Mail van BBS
Warm greetings and salutations,
Since Arrowhead's R&D Day, you'd think that the company's stock would start turning around, but instead it took another hit like most of the biotech companies out there. I wasn't too thrilled at Arrowhead's last conference call, as they didn't have the same energy as they had in the prior quarter. Additionally, I heard many rumors on a number of topics that were entirely unsubstantiated. Because of this, I scheduled a call with Arrowhead last week, and here is what I was able to learn on a large number of topics. These are not direct quotes, but rather the best summary taken from my notes of the conversation. Hopefully this addresses some of your concerns, as it did answer and confirm much of what I thought.
Company Stock Price:
Three common things Arrowhead has heard on why its stock price may be depressed:
1) balance sheet - investors want to make sure that Arrowhead has access to capital that's not super expensive. To date, Arrowhead has been able to fund operations through a mix of many different sources, and they will continue to do so. Arrowhead has a lot of opportunities to bring in capital without doing super-dilutive equity deals. Arrowhead knows that once it raises capital, it will make investors more comfortable.
2) Some investors thought that the way James Hamilton was talking about the pulmonary drugs in the last quarterly conference call, that there wouldn't be any data until middle-to-end of next year, and because of this, some thought that there was a delay in the pulmonary trials. This is not true, there is no delay, and there will be interim data provided on a regular basis.
3) Some thought that Novo Nordisk's data from its GLP-1 drug may end up shrinking the patient population for APOC3, and Arrowhead doesn't believe that's the case.
Arrowhead believes its balance sheet today is fine and that they currently have plenty of capital, however, they know that they need to address this issue in the near future. They believe that there's still plenty of time to take care of this and there's no urgency or rush to do so.
There were a few companies that were keeping track of this drug, as they expressed an interest in licensing it. However, since it covers a new tissue (muscle), Arrowhead's initial plan was to maintain control of the drug through commercialization. At the time Arrowhead was about to file a CTA, they received aggressive interest from one of those companies. So at that point they paused filing a CTA to allow for a review, as that company may want to develop the phase 1 trial their own way. Arrowhead then opened up a data room for those few companies that were interested and provided a deadline for when Arrowhead would then file its own CTA. That deadline passed and therefore Arrowhead filed a CTA, as they did not want to keep the drug from getting to patients any longer. I was told that the deal is not dead, and that there's still significant interest, but that it may take some additional time for review.
Arrowhead is full-steam ahead on this drug. The measurement of target engagement is easier to measure for this drug and is similar to RAGE. The early cohorts are starting to come in, and there will be data readouts coming in like they were with RAGE.
Arrowhead believes that marketing and commercialization for pulmonary is easier and less expensive than what it would be for its primary-care cardio drugs (the larger indications). Hence, they may be leaning in this direction. Still too early to tell.
Arrowhead decided to no longer show preclinical drugs on its pipeline, as its current clinical pipeline is already fairly large. They did confirm that ENaC2 was not dropped and that it was still in preclinical development, along with 8 or 9 other drugs.
I pointed out Arrowhead's recent published patent application for Covid, and they said that they did quite a bit of work on this, but it is lower on the list of priorities they currently have, as there are more desirable targets to go after than Covid.
Arrowhead is thrilled to have this drug and they are in the process of developing their own phase 2 trial, which will include efficacy, as JNJ's trial design did not weigh in on efficacy. This should allow Arrowhead to move this drug along faster in the clinic.
PNH indication was removed because it's a crowded area, and it's the most challenging indication to see any early signals of efficacy. The renal side made more sense, as they would be able to see earlier results. However, they may reassess and include PNH at a phase 2 trial.
Ability to Finance:
They are finding no shortage of interest in being able to create a finance deal in many different ways. Arrowhead did mention that they believed Alnylam's Blackstone deal was a catalyst for its stock price, as that financing allowed Alnylam to accomplish what they needed to for a period of years.
Clinical Trial Progress:
Arrowhead did stress that none of its trials are being slowed down or delayed, however, some trials may have been extended due to the difficulty in finding patients (which is non uncommon). This is why you may see the opening of additional trial sites.
JNJ's HBV drug:
There are no new updates at this time, as business development takes time. JNJ had previously indicated publicly that they would not be in the business of developing HBV drugs. JNJ is currently trying to find a new home for this drug with another company, as they are trying to recoup some of its costs. There is no reason or benefit for JNJ to drag its feet on this, and that they're trying to figure things out and make a deal as quickly as possible. I clarified that any new licensee for this drug would have to take on the same terms under the existing agreement, unless they renegotiate with Arrowhead.
Despite being retired, Bruce Given is still occasionally around and working for the company.
Verona construction continues as planned with some cost overruns due to inflation. The offices and analytical labs will open first where there will be process development and analysis to support manufacturing. The manufacturing facility is phase 2 and will open later. When complete, the facility will have the capacity to manufacture everything Arrowhead needs through 2034 (that includes multiple drug launches for multiple commercial products), but they will also maintain their relationships with external CMOs (contract mfg. organizations) just in case a facility goes down for whatever reason.
Arrowhead has a lot of new marketing going on with institutional investors with meetings in its offices in Pasadena, along with visits outside the office. Arrowhead's calendar is very busy with this outreach in September, October, and into November. The types of institutions they're targeting are those that typically take a large position and stick with it for a long time. They are seeing more interest now than before (perhaps because of the depressed value of the stock price).