The good news keeps rolling in for Arrowhead Pharmaceuticals (ARWR). Last week, the biotech announced a new collaboration and licensing agreement with Takeda Pharmaceutical. The two will work together on ARO-ATT, Arrowhead’s RNAi treatment for patients with Alpha-1 Antitrypsin deficiency associated liver disease (AATD).
Arrowhead will receive an upfront payment of $300 million and are potentially looking at an additional windfall of $740 million, 40% of which could be provided in the near term, with the rest dependent on development, regulatory approval, and commercial milestones.
The two will share a 50/50 profit structure in the U.S., with Arrowhead eligible for 20-25% tiered royalties for sales outside the US.Arrowhead will stay responsible for the ongoing Phase 2SEQUIOA study, and the AROAAT2002 open-label Phase 2 clinical trial, while Takeda will take on the mantle for the Phase 3 pivotal study and, later, the worldwide commercialization strategy.
Chardan Capital analyst Keay Nakae views the development “as a positive decision by Arrowhead.”
“Takeda has an established global sales and marketing infrastructure, and strong familiarity with the loss of function impact of AAT deficiency,” the 4-star analyst said. “We believe that this arrangement will allow Arrowhead to be more selective in how it builds out its own sales and marketing infrastructure, and it retains more of the upside associated with direct sales. Finally, we believe that Arrowhead is advantaged by being able to deploy the upfront cash to more aggressively pursue the development of its proprietary pipeline assets.”
The collaboration’s announcement comes hot on the heels of last month’s release of positive interim data from the Phase 2 AROAAT2002 study. The treatment showed convincing proof of a significant pharmacodynamic effect on AATD patients resulting in improvements in relevant biomarkers following 24 weeks of treatment.
Arrowhead will present the full data set at the AASLD (American Association for the Study of Liver Diseases) meeting in November.
All in all, Nakae has a Buy rating on ARWR shares along with a $81 price target. Investors are looking at strong upside of 76% from current levels. (To watch Nakae’s track record, click here)
There is similar sentiment among Nakae’s colleagues. Arrowhead has a Strong Buy consensus rating, based on 5 Buys and 1 Hold. The Street is forecasting upside of 53% over the next 12 months, given the average price target clocks in at $70.57. (See Arrowhead stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
