News has it that Gilead Sciences, Inc. (NASDAQ:GILD) is looking forward to sealing an acquisition deal with Arrowhead Research Corp (NASDQ:ARWR). The company bought a small cap of the latter’s stock, and now it wants to acquire the whole company. According to the news, the healthcare giant wants to acquire Arrowhead for its hepatitis B drugs. The pipeline of Arrowhead is very strong, as it contains ARC-520 drug.
Arrowhead Research Corp (NASDAQ:ARWR) is based in California. The company has a number of important drugs in its pipeline; some of them being the experimental ones. The ARC-520 drug of Arrowhead is being tested for the cure of hepatitis B. Another significant drug that Arrowhead is testing is an anti-obesity one.
Gilead Sciences, Inc. (NASDAQ:GILD) recently bought some stocks in Arrowhead, causing the share price of Arrowhead to go up by 14.5 percent. The average trading volume for 30 day period was recorded to be at 2.23 million; however, the stocks volume reached 11.7 million as soon as Gilead bought the shares.
The stocks of Arrowhead plummeted in the last few months, due to a rough period that the company was going through. The company released a research report on the phase 2 trial study of one of its hepatitis drugs: the results of the study were not very favorable, causing the investors to trade their shares. The results were even weaker than what the company and the analysts were expecting. Some of the investors sought help from law firms and filed suits against the company, alleging that Arrowhead did not reveal the full information about the drug, and thus tricked the investors into investing their money on the experimental drug.
The chief executive of Arrowhead, Christopher Anzalone, on the other hand, is very confident about the company, especially the technology that it is developing in its test units in Madison. According to Christopher, the company has investment in research and development, which is not a bad choice. He further stated that the investments will pay off very soon.
That said, Arrowhead can only afford to lose a few competitions, for the situation in healthcare industry is quite tense at the moment. It is important to mention here that ARC-520 is an RNA interference drug. Gilead Sciences, Inc. (NASDAQ:GILD) has 3 products in its pipeline; however, none of them is an RNA interference drug. The only other company that is developing and RNA interference drug for hepatitis B is Alnylam Pharmaceuticals (NASDAQ:ALNY)
Gilead Sciences, Inc. (NASDAQ:GILD) currently has $6.2 billion cash lying around, so it can surely afford Arrowhead. The acquisition will not only improve its pipeline for hepatitis B drugs but it will also make the company’s position a dominant one in the market. Since the market for hepatitis drugs is quite big- around 5 percent of the total population suffers from it- Gilead Sciences, Inc. (NASDAQ:GILD) will be making a positive decision from the point of view of sales, profits and revenues.