Wednesday, February 11, 2015

The Tide May Have Turned for ARWR

Arrowhead Research emerged as a major RNAi Therapeutics player due to its- at least publicly- single-minded focus on HBV.  During this time (early 2013-early 2014) it saw a meteoric rise in its stock by more than 10-fold.

Management got so caught up by their own campaign of pushing Arrowhead Research as an HBV stock that they set themselves up for failure by setting overly ambitious goals for that program. 

As a result, the stock plummeted almost as rapidly as it had risen first by the Fed-induced biotech sell-off in spring 2014, and especially after first clinical results (see here and here) of ARC520 in HBV-infected patients did not live up to the hyped-up expectations.  90% HBsAg knockdowns had been the stated goal for a single-dose 2mg/kg.  This was despite preclinical studies which suggested that more than 2mg/kg of the endosomolytic DPC component was needed to achieve such robust knockdowns.

While my jaws certainly dropped in disbelief when I heard this, in my mind this has to be chalked up to a lack of full understanding of their company's own technology rather than gross misconduct.

…but for me it has always been subQ, subQ, subQ, extrahepatic

While I very much liked the fact that Arrowhead Research was at the very cutting edge of the ‘HBV-The-Next-HCV'  wave, what originally got me all fired up about Arrowhead Research was an OTS presentation in late 2012 where they presented impressive (robust and long-lasting) knockdown in non-human primates with a subcutaneous, most likely single-molecule version of their DPC delivery technology.  Knockdown that was more potent than anything out there (Alnylam GalNAc-STC at the time) combined with the convenience of subcutaneous instead of intravenous administration.  The latter is practiced with their more advanced two-molecule DPC version underlying ARC520 and ARC-AAT in the clinic already.

Single-molecule DPCs should also be the foundation for reaching tissues beyond the liver, making the transition back to single-molecule DPC all the more valuable.  Given that the liver has been solved for oligonucleotide therapeutics with Alnylam’s and ISIS’ GalNAcs, opening up new tissues to RNAi is obviously all the more attractive.

It is unclear what held the company back from taking the non-human primate achievements almost 3 years ago into the clinic.  Scale-up manufacturing issues rank highest on my list of possibilities.

Company guides for 2015 IND for either subQ liver or extrahepatic i.v. candidate  

During this week’s Q4 earnings conference call, the company indicated that they have finally achieved long-awaited technological breakthroughs so that we can now expect them to file an IND for either a liver target using for the first time a subcutaneous DPC formulation or an IND for an extra-hepatic target. 

Correction/clarification (2 Feb 2015): The company contacted me to clarify that what they said was that they will file an IND in 2015, and in addition to that, nominate a new development candidate that will either be extrahepatic or a subQ liver candidate.

Interestingly, if the extrahepatic program should make it to the finish line first, it would still be administered intravenously, which leads me to believe that it is a target in the kidney which I consider the only other obvious target tissue amenable to 2-molecule DPC.  If the target cell is not the proximal tubule cell, it would suggest that Arrowhead has identified a GalNAc-ASGPR-type ligand-receptor pair for the kidney.

ARWR 2015 playbook

Be it as it may, the prospect of both a highly competitive delivery technology for the liver and the availability of a new target tissue makes this a highly attractive re-entry point into ARWR.  At $6+ down from the mid $20s not even a year ago and with almost half of its valuation in cash, I do not see much downside from the 3-4mg/kg results of ARC520 to be reported in Q2 2015. 

Personally, I expect an 80-90% knockdown at 4mg/kg, but since I have no idea how the market would react to an 80% knockdown, the results are a coin toss to me, but with a somewhat larger upside (up to $14) than downside (down to $5) from here.

If the stock trades down, but somewhat dependent on the safety data, it may be an opportunity to snap up ARWR for the ARC-AAT phase I results coming up by the end of the year.  I consider ARC-AAT a very robust program with increased knockdown potency compared to ARC520 and much less ambiguity around what an X% knockdown means.
 

Right now, Arrowhead Research is an ARC520-only story and that should change once ARC-AAT becomes recognized as a medically and commercially very attractive product candidate (e.g. an orphan indication with an estimated 100.000 patient population in the US alone).  And I am convinced that I'm not the only investor to recognize subQ and extra-hepatic as the ultimate value drivers for ARWR all of which could propel the stock back to its 2014 highs over the next year.

33 comments:

hparch said...

And it is clear they are still saying they are not going for 5 mgs and some of the analyst comments have picked up on this inference that it means they know they don't need 5 mgs.

If we don't need 5 mgs for the simple reason that 4 mgs yields 1 log KD and they have met or know they will meant that clearly announced 1 log goal from a single dose, then things are really looking up.

If you add to all that the possibility that the KD duration is running longer than 3 months, that would also explain the increased emphasis on testing ARC-520 in combination with other drugs. One shot of ARC-520 and daily NUCs or some other new drug could even get beyond FC to full cure.

We could be sitting on an unbelievable explosion in the PPS.

Anonymous said...

There is an actual discharge slip from the PA's FB pg from Queen Mary Hospital. Discharge dated 11-14. Checked in for a follow up Dec 3. Talked about thanking Jesus for the complete and total healing Jan 30. Oct 2014 posted:I DECLARE THAT GOD IS IN CONTROL OVER MY LIFE AND MY FAMILY CONCERNED TOO. IN JESUS NAME! — feeling positive at High Street, Sai Ying Pun. And Finally Aug 7th posted: Lord. Thanks been clear and fix the problem of mine... Now i know when i 'll start and end... A bit out of order. lol

mike said...

My statistically based predictions are 70% for 3mg and 89% for 4mg

Stan Van G said...

If the 3 mg data is that good, and much better than the calculations every one was making, then the 4 mg data could be even better! How could this be kept from the market for 8 months? You would expect a leak, but if the market is dead wrong and the 3 and 4 mg data are going to be outstanding, something that ARWR has known for a long time, yes, that might explain spending $7 M on options, and it could also explain why they want to pass the new resolutions to prevent a hostile takeover BEFORE they release the 3 and 4 mg news that could tend to promote a hostile takeover attempt. If this mosaic of pieces is going to support large KD and long duration, then we are looking at a PPS that will be over $30 by July 1, IMO.

Chung Leory said...

ARWR will be $100 before the end of the year. This is a fact. The company did not buy $7 million worth of options because the results are not good. Expect the market to start responding to the signs starting now until the results are posted.

Anonymous said...

3mg dosing started back in JULY/2014.

The RBC note on Sept 17 talked about interim results:

ARWR complete RBC reseacr note 9/17
Arrowhead Research Corp.
On the road with big idea…we predict Street interest in Hep B just getting started
Our view: We like ARWR long-term because we believe interest is going to pick up in 2015 with HBV co's, and upside should be quite significant if Phase IIB shows “cures”.
Key points:
Big picture: Investors are looking for the next big market after Hep C and that could be NASH (ICPT, GILD, GenFit) or Hep B. On the road w/ mgmt we learned
1) Phase I now through high-dose 4mg is safe in healthy pts,
2) Phase II in HBV now dosing 3mg clearly shows knockdown including “long duration” effects after just one dose….could be "bi-phasic" reduction and immune system already starting to work (no ALT flair expected),
3) higher doses could get even better,
4) multiple doses could have more effect,
5) ARC-520 could be complementary to peg-interferon, or other approaches (KOLs say this will be a long-term combination just like Hep C….).

So ARWR has many ways to win: They could have “cures” and/or ARC-520 could play a role in a future combination. We will continue to follow other very early-stage companies with a different approach that could be “complementary”: OnCore Biopharma (entering Phase I in 2015 – email us for poster), Novira (Phase I), Assembly Pharma (entering clinic 2015),

And later in the note, specifically:

"3mg may not
be “finished” by AASLD but company may “describe” some of the general blinded data in its update. "

dan said...

insiders can't buy .... legal issues there

however funds can! and we are seeing this, with all the 5% owners!!!!

LONG DURATION effects on the 3mg data means $50+ per share

Anonymous said...

Won't this have some kind of effect on ARWR if they don't own the endosomal escape hatch technology outright?

Hat tip to PfizerSloth.

http://www.raps.org/Regulatory-Focus/News/2015/02/11/21309/Trade-Talks-Stumble-over-Biologics-Data-Exclusivity/

Anonymous said...

Hi Dirk. Curious to know why you think 4 mg/kg will hit the 90% knockdown mark with single dose. From what I can see, I wouldn't expect that from the chimp data, or from the dose escalation data in humans (perhaps I'm wrong... but I did believe the market was placing their expectations way too high before the 2 mg data was released). I think they can get there with multiple dose, but perhaps we're saturating with single dose.

On the AAT front, I've been looking into the liver space recently and would caution taking a very close look at disease presentation and progression. It's more complex than most assume. Most pediatric liver pathology cases resolve, and althought long term liver disease is a problem in most patients, it would be important to understand what endpoints could be used in a reasonably lengthed clinical trial to show efficacy.

Asail

Anonymous said...

Why has GENE put on over five dollars in the space of just two weeks?

Dirk Haussecker said...

Hi Asail- I did not say 90%, I gave a range of 80-90%. That's an important difference.

RE AAT-related liver disease. From what I understand, more and more piZZ carriers get diagnosed now with the liver disease (instead of being told they are simply drinking too much). Though I am yet to learn more about the intricacies of diagnosis and disease progression in the various patient populations, I can imagine that for the worst off (e.g. those getting close to needing a liver transplant), a biomarker could suffice as an approvable endpoint. Then you work your way down the pyramid.

Anonymous said...

Dirk, have you checked out the newly published study on PLOS One, "Effects of Entecavir on Hepatitis B Virus Covalently Closed Circular DNA in Hepatitis B e Antigen-Positive Patients with Hepatitis B"?

Boiled down to core, "Our results showed that, over a treatment period of 48 weeks, the serum total HBV DNA and cccDNA levels decreased by approximately four and three logs, respectively. The reduction in serum cccDNA levels roughly reflected a similar trend in intrahepatic cccDNA content."

But they didn't totally clear the cccDNA after 48 weeks. Does this build or erode your confidence for upcoming combo trials with ARC-520?

Dirk Haussecker said...

I also noticed that nukes are good at reducing (but not eliminating) cccDNA. Interestingly, there isn't a concomitant drop in HBsAg levels, making me believe that the main source for HBsAg is from HBV copies that have integrated into the genome.

Good or bad for ARC520? 'good' in a way that they do not effectively reduce HBsAg.

PfizerSloth said...

GENE and five bucks. Have you not heard the scuttlebutt about Pfizer?

Buy out rumors abound.

Anonymous said...

You really dropped the ball on GENE Dirk. Up another 40% today. That's about 600-700% in a couple of weeks. Maybe biomarker diagnostics will be make better businesses than RNAi companies because they actually have a product in market.

Tom Brady said...

Great Call Pete Carroll - Loser

Giselle said...

Tom has a very small penis

Anonymous said...

ALS patients fight for right to try drug


In a counterintuitive plot twist, the ALS Association hasn’t endorsed GM6’s early release. Steve Becvar, director of the association’s local branch, repeats a cautious official line: “There’s a process and a protocol” to releasing new drugs.

Clark believes the association’s ties to large research companies make it leery of giving tiny Genervon a lucrative green light to market its brand of hope.

Last year, the Ice Bucket Challenge, a viral wet T-shirt contest, raised millions for the ALS Association’s search for a future cure.

The FDA’s private review of GM6, which reportedly is happening any day, is about action in the present tense.

If GM6 is bottled up in lengthy trials, the effect on Huntley and thousands of others will be freezing cold.

http://www.utsandiego.com/news/2015/feb/10/als-patients-fight-right-try-drug/

GM604 Campaign Website:
https://sites.google.com/site/aap4gm6/

GM604 Facebook page:
https://www.facebook.com/gm604forals

Anonymous said...



Facebook today.

One Gene from Perfect feeling hopeful
Heidi had safety and physical evaluations at Nemours yesterday morning.

The highlight was Dr. Finkel saying that Heidi now looks more like a weak type 2 than a "typical" type 1. Please understand, Heidi is still extremely weak, she can't officially roll over, and she can't sit without support. Even if/when she reaches those milestones I don't believe that will magically transform her into a "Type 2", but statements like that indicate how much her physical abilities have improved in a little over a year.

For instance, fifteen months ago Dr Finkel had to pinch her foot to make her cry just to be sure she had sensation in her feet. There was no movement in her knees and hips, even when pinched. Yesterday Heidi pushed down on the exam table with her feet when he tested her for bearing weight.

Dr. Finkel also said a word I haven't heard him say during any of our prior ten visits.

The word was "Amazing", and he said it twice!

First to describe Heidi's head control, and second while he watched Heidi fully extend her arm towards her Ipad, use a single finger to scroll through a selection of videos on Youtube and turn on the one she wanted to watch. When she got bored with one she scrolled through the list again and started another one. (He did call her a "video junky" so it wasn't all sweet talk!)

Dr Finkel also saw something I noticed about a month ago, when he saw it he said "Oh! Look at her abdominals." And it's true, you can see Heidi's abdominal muscles flexing when she moves her torso. She doesn't have a six pack or anything, but her abdomen definitely contracts and you can feel muscle tone.

Heidi's motor function gains have been slow and steady, more like compound interest than winning the lottery. But they have accumulated over time and now represent some valuable skills that are improving her quality of life and ours.
February 10 at 7:21pm · Public

https://m.facebook.com/story.php?story_fbid=395866690595733&id=288279138021156&refid=17

Anonymous said...

GENE up another 17% to $9.40 from $1.30 a couple of weeks ago. That's 700%!

Dirk doesn't even mention it!

What's behind the re-rate?

As for any stock picks mentioned on this site...gotta have doubts about motivations.

Anonymous said...

Same story with NVGN. He totally missed that as well.

Tomorrow will shed more light on just how big a clanger that was as they are due to present in NYC.

Anonymous said...

Dirk,

ARC-AAT Phase 1 Study just got posted:

http://1.usa.gov/1vE92jI

NCT02363946: A Study of ARC-AAT in Healthy Volunteer Subjects and Patients With Alpha-1 Antitrypsin Deficiency (AATD)

"The purpose of the study is to determine the safety and tolerability of escalating doses of ARC-AAT and to evaluate the pharmacokinetics of ARC-AAT and the effect of ARC-AAT on circulating levels of alpha-1 antitrypsin. The study will consist of two parts, Part A (conducted in healthy volunteers) and Part B (conducted in AATD patients) at up to 7 escalating dose levels with 6 participants per dose level.

Detailed Description:

This is a multi-center, randomized, placebo-controlled, double-blind, single-dose-escalation first-in-human, Phase 1 study. Healthy volunteers and AATD patients will be randomized to receive a single intravenous injection of either ARC-AAT or Placebo in double-blind fashion. Up to eight cohorts (6 participants per cohort) will be enrolled. Subjects in all cohorts will be confined to the clinical facility beginning on Day -1 with discharge on Day 2. Escalation to the next dose level will proceed until a participant experiences a dose-limiting toxicity (DLT) or there is achievement of pre-determined threshold reductions in AAT levels. Part A (dosing in healthy volunteers) will stop and dosing in AATD patients (Part B) will commence based on pre-determined threshold reductions in AAT levels for healthy volunteers.
....
For each participant, the duration of the study clinic visits is up to 11 weeks, from Screening to the End-of-Study examination. However, including a Day 90 Follow-Up telephone call, the maximum study duration is approximately 20 weeks."

Anonymous said...

Arms for Asher - Fighting SMA Together

Not even ten days into the New Year and we are already witnessing a miracle in Asher's life. We are so overwhelmed with joy to share this video of Asher standing. He is standing bearing weight on his legs!

Most of you know Asher is in a clinical trial that administers a drug to help his body produce the protein it needs to stop his muscles from dying. The fact that he is still making strength gains means this drug is working!
https://www.facebook.com/video.php?v=758661164214433&set=vb.671525679594649&type=2&theater

Anonymous said...

So far the blogger has missed NVGN and GENE. Today, I noticed a stem cell company in Australia called Cynata up 146% in a single day.

I wonder if the blogger will have anything to say about this or stem cell companies in general or if he has missed this boat as well if he doesn't.

Anonymous said...

I noticed on the BIO Europe site, Benitec is listed as a Israeli located company.

I also noticed RA Capital is selling out of its holding, on market.

I guess its the Israelis who are doing the buying but haven't let on yet. Does that mean Australia's CSIRO have sold out, of the company and the shareholders?

Its possible that the TKMR/Oncore deal could depend on them having a clear line of site to BLT's IP.

Unknown said...

This is from the Benitec website http://www.benitec.com/about/our-story

Locations
Benitec Biopharma is headquartered in Sydney, Australia. Our premier in-house research facility is located in the Bay Area of San Francisco, CA, USA, and we work collaboratively with a number of laboratories in Australia, the USA and China.

Anonymous said...

This is not a general biotech blog. It focuses on RNAi only, so people stop posting lame comments about lack of analysis of GENE, etc. Enough already!

Anonymous said...

Totally disagree. Gene therapy is the topic under discussion here. Day in, day out.

Bio-markers for diagnosis is a critical part in the symbiosis of personalized medicine through gene therapy.

The lack of analysis in this area speaks volumes. Especially since the blogger has on many occasions doffed his investment wizard hat.

Anonymous said...

Churlish to be bragging about gains in CYCC and KBIO when you miss out on 700% in GENE and not even mention it.

Anonymous said...

Here's another tip Dirk, Viralytics. Outperform that one in the next little while.

Anonymous said...

Viralytics another one out of the RA Capital/Kolchinsky stable.

Anonymous said...

Dirk's talking about Viralytics.

"The best investors ever, a handful of investments made up a bulk of their gains. It only takes a few great decisions."

Just a little oblique for some.

James Brown said...

Absolutely no concerns-service and treatment received are always of the highest standard. Great staff, great office, great care, great dentist. Hard to believe service of the quality is found in my own neighborhood.affordable dental braces

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