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Arrowhead shares price target cut, retains overweight rating on partnership

EditorNatashya Angelica
Published 28/11/2024, 02:06 am
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On Wednesday, Piper Sandler adjusted its outlook on shares of Arrowhead Pharma (NASDAQ:ARWR), reducing the 12-month price target to $45 from the previous $62 while maintaining an Overweight rating on the stock. The reassessment follows Arrowhead's announcement of a significant strategic partnership with Sarepta Therapeutics (NASDAQ:SRPT), involving various TRiM programs.

The collaboration includes a $500 million upfront cash payment to Arrowhead, a $325 million equity investment, and an additional $250 million to be paid over the next five years. The agreement also includes potential milestones that could reach up to $10 billion, along with low double-digit royalties on future sales. This partnership is slated to be finalized in early 2025.

Arrowhead has also made strides with its New Drug Application (NDA) for plozasiran in treating Familial Chylomicronemia Syndrome (FCS), a condition that could lead to the company's first product approval and market launch in 2025.

The company is actively engaged in several Phase III trials, including SHASTA-3 and SHASTA-4 for Severe Hypertriglyceridemia (SHTG), as well as the MUIR-3 trial for Homozygous Genetic Triglyceridemia (HGT). Moreover, Arrowhead is planning the CAPITAN Cardiovascular Outcomes Trial (CVOT) for plozasiran, pending the necessary financing to expand the drug's label.

The financial aspect of the partnership with Sarepta is significant for Arrowhead, with the upfront and equity investments estimated to bolster the company's pro forma cash to $1.5 billion. This infusion is projected to sustain Arrowhead's operations well into 2028.

In the wake of this new partnership and Arrowhead's ongoing clinical developments, Piper Sandler reaffirms its confidence in the company's prospects. The revised price target reflects the current valuation following the deal with Sarepta Therapeutics.

In other recent news, Arrowhead Pharmaceuticals (NASDAQ:ARWR) has made significant strides in its operations. The company announced a transformative licensing and collaboration agreement with Sarepta Therapeutics, a move that has been well-received by Chardan Capital Markets and Citi, despite a minor target price adjustment by the latter.

This deal, which includes a substantial upfront payment of $850 million and potential additional payments totalling $550 million, is expected to bolster Arrowhead's financial stability until 2028.

In addition to the Sarepta deal, Arrowhead has been making progress with its drug candidate, plozasiran. The company recently submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration for the treatment of familial chylomicronemia syndrome (FCS). This move, coupled with the initiation of Phase 3 trials for severe hypertriglyceridemia (sHTG) patients, could potentially expand Arrowhead's patient base.

The company's fiscal year 2024 was marked by a net loss of $599.5 million, but it retains a robust cash and investment balance of $681 million. Arrowhead also introduced two new obesity programs, ARO-INHIBI and ARO-ALK7, as part of its ongoing commitment to innovation in RNAi therapeutics. These are among the recent developments that have contributed to a transformative year for Arrowhead Pharmaceuticals.

InvestingPro Insights

Recent InvestingPro data provides additional context to Arrowhead Pharmaceuticals' (NASDAQ:ARWR) financial position and market performance. The company's market capitalization stands at $2.62 billion, reflecting investor sentiment following the announced partnership with Sarepta Therapeutics.

Despite the significant deal, InvestingPro Tips highlight that Arrowhead is "quickly burning through cash" and is "not profitable over the last twelve months." This aligns with the article's mention of the importance of the $1.5 billion cash infusion from Sarepta, which is expected to fund operations into 2028.

The company's revenue for the last twelve months was $19.65 million, with a striking revenue growth decline of -92.33%. This context underscores the potential impact of the Sarepta deal and the importance of Arrowhead's pipeline progress, particularly the NDA for plozasiran.

An InvestingPro Tip notes that "analysts anticipate sales decline in the current year," which may explain Piper Sandler's price target reduction despite maintaining an Overweight rating. However, the stock has shown a "significant return over the last week," with a 12.51% increase, possibly reflecting positive market reaction to the Sarepta partnership.

For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Arrowhead Pharmaceuticals, providing deeper insights into the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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