Arrowhead Pharmaceuticals (NASDAQ: ARWR) announced an exclusive worldwide license agreement with Madrigal Pharmaceuticals (NASDAQ: MDGL) for ARO-PNPLA3, a clinical-stage RNA interference therapeutic designed to treat patients with metabolic dysfunction-associated steatohepatitis (MASH).

Under the agreement, Madrigal will pay $25 million upfront to Arrowhead and could provide up to $975 million in development, regulatory, and sales milestone payments. Arrowhead will also receive tiered royalties on commercial sales ranging from high-single digits to the mid-teens.

The drug targets patients with a mutation in the PNPLA3 gene, which is prevalent among Hispanic patients with MASH. Phase 1 trial data published in The New England Journal of Medicine showed a 46% reduction in liver fat in homozygous patients following a single dose, with effects observed at six weeks and sustained through 24 weeks.

The Phase 1 trial included 55 patients with metabolic dysfunction-associated fatty liver disease who carried the PNPLA3 I148M variant, with approximately 93% of participants being Hispanic or Latino. The study found no clinically meaningful adverse events and no effect on liver fat content in heterozygous participants at any dose levels tested.

ARO-PNPLA3 uses Arrowhead's TRiM platform to silence hepatocyte expression of PNPLA3. The PNPLA3 I148M genetic variant is associated with fat accumulation and liver damage and represents a risk factor for hepatic steatosis, steatohepatitis, elevated plasma liver enzyme levels, hepatic fibrosis, and cirrhosis.

A second Phase 1 trial conducted in Japan with nine patients supported the U.S. trial findings, according to the company statement.