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As It Waits to Start HBV Trial, Arrowhead Plans Additional Drug Candidates

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As it waits on regulators for clearance to begin a phase IIa trial of its flagship hepatitis B treatment ARC-520, Arrowhead Research is preparing to name two additional clinical candidates, with one unveiled around the end of the second quarter, companies officials said this week.

Also this week, Arrowhead filed a shelf registration to sell as much as $200 million in common stock, preferred stock, and/or warrants, which President and CEO Christopher Anzalone said would give the company the ability to fully develop ARC-520 with or without a partner.

ARC-520 comprises two distinct siRNAs targeting highly conserved genomic regions across the major HBV genotypes, and is formulated with proprietary delivery vehicles called dynamic polyconjugates.

Arrowhead acquired the drug and the delivery technology when it bought Roche's RNA drug assets in 2011.

In mid-2013, Arrowhead advanced ARC-520 into a phase I trial of 36 healthy volunteers, finding that single doses drug was safe and well tolerated at the six dose levels tested.

"All subjects received their full, assigned dose and there were no discontinuations for adverse events or otherwise," Anzalone said during a conference call held this week to discuss Arrowhead's fiscal first-quarter financial results. "No serious or severe adverse events were reported and laboratory results have not indicated any end-organ toxicity in any subject."

He noted that unblinded data showed that the frequency and severity of adverse events in that study were the same between individuals receiving placebo and those receiving ARC-520.

Buoyed by the findings, in November Arrowhead filed with Hong Kong regulators to begin a single-dose phase IIa study of the drug in combination with the antiviral entecavir in patients with chronic HBV infection.

Anzalone said that the ethics committees from the two clinical sites conducting the trial have approved the study's protocol, and that all patient dosing will begin as soon as Arrowhead receives final clearance from the Hong Kong Department of Health, expected to come before the end of March.

He added that the trial includes two dose groups of eight patients each, and that primary endpoints include safety and tolerability, as well the "depth and duration" of knockdown of surface antigen (s-antigen), the expression of which indicates an active and replicating virus.

"We believe the dosing portion will be complete in the second quarter and we will follow patients until s-antigen levels return to baseline," Anzalone said during this week's call. "While we cannot predict how long the duration of effect will be, we believe that top-line data should be available sometime during the summer."

Assuming a positive outcome in the phase IIa trial, Arrowhead is planning to kick off a multi-dose phase IIb study in the second half of 2014, he added. This trial is expected to run at sites in the US, Europe, and Asia, and will be designed to "provide a read out on ARC-520’s ability to achieve functional cures" as indicated by consistent s-antigen reduction.

Although Arrowhead has long expressed interest in securing a big pharma partnership, Anzalone indicated that such a milestone isn't necessary for the firm to get a drug on the market.

Currently, the company has enough funds on hand to advance ARC-520 through phase IIb testing, he said. With the shelf registration now filing, Arrowhead has the ability to tap the public market for up to $200 million in additional capital, putting it in the position to move the drug through the regulatory approval process.

Anzalone said that Arrowhead is not planning to immediately raise $200 million, but said that the shelf "gives us added flexibility to further strengthen our balance sheet at some point in the future and continue independent development beyond that."

That independent development extends beyond ARC-520, he added. At an analyst and investor meeting planned for the end of the second quarter, Arrowhead expects to discuss its next clinical candidate. Although the specifics of that program remain under wraps, Anzalone said it would center around an "orphan liver indication," allowing the company to build on its experience with ARC-520.

"Think of ARC-520 as a candidate that drives value directly and as a proxy for other liver-based candidates," he said, adding that an investigational new drug application for this next drug will likely be filed around the end of the year.

Meanwhile, Arrowhead is working on a number of earlier-stage programs, including ones exploring dynamic polyconjugate formulations that can subcutaneous delivered and drug targets outside of the liver. Additional details about these efforts will be released later in 2014, Anzalone said.

Fiscal first quarter

For the three-month period ended Dec. 31, 2013, Arrowhead posted a net loss of $10.6 million, or $0.28 a share, compared with a year-ago loss of $4.6 million, or $0.33 a share.

Contributing to the increased loss was a jump in operating expenses to $7.1 million from $5 million, driven by a roughly $1.5 million rise in research and development spending to $3.1 million, according to a company filing with the US Securities and Exchange Commission.

At the end of 2013, Arrowhead had cash and cash equivalents totaling $59.7 million.

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