The share price in Arrowhead Pharmaceuticals Inc. jumped by more than 48% in the two months since it hit its lowest value of the past year.
On Oct. 10, the Pasadena company reached its lowest close of the last 52-week period of $17.70. By Dec. 2, it had gone up by nearly 49% to close at $26.34.
The stock closed at $22.30 on Dec. 5.
There were two announcements on Nov. 26 that may have affected the stock price the most.
Arrowhead has entered a licensing and collaboration deal with Sarepta Therapeutics Inc. in Cambridge, Massachusetts.
Upon closing, Sarepta will provide Arrowhead with $825 million, consisting of $500 million cash and $325 million as an equity investment. Arrowhead will also receive $250 million paid out over five years, in addition to $300 million in near-term payments, which Arrowhead is on track to achieve during the next 12 months. And finally, the company is set to receive from its partner up to $10 billion in future potential milestone payments as well as royalties on any commercial sales of drugs developed by Sarepta.
For its part, the New England company will receive four investigational treatments that leverage Arrowhead’s targeted RNAi molecule platform as well as let Sarepta to select up to six new targets for Arrowhead to conduct discovery and preclinical drug development which can use the company’s platform.
Christopher Anzalone, the chief executive of Arrowhead, said during a conference call with analysts that the deal with Sarepta was “transformational” because it returns balance to its business model, helps to focus its investment thesis without constricting upside potential and puts the company on a straight path to profitability.
Moving the needle
The announcement pushed the stock price 12% higher, from a close of $18.79 on Nov. 25 to a close of $21.05 on the following day.
Then the stock went up by 24% from the $21.05 on Nov. 26, the day it released its full fiscal year earnings after the market closed, to end at $26.15 on Nov. 27, or for an increase of just more then 36% over the two days.
Arrowhead reported a net loss of $599 million (-$5 a share) for the fiscal year ending Sept. 30, compared to a net loss of $205 million (-$1.92) in the previous fiscal year. Revenue decreased by about 99% from the prior year to $3.6 million.
In comments from Chief Financial Officer Ken Myszkowski during the conference call, he attributed the steep decline in revenue to there being no new partnership or license agreements during the year.
Revenue from last year primarily relates to the company’s collaboration agreements with Amgen Inc. in Thousand Oaks, Takeda Pharmaceutical Company Ltd. in Tokyo and GSK Intellectual Property (No. 3) Ltd. in London, he added.
