April 15, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Earlier this week, Arrowhead Pharmaceuticals , located in Pasadena, Calif., announced that it will be making three presentations regarding ARC-520, its experimental treatment for hepatitis B, at The International Liver Congress 2015 in Barcelona, Spain. All of the presentations will show how effective the drug appears to be in clinical trials at treating hepatitis B (HBV).
These results gave the company a boost, jumping about 4.04 percent to $6.18 on Thursday. Trading was almost double what it typically is, with 1.16 million shares traded yesterday compared to an average volume of 630,597 shares per day.
TheStreet Ratings Team gave the stock a “sell” rating with a score of D. It wrote yesterday, “The company’s weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.”
Nonetheless, Arrowhead is considered by many analysts to be an attractive acquisition target for larger companies, such as Gilead Sciences . ARC-250 is the company’s lead candidate and if it makes it to approval, still a ways off, it has the potential to be a blockbuster. Currently it is being tested in several Phase IIb clinical trials.
Although there is an effective vaccine for HBV, there is no complete cure, and early data on ARC-250 is suggesting that tantalizing possibility. There are other companies focusing on a cure for the disease as well, including Gilead, Bristol-Myers Squibb , Johnson and Johnson and a small biotech firm, ContraVir Pharmaceuticals. Arrowhead appears to be the leader.
In a statement in December, Christopher Anzalone, chief executive officer and president of Arrowhead, said, “We have achieved the highest knockdown ever reported in humans with RNAi and a safety profile that continues to be excellent. We are optimistic that this will ultimately translate into powerful clinical outcomes for ARC-520 and follow-on candidates against multiple indications.”
For example, an early-stage trial that mixed ARC-520 with Bristol-Myers Squibb’s Baraclude (entecavir), it reduced serum HBV DNA by 99.99 percent. It also showed that a particularly difficult-to-treat negative mutation, HbeAg, when treated with the combination, dropped to a level so low it couldn’t be quantified.
If everything went according to plan—and that occasionally happens in the pharmaceutical industry—the drug could be on the market in 2020. Analysts project a potential $4.5 billion in peak annual sales.
At the moment, Gilead is the major player in HBV treatments, which would give it a good reason to buy Arrowhead—eliminate a future competitor. Gilead’s two drugs are Hespera and Viread. In 2015, Viread brought in $1.11 billion in sales, a 4.73 percent year-over-year increase, and is projected to bring in $1.12 billion this year.
Writing for Bidnessetc, Aliya Kaleem says, “An acquisition at this point becomes all the more important for Gilead if it wishes to maintain its dominance in the high growth HBV treatment market. Moreover, the failure of Gilead’s own HBV product candidates makes Arrowhead even more attractive as an acquisition.”
In May 2015, Gilead’s HBV drug candidate, GS-4774, did not meet its mid-stage trial endpoints. Gilead has three HBV drugs in its pipeline, but only one is in the final stages of development.
