Here's What Caused Arrowhead Pharmaceuticals' Stock to Spike Today

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What happened

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After Arrowhead Pharmaceuticals (NASDAQ: ARWR) announced Thursday that it has crafted a new drug development platform, and created a handful of candidate compounds, shares of the clinical-stage biotech, which is focused on RNAi drug development, rose by 14.7% as of 12:05 p.m. EDT on Friday.

So what

Arrowhead stated that it will be hosting a research and development meeting later Friday where it will provide investors with an overview of its new Targeted RNAi Molecule (TRiM) drug development platform, and sharing a few details about some of its product candidates.

Arrowhead's management team asserts that the TRiM platform will provide the company with several advantages, including:

  • Simplified manufacturing processes.
  • Lower costs.
  • Multiple drug-delivery options (subcutaneous, intravenous, and inhaled). 
  • Faster development time. 
  • Wide safety margins.
  • The potential to use RNAi therapy in organs other than the liver. 

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What's more, the company announced several product candidates that have been already been developed using the TRiM platform, including:

  • ARO-HBV, targeting chronic hepatitis B infection.
  • ARO-AAT targeting alpha-1 antitrypsin deficiency liver disease.
  • ARO-APOC3 and ARO-ANG3, both of which target hypertriglyceridemia.

CEO Chris Anzalone commentated that the new TRiM platform "opens up a host of new opportunities for disease targets previously not accessible to RNAi therapeutics." 

Traders appear to be optimistic about the potential of the new platform, which is why shares are rising.

Now what

There's no doubt that the TRiM platform sounds promising, but it is important for investors to remember that 90% of all drug candidates that enter clinical trials fail to make it to market. Furthermore, Arrowhead doesn't exactly have a stellar history of success with drug development, and the company's cash balance -- which as of June stood at $75 million -- continues to dwindle with each passing quarter.

While I'm as hopeful as anyone that the TRiM platform will go on to produce several winning drugs for the company, the investor in me knows that the odds of success are lousy. For that reason, I continue to believe that the smart move is to keep Arrowhead's stock far away from your portfolio.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.