ARWR Stock Slid Lower Today — What Does Wave Life Sciences Have To Do With It?

• Wave said earlier on Thursday that individuals administered a single 240 mg dose of WVE-007 showed a body weight reduction of 0.9% in the early stage portion of its trial.
• Jones Research attributed WVE’s selloff on Thursday to the low total weight loss at six months, 0.9% versus hopes for 2% or 3%.
• Unlike traditional GLP-1 drugs that often lead to muscle loss, Arrowhead’s obesity candidates, ARO-INHBE and ARO-ALK7, aim to reduce body fat, while specifically preserving lean muscle mass.

Shares of Arrowhead Pharmaceuticals Inc. (ARWR) fell nearly 2% on Thursday before paring back losses after Wave Life Sciences (WVE) announced mixed data from the early stage portion of its trial evaluating its investigational drug WVE-007 in individuals with obesity.

Leerink analyst Mani Foroohar said that they are not surprised to see ARWR stock down as material obesity value is baked in at Arrowhead’s $8.5 billion market cap. The firm has a ‘Market Perform’ rating on Arrowhead shares.

Wave said earlier on Thursday that individuals administered a single 240 mg dose of WVE-007 showed a body weight reduction of 0.9% in the early stage portion of the trial, with clinically meaningful reductions in visceral fat and waist circumference, after six months. The investigational drug was well tolerated to date up to 600 mg with no treatment discontinuations, the company said.

WVE shares traded 50% lower at the time of writing.  

Why The WVE Selloff?

Jones Research attributed WVE’s selloff to the low total weight loss at six months, 0.9% versus hopes for 2% or 3%. The firm believes that while WVE-007 may not be competitive to GLP-1 category weight loss drugs in the general population, there is still a chance for utility in the elderly or patients with metabolic disease.

Jones Research has a ‘Buy’ rating on Wave Life with a $35 price target.

Leerink analyst Joseph Schwartz, meanwhile, said that the firm likes the continued improvement in visceral fat reduction at 240 mg after six months, as well as the larger reduction on waist circumference and measurable body weight reduction. The stock's reaction premarket seems to remove all value for WVE-007, which is "very overdone," the firm said. Leerink has an ‘Outperform’ rating on WVE shares.

Arrowhead’s Obesity Pipeline

Unlike traditional GLP-1 drugs that often lead to muscle loss, Arrowhead’s obesity candidates, ARO-INHBE and ARO-ALK7, aim to reduce body fat while specifically preserving lean muscle mass.

While comparisons between Wave and Arrowhead data are impaired by small numbers of patients, differences in baseline, and other factors, the greater than 50% fall in Wave's stock price "highlights the degree of optimism baked into INHBE expectations" and brings questions related to Arrowhead "back to center stage," Foroohar told investors, as per TheFly.

BofA, meanwhile, lowered the firm's price target on Arrowhead to $81 from $84 and kept a ‘Buy’ rating on the shares. The analyst said that Wave’s update appears largely priced in.

How Did Retail Traders React?

On Stocktwits, retail sentiment around ARWR stock improved from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume increased from ‘low’ to ‘high’ levels.

ARWR stock has more than quadrupled over the past 12 months. 

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