Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Arrowhead Pharmaceuticals Stock Jumped 34% in June

By Maxx Chatsko – Jul 8, 2020 at 10:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The RNAi treatment developer is clawing its way back after a rough start to 2020.

What happened

Shares of Arrowhead Pharmaceuticals (ARWR -1.29%) rose 34% last month, according to data provided by S&P Global Market Intelligence. That far outpaced the less than 2% gains of the S&P 500 and the NASDAQ Biotechnology Index

There wasn't any company-specific news to drive shares higher, but after the slide they took early in 2020 -- a rough period that began for Arrowhead before the coronavirus pandemic seized Wall Street's attention -- investors probably aren't complaining. Considering the company initiated multiple new clinical trials in the first half of the year, there's reason to expect the pharma stock can hang onto its recent gains.

A hand placing blocks in ascending columns.

Image source: Getty Images.

So what

Arrowhead Pharmaceuticals is developing a pipeline of genetic medicines based on RNA interference (RNAi). Shares of the company and its RNAi peers rose to all-time highs in late 2019 on the heels of multibillion-dollar deals in the space, positive clinical trial results for treatments being developed by multiple companies, and renewed enthusiasm for this class of gene-correcting tools. 

Due to the relative early-stage nature of most RNAi pipelines, the meteoric rise in share prices late last year set the stage for a predictable cool down in early 2020. That's exactly what happened. The correction was accelerated when the COVID-19 pandemic tanked stock markets in February and March. At the nadir of that trough, Arrowhead Pharmaceuticals had declined more than 60% in 2020.

The drug developer's share price has been gradually recovering from its March low; it's now off by only 30% year to date. But even though the stock is significantly down from its recent peak, investors can argue Arrowhead Pharmaceuticals is in its best position in years. Since the start of the year, the business has reported clinical progress for four drug candidates in cardiometabolic disorders, nonalcoholic steatohepatitis (NASH), and cystic fibrosis. 

Now what

A volatile stock price isn't ideal, but after the first six months of 2020, individual investors have no reason to change their previously-held opinions about this company. Arrowhead Pharmaceuticals is making progress with early-stage pipeline assets, and it ended March with $256 million in cash. The next big stock-moving events remain the same as before: data readouts from mid- and late-stage clinical trials.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Arrowhead Pharmaceuticals Stock Quote
Arrowhead Pharmaceuticals
ARWR
$34.46 (-1.29%) $0.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.