Arrowhead Research (ARWR) Plunges on Mysterious Price Action

Joel Anderson  |

Shares of small-cap biopharmaceutical company Arrowhead Research (ARWR) plunged more than 15 percent Monday on mysteriously negative trading.

Arrowhead actually gapped up slightly to begin the day, trading at $21.05 at the opening bell after closing at $20.70 a share on Friday. However, the selling started early and quickly pulled prices down as low as $15.97 a share. The stock rebounded some from that level, but was still trading at close to $17.25 a share in early afternoon trading.

The stock didn’t have any clear news items or fundamental factors that would prompt the major sell-off. However, a look at the stock’s chart could indicate certain technical signals that, in the context of an already rough day across the biotech sector, could have prompted investors to flee the stock in droves.

Arrowhead has been on a long uptrend, gaining more than 750 percent since the beginning of last July on the strength of the company’s siRNA genetic therapies. And since late November, the stock has treated its 20-day SMA as a support level, repeatedly falling to that level but not going below it for almost three months.

However, the stock had been trading very close to that level for over a week prior to breaking past it from above on Monday. It’s possible that traders saw the chart pattern indicating that the 20-day SMA wasn’t going to hold as a support level and, once the stock started to breakout downward, they sold shares quickly and provided the catalyst for the day’s big losses.

It’s also notable that a number of different biotech stocks are plunging Monday morning, with each showing similar action in opening level and plunges in early-morning trading, making it possible that Arrowhead also got caught up in a sector-wide trend.

The one piece of news for Arrowhead on Monday was that the company had initiated dosing for its phase 2a clinical trial of ARC-520, an RNAi therapeutic for treatment of chronic hepatitis B. However, it seems clear that this wouldn’t be the cause for the company’s plummeting stock price as company executives spoke openly about the promise of ARC-520.

“This is a significant milestone for the ARC-520 program and has broad implications for the development of additional RNAi therapeutics using the Dynamic Polyconjugate, or DPC, delivery system,” said President and CEO Christopher Anzalone, Ph.D. “We took an important step toward clinical validation of the DPC system when the Phase 1 was completed and data indicated that ARC-520 was generally safe and well tolerated across all dose levels studied. Our next step will be confirmation that ARC-520 induces deep and durable target gene knockdown in humans. We are confident that the Phase 2a will rapidly provide us with the data necessary to make that assessment as we anticipate patient enrollment and dosing may be complete in the second quarter of this year.”

The novel siRNA therapies being developed by Arrowhead could potentially be used in treating hepatitis B.

“Arrowhead is focused on getting siRNA drugs into tissues and cell types of interest while avoiding non-specific uptake,” reads the description from the company’s website. “Our lead delivery technologies – Dynamic Polyconjugates (DPCs) and Homing Peptides – are actively targeted delivery vehicles that can be modified to exhibit the specific pharmacological properties desired for each target. Efficient targeting is a key differentiator for Arrowhead's technology, which has the potential to make siRNA therapeutics more effective by getting more of the dose to target tissues.”

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