bonds are purchased 90 days or less from maturity. The Company’s marketable equity securities consist of mutual funds that primarily invest in U.S. government bonds, U.S. government agency bonds, corporate bonds and other asset-backed debt securities. Dividends from these funds are automatically ~~reinvested.~~re-invested. The Company may also invest excess cash balances in money market accounts, government-sponsored enterprise securities, and/or commercial paper. These securities are classified as cash and cash equivalents on the Company’s Consolidated Balance Sheet. The Company accounts for its held to maturity investments in accordance with FASB ASC 320, Investments – Debt and Equity Securities and its marketable equity securities in accordance with ASC 321, Investments – Equity Securities. We did not record any impairment charges related to our marketable debt securities during the three and six months ended March 31, 2022.

The following tables summarize the Company’s short-term and long-term investments and marketable securities as of ~~June 30, 2021~~March 31, 2022 and September 30, ~~2020~~2021 by measurement ~~category.~~category:

Held to Maturity	As of June 30, 2021
	(In thousands)										As of March 31, 2022
	Amortized Cost		Gross Unrealized Gains		��	Gross Unrealized Losses			Fair Value		(In thousands)
											Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Classified as Cash Equivalents
Commercial notes (due within ninety days)											$	26,678	$	1	$	(1	)	$	26,678
Classified as Held to Maturity
Commercial notes (due within one year)	$	63,924	$	711		$	-		$	64,635	$	142,912	$	225	$	(307	)	$	142,830
Commercial notes (due within one through three years)	$	78,376	$	1,996		$	-		$	80,372	$	201,590	$	-	$	(5,864	)	$	195,726
Certificate of deposit (due within two years)	$	50,000	$	-		$	-		$	50,000
Certificate of deposit (due within one year)											$	50,000	$	-	$	-		$	50,000
Classified as Marketable Securities
Marketable securities											$	128,805	$	-	$	(6,230	)	$	122,575
Total	$	192,300	$	2,707		$	-		$	195,007	$	549,985	$	226	$	(12,402	)	$	537,809

	As of September 30, 2020										As of September 30, 2021
	(In thousands)										(In thousands)
	Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses			Fair Value		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Classified as Held to Maturity
Commercial notes (due within one year)	$	86,890	$	1,590		$	-		$	88,480	$	56,627	$	803	$	-		$	57,430
Commercial notes (due within one through three years)	$	137,487	$	4,573		$	(79	)	$	141,981	$	195,595	$	1,151	$	(103	)	$	196,643
Certificate of deposit (due within one through two years)											$	50,000	$	-	$	-		$	50,000
Classified as Marketable Securities
Marketable securities											$	127,481	$	-	$	(753	)	$	126,728
Total	$	224,377	$	6,163		$	(79	)	$	230,461	$	429,703	$	1,954	$	(856	)	$	430,801

~~Realized gains for marketable securities recorded at fair value consist of dividends received and re-invested into the associated fund.~~

Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition in March 2015. The license agreement associated with the Novartis RNAi asset acquisition is being amortized over the estimated life remaining at the time of acquisition, which was 21 years, and the accumulated amortization of the asset is ~~$0.9~~$1.1 million. The patents associated with the Novartis RNAi asset acquisition are being amortized over the estimated life remaining at the time of acquisition, which was 14 years, and the accumulated amortization of the assets is ~~$9.8~~$11.0 million. Amortization expense for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $0.4 million and $0.4 million, respectively. Amortization expense for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$1.3~~$0.9 million and ~~$1.3~~$0.9 million, respectively. Amortization expense is expected to be ~~$0.4~~$0.9 million for the remainder of ~~2021, $1.7 million in~~ fiscal2022, $1.7 million in 2023, $1.7 million in 2024, $1.7 million in 2025, $1.7 million in 2026 and ~~$6.9~~$5.2 million thereafter.

The following table provides details on the Company’s intangible asset balances:

	Intangible assets subject to amortization			Intangible Assets Subject to Amortization
	(in thousands)			(in thousands)
Balance at September 30, 2020	$	15,363
Balance at September 30, 2021				$	13,663
Impairment		-			-
Amortization		(1,275	)		(850	)
Balance at June 30, 2021	$	14,088
Balance at March 31, 2022				$	12,813

At ~~June 30, 2021,~~March 31, 2022, the Company had a total of 150,000,000 shares of capital stock authorized for issuance, consisting of 145,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share.

At ~~June 30, 2021,~~March 31, 2022, ~~104,209,347~~105,702,499 shares of Common Stock were outstanding. At ~~June 30, 2021, 15,381,164~~March 31, 2022, 14,054,083 shares of Common Stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under Arrowhead’s 2004 Equity Incentive Plan, 2013 Incentive Plan, and 2021 Incentive Plan, as well as for inducement grants made to new employees under Rule 5635(c)(4) of the Nasdaq Listing Rules.

11In August 2020, the Company entered into an Open Market Sale Agreement (the “ATM Agreement”), pursuant to which the Company may, from time to time, sell up to $250,000,000 in shares of the Company’s Common Stock through Jefferies LLC, acting as the sales agent and/or principal, in an at-the-market offering. The Company is not required to sell shares under the ATM Agreement. The Company will pay Jefferies LLC a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement. Unless otherwise terminated, the ATM Agreement continues until the earlier of selling all shares available under the ATM Agreement or December 2, 2022. At March 31, 2022, 0 shares have been sold under the ATM Agreement.

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 0 contingent liabilities recorded as of ~~the nine months ended June 30, 2021.~~March 31, 2022.

~~In the normal course of business,~~On December 20, 2021, the Company ~~enters into various~~completed a purchase ~~commitments for~~of 13 acres of land in the ~~manufacture of drug components, for toxicology studies and for clinical studies. As of June 30, 2021, these future commitments were estimated at approximately $177.4 million, of~~Verona Technology Park in Verona, WI, which ~~approximately $39.0 million~~ is ~~expected~~planned to be ~~incurred during~~ the ~~remainder~~site of ~~fiscal year 2021.~~an approximately 140,000 square foot drug manufacturing facility and an approximately 115,000 square foot laboratory and office facility to support process development and analytical activities. Arrowhead intends to invest between $200 million and $250 million into the buildout of the facilities. As part of this acquisition, the Company also entered into a development agreement with the City of Verona to construct certain infrastructure improvements within the TIF district, and will be reimbursed by the City of Verona by future tax increment revenue generated from the developed property. The total amount of funding that City of Verona will pay as reimbursements under the TIF program for these improvements is not guaranteed and will depend on future tax revenues generated from the developed property.

The Company has licensed from third parties the rights to use certain technologies for its research and development activities, as well as in any products the Company may develop using these licensed technologies. These agreements and other similar agreements often require milestone and royalty payments. Milestone payments, for example, may be required as the research and development process progresses through various stages of development, such as when clinical candidates enter or progress through clinical trials, upon a new drug application and upon certain sales level milestones. These milestone payments could amount to the mid to upper double-digit millions of dollars. During the three and ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021, the Company did 0t reach any milestones. ~~During the three and nine months ended June 30, 2020, the Company accrued milestone payments of $0 and $0.9 million, respectively, related to the progression of the ARO-ENaC program. In~~Under certain agreements, the Company may be required to make mid to high single-digit percentage royalty payments based on a percentage of ~~the~~ sales of the relevant products.

In April 2019, the Company entered into a lease for its corporate headquarters in Pasadena, California. The 91 month office building lease between the Company and 177 Colorado Owner, LLC is for approximately 24,000 square feet of office space located at 177 E. Colorado Blvd, Pasadena, California. The increased capacity of this new office space compared to the Company’s prior corporate headquarters ~~was intended to~~will accommodate increased personnel as the Company’s pipeline of drug candidates expands and moves closer to market. Lease payments began on September 30, 2019 and are estimated to total approximately $8.7 million over the term. The lease expires on April 30, 2027. The Company has paid approximately $3.5 million for leasehold improvements, net of tenant improvement allowances. The lease contains an option to renew for 1 ~~additional~~ term of five years. The exercise of this option was not determined to be reasonably certain and thus was not included in lease liabilities on the Company’s Consolidated Balance Sheet at ~~June 30, 2021.~~March 31, 2022. On October 23, 2020, the Company entered into a lease expansion to add an additional approximately 24,000 square feet of office space at the same location for its corporate headquarters. Lease payments for the expansion began in July 2021 and the lease for the expansion expires in April 2027. The lease payments for the expansion are expected to total $6.9 million. The Company ~~anticipates paying~~has paid approximately ~~$4.2~~$4.0 million of leasehold improvements, net of tenant improvement allowances, for the lease expansion. The increased capacity of this additional office space compared to the Company’s current corporate headquarters is intended to accommodate increased personnel as the Company’s pipeline of drug candidates continues to expand and move closer to market.

In January 2016, the Company entered into a lease for its research facility in Madison, Wisconsin. The lease iswas for approximately 60,000 square feet of office and laboratory space and ~~has~~had an expiration date of September 30, 2026. The lease was amended in January 2019 and May 2020 to expand the rentable square feet by an additional 40,000 ~~total~~ square feet and to extend the lease expiration date to September 30, 2031. Lease payments are estimated to total approximately $26.2 million for the term. The Company incurred approximately $11.0 million of leasehold improvements for the additional 40,000 square feet, net of tenant improvement allowances. The lease contains 2 options to renew for two ~~additional~~ terms of five years. The exercise of these options were not determined to be reasonably certain and thus was not included in lease liabilities on the Company’s Consolidated Balance Sheet at ~~June 30, 2021.~~March 31, 2022. In November 2020 and December 2020, the Company entered into amendments to expand the rentable square space by an additional 10,743 square feet and these amendments added a total of approximately $1.2 million of lease payments for the remainder of the term.

In March 2020, the Company entered into a sublease agreement ~~(the “Sublease”) with Halozyme, Inc.~~ for additional research and development facility space in San Diego, California. The Sublease provides additional space needed to accommodate the recent growth of the Company’s personnel and discovery efforts. The Sublease is for approximately 21,000 rentable square feet. The term of the Sublease commenced on April 1, 2020 and will end on January 14, 2023. Sublease payments are estimated to total approximately $2.0 million over the term.

On November 19, 2021, the Company entered into a new lease for a San Diego, California research facility. The 15-year lease is for approximately 144,000 square feet of office and research and development laboratory space to be constructed in San Diego, California. This lease will replace the Company’s current research facility sublease for property located in San Diego, California. The increased capacity of this new facility compared to the Company’s current research facility in San Diego will accommodate increased personnel for the Company’s expanding pipeline of current and future drug candidates. The estimated rent commencement date for the lease is in May 2023, after construction and leasehold improvements have been completed. The lease payments, which begin on the rent commencement date, will be approximately $119.0 million over the initial 15-year term. The Company also estimates payments for operating expenses to be approximately $3.0 million for the first year of the lease, and these payments will continue throughout the initial 15-year term. The Company expects to pay approximately $31.0 million for leasehold improvements, net of tenant improvement allowances. 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 1 additional ten-year term, with certain annual increases in base rent. No lease liabilities have been recorded as of March 31, 2022 as the lease commencement date has not yet occurred.

Operating lease cost during the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$1.6~~$1.3 million and ~~$0.8~~$1.1 million, respectively. Operating lease cost during the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$3.6~~$2.6 million and ~~$1.7~~$2.0 million, respectively. Variable lease costs for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $0.1 million and $0.2 million, respectively. Variable lease costs for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$0.6~~$0.3 million and ~~$0.6~~$0.5 million, respectively. There was 0 short-term lease cost during the three and ~~nine~~six months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

The following table presents ~~maturities~~payments of operating lease liabilities on an undiscounted basis as of ~~June 30, 2021:~~March 31, 2022:

	(in thousands)			(in thousands)
2021 (remainder of fiscal year)	$	964
2022		4,522
2022 (remainder of fiscal year)				$	2,537
2023		4,624			4,786
2024		4,523			4,621
2025		4,649			4,749
2026 and thereafter		17,422
2026					5,050
2027 and thereafter					13,200
Total	$	36,704		$	34,943
Less imputed interest	$	(12,560	)	$	(9,335	)
Total operating lease liabilities (includes current portion)	$	24,144		$	25,608

Cash paid for the amounts included in the measurement of the operating lease liabilities on the Company’s Consolidated Balance Sheet and included in Other changes in operating assets and liabilities within cash flows from operating activities on the Company’s Consolidated ~~Statement~~Statements of Cash ~~Flow~~Flows for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $2.2 million and ~~$1.1~~$1.4 million, respectively. The weighted-average remaining lease term and weighted-average discount rate for all leases as of ~~June 30, 2021~~March 31, 2022 was ~~8.3~~7.6 years and 8.5%, respectively.

Arrowhead has three plans that provide for equity-based compensation. Under the 2004 Equity Incentive Plan and the 2013 Incentive Plan, as of ~~June 30, 2021, 429,141~~March 31, 2022, 218,107 and ~~5,293,368~~4,183,395 shares, respectively, of Arrowhead’s Common Stock are reserved for the grant of stock options, stock appreciation rights, and restricted stock ~~awards and performance unit/share~~unit awards to employees, consultants and others. No further grants may be made under the 2004 Equity Incentive Plan. As of ~~June 30, 2021,~~March 31, 2022, there were options granted and outstanding to purchase ~~429,141~~218,107 and ~~2,127,918~~1,871,258 shares of Common Stock under the 2004 Equity Incentive Plan and the 2013 Incentive Plan, respectively, and there were ~~3,165,450~~2,312,137 restricted stock units granted and outstanding under the 2013 Incentive Plan. ~~Also, as~~As of ~~June 30, 2021,~~March 31, 2022, there were ~~1,001,516~~857,290 shares reserved for options and ~~636,700~~691,750 shares reserved for restricted stock units issued as inducement grants to new employees outside of equity compensation plans. On March 18, 2021, the Company’s stockholders approved the Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan (“2021 Incentive Plan”), which authorizes 8,000,000 shares (subject to certain adjustments) to be awarded for grants of stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of Arrowhead’s Common Stock. The maximum number of shares authorized under the 2021 Incentive Plan will be (i) reduced by any shares subject to awards made under the 2013 Incentive Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Incentive Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash. As of ~~June 30, 2021,~~March 31, 2022, there were ~~options granted and outstanding to purchase 18,000~~3,000 shares of Common Stock reserved for options and ~~43,500~~1,474,350 shares of Common Stock reserved for restricted stock units granted and outstanding under the 2021 Incentive Plan. As of ~~June 30, 2021,~~March 31, 2022, the total number of ~~authorized~~ shares available under the 2021 Incentive Plan was ~~8,020,439~~6,635,816 shares, which includes ~~81,939~~110,791 shares that were forfeited under the 2013 Incentive Plan.

	Number of Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value		Number of Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Balance at September 30, 2020		4,539,403		$	16.67
Balance at September 30, 2021										3,456,239		$	19.60
Granted		186,000		65.57						-			-
Cancelled		(167,609	)	34.86						(61,820	)	44.77
Exercised		(981,219	)	10.69						(444,764	)	8.28
Balance at June 30, 2021		3,576,575		$	20.00	5.9 years	$	224,666,017
Exercisable at June 30, 2021		2,417,915		$	11.18	4.7 years	$	173,212,122
Balance at March 31, 2022										2,949,655		$	20.78	5.4 years	$	83,259,543
Exercisable at March 31, 2022										2,342,356		$	15.41	4.8 years	$	75,982,912

Stock-based compensation expense related to stock options for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$3.2~~$2.7 million and ~~$2.7~~$3.3 million, respectively. Stock-based compensation expense related to stock options for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$9.6~~$5.7 million and ~~$6.8~~$6.4 million, respectively. For non-qualified stock options, the expense creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance.

The grant date fair value of the options granted by the Company for the three months ended ~~June 30,~~March 31, 2022 and 2021 was $0 and ~~2020 was $0.9 million and $3.4~~$1.4 million, respectively. The grant date fair value of the options granted by the Company for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 was $0 and ~~2020 was $9.0 million and $30.0~~$8.1 million, respectively.

The intrinsic value of the options exercised during the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$10.2~~$10.8 million and ~~$9.5~~$20.9 million, respectively. The intrinsic value of the options exercised during the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$63.0~~$23.3 million and ~~$39.8~~$52.8 million, respectively.

As of ~~June 30, 2021,~~March 31, 2022, the pre-tax compensation expense for all outstanding unvested stock options in the amount of ~~$31.3~~$18.6 million will be recognized in the Company’s results of operations over a weighted average period of ~~2.7~~1.9 years.

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 valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

	Nine Months Ended June 30,				Six Months Ended March 31,
	2021		2020		2022	2021
Dividend yield		-		-	N/A		-
Risk-free interest rate	0.4 – 1.1%		0.4 – 1.8%		N/A	0.4 – 0.6%
Volatility	86.2 – 90.4%		90.5 – 91.9%		N/A	86.6 – 90.4%
Expected life (in years)		6.25		6.25	N/A		6.25
Weighted average grant date fair value per share of options granted	$	48.64	$	38.12	N/A	$	48.62

Volatility is estimated based on volatility average of the Company’s Common Stock price.

Restricted stock units (“RSUs”), including time-based, market condition-based, and ~~performance-based~~performance condition-based awards, have been granted under the Company’s 2013 Incentive Plan, 2021 Incentive Plan, and as inducements grants granted outside of the Company’s equity-based compensation plans under Rule 5635(c)(4) of the Nasdaq Listing Rules. 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.

	Number of RSUs			Weighted- Average Grant Date Fair Value		Number of RSUs			Weighted- Average Grant Date Fair Value Per Share
Unvested at September 30, 2020		3,524,025		$	44.11
Unvested at September 30, 2021							3,831,850		$	61.24
Granted		1,488,450			75.29		1,605,450			56.73
Vested		(851,825	)		30.41		(931,063	)		49.25
Forfeited		(315,000	)		39.93		(37,625	)		63.42
Unvested at June 30, 2021		3,845,650		$	59.55
Unvested at March 31, 2022							4,468,612		$	62.10

During the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded ~~$15.4~~$28.2 million and ~~$7.4~~$12.1 million of expense related to RSUs, respectively. During the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded ~~$32.5~~$49.7 million and ~~$20.7~~$17.1 million of expense related to RSUs, respectively. Such expense is included in stock-based compensation expense in the Company’s Consolidated ~~Statement~~Statements of Operations and Comprehensive Income (Loss). For RSUs, the expense creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance.

For RSUs, the grant date fair value of the award is based on the Company’s closing stock price at the grant date, with consideration given to the probability of achieving performance conditions for performance-based awards. The grant date fair value of the RSUs granted by the Company for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$3.1~~$83.4 million and ~~$5.9~~$101.6 million, respectively. The grant date fair value of the RSUs granted by the Company for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$112.1~~$91.1 million and ~~$141.8~~$109.0 million, respectively.

As of ~~June 30, 2021,~~March 31, 2022, the pre-tax compensation expense for all unvested RSUs in the amount of ~~$123.5~~$206.8 million will be recognized in the Company’s results of operations over a weighted average period of 2.7 years. Unvested RSUs that we have deemed not probable of vesting as of June 30, 2021, have the potential of generating an additional $70.1 million of pre-tax compensation expense if we deem them probable of vesting in a future reporting period.

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

Level 1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following table summarizes fair value measurements at ~~June 30, 2021~~March 31, 2022 and September 30, ~~2020~~2021 for assets and liabilities measured at fair value on a recurring ~~basis.~~basis:

Level 1

Level 2

Level 3

Total

(in thousands)

Cash and cash equivalents

$
325,981

$
-

$
-

$
325,981

Marketable securities

$
126,407

$
-

$
-

$
126,407

Short-term investments (held to maturity)

$
-

$
64,635

$
-

$
64,635

Long-term investments (held to maturity)

$
-

$
130,372

$
-

$
130,372

Contingent consideration

$
-

$
-

$
-

$
-

	Level 1		Level 2		Level 3		Total
	(in thousands)
Classified as Cash and cash equivalents
Commercial Notes	$	-	$	26,678	$	-	$	26,678
Classified as Marketable Securities
Marketable securities	$	122,575	$	-	$	-	$	122,575
Classified as Held to Maturity
Short-term investments	$	-	$	142,830	$	-	$	142,830
Long-term investments	$	-	$	195,726	$	-	$	195,726
Certificate of deposits	$	50,000	$	-	$	-	$	50,000
Classified as Contingent Consideration
Contingent consideration	$	-	$	-	$	-	$	-

On April 25, 2022, Arrowhead Pharmaceuticals, Inc., entered into definitive agreements to form a joint venture, Visirna Therapeutics, Inc. (“Visirna”) with Vivo Capital (“Vivo”) through which the Company and Vivo intend to expand the reach of innovative medicines in Greater China. The Company licensed to Visirna the exclusive rights to develop and commercialize four of Arrowhead’s investigational RNA interference (RNAi) therapeutic candidates for cardiometabolic diseases in mainland China, Hong Kong, Macau, and Taiwan. Vivo will provide initial funding of $60.0 million to Visirna. The Company has a majority stake in Visirna following this initial funding and is further eligible to receive potential royalties on commercial sales.

This Quarterly Report on Form 10-Q contains 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, 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,” “intend,” “plan,” “project,” “could,” “estimate,” “target,” “forecast,” 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.

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. In addition, many of these risks and uncertainties may be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. As such, our actual results may differ materially from those expressed in any forward-looking statements. Readers should carefully review the factors identified in our most recent Annual Report on Form 10-K under the caption “Risk Factors” as well as the additional risks and uncertainties described in other documents we file from time to time with the Securities and Exchange Commission (“SEC”), including ~~our Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, our~~this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021 and this Quarterly Report on Form 10-Q.~~2022. 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. 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~~events.

~~Arrowhead has focused its resources on therapeutics that exclusively utilize the Company’s Targeted RNAi Molecule (TRiM~~^TM~~) platform technology. Therapeutics built on the TRiM~~^TM ~~platform have demonstrated high levels of pharmacologic activity in multiple animal models spanning several therapeutic areas. TRiM~~^TM enabled therapeutics offer several potential advantages over prior generation 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 and tumors; and the potential for improved safety and reduced risk of intracellular buildup, because there are less metabolites from smaller, simpler molecules.

Net ~~losses were $29.9~~income was $44.4 million for the three months ended ~~June 30, 2021~~March 31, 2022 as compared to net losses of ~~$13.6~~$26.8 million for the three months ended ~~June 30, 2020.~~March 31, 2021. Net losses were ~~$77.5~~$18.5 million for the ~~nine~~six months ended ~~June 30, 2021~~March 31, 2022 as compared to net losses of ~~$36.1~~$47.6 million for the ~~nine~~six months ended ~~June 30, 2020.~~March 31, 2021. Net ~~losses~~income per share-diluted ~~were $0.29~~was $0.41 for the three months ended ~~June 30, 2021~~March 31, 2022 as compared to net losses per share-diluted of ~~$0.13~~$0.26 for the three months ended ~~June 30, 2020.~~March 31, 2021. Net losses per share-diluted were ~~$0.75~~$0.18 for the ~~nine~~six months ended ~~June 30, 2021~~March 31, 2022 as compared to net losses per share-diluted of ~~$0.36~~$0.46 for the ~~nine~~six months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase~~net income during the three months ended March 31, 2022, and the reduction in net ~~losses~~loss for the ~~three and nine~~six months ended ~~June 30,~~March 31, 2022 as compared to the six months ended March 31, 2021 was due to ~~an increase in~~the recognition of the $120.0 million upfront payment received from GSK under the GSK License Agreement (as defined below). This increased revenue was partially offset by increased research and development and general and administrative expenses as the Company’s pipeline of candidates has expanded and progressed through clinical trial ~~phases, partially offset by an increase in revenue from the Company’s license and collaboration agreements, primarily from the Takeda collaboration.~~phases.

The Company has strengthened its liquidity and financial position through upfront and milestone payments received under its collaboration agreements, as well as equity financings. Under the terms of the Company’s agreements with Janssen, taken together, the Company has received $175.0 million as an upfront payment, $75.0 million in the form of an equity investment by JJDC in

Arrowhead Common Stock, and ~~three~~four milestone payments totaling ~~$60.0~~$70.0 million. Under the terms of the Company’s agreements with Amgen, the Company has received $35.0 million in upfront payments, $21.5 million in the form of an equity investment by Amgen in the Company’s Common Stock and $30.0 million in milestone payments. T~~he Company’s October 2020 licensing agreement with~~The Takeda License Agreement resulted in a $300.0 million upfront payment, and the Horizon License Agreement resulted in a $40.0 million upfront payment. Finally, the GSK License Agreement resulted in an upfront payment of $120.0 million, which was ~~collected~~received in ~~the beginning of the second quarter of 2021.~~ January 2022.The Company had ~~$326.0~~$86.4 million of cash and cash equivalents, ~~$126.4~~$122.6 million of marketable securities, ~~$63.9~~$192.9 million in short-term investments, ~~$128.4~~$201.6 million of long term investments and ~~$734.9~~$703.6 million of total assets as of ~~June 30, 2021,~~March 31, 2022, as compared to ~~$143.6~~$184.4 million of cash and cash equivalents, ~~$85.0~~$126.7 million of marketable securities, ~~$86.9~~$56.6 million in short-term investments, ~~$137.5~~$245.6 million of long term investments and ~~$522.5~~$710.1 million of total assets as of September 30, ~~2020, respectively.~~2021. Based upon the Company’s current cash and investment resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months.

There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K.

The following data summarizes our results of operations for the following periods indicated:

The increase in revenue and operating income for the three and ~~nine~~six months ended ~~June 30, 2021~~March 31, 2022 compared to the three and ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 was driven by the revenue recognized for the Takeda collaboration. The increase in net losses during the three and nine months ended June 30, 2021 compared to the three and nine months ended June 30, 2020 was driven by an increase in research and development expenses as our pipeline of clinical candidates has continued to increase and progress through clinical trial phases, partially offset by an increase in revenue from the GSK, Takeda and Horizon License ~~Agreement.~~Agreements.

Total revenue for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$45.9~~$151.8 million and ~~$27.4~~$32.8 million, respectively. Total revenue for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$100.0~~$179.2 million and ~~$80.4~~$54.1 million, respectively. Revenue for the three months ended ~~June 30, 2021~~March 31, 2022 is primarily related to the recognition of ~~$35.7~~the $120.0 million of revenue associated with the ~~Takeda~~upfront payment received from GSK under the GSK License Agreement and the $10 million milestone payment from Janssen for ARO-JNJ1. Revenue for the nine months ended June 30, 2021 is primarily related to the recognition of $69.3 million of revenue associated with the Takeda License Agreement, the recognition of a portion of the $252.7 million initial transaction price associated with our agreements with Janssen and JJDC for the progress we achieved towards completing our performance obligations under those agreements, and the $10 million milestone payment from Janssen for ARO-JNJ1.Agreement.

On September 28, 2016, the Company entered into two collaboration and license agreements and a common stock purchase agreement with Amgen. Under the Second Collaboration and License Agreement ~~or Olpasiran Agreement,~~(the “Olpasiran Agreement”), Amgen has received a worldwide, exclusive license to Arrowhead’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 ~~other~~prior collaboration and license agreement (the “First Collaboration and License Agreement” or the “ARO-AMG1 Agreement”), Amgen received an option to a worldwide, exclusive license for ARO-AMG1, an RNAi therapy for an undisclosed genetically validated cardiovascular target. InUnder both agreements, Amgen is wholly responsible for clinical development and commercialization. Under the terms of the agreements taken together, the Company has received $35.0 million in upfront payments, $21.5 million in the form of an equity investment by Amgen in the Company’s Common Stock, and $30.0 million in milestone payments, and may receive up to an additional $400.0 million in remaining development, regulatory and sales milestone payments. The Company is further eligible to receive up to low double-digit royalties for sales of products under the Olpasiran Agreement. In July 2019, Amgen informed the Company that it would not be exercising its option for an exclusive license for ARO-AMG1, and as such, there will be no further milestone or royalty payments under the ARO-AMG1 Agreement.

The Company has evaluated these agreements in accordance with FASB Topics 808 – Collaboration Arrangements and 606 - Revenue for Contracts from Customers. The Company has substantially completed its performance obligations under the Olpasiran Agreement and the ARO-AMG1 Agreement. Future milestones and royalties achieved will be recognized in their entirety when earned. In July 2020, Amgen initiated a Phase 2 clinical study of Olpasiran, which resulted in a $20.0 million milestone payment to the Company. During the three and six months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized $0 and ~~$20.0~~$0 of revenue ~~respectively. During the nine months ended June 30, 2021 and 2020, the Company recognized $0 and $20 million of revenue,~~associated with its agreement with Amgen, respectively. As of ~~June 30, 2021,~~March 31, 2022, there were $0 in contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance Sheets.

On October 3, 2018, the Company entered into ~~the Janssen~~a License Agreement (the “Janssen License Agreement”) and ~~the Janssen~~a Research Collaboration and Option Agreement (the “Janssen Collaboration Agreement”) with Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson. The Company also entered into a stock purchase agreement with JJDC (“JJDC Stock Purchase Agreement”). Under the Janssen License Agreement, Janssen has received a worldwide, exclusive license to the Company’s JNJ-3989 (ARO-HBV) program, the Company’s third-generation subcutaneously administered RNAi therapeutic candidate being developed as a potential therapy for patients with chronic hepatitis B virus infection. Beyond the Company’s Phase 1/2 study of JNJ-3989 (ARO-HBV), which the Company iswas responsible for completing, Janssen is wholly responsible for clinical development and commercialization of JNJ-3989. Under the Janssen Collaboration Agreement, Janssen ~~will be~~was able to select three new targets against which Arrowhead ~~will~~would develop clinical candidates. These candidates ~~are~~were subject to certain restrictions and do not include candidates that already were in the Company’s pipeline. The Company ~~will~~was obligated to perform discovery, optimization and preclinical research and development, entirely funded by Janssen, which on its own or in combination with Janssen development work, iswould have been sufficient to allow the filing of a U.S. Investigational New Drug Application or equivalent, at which time Janssen ~~will~~would have the option to take an exclusive license. If the option iswas exercised, Janssen ~~will be~~would have been wholly responsible for clinical development and commercialization of each optioned candidate. Under the terms of the agreements taken together, the Company has received $175.0 million as an upfront payment, $75.0 million in the form of an equity investment by JJDC in Arrowhead Common Stock under the JJDC Stock Purchase Agreement, and ~~three~~ milestone and option payments totaling ~~$60.0~~$73.0 million, and the Company may receive up to $1.6 billion in development and sales milestones payments for the Janssen License Agreement, and up to ~~$1.9~~$0.6 billion in development and sales milestone payments for the ~~three additional targets~~remaining target covered under the Janssen Collaboration Agreement. The Company is further eligible to receive tiered royalties on product sales up to mid-teens under the Janssen License Agreement and up to low teens under the Janssen Collaboration Agreement. During the three months ended March 31, 2022, Janssen’s option period expired unexercised for two of the three candidates (ARO-JNJ2 and ARO-JNJ3) under the Janssen Collaboration Agreement.

The Company has evaluated these agreements in accordance with FASB ~~Topic~~Topics 808 – Collaboration Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of these agreements, the Company identified one distinct performance obligation. Regarding the Janssen License Agreement, the Company determined that the key deliverables included the license and certain R&D services including the Company’s responsibility to complete the Phase 1/2 study of JNJ-3989 (ARO-HBV) and the Company’s responsibility to ensure certain manufacturing of JNJ-3989 (ARO-HBV) drug product is completed and delivered to Janssen (the “Janssen R&D Services”). Due to the specialized and unique nature of these Janssen 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. The Company also determined that Janssen’s option to require the Company to develop up to three new targets is not a material right and, thus, not a performance obligation at the onset of the agreement. The consideration for this option is accounted for separately.

antitrypsin deficiency. Within the United States, ARO-AAT, if approved, will be co-commercialized under a 50/50 profit sharing structure. Outside the United States, Takeda will lead the global commercialization strategy and will receive an exclusive license to commercialize ARO-AAT, ~~with~~while the Company will be eligible to receive tiered royalties of 20% to 25% on net sales. In January 2021, the Company received $300.0 million as an upfront payment and is eligible to receive potential development, regulatory and commercial milestones of up to $740.0 million.

The Company has evaluated the Takeda License Agreement in accordance with FASB ~~Topic~~Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of the Takeda License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D 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 ARO-AAT 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. Beyond the Takeda R&D Services, which are the responsibility of the Company, Takeda will be responsible for managing future clinical development and ~~commercialization.~~commercialization outside the United States. Within the United States, the Company will also participate in co-development and co-commercialization efforts and will co-fund these efforts with Takeda as part of the 50/50 profit sharing structure within the United States. The Company ~~will co-fund certain~~considers the collaborative activities, including the co-development and co-commercialization, to be a separate unit of ~~the development~~account within Topic 808, and ~~commercialization costs that Takeda manages, and~~as such, these co-funding amounts will be recorded as Research and Development Expenses or General and Administrative Expenses, as appropriate.

The Company determined the initial transaction price totaled ~~approximately~~ $300.0 million, which includes the upfront payment. The Company has excluded any future ~~estimated~~ milestones ~~royalties,~~ or ~~profit-sharing payments~~royalties from this transaction price to date. The Company has allocated the total $300.0 million initial transaction price to its one distinct performance obligation for the ARO-AAT license and the associated Takeda R&D Services. Revenue will be recognized using a proportional performance method (based on actual ~~costs incurred~~patient visits completed versus total estimated ~~costs incurred~~visits completed for the ~~Takeda R&D Services)~~ongoing SEQUOIA and AROAAT2002 clinical studies). Revenue for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$35.7~~$20.8 million and ~~$0,~~$25.4 million, respectively. Revenue for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~$69.3~~$41.6 million and ~~$0,~~$33.6 million, respectively. As of ~~June 30, 2021,~~March 31, 2022, there were $0 in contract assets recorded as accounts receivable, ~~$150.9~~$77.9 million in contract liabilities recorded as deferred revenue and ~~$79.7~~$89.8 million in contract liabilities recorded as deferred revenue, net of the current ~~portion.~~ portion, and $5.0 million in contract liabilities recorded as accrued expenses. The $5.0 million in accrued expenses was primarily driven by co-development and co-commercialization activities.

RNAi therapeutic being developed by the Company as a potential treatment for people with uncontrolled gout. The Company will conduct all activities through the preclinical stages of development of ARO-XDH, and Horizon will be wholly responsible for clinical development and commercialization of ARO-XDH. In July 2021, the Company received $40 million as an upfront payment and is eligible to receive up to $660 million in potential development, regulatory and sales milestones. The Company is also eligible to receive royalties in the low- to mid-teens range on net product sales.

The Company has evaluated the Horizon License Agreement in accordance with FASB ~~Topic~~Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from ~~Customers, which became effective for the Company on October 1, 2018.~~Customers. At the inception of the Horizon License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibilities to conduct all activities through the preclinical stages of development of ARO-XDH (the “Horizon R&D Services”). Due to the specialized and unique nature of these Horizon R&D Services and their direct relationship with the license, the Company determined that these deliverables ~~represent~~represented one distinct bundle and, thus, one performance obligation. Beyond the Horizon R&D Services, which are the responsibility of the Company, Horizon will be responsible for managing future clinical development and commercialization of ARO-XDH.

The Company determined the initial transaction price totaled ~~approximately~~ $40.0 million, ~~which includes~~including the upfront payment. The Company ~~will exclude~~has excluded any future estimated milestones ~~royalties,~~ or ~~profit-sharing payments~~royalties, from this transaction price to date. The Company will allocate the total $40.0 million initial transaction price to its one distinct performance obligation for the ARO-XDH license and the associated Horizon R&D Services. Revenue will be recognized ~~using~~on a ~~proportional~~straight-line basis over the estimated timeframe for completing the Horizon R&D Services. The Company determined that the straight-line basis was appropriate as its efforts will be expended evenly over the course of completing its performance ~~method. At June 30,~~obligation. Revenue for the three months ended March 31, 2022 and 2021 ~~no amounts~~was $6.7 million and $0, respectively. Revenue for the six months ended March 31, 2022 and 2021 was $13.3 million and $0, respectively. As of March 31, 2022, there were $0 million in contract assets recorded as accounts receivable, $20.0 million in contract liabilities recorded as deferred revenue.

The Company has manufactured ARO-XDH material for Horizon in furtherance of the research plan entered into pursuant to the Horizon License Agreement, for which the Company has been reimbursed for its costs. During the three and six months ended March 31, 2022 and 2021, the Company recognized $1.3 million and $0 with these efforts, respectively. As of March 31, 2022, there were $1.3 million of contract assets recorded as accounts receivable and $0 of contract liabilities recorded as current deferred revenue on the Company’s Consolidated Balance ~~Sheets or Consolidated Statements~~ Sheets.

The Company has evaluated the GSK License Agreement in accordance with FASB Topics 808 – Collaborative Arrangements and 606 - Revenue for Contracts from Customers. At the inception of the GSK License Agreement, the Company identified one distinct performance obligation. The Company determined that the key deliverables included the license and certain R&D services, including the Company’s responsibility to complete the Phase 1/2 study, (the “GSK R&D Services”). Due to the specialized and unique nature of these GSK R&D Services and their direct relationship with the license, the Company determined that these deliverables represented one distinct bundle and, thus, one performance obligation. Beyond the GSK R&D Services, which are the responsibility of the Company, GSK will be responsible for managing future clinical development and commercialization in its territory.

The analysis below details the operating expenses and discusses the expenditures of the Company within the major expense categories. Certain reclassifications have been made to prior-period operating expense categories to conform to the current period presentation. For purposes of comparison, the amounts for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ are shown in the tables below.

R&D expenses are related to the Company’s research and development efforts and related program 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 operations at our research facilities in Madison, Wisconsin and San Diego, California, including facility costs and laboratory-related expenses. Salaries and stock compensation expense consist of salary, bonuses, payroll taxes and related benefits and stock compensation for our R&D personnel. Depreciation and amortization expense ~~relates to~~consist of depreciation on lab equipment and leasehold improvements at our research facilities. We do not separately track R&D expenses by individual research and development projects, including by individual drug candidates. 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 for research and development activities. The following table provides details of research and development expenses for the periods indicated:

	Nine					Nine										Three					Three
	Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)					Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)
	June 30, 2021		Category			June 30, 2020		Category			$		%			March 31, 2022		Category			March 31, 2021		Category			$		%
Salaries	$	25,375		18	%	$	13,173		15	%	$	12,202		93	%	$	11,404		15	%	$	8,685		19	%	$	2,719		31	%
Facilities related		4,456		3	%		2,653		3	%		1,803		68	%		1,779		2	%		1,671		4	%		108		6	%
Candidate costs		67,152		48	%		44,901		53	%		22,251		50	%		37,713		50	%		20,667		47	%		17,046		82	%
R&D discovery costs		20,295		14	%		11,540		14	%		8,755		76	%		14,266		19	%		5,502		12	%		8,764		159	%
Total research and development expense, excluding non-cash expense	$	117,278		84	%	$	72,267		85	%	$	45,011		62	%	$	65,162		86	%	$	36,525		82	%	$	28,637		78	%
Stock compensation		18,421		13	%		9,411		11	%		9,010		96	%		8,642		11	%		6,406		14	%		2,236		35	%
Depreciation/amortization		4,877		4	%		3,712		4	%		1,165		31	%		2,181		3	%		1,766		4	%		415		23	%
Total research and development expense	$	140,576		100	%	$	85,390		100	%	$	55,186		65	%	$	75,985		100	%	$	44,697		100	%	$	31,288		70	%


																Six					Six
																Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)
																March 31, 2022		Category			March 31, 2021		Category			$		%
Salaries																$	22,398		16	%	$	16,857		21	%	$	5,541		33	%
Facilities related																	3,817		3	%		3,150		4	%		667		21	%
Candidate costs																	70,058		49	%		35,684		44	%		34,374		96	%
R&D discovery costs																	25,266		18	%		10,213		13	%		15,053		147	%
Total research and development expense, excluding non-cash expense																	121,539		86	%		65,904		82	%		55,635		84	%
Stock compensation																	15,860		11	%		11,891		15	%		3,969		33	%
Depreciation/amortization																	4,351		3	%		3,456		3	%		895		26	%
Total research and development expense																$	141,750		100	%	$	81,251		100	%	$	60,499		74	%

Salaries expense increased by ~~$3,657,000~~$2,719,000 from ~~$4,861,000~~$8,685,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$8,518,000~~$11,404,000 during the current period. Salaries expense increased by ~~$12,202,000~~$5,541,000 from ~~$13,173,000~~$16,857,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$25,375,000~~$22,398,000 during the current period. This increase is primarily due to an increase in R&D headcount that has occurred as the Company has expanded its pipeline of candidates. We anticipate this expense to continue to increase as we continue to expand our pipeline of candidates and increase headcount to support our discovery efforts to identify new drug candidates, in addition to inflationary pressures in the labor market.

Facilities expense increased by ~~$97,000~~$108,000 from ~~$1,209,000~~$1,671,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$1,306,000~~$1,779,000 during the current period. Facilities expense increased by ~~$1,803,000~~$667,000 from ~~$2,653,000~~$3,150,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$4,456,000~~$3,817,000 during the current period. This category includes rental costs for our research and development facilities in Madison, Wisconsin and San Diego, California. ~~This~~We expect this expense to continue to increase ~~is primarily due~~as we continue to ~~the commencement of~~build out our ~~sublease in San Diego, California in April 2020 and the lease expansion at~~manufacturing capabilities to support our ~~Madison facility in May 2020.~~discovery efforts to identify new drug candidates.

Candidate costs increased by ~~$15,713,000~~$17,046,000 from ~~$15,755,000~~$20,667,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$31,468,000~~$37,713,000 during the current period. Candidate costs increased by ~~$22,251,000~~$34,374,000 from ~~$44,901,000~~$35,684,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$67,152,000~~$70,058,000 during the current period. This increase is primarily due to the progression of our pipeline of candidates into and through clinical trials, which results in higher outsourced clinical trial, toxicity study and manufacturing costs. For example, our cardiometabolic candidates, ARO-ANG3 and ARO-APOC3, have advanced into phase 2 and phase 3 clinical trials. We anticipate these expenses to continue to increase as our pipeline of candidates grows and progresses to later phase clinical ~~trials.~~trials, in addition to unforeseen inflationary pressure on goods and services.

R&D discovery costs increased by ~~$6,012,000~~$8,764,000 from ~~$4,070,000~~$5,502,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$10,082,000~~$14,266,000 in the current period. R&D discovery costs increased by ~~$8,755,000~~$15,053,000 from ~~$11,540,000~~$10,213,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$20,295,000~~$25,266,000 in the current period. This increase is primarily due to the growth of our discovery efforts, including the addition of our research facility in San Diego. We anticipate this expense to continue to increase as we increase headcount to support our discovery efforts to identify new drug candidates.

Stock compensation expense, a non-cash expense, increased by ~~$1,234,000~~$2,236,000 from ~~$5,296,000~~$6,406,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$6,530,000~~$8,642,000 during the current period. Stock compensation expense, a non-cash expense, increased by ~~$9,010,000~~$3,969,000 from ~~$9,411,000~~$11,891,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$18,421,000~~$15,860,000 during the current period. Stock compensation expense is based upon the valuation of stock options and restricted stock units granted to employees, directors and certain consultants. Many variables affect the amount expensed, including the Company’s stock price on the date of the grant, as well as other assumptions. The increase in the expense in the current period is primarily due to the increased headcount discussed above and a mix of higher grant date fair values of awards amortizing during the current period due to the Company’s stock price at the time of the grants. We generally expect future stock compensation expense to continue to increase as our headcount continues to increase to support our clinical pipeline.

Depreciation and amortization expense, a non-cash expense, increased by ~~$39,000~~$415,000 from ~~$1,382,000~~$1,766,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$1,421,000~~$2,181,000 during the current period. Depreciation and amortization expense, a non-cash expense, increased by ~~$1,165,000~~$895,000 from ~~$3,712,000~~$3,456,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$4,877,000~~$4,351,000 during the current period. The majority of depreciation and amortization expense relates to depreciation on lab equipment and leasehold improvements at our Madison and San Diego research facilities. The increase in depreciation and amortization expense is due to an increase in laboratory equipment and leasehold improvements. We expect this amount to increase in the future as we continue to purchase additional lab equipment to support our growing pipeline.

The following table provides details of our general and administrative expenses for the periods indicated:

	Nine					Nine											Three					Three
	Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)						Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)
	June 30, 2021		Category			June 30, 2020		Category			$			%			March 31, 2022		Category			March 31, 2021		Category			$			%
Salaries	$	8,411		19	%	$	9,747		26	%	$	(1,336	)		-14	%	$	3,760		11	%	$	3,257		20	%	$	503			15	%
Professional/outside services		4,199		10	%		5,519		15	%		(1,320	)		-24	%		2,330		7	%		1,838		11	%		492			27	%
Facilities related		2,127		5	%		1,657		4	%		470			28	%		702		2	%		787		5	%		(85	)		-11	%
Other G&A		4,326		10	%		2,531		6	%		1,795			71	%		1,911		6	%		1,355		8	%		556			41	%
Total general & administrative expense, excluding non-cash expense	$	19,063		44	%	$	19,454		51	%	$	(391	)		-2	%	$	8,703		26	%	$	7,237		44	%	$	1,466			20	%
Stock compensation		23,631		54	%		18,099		48	%		5,532			31	%		25,160		73	%		8,953		55	%		16,207			181	%
Depreciation/amortization		887		2	%		456		1	%		431			95	%		404		1	%		156		1	%		248			159	%
Total general & administrative expense	$	43,581		100	%	$	38,009		100	%	$	5,572			15	%	$	34,267		100	%	$	16,346		100	%	$	17,921			110	%


																	Six					Six
																	Months Ended		% of Expense			Months Ended		% of Expense			Increase (Decrease)
																	March 31, 2022		Category			March 31, 2021		Category			$			%
Salaries																	$	7,190		12	%	$	5,841		23	%	$	1,349			23	%
Professional/outside services																		4,507		8	%		3,820		15	%		687			18	%
Facilities related																		1,382		2	%		1,517		6	%		(135	)		-9	%
Other G&A																		2,929		5	%		2,048		8	%		881			43	%
Total general & administrative expense, excluding non-cash expense																		16,008		27	%		13,226		52	%		2,782			21	%
Stock compensation																		42,447		72	%		11,611		46	%		30,836			266	%
Depreciation/amortization																		807		1	%		310		2	%		497			160	%
Total general & administrative expense																	$	59,262		100	%	$	25,147		100	%	$	34,115			136	%

Salaries expense ~~decreased~~increased by ~~$63,000~~$503,000 from ~~$2,633,000~~$3,257,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$2,570,000~~$3,760,000 during the current period. Salaries expense ~~decreased~~increased by ~~$1,336,000~~$1,349,000 from ~~$9,747,000~~$5,841,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$8,411,000~~$7,190,000 during the current period. ~~The decrease of $1,336,000 during the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020~~This increase is primarily due to ~~higher annual performance bonuses awarded~~an increase in ~~December 2019.~~G&A headcount that has occurred as the Company has grown. We expect salaries expense to continue to increase as our headcount continues to increase to support our expanding clinical pipeline.

Professional/outside services include legal, accounting, consulting, patent expenses, business insurance expenses and other outside services retained by the Company. Professional/outside services expense ~~decreased~~increased by ~~$1,641,000~~$492,000 from ~~$2,020,000~~$1,838,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$379,000~~$2,330,000 during the current period. Professional/outside services expense ~~decreased~~increased by ~~$1,320,000~~$687,000 from ~~$5,519,000~~$3,820,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$4,199,000~~$4,507,000 during the current period. ~~The decrease in~~We expect future professional/outside services expense ~~is primarily related~~ to ~~the timing of certain patent-related expenses.~~increase as we continue to increase discovery efforts.

Facilities-related expense ~~increased~~decreased by ~~$164,000~~$85,000 from ~~$446,000~~$787,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$610,000~~$702,000 during the current period. Facilities-related expense ~~increased~~decreased by ~~$470,000~~$135,000 from ~~$1,657,000~~$1,517,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$2,127,000~~$1,382,000 during the current period. This category primarily includes rental costs for our corporate headquarters in Pasadena, California. The ~~increase~~decrease in ~~both periods was~~facilities related expenses is due to ~~the additional space leased for~~a decrease in building maintenance and repair costs. We expect future facilities related expenses to increase as we continue to increase our ~~corporate headquarters~~headcount & footprint to ~~accommodate an increase in headcount.~~support our discovery efforts.

Other G&A expense increased by ~~$1,532,000~~$556,000 from ~~$746,000~~$1,355,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$2,278,000~~$1,911,000 during the current period. Other G&A expense increased by ~~$1,795,000~~$881,000 from ~~$2,531,000~~$2,048,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$4,326,000~~$2,929,000 during the current period. This category consists primarily of travel, communication and technology, office expenses, and franchise and property tax expenses. The increase is due to ~~an increase in headcount at~~increased information technology costs to support the Company’s ~~corporate headquarters.~~increased headcount.

Stock compensation expense, a non-cash expense, increased by ~~$7,270,000~~$16,207,000 from ~~$4,750,000~~$8,953,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$12,020,000~~$25,160,000 during the current period. Stock compensation expense, a non-cash expense, increased by ~~$5,532,000~~$30,836,000 from ~~$18,099,000~~$11,611,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$23,631,000~~$42,447,000 during the current period. Stock compensation expense is based upon the valuation of stock options and restricted stock units granted to employees, directors and certain consultants. Many variables affect the amount expensed, including the Company’s stock price on the date of the grant, as well as other assumptions. The increase in the current period is due to a performance award that was achieved earlier than anticipated, as well as a modification of certain performance awards to include market conditions. The fair value of market condition-based awards is expensed ratably over the service period and is not adjusted for actual achievement.We generally expect future stock compensation expense to continue to increase as our headcount continues to increase to support our clinical pipeline.

Depreciation and amortization expense, a noncash expense, increased by ~~$423,000~~$248,000 from ~~$154,000~~$156,000 during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$577,000~~$404,000 during the current period. Depreciation and amortization expense, a noncash expense, increased by ~~$431,000~~$497,000 from ~~$456,000~~$310,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 to ~~$887,000~~$807,000 during the current period. The increase is primarily related to amortization of leasehold improvements for our corporate headquarters.

Other income/expense was income of ~~$2,335,000~~$1,414,000 during the three months ended ~~June 30, 2020~~March 31, 2021 compared to ~~income of $1,944,000~~$2,813,000 during the current period. Other income/expense was income of ~~$6,920,000~~$4,735,000 during the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 compared to ~~income of $6,679,000~~$3,262,000 during the current period. Other income is primarily related to interest income and realized and unrealized gain/loss on our marketable securities. The increase in other income/expense is due to lower yields on more recently purchased bonds and increase in unrealized loss on our marketable securities offset by a property tax credit the company received during the current period.

Arrowhead has historically financed its operations through the sale of its equity securities and revenue from its collaboration agreements. Research and development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure as the Company’s pipeline continues to expand and matures into later stage clinical trials. Additionally, the Company’s plans to expand its facilities with its purchase of land in Verona, Wisconsin, and its entry into a new lease in San Diego, California. Each of these expansions is designed to increase the ~~future.~~Company’s internal manufacturing and discovery capabilities, and each will require significant capital investment.

At ~~June 30, 2021,~~March 31, 2022, the Company had cash on hand of approximately ~~$326.0~~$86.4 million as compared to ~~$143.6~~$184.4 million at September 30, ~~2020.~~2021. Cash invested in short-term fixed income securities and marketable securities was ~~$190.3~~$315.5 million at ~~June 30, 2021,~~March 31, 2022, compared to ~~$171.9~~$183.4 million at September 30, ~~2020.~~2021. Cash invested in long-term fixed income securities was ~~$128.4~~$201.6 million at ~~June 30, 2021,~~March 31, 2022, compared to ~~$137.5~~$245.6 million at September 30, ~~2020.~~2021. The Company also entered into an Open Market Sale Agreement (the “ATM ~~agreement”~~Agreement”) in August 2020, pursuant to which the Company may, from time to time, sell up to $250,000,000 in shares of the Company’s Common Stock through Jefferies LLC. As of ~~June 30, 2021,~~March 31, 2022, no shares have been ~~issued~~sold under the ATM ~~agreement.~~Agreement. The Company believes its current financial resources are sufficient to fund its operations through at least the next twelve months.

A summary of cash flows for the ~~nine~~six months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is as follows:

During the ~~nine~~six months ended ~~June 30,~~March 31, 2022, cash flow used by operating activities was $1.4 million, which was primarily due to the receipt of the $120.0 million upfront payment from GSK, partially offset by the ongoing expenses related to the Company’s research and development programs and general and administrative expenses. Cash used in investing activities was $103.1 million, which was primarily related to the purchase of property and equipment of $10.5 million and net purchase of investments of $92.6 million. Cash provided by financing activities of $3.7 million was related to cash received from stock option exercises.

During the six months ended March 31, 2021, cash flow provided by operating activities was ~~$195.3~~$225.0 million, which was primarily due to the $300 million payment received under the Takeda License Agreement, ~~and the $10 million milestone payment from Janssen for ARO-JNJ1,~~ partially offset by ongoing expenses of the Company’s research and development programs and general and administrative expenses. Cash used in investing activities was ~~$23.4~~$3.9 million, which was primarily related to the purchase of property and equipment of ~~$15.4~~$11.4 million, partially offset by the net ~~purchase~~sales of investments of ~~$8.1~~$7.5 million. Cash provided by financing activities of ~~$10.5~~$7.7 million was related to cash received from stock option exercises.

On December 20, 2021, the Company completed a purchase of 13 acres of land in the Verona Technology Park in Verona, WI, which is planned to be the site of an approximately 140,000 square foot drug manufacturing facility and an approximately 115,000 square foot laboratory and office facility to support process development and analytical activities. Arrowhead intends to invest between $200 million and $250 million into the buildout of the facilities. As part of this acquisition, the Company also entered into a development agreement with the City of Verona to construct certain infrastructure improvements within the TIF district, and will be reimbursed by the City of Verona by future tax increment revenue generated from the developed property. The total amount of funding that City of Verona will pay as reimbursements under the TIF program for these improvements is not guaranteed and will depend on future tax revenues generated from the developed property.

A summary of our capital resources and material cash requirements is presented in Item 7 of our Annual Report on Form 10-K for our fiscal year ended September 30, 2021. Other than as described above, there were no material changes to our capital resources and material cash requirements during the ~~nine~~three months ended June 30, 2020, the Company used $84.5 million in cash from operating activities, which was primarily related to the ongoing expenses of the Company’s research and development programs and general and administrative expenses. Cash used in investing activities was $174.9 million, which was primarily related to the purchase of fixed-income investments of $194.0 million and property and equipment of $10.1 million, partially offset by the maturity of $29.1 million of fixed-income securities. Cash provided by financing activities of $256.9 million was driven by the Company’s securities financing in December 2019, which generated $250.5 million in net cash proceeds, as well as $6.5 million in cash received from stock option exercises.March 31, 2022.

There has been no material change in our exposure to market risk from that described in Item 7A of our Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021.

Our Chief Executive Officer and our Chief Financial Officer, after evaluating our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in ~~SEC~~Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer where appropriate, to allow timely decisions regarding required disclosure.

No change in the Company’s internal controls over financial reporting (as defined in ~~Rule~~Rules 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings, particularly complex legal proceedings, cannot be predicted with any certainty. There have been no material developments in the legal proceedings that we disclosed in Part I, Item 3 of our Annual Report on Form 10-K for the year ended September 30, ~~2020.~~ 2021.

There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021 other than the risk factors presented below. Please carefully consider the information set forth in this Quarterly Report on Form 10-Q and the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, ~~2020,~~2021, which could materially affect our business, financial condition or future results. The risks described herein and in our Annual Report on Form 10-K, as well as other risks and uncertainties, could materially and adversely affect our business, results of operations and financial condition, which in turn could materially and adversely affect the trading price of shares of our Common Stock. Additional risks not currently known or currently material to us may also harm our business.

Our success depends on the attraction and retention of senior management and scientists with relevant expertise.

Our future success depends to a significant extent on the continued services of our key employees, including our senior scientific, technical and managerial personnel. We do not maintain key person life insurance for any of our executives and we do not maintain employment agreements with many senior employees. Competition for qualified employees in the pharmaceutical industry is high, and our ability to execute our strategy will depend in part on our ability to continue to attract and retain qualified scientists, management and other employees. This will depend in part on our ability to create and maintain a desirable workplace culture, which may be impacted by the long-term effects of the COVID-19 pandemic on the nature of the office environment and employee preferences for remote working. In addition, the market for qualified employees in the pharmaceutical industry is experiencing labor shortages and inflationary pressures are causing salaries and wages to increase, all of which exacerbates these competitive dynamics. If we are unable to find, hire and retain qualified individuals, we will have difficulty implementing our business plan in a timely manner, or at all.

Geopolitical risks associated with the ongoing Russia-Ukraine conflict have impacted our clinical trial plans and could have an adverse impact on our business, financial condition and results of operations.

The ongoing conflict between Russia and Ukraine has caused or exacerbated volatility and disruptions to various aspect of the global economy. The uncertain nature, magnitude, and duration of hostilities stemming from the conflict in Ukraine, including the potential effects of sanctions and counter-sanctions, retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations, such as worldwide supply chain issues. Sanctions imposed by the U.S., EU, and other countries in response to the Russia-Ukraine conflict and any response to such sanctions may have an adverse impact on our business, including our clinical trials, the financial markets and the global economy. Additionally, the ongoing conflict has impacted our business decisions with respect to potential clinical trial sites in Europe. For example, a number of our clinical trial sites we had previously planned to use in Russia, Ukraine and Belarus were shut down and we have sought alternatives in other geographies. We cannot be certain of the overall impact of the conflict on our ability to conduct and complete our clinical trials as planned. However, interruptions of our clinical trials can result in significant delays or termination of the research, development or commercialization of our drug candidates, which could impair our ability to generate revenues and harm our business and financial condition. The potential effects of the conflict could also amplify many of the other risks described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2021.

Our ability to protect our patents and other proprietary rights is uncertain, exposing us to the possible loss of competitive advantage.

We have licensed rights to pending patents and have filed and expect to continue to file patent applications. Researchers sponsored by us may also file patent applications that we may need to license. Such patent applications may not be available for licensing or may not be economically feasible to license. Certain of our patents may not be granted or may not contain claims of the necessary breadth because, for example, prior patents exist. If a particular patent is not granted, the value of the invention described in the patent would

be diminished. Further, even if these patents are granted, they may be difficult to enforce. Even if ultimately successful, efforts to enforce our patent rights could be expensive, distracting for management, cause our patents to be invalidated or held unenforceable, and thus frustrate commercialization of products. Even if patents are issued and are enforceable, others may develop similar, superior or parallel technologies to any technology developed by us and not infringe on our patents. Our technology may prove to infringe upon patents or rights owned by others. Patent prosecution and maintenance is expensive, and we may be forced to curtail prosecution or maintenance if our cash resources are limited. Thus, the patents held by or licensed to us may not afford us any meaningful competitive advantage. In addition, the laws of some foreign countries in which we do business, including through our joint ventures, do not protect intellectual property rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to adequately protect our owned intellectual property or derive sufficient value from our licensed or owned intellectual property, the value of your investment may decline.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

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

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

	Page(s)
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS	1

Consolidated Balance Sheets	1

Consolidated Statements of Operations and Comprehensive Income (Loss)	2

Consolidated Statements of Stockholders’ Equity	3

Consolidated Statements of Cash Flows	4

Notes to Consolidated Financial Statements	5

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1718

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2729

ITEM 4. CONTROLS AND PROCEDURES	2729

PART II — OTHER INFORMATION	2830

ITEM 1. LEGAL PROCEEDINGS	2830

ITEM 1A. RISK FACTORS	2830

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2831

ITEM 3. DEFAULTS UPON SENIOR SECURITIES	2831

ITEM 4. MINE SAFETY DISCLOSURES	2831

ITEM 5. OTHER INFORMATION	2831

ITEM 6. EXHIBITS	2932

SIGNATURE	3033

Exhibit Number		Document Description

~~10.1~~10.1† 31.1		Form of Performance RSU Agreement (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)*

~~10.2~~		Form of Stock Option Agreement (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)*

~~10.3~~		Form of RSU Agreement (Arrowhead Pharmaceuticals, Inc. 2021 Incentive Plan)*

~~10.4~~		~~Collaboration~~First Amendment to Exclusive License and ~~License~~Co-Funding Agreement by and between Arrowhead Pharmaceuticals, Inc. and ~~Horizon Therapeutics Ireland DAC,~~Takeda Pharmaceuticals U.S.A., Inc. dated ~~June 18, 2021~~*†March 15, 2022

~~31.1~~		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*2002

~~31.2~~31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*2002

~~32.1~~32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**2002

~~32.2~~32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**2002

~~101.INS~~101.INS*		Inline XBRL Instance Document

~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document*Document

~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document*Document

~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document*Document

~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document*Document

~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document*Document

~~104~~104*		The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL (included as Exhibit 101)*

	ARROWHEAD PHARMACEUTICALS, INC.

	By:		/s/ Kenneth A. Myszkowski
			Kenneth A. Myszkowski Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)

	Nine Months Ended			Nine Months Ended
	June 30, 2021			June 30, 2020
	(in thousands)
Cash Flow from:
Operating Activities		195,341			(84,541	)
Investing Activities		(23,433	)		(174,883	)
Financing Activities		10,490			256,943
Net Increase (decrease) in cash and cash equivalents		182,398			(2,481	)
Cash and cash equivalents at beginning of period		143,583			221,804
Cash and cash equivalents at end of period		325,981			219,323

	Six Months Ended			Six Months Ended
	March 31, 2022			March 31, 2021
	(in thousands)
Cash flow from:
Operating activities		1,383			224,951
Investing activities		(103,140	)		(3,892	)
Financing activities		3,731			7,735
Net increase (decrease) in cash and cash equivalents		(98,026	)		228,794
Cash and cash equivalents at beginning of period		184,434			143,583
Cash and cash equivalents at end of period		86,408			372,377

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company