What happened

Shares of Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), a preclinical-stage biotech developing therapies that silence troublesome genes, jumped after presentations at this year's J.P. Morgan Healthcare Conference. The stock was up 16.1% as of 2:04 p.m. EST on Thursday.

So what 

Investors got excited about Arrowhead earlier this week when they noticed Amgen (NASDAQ:AMGN) highlighted an Arrowhead molecule, AMG-890, as a cornerstone in the big biotech's ongoing expansion into cardiovascular disease.

Woman in business suit walking through a wall opening shaped like an upward-pointing arrow.

Image source: Getty Images.

This morning, Arrowhead gave more details that made them smile. According to Arrowhead, Amgen now has an exclusive license to the atherosclerosis candidate formerly known as ARO-LPA, and an option to develop another against an undisclosed target. 

Arrowhead receives royalty rights if a candidate succeeds, $35 million in up-front cash and a $21.5 million equity investment. Potential milestone payments could raise the deal's value as high as $673.5 million. All in all, it looks like a terrific deal for preclinical assets discovered with an unproven platform.

Now what

Arrowhead hasn't started human trials with any of its new drug candidates, but it did file clinical-trial applications in New Zealand that could allow it to take the important step with two unlicensed candidates soon. My favorite of the two, ARO-AAT, silences a gene that leads to overexpression and buildup of a misfolded protein in the livers of approximately 100,000 Americans with alpha-1 liver disease.

Arrowhead's candidate knocked levels of the protein down 92% in preclinical studies. Alpha-1 liver disease lacks effective treatments, which means repeating these results in actual patients would send the stock soaring.

I can't remember the last time a well-run company like Amgen shelled out significant sums for new drug candidates with so little information to base a decision on. Given the impressive preclinical results released so far, I really can't criticize the big biotech. That said, I'll be watching this company from a safe distance until there is a lot more data to work with.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.