Arrowhead Research (ARWR -0.50%) is using technology from Alnylam (ALNY -0.20%) and Isis (IONS 1.46%) to create gene interfering drugs targeting kidney disease and cancer. 

Two of the largest drugmakers, Roche (RHHBY 1.51%) and Shire (NASDAQ: SHPG), found Arrowhead's technology intriguing enough to ink contracts with the company to co-develop new therapies. Commercializing drugs from these relationships is still years away, but support from these two big players suggests Arrowhead is a company worth watching.  

Knock, knock. Nano-delivery is here
Arrowhead thinks nano sized delivery men can improve the ability of antisense technology to turn off genes associated with disease.

The company is combining Alnylam and Isis technology with nano structures designed to mimic how viruses invade cells. By building these dynamic polyconjugates, or DPCs, Arrowhead thinks it can more effectively deliver drug payloads to specific compartments within targeted cells.

It's an intriguing approach that addresses the problem of polypharmacology, or the unplanned interaction of drugs with unplanned targets. Such unplanned interaction, and the side effects like toxicity it causes, is a common reason drugs fail in human trials.  

Advancing into human trials
In 2011, Roche (RHHBY 1.51%) found Arrowhead's technology so promising that it agreed to hand over its RNA intellectual property, including licenses it held with Isis, in exchange for nearly 10% ownership. That deal gives Roche the opportunity to license and receive royalties on future Arrowhead drugs and provides Arrowhead with a well-heeled collaborator and part-owner.

Arrowhead will leverage that relationship this year as it advances its pre-clinical compounds, including ARC-520 for chronic hepatitis B, through human trials

During pre-clinical studies, ARC-520 showed promise as a treatment for kidney disease in primates. A chronically infected chimpanzee with the hep B virus treated ARC-520 saw a rapid reduction of 90% to 95% in HBV DNA, e-antigen, and s-antigen that didn't return to baseline until day 43, 43, and 71 respectively.

That gave Arrowhead and Roche enough confidence to move the drug into a small phase 1 trial in October. Safety data from that trial, which is studying the drug in patients with chronic HBV, was reported in December. Adverse events and severity were the same between placebo and ARC-520, with 75% of both treated and placebo subjects reporting mild or moderate adverse events. That safety profile is strong enough that Arrowhead and Roche will move the study into a phase 2a study to determine efficacy.

But Roche isn't the only one betting that Arrowhead's approach could work. Shire is working with the company to develop DPCs to deliver Shire's drugs. Shire will pay Arrowhead up to $32.8 million for each development candidate, as well as royalties.

Arrowhead is also working with Cerulean Pharma on CRLX-101, or camptothecinan, an anti-cancer compound originally discovered in the 1960s but deemed too toxic to advance through clinic. The two companies believe marrying camptothecinan with Arrowhead's nano targeting technology can overcome those safety concerns. They've completed enrollment for a phase 2 trial in non-small-cell lung cancer and Arrowhead stands to receive both milestone payments and royalties on net sales if the drug ever makes it to market. 

Alynylam is also licensing Arrowhead DPC technology for an undisclosed RNAi therapy as part of its 5x15 pipeline goal to have five compounds in clinic by 2015. Under that agreement with Alynylam, Arrowhead will get both milestone and royalty payments if the therapy is ever commercialized.

Fool-worthy final thoughts
We may be miles away from having enough data to consider Arrowhead anything more than speculative.  But there are reasons to pay attention to the company and its progress.

ARC-520 may eventually help address a significant unmet need in hepatitis B given the disease can cause liver failure and liver cancer. That's potentially a big market given some 500,000 to 1 million of the 350 million people diagnosed with hepatitis B die every year from the disease. A payday could also come to Arrowhead shareholders thanks to collaborations with Shire and Alnylam.

However, Arrowhead remains an early stage company that offers more promise than proven results. That makes it suitable only for the most risk tolerant investor. As a result, investors may want to wait for mid-stage trial data on ARC-520 or CRLX-101 before jumping in.