Better Buy: Isis Pharmaceuticals vs. Arrowhead Research

Earlier this year, clinical-stage biotechs fell in dramatic fashion, as investors turned toward bigger health-care names generating revenue from approved products. In recent weeks, however, a marked reversal in this trend has seen several developmental biopharmas marching higher.

Arrowhead Research (NASDAQ: ARWR  ) and Isis Pharmaceuticals (NASDAQ: ISIS  ) were two of the biggest losers in the biotech downturn, even though both companies are working on promising new therapies centered around RNA-based technology. This novel approach to drug development focuses on blocking the expression of defective proteins, which could be tantamount to a functional cure in many diseases. 

Although both companies have compelling pipelines based on this technology, their platforms have important differences that investors need to understand. With that in mind, let's consider which company offers the better opportunity moving forward.  

ARWR Chart

ARWR data by YCharts.

A look at Arrowhead
Arrowhead's platform uses RNA interference, or RNAi, technology. Although this technology was once heralded as a potentially revolutionary discovery, problems associated with delivering the therapy to specific tissues have dogged the field since its inception. So much so that Roche sold its RNAi program to Arrowhead in 2011, citing the many hurdles the sector would need to overcome prior to a viable therapy being developed. The main difficulty facing RNAi technologies is that the molecules tend to end up in the liver, often far from the target tissue.

Arrowhead's breakthrough idea was to turn this weakness into a strength by developing a pipeline of RNAi therapeutics aimed at treating liver diseases such as hepatitis B. The company is conducting a midstage trial of its experimental hepatitis B treatment ARC-520 and is performing pre-clinical work for other liver diseases as well.

If everything goes according to plan, we should see top-line data for ARC-520's midstage trial by the third quarter of this year. Given that this trial would go a long ways toward validating Arrowhead's approach to RNAi therapeutics in general, this is a key event to keep tabs on.  

A look at Isis
Isis' pipeline is centered around antisense technology, which has been broadly validated by two FDA approvals for Isis products to date. Indeed, Isis' Kynamro treatment for homozygous familial hypercholesterolemia was the first antisense drug to reach the market. 

Unlike RNAi, antisense drugs may be more effective at treating a wide range of disorders such as cancers, diabetes, and rare genetic conditions. So it's not surprising that Isis has developed one of the deepest and most diverse clinical pipelines in the industry. Specifically, Isis' pipeline sports over 30 drugs in development, including multiple potential blockbusters. Thanks to its robust pipeline, Isis has had little trouble generating significant interest from Big Pharma when it comes to licensing agreements.

It was announced last week that the company's experimental treatment for high triglycerides, called ISIS-APOCIIIRx, significantly lowered the risk of heart disease in two independent studies. Management said it is therefore actively looking at ways to expand the drug's potential indications based on this finding, which could add up to $2 billion to peak sales. In short, there are a lot of good reasons to keep track of this mid-cap biopharma. 

Foolish wrap-up
Arrowhead and Isis are both developing cutting-edge technology that could change the standard of treatment for a host of debilitating diseases. From an investment standpoint, however, Isis looks like the clear winner for a couple reasons.

First, its technology has already been validated by strong clinical trial results and FDA approvals. Second, the sheer diversity of diseases antisense technology could treat might end up dwarfing that of RNAi approaches -- although the leading developer of RNAi-based therapies, Alnylam, is performing a wide range of clinical trials for a host of diseases. Big Pharma has repeatedly partnered with Isis on various compounds, while RNAi was abandoned by one of its former top proponents, Roche. And even many of Alnylam's pre-clinical candidates are Big Pharma cast-offs, showing the general disinterest in this technology from larger players. 

Put simply, Arrowhead's path to building a product line based on its platform is probably more challenging than what Isis faces. Isis' diverse pipeline also gives it multiple shots on goal on the commercial front, which is why I'm much more confident in the stock. 

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool’s new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

  


Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 24, 2014, at 10:25 AM, investron wrote:

    The only reason carpet bombing was favored was because guided missiles had not been perfected yet.

    Arrowhead - and what a name that embodies that concept - is the future.

    ARWR is the go-to in RNAi therapeutics: its DPC platform is the delivery vehicle that will take it beyond the liver thus fulfilling the promise of RNAi.

    Arrowhead's next clinical candidate under development is extra hepatic.

    Even now the incredible value of DPC was demonstrated just last week, when ARWR announced its most recent drug candidate, ARC-AAT, addressing Alpha-1 Antitrypsin Deficiency.

    From zero to ready to file IND in just over a year!

    That is absolutely unheard of speed and efficiency, and left prodding Alnylam (ALNY) that had been working on this for two years and looking to file IND mid-next year in the proverbial dust.

    This fulfills the railroad thesis of ARWR's DPC and begins the modern day era whereby drugs may be developed with unprecedented speed and efficiency.

    It's up to you, whether you want to invest in the present day horse and buggy or the new DPC railroad.

    To me, investing is forward looking.

  • Report this Comment On June 24, 2014, at 10:58 AM, investron wrote:

    The only reason carpet bombing was favored was because guided missiles had not been perfected yet.

    Arrowhead - and what a name that embodies that concept - is the future.

    ARWR is the go-to in RNAi therapeutics: its DPC platform is the delivery vehicle that will take it beyond the liver thus fulfilling the promise of RNAi.

    Arrowhead's next clinical candidate under development is extra hepatic.

    Even now the incredible value of DPC was demonstrated just last week, when ARWR announced its most recent drug candidate, ARC-AAT, addressing Alpha-1 Antitrypsin Deficiency.

    From zero to ready to file IND in just over a year!

    That is absolutely unheard of speed and efficiency, and left prodding Alnylam (ALNY) that had been working on this for two years and looking to file IND mid-next year in the proverbial dust.

    This fulfills the railroad thesis of ARWR's DPC and begins the modern day era whereby drugs may be developed with unprecedented speed and efficiency.

    It's up to you, whether you want to invest in the present day horse and buggy or the new DPC railroad.

    To me, investing is forward looking.

    And that, is why it's ARWR.

  • Report this Comment On June 24, 2014, at 12:13 PM, WyattKAP wrote:

    ISIS with just over $1 per share in sales and holding a $4 Billion+ market cap and ARWR looking in the eyes of a $500+ BILLION market with their spearhead technology and a market cap of only $700+ million. I'll TAKE ARWR for a MONSTER UPSIDE VALUATION over ISIS.

  • Report this Comment On July 02, 2014, at 9:07 AM, investron wrote:

    Check out the bear article on SA.

    THAT is why we're moving from carpet bombing to guided missiles.

    While ISIS management talks it up, they're selling like crazy.

    ARWR will surpass ISIS.

    It's a matter of science.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3003655, ~/Articles/ArticleHandler.aspx, 11/29/2014 12:22:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement