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Here's Why Arrowhead Pharmaceuticals Skyrocketed Almost 30% in September

By Brian Orelli, PhD - Oct 11, 2018 at 3:58PM

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Investors are excited about data for its hepatitis B drug.

What happened

Arrowhead Pharmaceuticals (ARWR 8.79%) jumped 29.9% in September, according to data from S&P Global Market Intelligence. This came after after the company released early-stage data for its hepatitis B virus (HBV) treatment, ARO-HBV, at the 18th World Gastroenterologists Summit.

So what

Data from the lowest two doses (100 mg and 200 mg), tested on a total of eight patients, looked quite promising. ARO-HBV was able to lower the circulating HBV surface antigen -- a measurement of the amount of virus in a patient -- by as much as 99.99%. The average reduction on day 85 for the 100 mg dose was 99%. Data for the 200 mg dose was only available out to day 71, at which point there was an average reduction of 96%. And all the patients in both cohorts combined had at least a 93% reduction.

Arrowhead's drug clearly does what it's supposed to do. While the number of patients is small, antiviral medications tend to perform consistently as the number of patients they're tested on increases, because there's less variability in viral targets than in humans.

ARO-HBV has been fairly safe at the lower doses, so it's possible that a higher dose will work even better -- although about 10% of patients had injection-site reactions, so if that substantially increases with a higher dose, it could be a problem. The study also tested 300 mg and 400 mg doses, which will be presented at the annual meeting of the American Association for the Study of Liver Diseases next month.

A September 2018 calendar

Image source: Getty Images.

Now what

There are already drugs approved to treat hepatitis B infections, but Arrowhead's ARO-HBV only has to be injected monthly, which could be a huge benefit for people with the chronic condition. The biggest concerns right now are potential safety issues that might not be seen with a small number of patients, and the possibility that the virus might eventually become resistant to ARO-HBV.

Last week, Arrowhead licensed ARO-HBV to Johnson & Johnson (JNJ 0.42%), which will take over development of the drug. The deal put $250 million in Arrowhead's pockets -- including a $75 million equity investment by Johnson & Johnson -- which will help Arrowhead fund the rest of its pipeline.

The company also reduced its upside, capping potential profits with a tiered royalty that tops out at percentages in the mid-teens. But with a long way to go to develop ARO-HBV and a platform that should be able to produce a large number of drug candidates, the move was likely the best choice for Arrowhead.

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Stocks Mentioned

Arrowhead Pharmaceuticals, Inc. Stock Quote
Arrowhead Pharmaceuticals, Inc.
ARWR
$35.77 (8.79%) $2.89
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$178.82 (0.42%) $0.74

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