This article has been revised and clarified.

Pasadena-based biopharma company Arrowhead Pharmaceuticals Inc. had a double-dose of good news last month.

On Nov. 18, Arrowhead announced that it had received its first-ever approval from the U.S. Food and Drug Administration for its lead drug candidate Redemplo to treat a rare condition that leads to frequent and severe bouts of pancreatitis. This approval turns Arrowhead into a commercial pharmaceutical company for the first time in its 36-year history. More importantly, it primes Arrowhead to pursue broader uses for the drug that could prove more lucrative.

A week later, Arrowhead announced it had received a $200 million milestone payment from Cambridge, Massachusetts-based Sarepta Therapeutics Inc. for a drug to treat a common form of muscular dystrophy that Arrowhead had licensed to Sarepta last year as part of a massive licensing deal. This payment is all the more remarkable considering that just five months ago, Arrowhead shares took a 22% hit upon news of patient deaths from an unrelated Sarepta drug.

Shareholders gobbled up this good news, sending Arrowhead shares up 62% for the two weeks between Nov. 17 and Dec. 3.

But that was only the culmination of a rocket run for Arrowhead shares since a five-year low of $9.99 was reached on April 8. Since then, the share price has zoomed up 550% to close on Dec. 3 at $65.07, the highest level since the closing days of 2021.

‘Important step’ for Arrowhead

Since its founding in 1989, Arrowhead has been working to bring drugs to market from its platform that uses RNA interference molecules to target rare diseases by silencing the genes that cause them.

In recent years, Arrowhead has cut multibillion-dollar licensing deals with major pharmaceutical companies – including Beerse, Belgium-based Janssen Pharmaceuticals, Tokyo-based Takeda Pharmaceuticals, Basel, Switzerland-based Novartis and the aforementioned Sarepta, to further develop its platform. The company is now in clinical studies for roughly 20 drugs from its RNAi platform.

Redemplo is the first Arrowhead drug out of the block.

“This is a very important step for us,” Christopher Anzalone, Arrowhead’s chief executive, said in an interview. “It’s not the culmination, though. We have been developing this platform for quite some time to bring important medicines to patients, and we now have 20 drugs in clinical studies – half partnered and half wholly-owned.”

To that end, Anzalone said, the $200 million milestone payment from Sarepta will also prove crucial.

Redemplo: Targeting a rare disease

Arrowhead’s Redemplo drug – at least in this initial stage – aims to specifically treat familial chylomicronemia syndrome, or FCS, a rare disease involving super-high triglyceride levels that can trigger severe bouts of pancreatitis.

According to Arrowhead, there are roughly 6,500 people in the United States with FCS, which is less than 0.002% of the total population.

Prior to this year, there was no specific treatment for FCS or the pancreatitis bouts it caused. Instead, according to information from a Mayo Clinic webpage, more generalized treatments were used to treat the symptoms of acute pancreatitis, including pain medications, intravenous fluids and surgery to drain fluid or remove damaged tissue.

But last December, the FDA approved the first-ever treatment for FCS: a drug known as Tryngolza, made by Carlsbad-based Ionis Pharmaceuticals Inc. Arrowhead’s Redemplo is the second drug cleared for use to treat FCS.

Both drugs are applied through injections and can be self-administered: Tryngolza on a monthly basis at an annual list price cost of $595,000 and Redemplo once every quarter at an annual list price cost of $60,000.

While the annual cost of Redemplo may be only one-tenth that of Tryngolza, it is still very high. During a conference call with analysts that Arrowhead hosted immediately after announcing the FDA approval for Redemplo, the cost issue was front and center for some analysts.

They raised concerns about how many insurers would agree to cover the drug, especially amid reports that a competitor had commented it was considering pricing its drugs to lower triglycerides in the $10,000 to $20,000 annual cost range.

In his interview with the Business Journal, Anzalone said the $60,000 price level was extensively studied before it was set.

Also, when insurance companies weigh whether to cover the drug, they should consider that the extended hospital stay to treat a single bout of pancreatitis could easily top $60,000, he said.

“It’s a clear equation here,” Anzalone said. “When set against the tens of thousands of dollars for an extended hospital stay, this is a relatively small investment in effective medicine.”

Anzalone said at least one insurer has already accepted the pricing.

“We have already shipped our first batch of the drug to patients,” he said.

As for those FCS patients who are uninsured or whose insurance companies reject coverage, “we have a system called ‘Rely on Redemplo’ that will provide discounts to ensure that anyone who needs the medication can get it,’” he said.

Expanded Redemplo uses and markets

Given the very small market size for treating FCS patients, this particular FDA approval will not dramatically change Arrowhead’s revenue picture.

But Arrowhead expects future approvals – by the FDA and its counterparts in other countries – will make a significant difference. Domestically, Anzalone said the company intends to file a formal application with the FDA as early as next summer to broaden the use of Redemplo to patients with triglyceride levels that are lower than for FCS patients but still considered severely high.

Broadening the use of an already-approved drug is generally an easier and quicker way to boost revenue than developing a completely new drug. A major reason: there is usually less work involved in proving that the drug is safe for use.

Anzalone said the company is also planning to seek approvals for Redemplo in the European Union nations, Canada and Australia, among other potential markets. That would add thousands more FCS patients to the mix.

Sarepta cash infusion

Late last year, Arrowhead reached a huge licensing deal with Sarepta, which specializes in therapies for rare diseases such as muscular dystrophy.

The deal involved Sarepta paying Arrowhead $500 million in cash up front with another $250 million in $50 million increments over five years and the potential for hundreds of millions of dollars in future milestone payment. Arrowhead’s investors also received $325 million worth of Sarepta shares up front.

In exchange, Sarepta gained entry to what it saw as a promising market for Arrowhead’s early-stage drugs to treat rare diseases. The deal opened up four of Arrowhead’s drugs that were in early clinical trial phases to collaborative development with Sarepta, as well as three more Arrowhead drugs in pre-clinical development.

But this summer, Sarepta was rocked by unfortunate developments with a drug that was not part of this deal. It is known as Elevidys, which treats Duchenne Muscular Dystrophy, a muscle-wasting disease primarily impacting boys.

Two boys who had received Elevidys, died within months of each other. When news of a third death of an Elevidys patient hit in mid-July, that prompted an immediate halt to all use and sales of the drug. (It was later determined that patient’s death was not tied to the drug.) Shares of Sarepta plunged, while Arrowhead shares took a brief plunge of more than 20%. Once Arrowhead had reassured nervous investors that the drugs in its licensing deal would not be impacted in the fallout, Arrowhead’s share price recovered.

Fast-forward to late November and the announcement of the $200 million milestone payment from Sarepta. This time, Arrowhead investors reacted with jubilation, sending the share price up 60% in less than two weeks. Also, a couple of analyst rating upgrades also helped boost the company’s stock.

Anzalone said the $200 million would be put to use on two fronts: to help with the marketing campaign for Redemplo and to further the development and/or clinical trials for several other drugs in its platform. For next year, Anzalone cited two drugs in particular: one injectable to treat Alzheimer’s disease and the other to treat cardiovascular patients with high levels of both LDL (so-called “bad” cholesterol) and triglycerides.

“We are in an expensive business,” he said. “We are not just a one or two-drug company. We have 20 drugs in development and $200 million is important to continue to bring these medicines to patients who desperately need them.”