Why Arrowhead Pharmaceuticals Shares Are Sliding

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Arrowhead Pharmaceuticals Inc. (NASDAQ: ARWR) shares plummeted early on Wednesday after the company gave an update on its hepatitis B virus (HBV) treatment. Unfortunately, Arrowhead was notified verbally by the U.S. Food and Drug Administration (FDA) of its decision to place a clinical hold on Heparc-2004.

The study is on hold while the company provides responses to questions arising from a nonclinical toxicology study in non-human primates using EX1, the company’s liver-targeted, intravenously administered delivery vehicle.

The FDA did not indicate the clinical hold was based on any human findings.

Across this substantial clinical experience, only three serious adverse events (SAE) have been observed. Two of these were fevers, treated with acetaminophen, after which the patients continued on the study with no further complications. The other SAE was an instance of hepatic carcinoma in a patient with chronic HBV and cirrhosis, judged by the treating physician to be unrelated to the drug.

Arrowhead has not yet received written notice of the clinical hold from the FDA; however, based on verbal communications, the clinical hold was prompted by deaths at the highest dose of an ongoing non-human primate toxicology study. This study involves higher doses of EX1 than those used clinically in humans and higher than those used in the company’s previous animal toxicology studies. The cause of these animal deaths is unknown and under investigation.

Excluding Wednesday’s move, Arrowhead has underperformed the broad markets, with the stock relatively flat year to date. Over the past 52 weeks, the stock is up 13%.

Shares of Arrowhead closed Tuesday up 4% at $6.11, with a consensus analyst price target of $10.92 and a 52-week trading range of $3.07 to $8.22. Following the update, the stock was down 28% at $4.36 in early trading indications Wednesday.

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