Danish pharmaceutical giant, Novo Nordisk (NVO -1.50%) made a lot of headlines recently with a big buyout offer for Dicerna Pharmaceuticals (DRNA). Novo Nordisk offered Dicerna shareholders a great big 80% premium, leading investors to wonder which biotech stock might be next. 

For good reasons, Arrowhead Pharmaceuticals (ARWR -2.86%) is a prime candidate for the next big biotech buyout. Here are four of the most important ones. 

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1. Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals have a lot in common

Novo Nordisk went big for Dicerna in order to gain access to a bunch of clinical-stage new drug candidates that employ a technique that's gaining attention. Dicerna's treatment candidates employ small strands of RNA that interfere with the production of troublesome proteins. In 2018, Alnylam (ALNY -1.93%) became the first company to launch an RNA interference (RNAi) drug and the company has since launched two more.

Combined revenue from Alnylam's RNAi drugs climbed to an annualized $668 million in the third quarter and plenty of big pharmaceutical companies with deep pockets are worried about missing out. Arrowhead Pharmaceuticals' development pipeline is chock-full of experimental new RNAi drugs including an antiviral treatment for chronic hepatitis B virus (HBV) that could become the new standard of care for an estimated 300 million people living with the disease worldwide. Earlier this month, the company shared clinical trial results that showed dramatic viral load knockdowns.

2. Lots to look forward to

A treatment candidate for HBV is just the tip of Arrowhead Pharmaceuticals' iceberg. The company's pipeline is bursting with nine experimental RNA interference drugs in clinical trials and seven more in pre-clinical stages.

Also in November, Arrowhead told investors about compelling phase 1 trial results for a triglyceride-lowering treatment candidate. Treatment with ARO-APOC knocked down the production of a triglyceride-producing protein called APOC3 by more than 95% compared to baseline measurements. This led to dramatically lower triglyceride and cholesterol levels for trial participants.

This month, Arrowhead also reported phase 1 trial results for ARO-HSD, an experimental treatment for alcohol-related and nonalcohol-related liver diseases. Treatment with ARO-HSD lowered production of the target protein, HSD17B13 which in turn led to encouraging signs of improved liver function.

3. Johnson & Johnson

A couple of years before Novo Nordisk offered to buy Dicerna at a premium, the acquirer struck up a collaboration deal. If Arrowhead gets a juicy buyout offer soon, it will most likely come from Johnson & Johnson (JNJ 0.28%), a longtime collaborator.

In 2018, Johnson & Johnson gave Arrowhead $250 upfront and up to $3.5 billion in milestone payments. The key asset in the J&J deal was Arrowhead's HBV candidate, now called JNJ-3989. It has since expanded to include a candidate for non-alcoholic steatohepatitis (NASH) called JNJ-0795, which is currently in a phase 1 clinical trial.

Acquiring Arrowhead Pharmaceuticals could keep Johnson & Johnson from having to make big milestone payments if its partnered candidates succeed in pivotal studies, or earn approval.

4. Novartis could seek redemption

If Johnson & Johnson doesn't bite, Novartis (NVS -0.75%) could be interested. The international pharmaceutical giant is flush with cash after selling off a long-held equity stake in Roche for nearly $21 billion. In 2015, Novartis sold RNAi-related intellectual property to Arrowhead for $35 million and has probably been regretting the decision ever since.

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While many of Dicerna's candidates are subject to collaboration deals, potential royalties and milestone payments convinced Novo Nordisk its $3.3 billion gamble on Dicerna has a good chance to pay off. With an enterprise value or theoretical acquisition cost of $6.9 billion at the moment, Arrowhead Pharmaceuticals could also pay off for Novartis down the road, even though some of its more valuable programs at the moment are already licensed out.

A giant like Novartis could probably pull off an acquisition of Alnylam, but that's a mighty big bet. Novartis could instead offer Arrowhead a juicy premium without exhausting the giant cash infusion it just received from selling its Roche stake. 

Buying a biotech stock just because you think the underlying company has a buyout offer on the way is an extremely risky strategy. With multiple promising candidates in clinical-stage trials, though, Arrowhead could be a good stock to buy and hold even if an offer never comes.