On Friday, Arrowhead Pharma (NASDAQ:ARWR), currently trading at $26.15, saw its price target lowered by Bernstein SocGen Group from the previous $27.00 to $24.00, while the Market Perform rating was maintained.
According to InvestingPro data, the stock has shown significant momentum with a 41% return over the past week. The adjustment follows Arrowhead's fourth fiscal quarter 2025 update, which highlighted a significant collaboration deal with Sarepta . The deal is viewed positively for its potential to transform Arrowhead's financial standing and to bring more focus to its wholly-owned pipeline, particularly in the cardiometabolic space.
The company's strategic shift will concentrate on advancing its cardiometabolic assets, such as plozasiran for FCS/SHTG and Phase 1 obesity candidates targeting INHBE and ALK7. While InvestingPro analysis indicates the company is quickly burning through cash, its strong liquidity position with a current ratio of 6.74 provides some flexibility.
Arrowhead is deferring the start of the plozasiran CAPITAN CVOT trial in mixed hyperlipidemia until it secures additional capital, a move that is seen favorably by investors who had concerns about the wisdom of initiating a long CVOT for a skeptically viewed indication.
Arrowhead's management has shown interest in partnering out its pulmonary asset ARO-RAGE and central nervous system assets targeting MAPT and α-synuclein. While there are possibilities for partnering complement assets, expectations for external interest are moderate. The company anticipates the Sarepta deal will help moderate the growth in its cash burn. Cash burn for 2025 is projected to be between $500-550 million, similar to the $512 million in cash operating expenses for 2024, with the forecast for 2026 expected to be roughly flat compared to 2025.
The analyst noted that while the collaboration provides Arrowhead with a financial runway into 2028 at the current burn rate, it may reduce the number of potential stock catalysts and place Arrowhead in the "funding short bucket." With analyst price targets ranging from $23 to $71 and a consensus recommendation of 1.87 (Buy), investors seeking deeper insights can access comprehensive analysis and 13 additional ProTips through InvestingPro's detailed research reports. Clinical success for FCS and SHTG is largely factored into the current stock price, with Phase 3 SHTG results not expected until late 2026 at the earliest. Late 2025 may see obesity data for INHBE, and 2026 for ALK7, but the INHBE space is becoming crowded and faces similar commercial skepticism as muscle preservation programs. Additional data for ARO-RAGE is not anticipated to significantly impact the stock, given the company's intention to seek partners for it.
In other recent news, Arrowhead Pharmaceuticals (NASDAQ:ARWR) has entered into a significant strategic partnership with Sarepta Therapeutics (NASDAQ:SRPT). The collaboration involves 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 deal, which includes potential milestones that could reach up to $10 billion, along with low double-digit royalties on future sales, is expected to be finalized in early 2025.
Piper Sandler, Chardan Capital Markets, and Citi have all reacted to this development, with Piper Sandler reducing its 12-month price target for Arrowhead to $45 from the previous $62, while maintaining an Overweight rating on the stock. Chardan Capital Markets sustained its Buy rating and $60.00 stock price target for Arrowhead. Citi, on the other hand, slightly reduced the price target from $27.00 to $26.00, while retaining a Neutral stance on the stock.
Arrowhead has also submitted a New Drug Application (NDA) for plozasiran, a potential treatment for Familial Chylomicronemia Syndrome (FCS). The company is also 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).
Despite a net loss of $599.5 million for fiscal 2024, Arrowhead maintains a robust cash and investment balance of $681 million, with the substantial upfront payment and equity investments from the Sarepta deal 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.
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