Deutsche Bank Downgrades Arrowhead to Hold

In a note on the small and midcap biotech industries, Deutsche Bank downgraded ArrowheadResearch Corp ARWR to a hold with a target price of $7. Deutsche expresses concerns with management execution, longer-than-expected development timelines for ARC-520, Arrowhead’s Hepatitis B (HBV) drug, and competition in HBV overall as reasons for the downgrade.

Deutsche labels 2015 as the “show-me year,” noting that the promise of ARC-520 is still there, yet there are uncertainties that create greater risk. If investor sentiment toward management improves, Deutsche sees a $1-3 per share rise in ARWR and that the stock could rise 100 percent or more if the company begins to perform.

Arrowhead hit a 52-week high of $27.63 in March 2014, before falling 45 percent for the year. The stock is currently trading at $6.76.