The drug manufacturer Arrowhead Pharmaceuticals was recently hit with a securities class action lawsuit after discontinuing a number of drug trials. To learn more about this case, visit Battea’s Arrowhead Pharmaceuticals case summary.
Specifically, it was revealed that Arrowhead’s hepatitis B drug known as ARC-520 was unlikely to be approved by the U.S. Food and Drug Administration, due to its being potentially lethal in certain doses, and the suit alleges the company made false and misleading statements related to the drug’s likelihood of approval. The suit has a class period of May 11, 2015, to Nov. 29, 2016.
Getting the details
In fact, ARC-520 is one of three drug trials Arrowhead was undertaking for which it shut down its human testing efforts, the company announced in late November. ARC-520 joined ARC-521 and ARC-AAT as drug trials halted over fears of a regulatory crackdown. The FDA first put a hold on ARC-520 after apes in a separate study died as a result of the drug’s delivery vehicle, known as EX1, which was used with the other two drugs as well.
As a result, all EX1-related trials were put on hold, and the company also cut its workforce, the report said. This comes despite the fact that it is still working on a number of other drug trials for different ailments, using other delivery mechanisms than EX1. The problem, though, is that many of these drugs are at least a year away from being ready for human testing, so this setback is a significant one for the company to endure.
“Because of the discontinuation of its existing clinical programs, the company is reducing its workforce by approximately 30 percent, while maintaining full resourcing necessary to support current and potential future partner-based programs and Arrowhead’s burgeoning pipeline,” the announcement said. “This more streamlined structure should enable the company to continue to develop its programs rapidly, and is intended to extend its cash runway into 2019.”
More than 300 human subjects had received some dosage of EX1, administered 800 separate times across that group, during those trials, the report said. Arrowhead notes only 6 percent of those infusions resulted in some sort of reaction, and the company also generally found the drugs to be helpful in reducing liver problems. However, because of the likelihood that the FDA would not approve the drug, it simply decided to stop the dosing, and will instead focus on transitioning patients to other care.
How the move affected stock prices
As a result of these announcements, Arrowhead’s stock price took a significant hit. The discontinuation of these tests was announced on Nov. 30, and the day before Arrowhead closed at $4.39 per share. The next day it closed at just $1.44, a decline of more than 67 percent, and has continued to slide since that time. That number is down even more significantly from the stock’s year-to-date high of $8.08 set in late August, and at this point Arrowhead is trading at just $1.24 per share.