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On Tuesday, RBC Capital Markets adjusted its outlook on Arrowhead Pharma (NASDAQ:ARWR), lowering the price target to $40 from $42, while still maintaining an Outperform rating on the company’s stock. The revision reflects an analysis of Arrowhead’s first-quarter performance and its strategic positioning for the future. Currently trading at $15.89, the stock sits between analyst targets ranging from $17 to $80, with a market capitalization of $2 billion. According to InvestingPro analysis, the stock is currently fairly valued based on its proprietary Fair Value model.
Luca Issi, an analyst at RBC Capital, highlighted Arrowhead’s strong financial position, noting the company’s extended cash runway into 2028 following a lucrative deal with SRPT, which provided approximately $1.4 billion in upfront and near-term cash. However, InvestingPro data reveals the company is quickly burning through cash with a current ratio of 0.71, indicating short-term obligations exceed liquid assets. Despite these challenges, Issi’s commentary focused on Arrowhead’s continued progress in its pipeline, particularly in the cardiometabolic and obesity sectors.
Arrowhead’s APOC3 inhibitor, designed for treating familial chylomicronemia syndrome (FCS), targets a small patient population in the United States but presents a potential $2-3 billion opportunity for severe hypertriglyceridemia (sHT) with pivotal trials expected to be fully enrolled by this summer. Issi pointed out the drug’s potential advantages over competitor Ionis Pharmaceuticals (NASDAQ:IONS)’ offering, including a more potent molecule and a trial specifically aimed at demonstrating benefits in preventing pancreatitis.
In the field of obesity treatment, Arrowhead is expected to provide a first glimpse at its clinical INHBE program by the end of 2025, with aspirations to demonstrate superior weight loss while preserving muscle mass. Additionally, Arrowhead is advancing a second obesity candidate, ALK7, which is also in clinical trials. Issi noted that while ALK7 may offer greater weight loss and less frequent dosing, its development involves higher risk due to uncertainties in adipose tissue response.
The company also plans to initiate a Phase III trial for its ANG3 program targeting homozygous familial hypercholesterolemia (HoFH) later this year. The potential for synergy with the APOC3 program was also mentioned, as both are cardiovascular targets with similar call points.
Issi concluded that despite a relatively quiet calendar in the coming months, Arrowhead’s execution capabilities and a more sharply focused pipeline, particularly with the upcoming data on its obesity programs, make it a compelling company to watch. InvestingPro forecasts significant revenue growth of 180.7% for FY2025, though analysts don’t expect profitability this year. For deeper insights into Arrowhead’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Arrowhead Pharmaceuticals reported impressive financial results for Q2 FY2025, with a net income of $370.4 million, or $2.75 per share, significantly surpassing the anticipated loss of $0.45 per share. The company’s revenue reached $542.7 million, well above the forecasted $127.9 million, primarily driven by a lucrative license agreement with Sarepta Therapeutics (NASDAQ:SRPT). Citi analysts revised their outlook on Arrowhead, reducing the price target to $17.00 from $21.00 while maintaining a Neutral rating, following the announcement of these robust financial results and updates on its pipeline. Additionally, the U.S. FDA accepted the New Drug Application for Arrowhead’s plozasiran, setting a Prescription Drug User Fee Act target action date of November 18, 2025. This development could position Arrowhead as a key player in the familial chylomicronemia syndrome market. Cantor Fitzgerald maintained its Overweight rating on Arrowhead, reflecting confidence in the company’s strategic position and financial projections. Arrowhead’s guidance suggests maintaining a cash balance between $600 million and $650 million by the end of 2026, providing a clearer picture of its anticipated financial trajectory.
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