Arrowhead Research (ARWR): ARO-AAT Data Provides Early Clinical Validation, Says Analyst


Shares of drug maker Arrowhead Research (NASDAQ:ARWR) rose nearly 9% today on heavy volume, thanks to new clinical data from an ongoing phase I study evaluating the company’s second generation subcutaneously administered RNA interference (RNAi) therapeutic as a treatment for a rare genetic liver disease associated with alpha-1 antitrypsin (AAT) deficiency. The data will be presented today at the α-1 National Education Conference in San Francisco.

B.Riley FBR analyst Madhu Kumar commented, “We are impressed by the early RNAi activity seen with ARO-AAT in Phase I studies […] We have been generally enthusiastic for Arrowhead’s RNAi platform, expressing caution only on valuation relative to the stage of clinical development. Consequently, we view today’s results with optimism, with greater than 80% AAT suppression across four initial healthy volunteers six weeks after a single ARO-AAT dose. As we understand this degree of AAT suppression represents near-complete silencing of liver-derived AAT, we believe that multiple doses of ARO-AAT could serve to effectively blockade AAT production in the liver, which we expect could positively impact disease progression in PiZZ AAT liver disease.”

“However, with a market cap of $1.1B, we believe this degree of success is largely priced in to ARWR shares ahead of initial clinical data for lead asset, HBV RNAi drug ARO-HBV, which we understand could be presented in November at the Liver Meeting in San Francisco, which could be a key upside catalyst. Taken as a whole, while bullish on the early ARO-AAT data, we await additional data to increase our ARWR optimism,” the analyst continued.

As such, Kumar reiterates a Neutral rating on Arrowhead shares, with a price target of $12, which implies a downside of 19% from current levels. (To watch Kumar’s track record, click here)

Out of the 6 analysts polled by TipRanks (in the past 12 months), 5 rate Arrowhead stock a Buy, while 1 rates the stock a Hold. With a downside potential of 28%, the stock’s consensus target price stands at $10.70.

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