If you cherry-picked the news about Arrowhead, it could look like the biotech had a good year. In September, for instance, it struck a $674 million biobucks cardiovascular RNAi pact with Amgen after, in May, posting new and positive data on ARC-LPA in transgenic mice and cynomolgus monkeys.
But of course this was not the only news coming out of the biotech; the day before the U.S. election in November (and the timing could only have been deliberate to minimize its impact), Arrowhead quietly posted the miserable news that its hep B candidate, ARC-520, was placed under a clinical hold by the FDA after a number of nonhuman primate deaths in testing.
Then things got worse: A few weeks later, at the end of November, this candidate, along with a host of others and 30% of its staff, were put under the ax as the biotech sought desperately to refocus.
Much of its work had revolved around its EX1 delivery vehicle, but the drugs created under this system—hep B meds ARC-520, ARC-521, and ARC-AAT for alpha-1 antitrypsin deﬁciency—will now all be canned. ARC-520 had once been touted as a potential cure for hep B, with the entire company and its platform once said to be a trillion-dollar opportunity.
Cue its market cap falling hard, dipping under $90 million on the news. It ended the year at around $1.55 a share; at its 2016 peak back in August, it had been valued at more than $8 a share.
Arrowhead has for some time been locked in a rivalry with fellow RNAi specialist Alnylam to get their RNAi meds onto the market first. But Alnylam has had its own troubles, losing around a half-billion dollars in market cap in trading in late September on the news that it halted development of RNAi liver disease candidate ALN-AAT after a phase 1/2 study resulted in three patients with liver enzyme elevation at the highest dose.
Although Arrowhead can look to its Amgen deal, it has still had to rejig its entire R&D arm and focus on subcutaneous and extrahepatic delivery systems, and will now rely on two previously unannounced HBV and AATD programs using this subQ platform, as well as other preclinical assets.
Ditching work on a drug that had been hyped as a cure and having to admit you cannot use your leading drug delivery tech, while scaling back staff and development timelines by years and hitting the reset button, is one of those worst-case scenarios for a biotech.
The cynical timing of releasing the news of the clinical hold, alongside losing a drug the company had claimed could be worth a trillion dollars, also helps earn it a rotten tomato award.