Arrowhead Research Corporation (NASDAQ:ARWR), a biopharmaceutical company developing targeted RNAi therapeutics, today announced that on October 11, 2013 it closed a previously announced private offering of common and convertible preferred stock. The financing, which was oversubscribed, had net proceeds of $60 million, after deducting commissions and other offering expenses payable by the company. It was led by RA Capital Management, LLC and included a syndicate of new and existing institutional investors.
“This capital raise enables us to aggressively build on the success of the ARC-520 Phase 1 study,” said Dr. Christopher Anzalone, Arrowhead’s President and CEO. “We have the resources to advance ARC-520 through the upcoming Phase 2a study in chronic HBV patients and a multi-national Phase 2b planned for the second half of 2014. The financing also enables us to expand on the DPC delivery platform by funding two new candidates through clinical proof of concept and advancing our pre-clinical pipeline with additional IND-ready candidates. We see the strong demand from high quality institutions as a vote of confidence in our technology, strategic plan, and execution.”
3,071,672 shares of common stock were issued at $5.86 per share. 46,000 shares of Series C convertible preferred stock were issued at $1,000 per share. Each share of preferred stock is convertible into 170.6 shares of common stock at a conversion price of $5.86 per share of common stock. The Series C preferred was issued to those investors who desire to not own in excess of 9.99% of Arrowhead’s outstanding voting securities following the financing. The Series C Preferred is non-voting above a beneficial ownership cap of 9.99% and carries no dividend or liquidation preference.
Jefferies LLC and Piper Jaffray & Co. acted as joint placement agents for the offering and Trout Capital acted as a financial advisor to the company.
Approximately 350 million people worldwide are chronically infected with the hepatitis B virus. Chronic HBV infection can lead to cirrhosis of the liver and is responsible for 80% of primary liver cancers globally. Arrowhead’s RNAi-based candidate ARC-520 is designed to treat chronic HBV infection by reducing the expression and release of new viral particles and key viral proteins. The goal is to achieve a functional cure, which is an immune clearant state characterized by hepatitis B s-antigen negative serum with or without sero-conversion. The siRNAs in ARC-520 intervene at the mRNA level, upstream of where nucleotide and nucleoside analogues act. In transient and transgenic mouse models of HBV infection, a single co-injection of Arrowhead’s DPC delivery vehicle with cholesterol-conjugated siRNA targeting HBV sequences resulted in multi-log knockdown of HBV RNA, proteins and viral DNA with long duration of effect. In a chimpanzee chronically infected with HBV and high viremia and antigenemia, ARC-520 induced rapid reductions of 90-95% in HBV DNA, e-antigen, and s-antigen. Arrowhead has completed enrollment in a Phase 1 single ascending dose study in normal volunteers, which the company expects to follow with a Phase 2a study in chronic HBV patients.