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Arrowhead Stock Plunges, Alector Stock Surges On Drug News

Arrowhead Pharmaceuticals (ARWR) is pausing a clinical study of its drug to treat cystic fibrosis after preliminary data show that it causes lung inflammation in rats. Meanwhile, Alector (ALEC) is teaming up with pharma giant GlaxoSmithKline (GSK) to develop two monoclonal antibody treatments for neurodegenerative diseases. Arrowhead stock sank, while Alector stock surged. Glaxo shares were mostly flat.

Pasadena, Calif.-based Arrowhead’s ARO-ENaC treatment for cystic fibrosis aims to reduce the production of a protein that causes airway dehydration and aids in the transport of mucus. The clinical trial is on hold until more data from the rat study and another primate toxicology analysis are available.

In hopeful news for Parkinson’s and Alzheimer’s patients though, Alector and GlaxoSmithKline will codevelop two new drug candidates that focus on eliminating neurodegeneration through immunoneurology.

Alector will receive $700 million in upfront payments for the collaboration, and up to $1.5 billion in potential milestone payments, profit-sharing and royalties.

The two companies will share profits in the U.S., but GSK will hold exclusive commercialization rights outside the U.S. 

Arrowhead Stock, Alector Stock

Alector stock skyrocketed as much as 77.5% to an all-time high of 43.32 intraday before paring back some of those gains. Shares are up 71% to 38.02, blowing past a buy point of 23.52 from a cup-with-handle base.

Its RS line also shot up. Alector’s RS Rating is 79, and its EPS Rating is only 14, as the company is not yet profitable.

Arrowhead stock tumbled 26.5% to 62.49 on the stock market today. Shares tried to break out past a buy point of 90.74 from a cup-with-handle base just a few days ago, MarketSmith chart analysis shows. But that effort failed. The stock fell below its 50-day and 200-day lines.

The relative strength line for Arrowhead stock also took a dive Friday. Its RS Rating is 86 out of a possible 99, while its EPS Rating is just 8.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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