After toxicology problems led RNA interference (RNAi) specialist Arrowhead Pharmaceuticals Inc. to give up on its clinical pipeline that deploys the EX1 delivery method, worries turned to whether the subcutaneous platform might run into similar woes, though the firm's chief operating officer, Bruce Given, said that "we see bigger safety margins and it just doesn't look at all like the EX1 program."
Shares of Pasadena, Calif.-based Arrowhead (NASDAQ:ARWR) ended Wednesday $1.44, down $2.95, or 67.2 percent as Wall Street reacted to word that all pipeline candidates designed with the EX1 liver-targeted, intravenously given vehicle would be scrapped: ARC-520, ARC-521 and ARC-AAT. Existing preclinical subcutaneous and extrahepatic programs such as ARC-LPA and ARC-AMG1, which are partnered with Thousand Oaks, Calif.-based Amgen Inc., ARC-F12, ARC-HIF2, and other undisclosed programs are not affected. Arrowhead also said it would reduce its work force by about 30 percent to extend the cash runway into 2019.
In November, chronic hepatitis B virus (HBV) therapy ARC-520 ran into trouble related to nonclinical work, specifically deaths at the highest dose of an ongoing nonhuman primate study, causing the FDA to place the phase II trial on clinical hold. (See BioWorld Today, Nov. 10, 2016.)
ARC-520 intervenes upstream of the reverse transcription process where current standard-of-care nucleotide and nucleoside analogues act, silencing the production of all HBV gene products via small interfering RNAs that engage the body's normal cellular RNAi machinery and directing specific cleavage of HBV RNA transcripts. The strategy is intended to reduce the levels of HBV proteins and the RNA template used to produce viral DNA. In pausing ARC-520, U.S. regulators cited no human findings.
With Arrowhead's wholesale dump of the EX1 pipeline which she called "surprising," given that the company had said last month the clinical hold "would not affect other programs" Jefferies analyst Eun Yang reset her price target from $5 to $2.
The company said it remains committed to finding therapeutic options for chronic HBV patients and those with alpha-1 antitrypsin deficiency (AATD), heading toward the clinic with two HBV and AATD programs not previously made public that use its subcutaneous platform. "Of course, we have a lot more toxicology information on EX1 because we had good laboratory practices [GLP] toxicology programs across three drugs and with our [subcutaneous] data, we have a considerable amount but it's all non-GLP and not as deep," Given said during a conference call with investors. "But what I can tell you is that across all three of the programs that are being discontinued, the EX1 programs, the toxicity consistently was driven by EX1. In all of these studies that we did, at the highest dose in the study we looked at EX1 alone. We looked at the drug product, which contained EX1 and the RNA, and we looked at the RNA alone. Consistently, what we always thought is that the EX1 and the drug product that contained EX1 and the RNA looked very similar, had the same sort of toxic profile and across all three of those drugs, [but] the RNA-only arm looked quite benign."
Around the fall of 2015, Arrowhead reported top-line data with ARC-520, demonstrating that it achieved significant HBV surface antigen reductions during a phase IIa study, particularly in treatment-naïve patients who tested positive for HBV e-antigen (HBeAg-positive), which is associated with chronic HBV infections and is used as a marker of active viral disease. The fresh results seemed to put the program on stronger footing after sentiment about its prospects turned frosty the previous year over concerns that the drug might not perform as well as expected. But things got worse when the FDA pointed to the toxicology anomaly. (See BioWorld Today, Oct. 10, 2014, and Sept. 25, 2015.)
'LONG ROAD AHEAD'
Piper Jaffray analyst Edward Tenthoff, like Yang, dropped his price target to $2, but from a more optimistic $10, and downgraded Arrowhead's stock from overweight to neutral. He put value in the company's partnership with Amgen, though he pointed to a risk that it "may falter."
In September, Amgen took a global exclusive license with Arrowhead, plus an option on a second, to develop and commercialize cardiovascular treatments using the subcutaneous RNAi delivery platform. Across the two agreements, Arrowhead is set to receive $35 million up front plus a $21.5 million equity investment and up to $617 million in option payments and rewards for hitting development, regulatory and sales milestones. The company also could get low double-digit royalties on product sales under the license to its ARC-LPA program, along with single-digit royalties on product sales for the option deal on a second RNAi therapy from Amgen's discovery engine for an undisclosed cardiovascular target that was said to be genetically validated. Amgen assumed responsibility for development and commercialization of both programs. (See BioWorld Today, Sept. 30, 2016.)
Arrowhead's Given said the potential tricky area "always looked like it was EX1, which made sense to us. I mean, you know, we expected all along that the [N-Acetylgalactosamine (GalNAc)-melittin-like protein, or NAG-MLP, which is used with the RNAi element of ARC-520] would be what would drive toxicity. That's no surprise to us." The subcutaneous program, though, does not employ any sort of endosomal escape mechanism and is "more of a traditional RNA, targeted RNA concept. You know, all of these are individual drugs and individual drugs can always in the end, when you do your toxicology studies show you something. But at this point, there doesn't look to be anything systemic in the conjugation platforms that would lead us to believe that they are going to have any of the EX1-related toxicity."
RBC Capital Markets analyst Michael Yee predicted "a long road in 2017" for Arrowhead, as the latest move "turns the company back into a preclinical entity to prepare for investigational new drug applications in 2017 and beyond." He estimated human trials with the remaining candidates will begin in 2018. "We don't see any major read-throughs to other RNAi competitors at this time given different delivery technology/chemistry," he added in a report.
RNAi has not fared well lately. In October, Cambridge, Mass.-based Alnylam Pharmaceuticals Inc. found itself trying to explain 18 trial deaths that caused the halt of phase III development of revusiran for hereditary transthyretin amyloidosis with cardiomyopathy. The Medicines Co., of Parsippany, N.J., felt some of the pain, because the company uses Alnylam's technology conjugating GalNAc to a small interfering RNA molecule. (See BioWorld Today, Oct. 7, 2016.)