BOSTON (TheStreet) -- A discussion of an experimental hepatitis B therapy kicks off this week's Biotech Stock Mailbag.

Tim L. asks, "Adam, I appreciate the preview of the Intercept Pharmaceuticals (ICPT) data you provided last week. Can you do the same for Arrowhead Research (ARWR - Get Report) and its hepatitis B data? Thanks."

Arrowhead is conducting a phase IIa study of ARC-520 in hepatitis B patients, with an announcement of initial results expected this quarter. All of the ARC-520 data generated to date have been in mice and a single hepatitis B-infected chimpanzee, so the phase IIa study results from hepatitis B-infected patients are very important for Arrowhead. 

ARC-520 uses RNA interference (RNAi) to turn off the production of hepatitis B genes, and by doing so, reduce the number of infectious hepatitis B viral particles. With the viral load reduced, a patient's own immune system can re-activate and kill the remaining hepatitis B virus. Arrowhead hopes to demonstrate treatment with ARC-520 can lead to a "functional cure" for hepatitis B. Current treatments for hepatitis B such as interferon or antivirals sold by Gilead Sciences GILD and Bristol-Myers Squibb BMY work by reducing viral load but don't help many patients achieve a cure.

The phase IIa study enrolls 16 hepatitis B patients and randomizes them to treatment with a single dose of ARC-520 (either 1 mg/kg or 2 mg/kg) or a placebo. The study's primary endpoint is the log reduction and duration of reduction of hepatitis B surface antigen (HBsAG), a measure of the presence of hepatitis B virus in the body. 

Gauging expectations for the study is a bit tricky. Buyside investors I've spoken with, generally speaking, are looking for a 1 log reduction in HBsAG from the 2 mg/kg dose of ARC-520. The homerun scenario would be a 1 log reduction in HBsAG combined with detection of antibodies and/or ALT (liver) flares, both of which suggest the patient's immune system is waking up to kill the hepatitis B virus. 

Sell-siders are giving Arrowhead more leeway with their study predictions. A log reduction in the range of 0.5 to 1 at the highest ARC-520 dose should be viewed positively, particularly if the drug's safety profile allows Arrowhead to increase the treatment dose to 3 mg/kg, where its effect should be greater. 

The safety of ARC-520 will also be scrutinized closely. In particular, the ALT (liver) flares which may indicate a positive immune response could also be a signal of a liver toxicity problem.

Aside from Arrowhead, the ARC-520 study results could also impact Alnylam Pharmaceuticals (ALNY), which is developing its own RNAi therapy against hepatitis B. Alynylam hasn't generated any human clinical data yet. 

I last wrote about Catalyst Pharmaceuticals Partners (CPRX) and its drug experimental drug Firdapse in October, eviscerating the company for being an orphan drug poseur and profiteer. Nothing has changed. Over the past two weeks, I reached out again to patients with Lambert-Eaton Myasthenic Syndrome (LEMS), the rare, neuromuscular-wasting disease targeted by Catalyst with Firdapse. The LEMS patients I contacted through email and Facebook generally view Catalyst with deep suspicion, even anger.

As I reported last fall, LEMS patients are most worried that Catalyst intends to charge an exorbitant price for Firdapse, if approved. They'd much prefer to see privately held Jacobus Pharmaceuticals secure FDA approval for 3,4-Dap, which contains the same active ingredient as Firdapse and is already available through compassionate use programs and compounding pharmacies. In the LEMS community, Jacobus wears the white hat because it gives away 3,4-Dap for free. Catalyst is seen as the unwelcome guest, the money-grabbing freeloader. 

Catalyst and Jacobus are in a race to get their respective drugs -- Firdapse and 3,4-Dap -- submitted to the FDA for review and approval. Both drugs are essentially identical and since LEMS is an orphan disease, the company which wins FDA approval first gets market exclusivity for 7 years. The losing company is frozen out. 

Here's where we stand: Catalyst and Jacobus have both completed LEMS patient enrollment for their respective registrational clinical studies. Catalyst has told investors to expect an announcement of study results in the third quarter. If the Firdapse data are positive, Catalyst will seek to complete an FDA approval submission in 2015.

 Jacobus is an intensely private company which doesn't make public announcements about anything. I last spoke with Laura Jacobus, an executive with the company and the daughter of company founder David Jacobus, a couple of months ago. She told me the conduct of its 3,4-Dap study was progressing well but she didn't disclose a timeline for when the study would be completed. Jacobus is well aware of Catalyst's stated timelines for the Firdapse study and its goal is to secure FDA approval first, Jacobus told me.

I have no idea if Jacobus will say anything publicly about the its 3.4-Dap study results. As a private company, Jacobus is under no obligation to make an announcement.

Interesting situation! Catalyst could announce positive results from the Firdapse study but the Jacobus overhang will remain. What happens if both drugs reach the FDA around the same time? I'm rooting for Jacobus and so are the LEMS patients I've spoken with, so will this sway the FDA to approve 3,4-Dap first? Jacobus already has an excellent working relationship with LEMS doctors and the FDA through its compassionate use program. If both drugs are under review at the same time, I expect you'll see a grassroots patient effort to lobby FDA to favor Jacobus over Catalyst. 

Stay tuned.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.