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What: After industry analysts at Cantor Fitzgerald began coverage with a buy rating, shares of Arrowhead Pharmaceuticals, Inc. (ARWR 1.11%) shot 12.5% higher at 1:30 p.m. EDT today.
So what: Arrowhead Pharmaceuticals is researching drugs that target RNA (ribonucleic acid), a nucleic acid present in all living cells that acts as a DNA messenger. The company's most advanced therapy is ARC-520, which is being studied as a new treatment for hepatitis B.
Recently, Arrowhead Pharmaceuticals reported that combining ARC-520 and Bristol-Myers Squibb's (BMY 1.08%) Baraclude resulted in up to 5.5 log, or 99.99% reductions in serum HBV DNA. Patients with HBeAg-negative mutation -- a tough-to-treat variation -- achieved reductions that put them below the limit of quantification, too.
Those results boost confidence that ARC-520 combination therapy could provide a functional cure for the 350-million-plus people worldwide who are infected with hepatitis B.
Now what: Cantor Fitzgerald analysts have slapped a $15 price target on Arrowhead Pharmaceuticals shares and if they're right, that would undeniably be a big win for investors.
However, before investors get too excited, they should remember that ARC-520 is in mid-stage trials, and that future trial results could fail to back up earlier findings.
Image source: Arrowhead Pharmaceuticals.
In short, while Arrowhead Pharmaceuticals has some intriguing research underway, following the advice of Wall Street analysts blindly is never a good idea. Instead, investors should do their own due diligence before clicking the buy button. In this case, that due diligence may lead risk-intolerant investors to decide that watchful waiting is the best way to approach this stock right now.
