Arrowhead tanks after FDA reins in dosage on key hep B trial

Shares of Arrowhead Research ($ARWR) took a beating Monday morning after the biotech revealed that the FDA had made a preliminary call on a partial clinical hold on a Phase IIb trial of its lead drug for hepatitis B.

According to the Pasadena, CA-based Arrowhead, regulators want Arrowhead to start the mid-stage study at a much lower dose than what had been planned: 1 mg/kg of ARC-520 rather than the proposed 2 and 4 mg/kg.

In addition, regulators have come calling for some added info about the experimental therapy. The FDA wanted to find out more about a completed single-dose study of ARC-520 along with some extra input on an ongoing multiple dose trial. The biotech's execs emphasized that they have seen no signs of organ toxicity in either study.

Investors, though, weren't soothed by the assurances. Arrowhead's stock tanked by 28% this morning as rattled investors bailed. And it's not hard to see why. The biotech took a drubbing a few months back after the lower 1 mg/kg dose of the drug failed to trigger the kind of response Wall Street was looking for.

ARC-520 uses a specially designed nano-polymer to deliver an RNA treatment which is supposed to block a key protein the hep B virus needs to stay hidden from the immune system. But at 1 mg/kg, there was only an average 39% reduction in the protein. The stock plunged, lawsuits were filed and Arrowhead set out to go up to 4 mg/kg to see if it could get a much better response.

Arrowhead CEO Chris Anzalone

"Over the next 30 days, Arrowhead will begin preparations for the multiple-dose Phase IIb study," said Arrowhead CEO Dr. Christopher Anzalone. "We will work closely with the FDA throughout this process while we continue to seek approval to proceed with other planned studies in Asia and Europe."

- here's the release