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Arrowhead Shares Plummet on Unexpected Phase II HBV Data

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NEW YORK (GenomeWeb) – Shares of Arrowhead Research tumbled this week after the release of data from an ongoing Phase IIa trial of its siRNA-based hepatitis B drug ARC-520 showed unexpectedly modest reductions in HBV surface antigen (s-antigen), a key indicator of active infection.

By the end of the day Wednesday, Arrowhead's stock had fallen more than 43 percent to close at $7.03 on the Nasdaq.

The Phase II data, which are to be presented at the American Association for the Study of Liver Diseases annual Liver Meeting later this week, showed that HBV patients receiving single 1 mg/kg doses of ARC-520 experienced a mean knockdown of s-antigen at nadir of 39 percent within a range of 22 percent and 57 percent. Patients receiving single 2 mg/kg doses achieved a mean s-antigen knockdown at nadir of 51 percent within a range of 46 percent to 59 percent.

These results fall far short of the one-log reduction in s-antigen that Arrowhead has set as its goal for ARC-520 and appear to be somewhat out of step with what company officials said about the data earlier this year.

In August, Arrowhead COO Bruce Given announced that dosing in the 1 mg/kg and 2 mg/kg cohorts had been completed and said that the data, while still blinded at the time, showed "clear activity at a modest level" for those receiving the lowest dose, but suggested "surprisingly large reductions in surface antigen" among those receiving the higher dose.

Importantly, the newly available Phase II data also show no adverse events associated with ARC-520, and data from the trial's 3 mg/kg cohort have yet to be released. This higher dose was added earlier this year as part of an effort by Arrowhead to ensure that it could still pursue the one-log s-antigen knockdown that it believes may be required to achieve a functional cure of HBV.

At that time, Arrowhead also disclosed that it had begun adding healthy volunteers to an ongoing Phase I safety study so that it could determine the tolerability of ARC-520 at 4 mg/kg, should it need to go even higher than 3 mg/kg to get the efficacy results it wants.

In a statement released on Thursday, Arrowhead President and CEO Christopher Anzalone called the market reaction to the data surprising, adding that "we have always believed that our public communications surrounding the ARC-520 Phase 2a study have been consistent and, more importantly, properly reflected the data we were seeing in the initial two cohorts."

He also cautioned that the one-log s-antigen knockdown goal, which would correspond to a roughly 90 percent inhibition of ARC-520's two targets in the HCV genome, is "somewhat arbitrary" since it is not known for certain whether this would be necessary for a functional cure.

"Indeed, the entire concept of enabling a functional cure by suppressing HBsAg release remains an untested theory," Anzalone said.

He further noted that Phase II development of ARC-520 remains ongoing, and that Arrowhead may still decide to test the drug at 4 mg/kg in infected patients given the favorable safety profile observed in healthy patients at that dose.

Anzalone noted that the company's development timeline for ARC-520 remains unchanged and that that it intends to submit regulatory filings for a multi-dose Phase IIb trial by year-end, regardless of whether 4 mg/kg doses are included in the Phase IIa study.

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