SoCal's Arrowhead Pharma (ARWR) Stock Craters After Terminating 30% of Workforce, Discontinuing Work on Lead Hep B Drugs
11/30/2016 5:40:03 AM
November 30, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Pasadena, Calif. – Arrowhead Pharmaceuticals (ARWR) announced that it is halting three clinical programs and laying off about 30 percent of staff.
On November 7, the U.S. Food and Drug Administration (FDA) placed a clinical hold on Heparc-2004 based on nonclinical toxicology studies of the company’s EX1 delivery platform, which utilizes intravenous administration and targets the liver. The programs Arrowhead is shuttering, ARC-520, ARC-521, and ARC-ATT, all use the EX1 delivery vehicle, also called DPCIV.
The company sites two factors for ending the programs. “First,” it indicated in a statement, “during ongoing discussions with regulatory agencies and outside experts, it became apparent that there would be substantial delays in all clinical programs that utilize EX1, while the company further explored the cause of deaths in a non-clinical toxicology study in non-human primates. Second, Arrowhead has made substantial advances in RNA chemistry and targeting resulting in large potency gains for subQ administered and extra-hepatic RNAi-based development programs.”
Arrowhead is shifting its focus to its subQ and extra-hepatic pipeline, which includes programs in HBV, AAT, Factor 12, HIF-2alpha, and other programs they haven’t announced.
In September, Arrowhead signed two license and collaboration deals with Amgen (AMGN) to develop and commercialize RNA interference (RNAi) treatments for cardiovascular disease. The programs use Arrowhead’s subcutaneous (subQ) RNAi delivery platform. Amgen paid $35 million upfront, $21.5 million in an equity investment, and up to $617 million in option payments, as well as various milestone payments. Arrowhead is eligible for single-digit royalties for the undisclosed target and up to low double-digit royalties for the ARC-LPA product.
The Amgen programs are not part of the programs that are being abandoned.
The company also believes that data so far indicate that ARC-520, ARC-521, and ARC-AAT are well tolerated in human clinical trials, and that the evidence supports continuing those programs. The company also notes that in animal studies, the test subjects receive higher doses than in human trials, and that human patients receive an oral antihistamine before being dosed. However, due to regulatory-related delays and finite financial resources, it is shifting its focus to other programs.
Chris Anzalone, the company’s chief executive officer, told the Wisconsin State Journal, that in some of the investigations with ARC-520, 521 and AAT, a biomarker for hepatitis B (HBV) had been cut by 99 percent. “Needless to say, this would be a breakthrough. These remain exciting and unprecedented results.”
But continuing studies into the animal deaths would be “complicated, time-consuming and expensive. We sadly and reluctantly turn away” from what Arrowhead views as “groundbreaking” products, Anzalone said.
The layoffs are designed to provide enough cash to continue operations through 2019. The company is headquartered in Pasadena, Calif., but research-and-development functions are in Madison, WI. Approximately 100 of the company’s staff are located in Madison, with about 20 in Pasadena.
Investors did not take the news well. Arrowhead stock is currently listed at $4.39. The stock price, however, dropped almost 60 percent in after-hours trading, to about $1.77. Madhu Kumar, an analyst with Chardan Capital, downgraded the company’s rating to “neutral,” and dropped the price target from $8 to $2.
Cantor Fitzgerald also downgraded the stock from “buy” to “hold,” and PiperJaffray downgraded from “overweight” to “neutral.”
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