Pasadena biotech firm Arrowhead Pharmaceuticals Inc. closed a $45 million private placement offering with a group of health care investment firms last month and will use the proceeds to advance the trials of its six drug products – which could entice new suitors.
The company issued 7.63 million new shares to OrbiMed, Perceptive Advisors, and RTW Investments of New York, Boston’s RA Capital Management and other institutional investors at $5.90 a share, roughly the same price its shares were trading at on the Nasdaq when the deal closed Aug. 12. The company’s stock closed at $6.17 on Aug. 31. It is up 19 percent since the deal was announced.
The vote of confidence might presage more transactions for Arrowhead in the not too distant future.
Ahmed Enany, chief executive of downtown trade group Southern California Biomedical Council, said Arrowhead’s promise could attract acquisition offers.
“Sometimes big pharma comes in when research in phase two and three looks promising,” said Enany.
Dr. Christopher Anzalone, Arrowhead’s chief executive, said the company is open to discussions and that a partnership could take a variety of forms, from another company taking over clinical development entirely to just providing sales and marketing in China, where Arrowhead sees a big potential market.
“I see us at some point as a fully integrated pharmaceutical company,” said Anzalone. “I think at some point we’ll have a mix of drugs that we sell ourselves, and some for which we’ll partner with another company because it makes sense for continued development.”
In the near term, he said, the infusion of cash would boost efforts to advance its ARC-520 hepatitis B drug, which is the furthest along in its trials.
Madhu Kumar, a research analyst at Chardan Capital Markets in New York, whose investment banking division advised Arrowhead on the deal, called the investment a vote of confidence in ARC-520.
“They probably have one of the best therapies for hepatitis B,” said Kumar. “The class of investors they got – blue-chip, top-notch biotech investors – that kind of scrutiny reflects the value of the company.”
Anzalone said the investment firms all took passive stakes.
The investment comes during a period of expansion for Arrowhead, which has been increasing its head count at its corporate headquarters in Pasadena and expanding its research and development facility in Madison, Wis., he said.
“It feels like a nice validation of where we are as a company and where our programs are,” he said.
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