What happened

After an update to investors on progress it's making in its phase 1 study of ARO-HBV in hepatitis B, shares of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) are skyrocketing 41.8% higher at 11:45 a.m. EDT today.

So what

Worry over liver toxicity led to Arrowhead Pharmaceuticals abandoning its clinical-stage therapies in 2016. The setback forced the company to develop a new RNA delivery system, and in 2018, Arrowhead has been one of biotech's best-performing stocks, because that new delivery system is being put to the test in clinical trials. 

A rocket soaring into outer space.

IMAGE SOURCE: GETTY IMAGES.

Earlier this year, management announced it had fully enrolled patients in a phase 1 study of ARO-AAT for AATD, a rare disease caused by an inability to properly create A1AT proteins that can lead to the need for a liver transplant.

The company also previously reported it had completed enrollment in the first phase of trials for its once-monthly therapy for hepatitis B, ARO-HBV. Arrowhead hopes ARO-HBV can pan out as monotherapy or alongside existing treatments. This morning, it reported encouraging data that suggest the therapy is effective and well tolerated.

Specifically, a 99.99% maximum reduction in hepatitis B surface antigen (HBsAg), which signifies an active infection, was observed, and on average, the reduction was 99% on day 85 in patients receiving three monthly doses of 100 mg and 96% on day 71 in patients receiving three monthly doses of 200 mg. The smallest HBsAg reduction witnessed so far in these two cohorts was 93%.

The most common adverse events were mild, including injection-site reactions that occurred in about 10% of injections. Symptoms "consistent with upper respiratory tract infection and headache" were also witnessed, but overall, there weren't any safety signals seen that are likely to derail the program.

Now what

Arrowhead's going to present the data at the World Gastroenterologists Summit in Auckland, New Zealand, tomorrow, and it plans to submit the data for potential presentation at additional conferences in the future.

The knockdown so far is impressive, and it helps validate Arrowhead's new RNA interference platform. However, investors should know that results represent data from only eight patients, and the company's prior hepatitis B therapy didn't wind up in the dustbin until safety concerns emerged in phase 2 trials involving more patients.

That said, there's unquestionably a need for new hepatitis B treatments, and disrupting the market presents a big opportunity for Arrowhead. Approximately 16 million people have chronic hepatitis B that puts them at risk of liver cirrhosis and liver cancer in the U.S., and current treatment regimens include a lifetime of daily pills. If ARO-HBV provides a functional cure with far fewer doses, then it could have blockbuster potential.

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.