Continued progress on the company’s hepatitis B treatment was just what the doctor ordered for Pasadena pharmaceutical company Arrowhead Research Corp.

Shares of Arrowhead surged 19 percent for the week ended Jan. 29 to close at $14.30, making it the top gainer on the LABJ Stock Index. (See page 22.) The stock is up more than 600 percent over the last 52 weeks.

Arrowhead’s core business is the development of targeted RNA interference treatments. RNA interference, also known as RNAi, prevents genetic diseases. The key product in Arrowhead’s pipeline is ARC-520, which is designed to treat chronic hepatitis B infections, which are transmitted by bodily fluids.

The company’s stock surge follows a series of promising results from preclinical testing of ARC-520 on chimpanzees. In December, the company announced additional positive results and said it was proceeding to the next phase of development on the treatment. That got the attention of investors and accounts for much of the recent rise in Arrowhead’s share price, according to Edward Tenthoff, an analyst who covers the company for New York investment bank Piper Jaffray.

“I think it’s a combination of people seeing the preclinical Phase I data and starting to look at potential for price appreciation into and on the Phase II data that’s due in the second quarter,” said Tenthoff.

Vince Anzalone, Arrowhead finance director, said that the promising results have “helped to bring the Arrowhead story to a broader universe of institutional investors.”

About 400 million people worldwide suffer from hepatitis B, a chronic ailment that has so far been difficult to cure. The disease is often caused by dirty water.

It is a “shockingly successful virus,” said Tenthoff.

The virus is especially problematic because it produces agents called s-antigens that suppress the immune system and weaken the body’s ability to fight off the disease.

“What’s really exciting about Arrowhead’s drug is that in preclinical models – in a chimpanzee affected with hepatitis B – they were able to not only show a knockdown in the virus, but also a knockdown in the s-antigen and that decline corresponded with a re-initiation of the chimp’s immune system,” Tenthoff said.

Foster City pharmaceutical company Gilead Sciences Inc. and New York biotech giant Bristol-Myers Squibb manufacture the current treatments, which Tenthoff estimated as a $3 billion business worldwide. Those drugs treat the symptoms while the Arrowhead product could cure the disease.

If ARC-520’s effect on chimpanzees can be replicated in humans, its long-term potential is as a “functional cure for hepatitis B, which could be a multibillion-dollar opportunity,” Tenthoff said.

Arrowhead purchased RNAi assets owned by Swiss biotech giant Roche in 2011 and has been developing RNAi treatments since.

For reprint and licensing requests for this article, CLICK HERE.