What: After reporting fiscal third quarter results that outpaced industry watchers' forecasts and updating investors on its research pipeline, shares in Arrowhead Research Corp (NASDAQ:ARWR) are soaring by more than 10% today.

So what: Since Arrowhead Research is a clinical-stage company without any approved products on the market, progress being made on its product pipeline is more important than its financials, and on that front, Arrowhead Research appears to be making headway.

In the quarter, Arrowhead Research received regulatory permission to initiate three multi-dose phase 2b studies of ARC-520, its hepatitis B therapy. It also completed enrollment in multiple cohorts of a phase 2a study of ARC-520 that should have data available in September.

The company is also making headway on ARC-AAT, a therapy in early stage trials as a treatment for a rare genetic liver and lung disease affecting about 100,000 people in the United States. The company is enrolling patients in phase 1 trials in Australia and recently won FDA orphan drug designation for ARC-AAT, which could accelerate its development timeline.

Overall, Arrowhead Research reports that fiscal third quarter sales totaled $123,750 and its net loss was $0.27 per share, which was $0.11 better than analysts were hoping, and led to cash burn of $16.8 million in the quarter.

Now what:  There's a big opportunity available to any company that can revolutionize hepatitis B care in a way that's similar to recent advances in hepatitis C. As many as 400 million people are infected with hepatitis B globally, and the disease accounts for 80% of primary liver cancers.

However, Arrowhead Research still has a lot of work to do before investors can feel confident that it has a winner in ARC-520. Historically, 60% of phase 2 trials fail, and 40% of phase 3 trials come up short. Additionally, failure has been common for RNA gene-targeting drugs like those being developed by Arrowhead Research, and for that reason, investors might be best served taking a watchful waiting approach to this one -- at least until we get more insight into ARC-520's mid-stage efficacy and safety.