What Caused Arrowhead Pharmaceuticals to Skyrocket 12.5% Today

By Markets Fool.com

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What:After industry analysts at Cantor Fitzgerald began coverage with a buy rating, shares ofArrowhead Pharmaceuticals, Inc.(NASDAQ: ARWR) shot 12.5% higher at 1:30 p.m. EDT today.

So what:Arrowhead Pharmaceuticals is researching drugs that target RNA (ribonucleic acid), a nucleic acid present in all living cells that acts as a DNA messenger.The company's most advanced therapy is ARC-520, which is being studied as a new treatment for hepatitis B.

Recently, Arrowhead Pharmaceuticals reported that combiningARC-520 and Bristol-Myers Squibb's (NYSE: BMY) Baraclude resulted in up to 5.5 log, or 99.99% reductions in serum HBV DNA. Patients with HBeAg-negative mutation -- a tough-to-treat variation -- achieved reductions that put them below the limit of quantification, too.

Those results boost confidence that ARC-520 combination therapy could provide a functional cure for the 350-million-plus people worldwide who are infected with hepatitis B.

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Now what: Cantor Fitzgerald analysts have slapped a $15 price target on Arrowhead Pharmaceuticals shares and if they're right, that would undeniably be a big win for investors.

However, before investors get too excited, they should remember thatARC-520 is in mid-stage trials, and that future trial results could fail to back up earlier findings.

Image source: Arrowhead Pharmaceuticals.

In short, while Arrowhead Pharmaceuticals has some intriguing research underway, following the advice of Wall Street analysts blindly is never a good idea. Instead, investors should do their own due diligence before clicking the buy button. In this case, that due diligence may lead risk-intolerant investors to decide that watchful waiting is the best way to approach this stock right now.

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Todd Campbell owns shares of Arrowhead Research.Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned.Like this article? Follow him onTwitter where he goes by the handle@ebcapitalto see more articles like this.

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