What: After reporting data from an early-stage study of its ARC-520 in hepatitis B patients, shares of Arrowhead Pharmaceuticals (NASDAQ:ARWR) shot 12.9% higher today.
So what: The clinical-stage researcher of drugs that target ribonucleic acid, a nucleic acid present in all living cells that acts as a DNA messenger, announced today that combining its ARC-520 with Bristol-Myers Squibb's (NYSE:BMY) commonly used Baraclude delivered significant efficacy in hepatitis B patients.
Specifically, the ARC-520 and entecavir combination therapy resulted in up to 5.5 log, or 99.99% reductions in serum HBV DNA. Additionally, patients with the tough-to-treat HBeAg negative mutation achieved reductions that put them below the limit of quantification.
Those findings suggest that ARC-520 containing therapy could have the potential to offer a functional cure for the 350 million-plus people infected with hepatitis B worldwide.
Now what: Although the findings are encouraging, investors will need to rein in a bit of their enthusiasm. ARC-520 is currently in mid-stage trials, and more complete trial results should be available over the course of the coming year.
Assuming results from these trials are positive, then a larger, confirmatory phase 3 trial would likely be required prior to FDA approval. Because drugs often fall short in late-stage trials, we're still pretty far away from the finish line for this drug.
Having said that, the concept of significantly improving care in this large patient population is incredibly intriguing. Liver disease caused by hepatitis B can be life-threatening, and there's a significant need for new treatment alternatives that improve upon Baraclude and other existing standards of care.
Risk-tolerant investors might want to consider keeping an eye on this company, but they ought to remember that management is spending roughly $18.5 million per quarter, and the company has just $76.5 million in cash and equivalents on its books.
Todd Campbell owns shares of Arrowhead Research. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.