Arrowhead Pharmaceuticals announced its intention to offer $500 million aggregate principal amount of convertible senior notes due 2032, with an option for underwriters to purchase up to an additional $75 million of notes within 30 days to cover over-allotments. The notes will be senior, unsecured obligations accruing interest payable semi-annually and will mature on January 15, 2032, unless earlier repurchased, redeemed or converted. Noteholders may convert in specified circumstances and Arrowhead will settle any conversions in cash, common shares or a combination, at its election.

In a separate registered public offering, Arrowhead plans to issue $200 million of common stock, with underwriters granted a 30-day option to purchase up to an additional $30 million of shares. The stock and note offerings are independent of one another, meaning the closing of one will not be contingent on the closing of the other. J.P. Morgan and Jefferies are acting as joint book-running managers on both transactions.

Arrowhead expects to use net proceeds from the note offering to fund capped call transactions designed to reduce potential dilution upon note conversion, with any additional proceeds from the exercise of the underwriters’ note option similarly allocated. The remainder of proceeds from both offerings will support general corporate purposes, including R&D, clinical trials, commercialization activities, capital expenditures, working capital and potential prepayment of existing credit facility loans.

The convertible notes will be redeemable by Arrowhead for cash, in whole or in part, from January 16, 2029 through 30 trading days before maturity if the company’s share price exceeds 130% of the conversion price for a specified period. Upon fundamental corporate events, noteholders may require repurchase at a cash price equal to principal plus accrued interest. Interest rates, initial conversion rates and other final terms will be determined at pricing.