Arrowhead Pharmaceuticals has provided a bullish update for its midstage liver disease treatment, pushing ARWR stock to surge Tuesday.
The company is testing a drug called fazirsiran in patients with a genetic condition that can lead to liver and lung problems. Arrowhead and partner Takeda Pharmaceutical now say they'll unveil the Phase 2 results in conjunction with plans for the Phase 3 study in the "near term."
Food and Drug Administration regulators must sign off on study designs, so investors took it to mean Arrowhead's drug scored a win in the midstage test called Sequoia.
"We are encouraged by commentary (Monday) that a Phase 3 study is being discussed without the FDA seeing Sequoia (results)," RBC Capital Markets analyst Luca Issi said in a report to clients. He noted earlier results for fazirsiran in the condition called alpha-1 antitrypsin deficiency were "compelling enough."
On today's stock market, ARWR stock surged 7.1% to close at 29.99. Takeda shares sank a fraction to finish at 14.50.
ARWR Stock: Silencing Genes
Fazirsiran belongs to a class of medicines engaged in RNA interference. This is a method of "silencing" the genes that create problematic proteins. In patients with alpha-1 antitrypsin deficiency, the body makes an abnormal protein that can build up and cause problems in the liver or lungs.
So far, fazirsiran has shown "impressive clinical proof of concept," says RBC's Issi. The economics are also favorable with a 50/50 split on profits in the U.S. between Arrowhead and Takeda. Arrowhead will also receive royalties on sales abroad.
Issi kept his outperform rating on ARWR stock.
Large Cardiovascular Pipeline
Analysts also see promise for Arrowhead's sprawling cardiovascular pipeline.
Further, Arrowhead reiterated plans to keep another drug in house. The company has no plans to seek a partner for ARO-APOC3, a potential treatment for high triglycerides. High triglycerides can cause a host of cardiovascular problems. ARO-APOC3 is in Phase 3 testing.
Arrowhead will have to run a cardiovascular outcomes study to win approval for ARO-APOC3. These are lengthy studies that determine a drug's ability to lower the risk of heart attack, stroke and other cardiovascular problems.
Another Arrowhead drug, dubbed ARO-ANG3, is targeting dyslipidemia. This condition is when lipids like cholesterol are out of balance. Together, the treatments for high triglycerides and dyslipidemia are targeting "large market opportunities," Chardan Research analyst Keay Nakae said in a report.
Keeping ARO-APOC3 in house "represents a trade-off of potentially significantly higher commercial revenue, but at a significant cost to conduct large cardiovascular outcome studies, and to build the required sales and marketing organization," he said.
Still, Nakae maintained his buy rating and 82 price target on ARWR stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
