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Arrowhead Touts HBV Drug Despite Controversy, Advances Second Clinical Candidate

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NEW YORK (GenomeWeb) – Just weeks after Arrowhead Research was sued over clinical data for its hepatitis B therapy ARC-520, the company's top official touted the drug's performance in human testing and reiterated the firm's confidence in the HBV program.

Speaking during a conference call held to discuss Arrowhead's fiscal full-year 2014 financial results, CEO Christopher Anzalone also said that the company remains on track with its second drug candidate, the alpha-1 antitrypsin (AAT) deficiency-associated liver disease therapy ARC-AAT, which is poised to enter Phase I testing in Australia.

ARC-520 comprises two distinct siRNAs targeting highly conserved genomic regions across the major HBV genotypes, and is formulated with a proprietary delivery technology called dynamic polyconjugates. It is currently in a Phase IIa trial examining single 1, 2, 3, and 4 mg/kg doses of the drug in chronic HBV patients.

Arrowhead has long maintained that if its drug can significantly cut levels of surface antigen (s-antigen), a key indicator of active infection, it might lead to a restoration of patients' immune systems so that the virus could be eliminated. While it is unknown what level of s-antigen reduction, if any, could lead to this so-called functional cure, company officials have suggested that a one-log knockdown could do it.

In October, Arrowhead released data from the Phase IIa trial showing that 1 mg/kg and 2 mg/kg doses of ARC-520 led to 39 percent and 51 percent reductions in s-antigen, respectively. In light of previous statements made by company management, including that patients receiving the 2 mg/kg dose experienced "surprisingly large reductions" in s-antigen, investors reacted strongly and negatively to the news.

Arrowhead shares tumbled more than 40 percent at the time to around $7, and have yet to recover, trading around $5.81 on the Nasdaq Wednesday. Arrowhead has also been named in two class action lawsuits for allegedly misleading investors over the data.

During the conference call, Anzalone did not address the stock drop or the litigation but painted a rosy picture of ARC-520's performance and potential.

He noted that the s-antigen reductions observed in the first two study cohorts represent the "first reliable report demonstrating clear reduction of s-antigen in humans after its single dose. Simply put, this has been a lofty and unmet goal in the HBV field for years, and we just accomplished it."

Noting that it is unclear what level of s-antigen suppression is needed to derepress patients' immune systems, he said that Arrowhead's previously stated goal of 90 percent knockdown was "somewhat arbitrary" since it expected its drug to trigger a rapid reduction in s-antigen followed by an equally rapid return to baseline after about 30 days.

"We reasoned that as long as s-antigen levels had not returned to baseline by the time of the next dose, we might achieve an additive dynamic over time that would give us a sustained reduction profile," he explained.

In reality, s-antigen knockdown followed a "drawn-out L-shaped knockdown curve," with peak suppression not occurring until after 30 days post-dose, Anzalone said. "Therefore, we expect monthly dosing to produce a step-down or additive effect because subsequent dosing will be acting on top of sustained activity from prior doses."

This effect has been observed in animal models and Arrowhead expects to see it in humans in multi-dose Phase IIb trials, he added. "In fact, other RNAi companies have used daily so-called loading doses in humans to create an additive step down effect on gene knockdown. Our monthly dosing could give us a similar effect but with far less frequent dosing given our long duration of action."

Arrowhead has already completed enrollment in the 3 mg/kg dose arm of the Phase IIa trial, and those data are expected to be released as early as April 2015. Meanwhile, the firm has begun screening patients for enrollment in an eight-patient, 4 mg/kg dose cohort. Anzalone noted that Arrowhead does not anticipate testing doses higher than this.

Arrowhead expects to submit by year-end a regulatory filing to begin Phase IIb testing of ARC-520, and is currently working to ramp up manufacturing of the drug in anticipation of moving quickly into Phase III should the multi-dose studies prove positive

Also during the conference call, Anzalone noted that an investigational new drug application equivalent for ARC-AAT has been submitted to Australian regulators and that Arrowhead anticipates having clinical proof of concept for the drug in 2015.

A third clinical candidate is also expected to be unveiled next year, he said.

FY 2014

For the 12-month period ended Sept. 30, Arrowhead reported a net loss of $58.7 million, up from $31.7 million the year before.

Contributing to the loss increase was a jump in research and development spending to $23.1 million from $8.7 million as Arrowhead moved ARC-520 into Phase II and prepared ARC-AAT for human testing.

General and administrative costs, meanwhile, rose to $5.9 million from $3.5 million.

Revenues for the year, generated primary from licensees to Arrowhead's technology, fell to $175,000 from $290,266.

At the end of its fiscal year, Arrowhead had cash and cash equivalents totaling $132.5 million.

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