Arrowhead Research Surges as It Advances Its Drug for Hepatitis B into Phase 2

Arrowhead is leveraging RNAi technology acquired from Roche in 2011 to develop a new therapy for hepatitis B.

Mar 7, 2014 at 2:30PM

Shares in speculative biotechnology company Arrowhead (NASDAQ:ARWR), which was one of 2013's best performing biotechs, jumped nearly 25% following news its lead compound is heading into phase 2 trials.

The company won approval from Hong Kong regulators to start a phase 2a trial for its ARC-520 drug for hepatitis B. ARC-520 will be dosed alongside Bristol-Myers' Hepatitis B drug Baraclude, a therapy that generates more than a billion in annual sales for Bristol. 

ARWR Chart

ARWR data by YCharts

Coming of age
The study will help Arrowhead determine efficacy and dosing, important considerations for moving the drug into much larger trials. The launch of the phase 2 trial comes following phase 1 results showing ARC-520 was generally safe and well-tolerated in six different doses.

While investors may not be familiar with Arrowhead, the company isn't a new player in RNAi. In fact, it acquired its dynamic polyconjugates technology from Roche when it bought Roche's RNAi assets in a 2011 fire sale.

Roche had previously invested big money into RNAi research in hopes such targeted therapies would usher in a new generation of disease busting drugs.  

Unfortunately, advances in RNAi didn't come quickly enough for Roche, prompting its exit. Merck soon followed Roche's lead, shuttering its own RNAi program in 2011. Merck finally sold those RNAi assets to Alnylam (NASDAQ:ALNY) earlier this year.

Now, Roche likely wishes it had held on given excitement surrounding RNAi is returning thanks to therapies from Isis, Alnylam, and now Arrowhead, advancing through clinic.

Isis, through its partners, has 20 compounds in phase 2 or phase 3, and Alnylam's most advanced compound, patisiran for TTR-Mediated Amyloidosis, is in phase 3.  Additionally, Isis already has one FDA approved drug, Kynamro, being sold by Sanofi's Genzyme unit.

Big opportunity
Thanks to vaccinations, the number of people with acute hepatitis B has fallen 82% in the U.S. since 1990. Despite the drop-off, the number of chronic cases requiring treatment remains high. An estimated 800,000 to 1.4 million people are diagnosed in the U.S., and 240 million are diagnosed worldwide. That sheer size translates into more than 600,000 deaths annually from the disease.

Hepatitis B is most common where vaccines have been slow to penetrate; including sub saharan Africa and East Asia, where between 5% and 10% of the population is infected.

As a result, international sales of hepatitis B treatments are higher overseas than in America and Western Europe. Currently, the bulk of that treatment comes in the form of side effect laden interferon, antivirals and Bristol's Baraclude. Baraclude's success hints at the potential for ARC-520. Sales of Baraclude totaled more than $400 million in the fourth quarter, and global sales of $1.5 billion were 10% higher last year than in 2012.

Unfortunately, all three of these current treatments aim at slowing disease progression, rather than curing it. That means those diagnosed with chronic hepatitis B remain at risk for liver cancer and liver failure, both of which offer a poor prognosis.

Fool-worthy final thoughts
Excitement surrounding Arrowhead's ARC-520 may prove justified given the backdrop of a huge global unmet need for new treatment options, and potential pricing power based on hefty price tags for next generation hepatitis C drugs including Gilead's Sovaldi.

However, ARC-520 could still be years away from being commercialized, so investors should approach Arrowhead with caution. Fools will want to stay tuned in to see early results from this phase 2 trial, which should come in the third quarter.  

1 more stock investors ought to know about this year
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Alnylam Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers