[Biotech&Pharma] Why This Top-Notch Biotech Stock Just Plunged By Double Digits

Browse By

Shares of Arrowhead Pharmaceuticals (ARWR) crashed to a two-month low Tuesday after an analyst initiated coverage of ARWR stock with an underperform rating.




X



{“@context”:”https://schema.org”,”@type”:”VideoObject”,”name”:”Investing Strategies: Trading Tactics And Portfolio Strategies For 2020″,”description”:”With 2019 quickly coming to a close, we're dissecting trading tactics to consider as we head into the new year. New York Life Investments discusses major themes set to impact the market's direction in the coming year, and what investors should do now to position themselves accordingly. NorthCoast Asset Management walks us through tactical portfolio strategies from an ETF perspective. And we analyze one of this year's top growth stocks u2013 Shopify u2013 and lay out the case for why the e-commerce software stock could still have more room to run.”,”thumbnailUrl”:”https://www.investors.com/wp-content/uploads/2019/12/VeD3iu5y-640×360.jpg”,”contentUrl”:”https://content.jwplatform.com/manifests/VeD3iu5y.m3u8″,”uploadDate”:”2019-12-09T16:58:10+0000″,”duration”:”PT1296.54S”,”author”:”ALISSA CORAM”,”publisher”:{“@type”:”Organization”,”name”:”Investor's Business Daily”,”logo”:{“@type”:”ImageObject”,”url”:”https://www.investors.com/wp-content/uploads/2018/09/ibd-logo.png”},”url”:”https://www.investors.com”},”keywords”:””}

SVB Leerink analyst Mani Foroohar expects competitive headwinds to batter ARWR stock over the next year. Further, Big Pharma rivals are likely to launch cardiovascular and lipid drugs with massive sales forces before Arrowhead reaches the market, he said.

“We see the next 12 months as far more challenging than the past two years as Arrowhead faces sky-high expectations in the face of increasingly clear competitive headwinds,” he said in a note to clients. Foroohar initiated coverage with an ARWR stock price target of 32.

On the stock market today, ARWR stock tumbled 15.7%, to 47.59, in massive volume. Representatives of Arrowhead didn't return a request for comment from Investor's Business Daily before the close.

ARWR Stock Tumbles On Bearish Report

Biotech company Arrowhead is working on a technology that interferes in ribonucleic acid, or RNA. RNA acts as a messenger, carrying instructions from the DNA that control protein creation. The technology is often called RNAi.

Arrowhead's lead drug is called ARO-AAT. If approved, it would treat alpha-1 antitrypsin deficiency, a genetic condition that can cause lung and liver problems. It's important to note that Arrowhead's drug is the furthest along among RNAi-focused companies.

But Foroohar sees ARWR stock challenged by the likes of Vertex Pharmaceuticals (VRTX). Vertex is further behind Arrowhead in developing a treatment for alpha-1 antitrypsin deficiency. But Vertex's drug could improve liver and lung disease “with the convenience of a pill,” he said.

“An update on the first of several Vertex (drugs called) correctors is expected in 2020 and represents a major risk catalyst to our — and Street — ARO-AAT estimates,” he said.

Rivaling Big Pharma In Cardio Diseases

A number of assets in Arrowhead's pipeline focus on cardiovascular and lipid disorders. But the biotech company is far from the only player in this space.

Arrowhead's targets are genetically validated. But the biotech company is going up against larger Big Pharma stalwarts in these disorders, Foroohar said.

This suggests “the orphan pricing necessary for Arrowhead to capture value from these assets may not be realizable, as launching these drugs against lower-priced competitors with broad labels, robust datasets and sizable sales forces is outside Arrowhead's core competency,” he said.

ARWR Stock Benefits From RNAi Deal

Further, ARWR stock benefits from an RNAi partnership with Johnson & Johnson (JNJ) in hepatitis B. But even that can't save ARWR stock, Foroohar said. He also noted investors have baked a substantial acquisition premium into shares.

“A partnering transaction for key Arrowhead pipeline assets or strong data from Vertex in alpha-1 antitrypsin deficiency or competitors in cardio-metabolic programs could flatten this premium,” Foroohar said.

Shares of Arrowhead have high ratings, according to Investor's Business Daily standards. The biotech company has a Composite Rating of 98 out of a best-possible 99. This puts ARWR stock in the top 2% of all stocks in terms of key growth metrics.

Arrowhead stock also has a top-notch Relative Strength Rating of 99, putting ARWR stock in the top 1% of all stocks in terms of 12-month performance.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

YOU MAY ALSO LIKE:

Biotech Stocks Are On Fire — Who's Leading The Profit Pack For 2020?

Why This Biotech's Next Chapter Is 'TBD' Amid Deal-Making Dearth

IBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis Today

Looking For The Next Apple Or Amazon? Start With These S&P 500-Beating Lists

Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks

The post Why This Top-Notch Biotech Stock Just Plunged By Double Digits appeared first on Investor's Business Daily.

Source Investor’s Business Daily

This news is provided by Investor’s Business Daily RSS Feed, All credits go to Investor’s Business Daily. For more Investor’s Business Daily News please visit: https://www.investors.com/

Disclaimer: All posts made on this website are provided for information purposes only. None of the information here is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, Company, or fund. Before making an investment decision, you should seek the advice of a qualified and registered securities professional. The author is not paid to share this information. Cannabis Investment Group is not paid to share this information and has no business relationship other than shareholder with any company whose stock is mentioned in this article.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.