Vincent Anzalone - Investor Relations Christopher Anzalone - President and Chief Executive Officer Bruce Given - Chief Operating Officer Ken Myszkowski - Chief Financial Officer

Thomas Wei - Jefferies & Company, Inc. Edward Tenthoff - Piper Jaffray Jason Zhang - Edison Investment Research Grant Zeng - Zacks Investment Research Kenneth Hershberg - Hershberg Capital

Ladies and gentlemen, welcome to the Arrowhead Research Fiscal 2013 Fourth Quarter and Year-End Financial Results Conference Call. Throughout today's recorded presentation all participants will be in a listen-only mode. After the presentation there will be an opportunity to ask questions. I will now hand the conference over to Vincent Anzalone, Director of Finance and Investor Relations for Arrowhead. Please go ahead, Vince.

Thank you, operator, and good afternoon everyone. Thank you for joining us today to discuss Arrowhead’s results for its fiscal 2012 fourth quarter and year-ended September 30, 2013. With us today from management are President and CEO, Dr. Christopher Anzalone; Chief Operating Officer and Head of R&D, Dr. Bruce Given; and Chief Financial Officer, Ken Myszkowski. Management will provide a brief overview of the quarter and year and we’ll then open the call up to your questions. Before we begin I would like to remind you that comments made during today's call may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts, including without limitation those with respect to Arrowhead’s goals, plans and strategies, are forward-looking statements. They represent management's current expectations and are inherently uncertain. Thus actual results may differ materially. Arrowhead undertakes no duty to update any of the forward-looking statements discussed on today’s call. You should refer to the discussions under Risk Factors in Arrowhead’s annual report on Form 10-K and the company’s quarterly reports on Form 10-Q for additional matters to be considered in this regard. With that said, I’d like to turn the call over to Dr. Christopher Anzalone, President and CEO of the company. Chris?

Thanks, Vince. Good afternoon everyone and thank you for joining us today. Fiscal 2013 and the period since our last conference call have been extremely productive. We completed planned enrollment in a Phase I study for ARC-520, applied to begin a Phase IIa trial, began chronic GLP tox study to support a multi-dose phase IIb, strengthened our balance sheet and released important non-clinical data demonstrating the value of the candidate in a broader platform. Together these represent important first steps in building long term, durable value with the assets we acquired from Roche. When we completed the acquisition at the end of 2011, we saw substantial value in the team, proprietary platforms, licenses and infrastructure and we also recognized that the market would not properly value any of that until we made it tangible, while we continued to expand the platform, as we needed to publish non-clinical data and push the candidate into the clinic as fast as possible such that the market could better understand the technology and see it past the commercialization. This is what we did in 2013. We think that unlocked substantial value by de-risking ARC-520 in a broader platform. Let's take a closer look at some of these accomplishments. We published data demonstrating deep and durable knockdown of Hepatitis B or HBV viral load in key antigens in two rodent models. We believe the consistent three to four log reductions we saw in viral proteins were deeper than had ever been demonstrated in the past. This was an important finding because it is widely believed the reduction of surface or s-antigen is necessary a step to achieve functional cure of HBV. High levels of circulating s-antigen are immuno-suppressive and it is thought that reducing S can reactivate the natural immune system and enable it to clear the virus and reach functional cure. People have tried for years to safely and consistently reduce S and they have consistently failed. Our work is tangibly a great leap forward in HBV research and provides hope for a functional cure which has been elusive. This work also supported the platform more broadly. We are not aware of any publications reporting this level of knockdown of any target with RNAi. In a world that used to be excited about 70% knockdown, then eventually even 90% to 95% we were showing greater than 99.9% silencing that lasted several weeks. This demonstrates the power of the DPC delivery platform in addition to the individual ARC-520 candidate. If we can achieve multi-log knockdown safely for HBV, we should also be able to do it for other liver targets. When combined with the work we have down in literary dozens of monkeys and hundreds of rodents with other liver targets, we've built a deep understanding of the safety and efficacy profile of the DPCs. We pushed this understanding further in a study that was conducted in collaboration with Dr. Robert Lanford at the Texas Biomedical Research Institute using a chimpanzee with chronic HBV. At the AASLD Liver Meeting in November, we reported the short exposure to ARC-520 resulted in deep reductions of HBV DNA, e-antigen and s-antigen that did not return to baseline until study day 43, 43, and 71 respectively. This level of knockdown in an extremely viremia chimp alone would have been an important finding because we do not believe anything like it had ever been reported. However, we also saw an increase in serum alanine transaminase, or ALT, which coincided with the nadir of the circulating s-antigen, and this was extremely exciting. It suggests that therapeutic immunological flare which is thought to be part of the cascade that under chronic therapy could lead to s-antigen seroconversion and functional cure. We expected to see a deep and durable reductions in HBV gene products, but liver flare was a welcome but somewhat unexpected surprise after such a short exposure to ARC-520. If this flare was in fact a marker of immune system being re-awakened, then it is a good indication that ARC-520 is doing what it was designed to do. Together, all of these animal studies have significantly de-risked the ARC-520 program, and the DPC platform. We have shown safety and efficacy across four species, including two species of primates. RNAi is reliable in that if a specific siRNA sequence is delivered to the right cell, it will generally knockdown an intended gene product after it has been validated. Further it is generally accepted in the RNAi field that non-human primate data are highly predictive with respect to safety, dose, and response in humans. Therefore, our excessive animal (inaudible) multiple species and models, including a chimpanzee naturally infected with the same HBV humans can be infected with, has given us substantial confidence that ARC-520 may reduce s-antigen in HBV infected people. At that point, what was the next hurdle we needed to get over? The answer is evidence of drug tolerability and safety in humans. Before a drug is introduced in humans, there is always a risk if there will be a safety signal that was not predicted in animal models. The successive Phase I study of ARC-520 which will be discussed in more detail later represented the next key de-risking event for Arrowhead. We began dosing in July, and we were able to complete planned enrolment in just three months. We saw no signs of end-organ toxicity and observed no differentiating findings on vital signs, ECGs, physical examinations, or clinical chemistries in the ARC-520 groups relative to placebo. ARC-520 and the DPC delivery system appeared to be safe and well tolerated at all dose levels studied. So at that point, we had fundamentally de-risked the ARC-520 and the DPC platform through extensive efficacy studies in animals and a successful Phase I showing good tolerability in humans. What else represents a near term risk? One answer is capital. We were also able to remove that risk. During 2013, we strengthened our balance sheet with two equity financings totaling $100 million with terms that were shareholder friendly. There were no discounts or warrants associated with these transactions. This capital fully funds Arrowhead into 2016 and enables us to move forward with our lead products and platform development plans rapidly. It ensures that ARC-520 is fully resourced through the upcoming Phase IIa study in the first half of 2014 and a Phase IIb study planned to begin in the second half of 2014. It also allows us to expand our pipeline with an IND for our second candidate planned for 2014 and one or more additional candidates targeted for 2015. The demand we’ve seen from high quality institutional investors has been encouraging, and we view their investment as a vote of confidence. We see the increasing level of institutional ownership as a sign that we are maturing as a company, so it's a move from less than 10% institutional ownerships to over 70% including preferred shares as converted is a significant step forward. As I said in the past, we view 2013 as a year in which we could begin to demonstrate the value of the assets acquired from Roche. To that end, we tried to provide consistent updates on the progress of our clinical programs and development of our DPC platform. We also hosted an Analyst and Investor Day in March and participated in several key investor and scientific conferences including AASLD and HepDART in recent months. We plan to continue this practice in 2014 and are eager to increase our visibility by providing updates on ARC-520 as results are available, giving guidance on our next clinical candidates, and publishing advances made through the DPC platform. I would now like to turn the call over to our COO and Head of R&D, Dr. Bruce Given to discuss the ARC-520 clinical program. Bruce?

Thanks, Chris and hello everyone. As Chris mentioned, it's been an extremely productive year for our R&D organization. I am very pleased and encouraged that we’ve been able to take ARC-520 through GLP toxicology studies, undertook the first external GMP manufacturing run of clinical drug supply, completed a Phase I study, and completed all necessary steps to initiate a Phase 2A study in less than 12 months. We’ve been operating at best-in-class speed. As you know, the goal of ARC-520 is to achieve a functional cure of chronic Hepatitis B infection. HBV is the world’s most serious liver infection with an estimated 350 million patients worldwide chronically infected. There are an estimated two million chronic HBV infections in the U.S. alone, and 14 million in Western Europe. So there is clearly a large disease burden in both the developed and developing world. HBV can lead to cirrhosis of the liver and is responsible for 80% of primary liver cancers globally. The death toll for HBV is estimated be as high as 1 million per year, and there is currently no reliable curative therapy. We initiated a Phase I study of ARC-520 in July and completed enrolment in October. The Phase I study was designed to characterize the safety profile of ARC-520 across a range of doses from 0.01 mg per kg to 2 mg per kg and to evaluate pharmacokinetics. It was a single-center, randomized, double-blind, placebo-controlled, single-dose escalation, first-in-human study of ARC-520 administered intravenously in healthy adult volunteers. 36 subjects were enrolled as planned and six groups randomized at a ratio of two-to-one to receive ARC-520 or placebo. Subjects were admitted to the unit overnight pre-dose and vital signs, telemetry, ECGs, safety labs, pharmacokinetics, and adverse events were monitored for 24 hours post-dose. Return visits occurred with repeat safety valuations and recording of adverse event at 48 hours, 72 hours, day seven, day 14, and day 28 post-dosing. We have been able to lock this database and review un-blinded individual data, although we don't yet have the statistical results. Our review has indicated that the Phase I study demonstrated that a single intravenous administration of ARC-520 appears to be safe and well-tolerated up to and including a dose at two mgs per kg, the highest dose tested. There were no serious AEs, no dose-limiting toxicities, no discontinuations and only a modest occurrence rate of drug-related AE with no dose-related increases in frequency or severity, with the possible exception of mild light headedness which occurred in two ARC-520 subjects in the two mg per kg dose group. There were no general differences observed or findings rated clinically significant on vital sign ECGs, physical examination or clinical laboratories in the ARC-520 group relative to placebo. Adverse events frequency of severity did not differ between placebo and ARC-520. We view these as typical Phase I safety results, which gives us confidence as we move towards a Phase IIa study of ARC-520 and as we work to bring additional DPC-enabled candidates into the clinic. In November we submitted an application for a certificate for clinical trial to the Hong Kong Department of Health for a Phase IIa study. Prior to that study protocol, investigator brochure and informed consent were submitted to the ethic committee at two sites in Hong Kong. Pending approval we intend to proceed with a multi-center randomized double-blind placebo controlled dose escalation study in patient. the study is being conducted to determine the depth and duration of Hepatitis B surface antigen reduction after a single intravenous dose of ARC-520 in combination with entecavir in patients with chronic HBV infection. Earlier in the year we conducted combination studies in rodent models and the data indicates that treatment with ARC-520 in combination with entecavir appears to have additive and possibly synergistic effect. Enrollment will only be open to e-antigen negative patients. We believe that keeping HBV DNA and e-antigen levels transient will allow us to get the cleanest readouts on ARC-520's ability to reduce s-antigen, which is possibly the key to de-repressing the immune system and achieving a functional jerk. Additional detail on the Phase IIa study design and anticipated timeline will be provided when patient enrollment begins. We are also on schedule to complete chronic GLP toxicology study and a second manufacturing run of ARC-520 clinical drug supply to support our plan to initiate a multi-dose Phase IIb study in the second half of 2014. This study will be a multi-national study currently planned to include sites in the U.S., Europe and Asia. It will likely be open to both e-antigen negative and e-antigen positive chronic HBV patients on the background of new therapy with entecavir or tenofovir. The design of the study will be informed by data from Phase IIa, but we expect our program in IIb to allow preliminary read-out achievement of functional cure. With that update I would now like to turn the call over to our CFO, Ken Myszkowski to review our financials for the period. Ken?

Thanks, Bruce and good afternoon everyone. As we reported today our net loss attributable to Arrowhead for the year-ended September 30, 2013 was $31.1 million or a $1.30 per share based on 24 million weighted average shares outstanding. This compares with a net loss attributable to Arrowhead of $21.1 million or a $1.90 per share based on 11.1 million weighted average shares outstanding for the year-ended September 30, 2012. Total operating expenses for the year-ended September 30, 2013 were $24.9 million, compared to $21.2 million for the year-ended September 30, 2012. Net cash used in operating activities in fiscal 2013 were $19 million compared with 15.3 million the prior year period. The increase in operating expenses and cash used in operating activities of approximately $3.5 million as compared to the prior fiscal year reflects final pre-clinical requirements including GMP manufacturing and GLP toxicology to enable our HBV candidate ARC-520 to answer clinical trials as well as the cost of the Phase I trial of ARC-520 for which we competed plan enrollment this past October. Turning to our balance sheet our cash and investments of idle cash are $29.8 million at September 30, 2013 compared to $3.4 million at September 30,2012. This increase in our cash balance reflects $42.5 million in cash from financings during fiscal 2013 in addition to cash inflow from warrant exercises of $2 million. Subsequent to September 30, 2013 additional financing yielded $60 million in net proceeds. That financing closed in October 2013. During the past year we secured equity financings of over a $1 million, which puts the company on a very solid financial footing to support the needs of our operations. During the fiscal year cash outlays for R&D were $13 million and cash used in G&A were $6.6 million. Cash inflows during the fiscal year included $42.5 million from the sale of equity securities. $2 million from warrant exercises, $300,000 in revenue and $1.4 million in proceeds related to the sale of our former subsidiary, Unidym. Our common shares outstanding at September 30, 2013, were 32.5 million, and would be 37.9 million assuming conversion of preferred shares outstanding at September 30,2013. Taking into account our October financing and shares issued through the exercise of warrants since the end of the fiscal year, current common shares outstanding are 38.7 million, and would be 49.4 million assuming conversion of the preferred shares outstanding. With that brief overview I’ll turn the call back to Chris.

Thanks Ken. Drug development, particularly in a new therapeutic modality is inherently uncertain business. We view raw discover as value creation but de-risking a productive discovery unlocks that value. 2013 has been year of unlocking value by systematically reducing risk for ARC-520 in the broader platforms. This has taken many forms including becoming well capitalized, [before] the non-clinical data demonstrating deep and reliable gene silencing, completing a successful Phase I study demonstrating that ARC-520 and DPCs more broadly are well tolerated in humans. And finally we meet or exceeded all our timeline guidance. Arrowhead's risk profile is fundamentally different than it was a year ago and this is the base on which we build for 2014. We expect to start and hope to finish the ARC-520 Phase 2a in the first half of 2014 and plan to begin a multi-dose Phase 2b in the second half of the year. We plan to file an IND for our candidate late in 2014 against a new liver target in orphan indication. We hope to provide more granular timing guidance as well as a full discussion about the new candidate during the first half of 2014. As I mentioned earlier one of the attractive features of RNAi is the ability to study new candidates rapidly. We see Arrowhead’s next stage as a period of pipeline expansion and because we have more mature and validated delivery platform now we believe that we have already started to de-risk new candidates. In addition to our DPC platform for IV administration we have an active program in subcutaneous administration. We hope to provide an update on this as well as where we are with [sRNAi] delivery later in 2014. We believe these are significant value drivers going forward. 2013 was a great year for us and was it marked by substantial progress but we truly believe there our best days are ahead. Thank you for joining us today and thank you for supporting Arrowhead. I would now like to open the call for questions, operator?

We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from Thomas Wei with Jefferies. Please go ahead. Thomas Wei - Jefferies & Company, Inc.: Thanks, just a couple of questions on this 520 chimp study. One question just in general, extrapolating the data, looking at the ALT flare that happened in the chimp, I guess I am curious how to distinguish between an immune response that could lead or could covert that surface antigen reduction into a cure versus an actual drug-induced liver toxicity. And then second I guess more generally what type of reduction do you think you need in surface antigen levels in humans based on the experience with either Interferon or patients who're spontaneously clear on anti-virals to trigger that sort of ALT flare and ultimate seroconversion? Thanks.

Bruce, do you want to take that?

Sure, let me I guess, to answer the second one, the second question first, regarding what level of HB surface antigen decline we think is necessary, the best data comes from Interferon because they are still a few seroconversions that occur in subjects or patients that are receiving nukes. And what the interferon data tends to say is that the only patient that ever achieved seroconversion have at least a one log of reduction in surface antigen, and generally that log of reduction in surface antigen has to occur in the first six months of therapy with Interferon for a seroconversion to occur. So that's usually the rule of thumb that you'd like to see a log of surface antigen reduction. Now what nobody really knows is whether a more rapid and earlier reduction in surface antigen could for instance be effective with even less reduction. The dynamics of immunologic de-repression are virtually not understood because there has really been so little opportunity to study it in any meaningful way, so it's a little bit complex answer, the question of what would be necessary. But our general thinking is that the opening table space is going likely be somewhere around a one log reduction in surface antigen. Of course it's possible that we will achieve even more than that, and it's not an unrealistic thought that more maybe better, but at this point, that's the position based on facts. Going to the first part of your question concerning the chimp, the one thing we know about our product is that if it's going to produce drug related toxicity, it's going to produce it very early after injection, in the first 24 to 48 hours. And the reason for that is because the entity that can produce toxicity at high doses is the DPC, and the DPC is a protein, it's a peptide, and we know that it's degraded in the body easily, within 24 to 48 hours it's all gone. So it either produces the toxicity very early or it doesn't produce any toxicity and it doesn't tend to look it produce a gene-related toxicity although the long term GLP toxicology studies are just going on now but we have looked at it in a non-GLP way. So, the finding in the chimp, we believe our view is against -- really our view is very strongly against drug toxicity. The second piece of that is that the ALT flare occurred right, basically just started right at the nadir of the surface antigen which was well out from when the drug had been given as when that nadir occurred, and we didn’t talk about it in the script, but there were also cytokine changes related to Interferon Gamma related cytokines which were also very much in support of this gain in immunologic flare. And I think that’s why Dr. Lanford felt quite strongly this was immunologic flare, it wasn’t just the timing, it wasn’t just relationship with surface antigen, it was also the relationship to the timing and the type of the elevations that he saw in cytokines as well. So all of that together made him feel pretty strongly that this was an immunologic flare.

The next question comes from Ted Tenthoff of Piper Jaffray. Please go ahead. Edward Tenthoff - Piper Jaffray: Great, thanks very much for taking my question. Apologize for the background noise. I am actually just on my flight back to New York. When it comes to actually timing of the start of the study, when should we expect that and how quickly could we get data from the first cohorts of patients in the Phase IIa?

Thanks, Ted we don’t have control over the timing of the start of Phase IIa. We applied in Hong Kong. The way that goes is that the IRVs or least one IRV has to sign off on the protocol first and then it goes to the authorities and they'll make a decision of whether or not we can move into patients. So that's just a big unknown for us. We are quite confident that it happens in the first half of 2014, but when in that first half we just don’t know. Having said that, once we do start it we should be able to move reasonably quickly. We’ve been working with the two sites. We are going to conduct the study for some time now and they both have by their own accounts thousands of patients that should meet our inclusion criteria, and it appears that they are highly motivated to -- and it's not a terribly long study. So we think that we can get this dose fairly quickly. Regarding when we have a read out we also can’t give too much guidance on that just because what we’d like to do is give top line results as quickly as we can and then give a full data set at some scientific conference or through publication of some type. But we are certainly motivated to get the top line results as quickly as we can. We are hopeful that the study can start and finish in the first half of next year and then release of date soon thereafter. Edward Tenthoff - Piper Jaffray: Excellent, I appreciate that and happy holidays and looking for a great 2014.

Thank you Ted.

Our next question comes from [Carmine Chen] of RBC Capital Markets. Please go ahead.

Hi guys. A question on the Phase IIa trial, is there a bar where you -- for the percentage of patients that you expect to show a lot of drop in S and if there let’s say some percentage of it do, how does that impact your decision to may be potentially use a higher dose?

Bruce, you want to address that?

Yeah, well I think that we very much look forward to seeing s-antigen levels and see what they do and we will certainly be interested if we are in a situation at the two mg per kg dose where were think that we are seeing very good safety and tolerability in the patient and we think there is still possibility for further reductions in S-antigen. I think it's quite reasonable that we may look to amend and go higher if that’s really sort of the base to your question.

Yes, and I guess on that point do you expect different PK and s-antigen reductions or differences, these are Asian patient versus like broader Caucasian patients on dosages?

I don’t think we expect that, the reason being that of course it's intravenous dosing so it's less variable than oral dosing anyway. And we didn’t have many Asian patients in the Phase I -- subjects in the Phase I study but we did have a few. We didn’t see any signs of differential kinetics. So I don’t think we are expecting it but that of course doesn’t mean that we won't see it.

And also regarding kinetics of s-antigen knockdown our two sequences in ARC-520 were designed to cover all the major gene types and so while we expect to see primarily gene types B and C in Hong Kong at least in theory the two sequences should cover those gene types that we are seeing in other geographies. It's a very complicated virus and so it could be that there'll be mechanisms that we don’t understand, some genotypes are going to be more or less sensitive to the drug we’ll just have to see.

Okay, that’s very helpful. And my last question is on the collaborative approach that you are doing the study in combination with Baraclude. From my understanding, Bristol-Myers is also going into Phase I with their PD1 drug and immuno-biological approach. So potentially this could be very interesting with your drug. Do you have thoughts on when something -- would you be open to a collaboration like that? And at what point do you feel like something like that might be fruitful? Thank you.

Yeah, seems to us that there is that there is no reason -- so first part of question, on top of entecavir, it seems like there is no reason not to go on top of nukes, entecavir and tenofovir are really good nukes and they are well tolerated and they do a good job of knocking down a viral load. We know that they do virtually nothing for knocking down s-antigen and getting to a functional cure but they are good at keeping viral load down. So well it's not clear that we need to on top of nukes because we know that with that we can also induce viral load knockdown, there is no reason not to do. So going forward we expect that we will always be on top of nukes. Regarding another part of the cocktail, if you will, we’ll just have to wait and see what the data look like. We believe that for at least a large number of occasions knocking down s-antigen will be enough to enable immune system to come back up and clear the virus. It could be that there is a sub population of patients that require some sort of immuno-stimulation to get to consistent seroconversion. And so we are not really prepared to speculate on whether or not we would want to include immuno-stimulatory agents in the cocktail until we see what those data look like.

Great, that’s very helpful. Thank you.

Sure.

The next question comes from Jason Jason Zhang of Edison Investment Research. Please go ahead. Jason Zhang - Edison Investment Research: Hi, thanks. Two questions, one, for maybe Ken, what is your guidance for the fiscal 2014 expense because you have Phase 2a, Phase 2b, I assumed there will be somewhat an increase in R&D? And the next question is that e-antigen negative patients in Phase 2a I remember there was some data in the past suggesting that s-antigen reduction was even harder to achieve in e-antigen negative I don’t know whether I am right or wrong. And the question really is the data from the Phase 2a, how I can use that to guide to Phase 2b because you have both e-antigen positive and negative patient in Phase 2b?

Sure, thanks Jason. I’ll take the first question and I’ll let Bruce address the second question. Regarding guidance we have not really given that kind of granular guidance. We’ve said publically that we have plenty of resources to get us into 2016 and that’s with our foot on the gas, that’s fully funding the Phase 2a, that’s fully funding the Phase 2b and that is fully funding our pipeline such that we will have two additional candidates through clinically proof-of-concept, we’ll also have additional IND ready candidates. So looking sort of longer term we’ve got quite a comfortable runway, again with our foot on the gas and really developing rapidly. But in terms of the next 12 months we had not given or even nine months we’ve not given guidance to that. so Bruce you want to address the e-antigen question?

Yeah sure, Jason, good questions and good to hear you. I guess what I’d say is that it is the case that e-antigen negative disease is probably considered to be a little bit tougher disease in the setting of the drugs that are available today which are the nukes and interferon. And why that would be I am not sure people really know, but e-antigen negative is probably a little bit more difficult disease with what people have in their pocket today. We really don’t have any reason to believe that e-antigen negative should be any tougher than e-antigen positive data for a direct acting anti-viral such ARC-520, that’s going right after that the transcribed RNA from the virus. So I don’t actually go into Phase II with any hypothesis in my mind that e-antigen negative is going to be inherently more difficult to treat or even to produce functional cure than e-positive and then maybe prove to be wrong of course and we just have to go figure it out. But I think it's we are in a whole new world now that we are getting into a direct acting agent. And whatever is going on with the e-antigen it should not impact our ability to knock down s for instance. So I am actually not too concerned about that, it doesn’t mean, as I said, doesn't mean that we may not see differences in the end but hypothetically I don’t actually I don’t actually see any reason that e-antigen negative is going to be any tougher than e-antigen positive for ARC-520. They will be different for other modalities but for this approach I don’t think so. Jason Zhang - Edison Investment Research: Okay, very well, thanks.

The next question comes from Grant Zeng of Zacks Investment Research. Please go ahead. Grant Zeng - Zacks Investment Research: Hi, guys congratulations on a successful quarter. I just had a quick question about the secondary candidates. Can you give us a little bit more color on these candidates such as the indications which are targeting and also is this based on the DPC platform and also give a time for these candidates?

Yeah, there is not much we can talk about that right now. But I will tell it is based on the DPC platform. Everything you can assume that all our candidates going forward are DPC-based and we have not seen a delivery system that is as efficient as that and as you may recall when we acquire the Roche assets, including that was really a basket of delivery systems. There is a license from Tekmira for one system, there is a proprietary LNP that Roche has developed and others and we had we decided DPC’s are where we are focused. Regarding the targets we have not talk about that publically. I expect that we will not until later 2014. We will do it sometime in the first half of the year and we’ll give a full explanation about what it is and our rationality for choosing it. And as I said in the prepared remarks we expect an IND for that target late in 2014 once we have -- once we do disclose what that target is and we’ll also give you a more granular time frame. Grant Zeng - Zacks Investment Research: Okay thanks.

Sure and also as I mentioned in my prepared remarks we are saying that it is in our liver targets and it's an orphan indication. Grant Zeng - Zacks Investment Research: Okay.

The next question comes from [James Gache], a Private Investor . Please go ahead. Mr. Gache please Mr. Gache disconnected. The next question comes from Kenneth Hershberg of Hershberg Capital. Please go ahead. Kenneth Hershberg - Hershberg Capital: Congratulations on the progress you are making with ARC-520. I have two questions. Are there any prospects for an additional [backdrop] in the ARC-520 treated agenda?

No, I appreciate that question but no, that was a study of defined duration and we really didn’t have the opportunity to go to the longer, not because of anything we saw with the drug just because it's difficult to do chimpanzee studies these days. They are highly regulated and we did as much as we could. But I tell you what we saw there was tantalizing. We saw a good deep s-antigen and e-antigen knockdown, we saw good deep DNA knockdown, so much validate that we saw this immune layers weeks after we provided ARC-520. It was tantalizing because it appears that we did enter that cascade of events that can lead to a functional cure. Now we were not providing the drug long enough to keep s-antigens down, long enough to get that functional cure. It makes us wonder if would have kept this animal on drug could be we got that functional cure. But again the interesting data there was that we are able to initiate the process. Kenneth Hershberg - Hershberg Capital: And the second question I have is there is been a major shake up with Merck regarding its R&D efforts. Have this effected your research alliance with them regarding PDCs?

No, has not. Kenneth Hershberg - Hershberg Capital: Great, thank you very much.

You are welcome.

Okay, the next question comes from [James Gache], a Private Investor. Please go ahead.

Yes, congratulations gentlemen on the year. As a shareholder I have faith, it was indeed a nice year. My question regards the upcoming Phase 2s the A and the B. I believe I heard mentioned that in the IIb the patients would probably be -- have been previously treated with nukes is that the case for the 2a as well?

Yes at both IIa and IIb patients will have been on nukes prior.

Did you see any possibly differences between those previously treated patients and untreated patients as regards an outcome?

It's a good question. We don’t think so. We’ve shown that ARC-520 alone is quite effective at knocking down viral DNA and therefore a viral load. So it could be that ARC-520 alone does the job just fine. As we know nukes don’t really do anything consistently towards functional cures. And that’s because or at least the thought to me because that they don’t do really anything to knock out s-antigen. So while knocking out viral loads keeps a patient from being contagious it doesn’t really do much towards functional cure. Now haven done all that it doesn’t seem to us that it would hurt to go on top of nukes. It might be helpful to interpret data because we can keep DNA constantly low and then just focus only on movement of s-antigen and also making sure that that viral load stays low can help us to avoid any possible immuno-genesis. Now we don’t expect the virus would really mutate away very consistently from our sequences but seems to like there is no reason to take a chance.

Okay I think I understand that. One more question about the financials I am looking at a statement here in front of me. The company had a net loss of $31.7 million for the year-ended September 30, 2013 compared to a net loss of $22.1 million for the year ended September 30, 2012, an increase of $4.4 million. One of those numbers is seems to be an error.

I am not sure exactly what you are looking, the net loss through the year we had with $31.1 million during the year and that was compared to $21.1 million in the prior year. A lot of that is non-cash expenses. So you might focus on operating expenses and that’s where you see a change of about $3.5 million.

I was just subtracting the two numbers basically. I am looking at -- it's not from you it's from a Business wire or something here. I was just subtracting the net loss of $31 million, to the net loss of you said it was $21 million?

Correct.

Isn’t closer to $10 million?

Right so the change in the net loss is about $10 million./ There are several items in the operating statement that are non-cash that you might want to disregard that are driven by items such as amortization and depreciation and other non-cash items and so that’s why I would direct you focus to the operating expense line. The change in our operations were about $3.5 million during the period the fiscal year compared to the prior fiscal year.

And what’s the status on any payment from the Unidym sale?

We don't have any guidance on that unfortunately. So I don't have good visibility on whether or when any milestone payments might take place. If we do get some visibility we will be happy to disclose it but at this point we don't have any.

Well, I don't think it's so much of a milestone as it was basically wasn't there two tranches of payments upfront for another front but basically not milestones per se but...

Yes, yes. and so we are still negotiating to get that second tranche.

Okay, no real news to report there?

Yeah, I don't if we -- as you correctly recall there should have been a second tranche by now and we are still negotiating to receive that.

Okay, all right, thank you, gentlemen. Good year.

You are welcome, thank you.

(Operator Instructions). The next question comes from [Lee Alper] of Hammock Investors. Please go ahead.

Thanks. My questions have been answered.

Okay, thank you very much.

As we have no further questions this concludes our question-and-answer session. I'd like to turn the conference back over to Chris Anzalone for any closing remarks.

I thank you all for your attention and interest and I wish you all happy holidays. I will see you in 2014.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.