Arrowhead’s (ARWR) stock jumped over 16% higher on Tuesday to $25.68 after the American biopharma company announced a deal with Switzerland-based pharmaceutical heavyweight Novartis (NVS). The stock also climbed by about 5% in morning trading on Wednesday.
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However, Novartis’s shares only rose marginally to $126.64 at the end of regular U.S. trading hours on Tuesday. The stock also eased up only slightly during the morning trading session on Wednesday.
Under the new deal, Arrowhead will give Novartis an exclusive global license to research and commercialize its ARO-SNCA therapy drug. The California-based company is expected to receive $200 million in an upfront payment from Novartis once the deal is sealed in the second half of this year, which is when the transaction is expected to close.
Arrowhead’s ARO-SNCA is an early-stage therapy developed to target alpha-synuclein, a protein involved in diseases like Parkinson’s disease that causes harmful clumps in the brain. These clumps disrupt normal brain function, leading to movement and mood problems.
Arrowhead Teams Up with Novartis
The new deal will also allow Novartis access to Arrowhead’s special RNAi technology platform called Targeted RNAi Molecule. The goal is to develop therapies that target disease-causing genes in the central nervous system, especially the brain.
Under the agreement, Arrowhead will carry out and complete all preclinical research required to support clinical trial application filings for programs determined by Novartis, including those outside Arrowhead’s current pipeline. Once completed, Novartis is expected to take sole responsibility for development, manufacturing, and commercialiszation.
Arrowhead can expect to get up to $2 billion in payments for developmental, regulatory, and sales milestones hit along the way.
Is Arrowhead Pharma a Buy or Sell?
Turning to Wall Street, Arrowhead’s stock has a Moderate Buy consensus recommendation on TipRanks. This is based on six Buys and five Hold Ratings by 11 Wall Street analysts. Also, the average ARWR price target is $35.44, which is a possible 38.01% upside from its current level.
