$45Mn Offering

[holdencf]

Without getting too detailed, it would be a suicide mission for Canter to offer stock on the same day that a company was going to announce bad news.  Canter is the leading purveyor of private placements and they have to go back to these investors with subsequent offerings.  For a relatively small deal they aren't going to blow their investors to hell when they will be showing them another deal next week.  I suspect buyers of this deal are smart biotech investors who have more perfect information than retail investors.  

Management has been radio silent for the past four weeks (since the Canter conference) which is about how long it takes to put a deal like this together.  So they have been busy "selling this private placement to institutions.  Are they telling them anything that they have not previously announced?  I suspect not.  However, the manner in which they convey the information can be different.  They can walk investors precisely through the key announcements.  Savvy biotech investors will be able to follow the bread crumbs when some of the "noise" is stripped away.

The deal buys them 3 incremental quarters which means the company is funded through 2017.  Any partners who thought they could pressure ARWR into doing a bad deal will now have to rethink their strategy.  I hope we get some insightful posts following the call.  Should be interesting.

[Think2Succeed]

The deal today is important for a number of reasons:

- It alleviates the worries for the need of cash for a few more quarters until data matures
- It provides bigger leverage to ARWR in its partnership negotiations
- It cements the fact that ARWR has something of value to offer ( via a third party's big bet ) and the private investor is surely planning to make lots of money from 5.90
- the deal today took place at the market prices which to me means the leverage was on ARWR's side

The price action today also confirms the positives that came out of this deal...and the intraday reversal is very telling for the future trend. I think today's news is also the first of a series of developments that the company is planning to announce before the end of 2016...they just wanted to start with the one that eliminates the funding worries so they can now turn their attention to the pipeline: AAT data, partnership news, and ARC 520 data and the stock should trade in double digits by the end of the year.

T2S

[end2war]

Holden,

The $45 M investment is from just one company according to the PR!!
What do you think? Could it be Roche or NVS? Or is it more likely to be someone like Barker Brothers?

If it is one company, we will know soon enough, due to the SEC filing requirement. But, I expect ARWR to reveal something tonight in the CC. They will have 10% and I assume this is enough to elect a board member, but I didn't check what that takes.



From the PR, it says, "The Company..."



"The securities to be sold in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or other jurisdiction’s securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state or other jurisdictions’ securities laws. The Company has agreed to file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock to be issued and sold in the private placement."

[end2war]

I guess if you read the entire PR, "the Company" might refer to ARWR, not the buyer of the stock, in which case, I am jumping to the wrong conclusion. It could be multiple buyers, the PR is ambiguous. If they meant ARWR when they wrote "the Company" why in the hell didn't they say so, LOL.

[holdencf]

ETW

This was done with multiple institutions.  I have no idea why you think this was done with one "company."   Could you please stop posting on PB.  You are perfect for YMB.  I believe TTS founded this site and wanted to prevent this from turning into another YMB.  Postings from people who don't read the PRs or read with no comprehension diminish the great goal of this Board. 

[end2war]

Holden, this is a discussion board, not your private domain. I did see the issue with the meaning of the word "Company" and posted my own comment, so I am glad you got it right from the start, but so did I. Your post that there were multiple investors turned out to be correct, but that was a guess, since the PR did not say if it was one investor, or more than one that invested.

[holdencf]

ETW said "It was a guess."

No it wasn't a guess.  Nobody would hire Canter Fitzgerald to place equity with one firm.  If you know anything about capital markets and investment banking you would know that the only reason to hire an investment bank for a private placement is to run a quick private process, selling to a tight but diversified group of investors.  The fact that it was done at market with no warrants made it clear that demand exceeded supply.  Had it been done with a strategic investor (i.e. a pharmaceutical company) that would be wildly material piece of information would have had to be publicly disclosed.  And the company would have trumpeted this as part of a broader deal that included royalties, milestones and a bigger bio buck number.

As for this being my "private forum," I do not now nor have I ever treated it as such.  The posters on this MB tend to be very serious professionals and do not post bullshit the way you post it on YMB.  You are the most ignorant people I have ever seen post.  Nothing you say is fact-based.  No assumptions you make are correct. You shoot first and then argue until you are blue in the face to try and support a clearly idiotic underlying premise.  You are one of the biggest reasons YMB went to hell and I thank T2S for starting this MB.  I post very infrequently and only if I KNOW I can support my post or if I have a question that the very bright participants on this MB might be able to answer without haphazardly slinging bullshit against the wall.  You are the antithesis of professionalism and an embarrassment to this message board. You don't belong here and I will work very hard to have your posting credentials stripped.  

[watopguy]

holden,
for this type of private placement, it seems that "the Company" (don't make a joke,.... don't make a joke....) is able to provide the investors with "non-public" information? Is that correct, because the shares are restricted? If so, it certainly makes the investment seem that much more informed and exciting.

Secondly, mudbug on the old YMB made a comment about management painting themselves into a corner because of the relatively small amount of cash raised and therefore not a lot of extra runway time. (Credit mud, not trying to steal your theory) Basically, that management must be confident that they can get a deal done within the next (year?). Thoughts?/comments?

[end2war]

Dear Holden,

I do not want to engage in petty arguments with you over what we see as each other's personal weaknesses; and, I intend to have a civil discourse with all posters on this board. I also plan to follow the board rules. I would request the same from you.

Your post to which I am responding contains a blatant violation of the rules of this board which read, in part:

"3. Insults, Name Calling, Sarcasm, Baiting will not be tolerated



3.1. Personal insults and name calling of any kind will not be allowed.
"

Please delete your personal attacks as posters here should not have to defend themselves from your malicious or even your well intentioned insults, name calling or sarcasm.

Thank you for your courtesy and cooperation.

[digdeeper1976]

It appears that Arrowhead Pharmaceuticals has been trying to convince investors to think of them as a platform company and not an HBV company. The question in my mind is will big pharmaceutical companies see 200 people being dosed with the IV version of DPC as enough evidence to spring for big upfront payments.

It is apparent the real money is in extra-hepatic version that has yet to be tested in humans. CA went out of his way to point out that the extra-hepatic version of DPC is single molecule version of DPC. I would be willing to bet a pile of cash that is what the companies that are in active discussions with Arrowhead are interested in.

In my opinion any deal for a undisclosed drug will be well received by the market. I see lots of speculation about how ARC-520 must have missed the mark. While this is a remote possibility I just don’t think it is the case. They still maintain that waiting for the data to mature before entering into a partnership agreement will be in the best interest of shareholder. From the data we have seen so far I believe it is worth the wait.

[end2war]

Dig, I don't know the answer to your question, "The question in my mind is will big pharmaceutical companies see 200 people being dosed with the IV version of DPC as enough evidence to spring for big upfront payments." However, getting "big upfront payments" from a preclinical collaboration does not seem likely to me and I did not understand that to be the "target" or goal that CA was discussing. A money raise is not out of the question, but the size and nature of the raise would depend on the type and nature of the collaboration. I would expect more potential income from a license, or a partnership, than from merely a collaboration, but one needs to know details of the deal..

The part of the CC that seem most on point to me was the following Q & A
:

"Carmen Augustine, Jefferies & Co. - Analyst [2]

--------------------------------------------------------------------------------

Hi. Thanks for taking the question. I was wondering if you could give us any more color on what kind of qualities you would be looking in a preclinical partner? And if discussions continue to be ongoing for a clinical collaboration in HBV.

--------------------------------------------------------------------------------

Christopher Anzalone, Arrowhead Pharmaceuticals Inc. - President & CEO [3]

--------------------------------------------------------------------------------

Thanks very much, Carmen,. So for a preclinical, discovery-stage collaboration, we are looking for a strong partner with a target that looks interesting to us. If it is -- if the target is coming from them. If we're talking about one of our targets, we're certainly interested in speaking with people about some of our earlier-stage discovery activities. So we really view those on a case-by-case basis. Regarding clinical collaborations, that is a match higher bar for us and I will tell you why.

We think we are building an awful lot of value with our clinical programs and while we're certainly happy to talk to companies about partnering on these, either geographically or worldwide, we take that very seriously and we view that as potentially strategically dilutive and so should those partnerships happen, we take a very close view at what the upside is for our shareholders. And so really, right now we are more interested in discovery-stage collaborations."

On the subject of whether DPC is ready for primetime, I think it is a proven delivery method to the liver only so far, but it is ready for collaborations and deals in which ARWR licenses it to a collaborator for use. It could be a two step process of first do the collaboration and show the utility of DPC, followed thereafter with a deal, such as a license or partnership.

Personally, I am betting on CA to get the collaboration, as that was a 2016 announced goal, but we will have to wait and see what kind of collaboration it is, and if money comes with the deal, how much. Again, I would not expect big up front payments for DPC use.

But, if money is obtained, it may depend on whether they are working on HBV or some other disease, and how much the collaborator is depending on DPC for delivery of their drug or other dependencies that would lead to payments..

You also might want to look at this current private offering as some indication that institutions will spring for $45M so it might follow that BP also will make and investment in DPC but not necessarily up front payments. CA did not say specifically they were trying to raise money or how much with such a collaboration and he draws a sharp distinction between collaborations and deals involving HBV as you see from the answers above..

While we are looking at the current deal, I think it might be instructive to review a prior private placement with an institutional syndicate that ARWR achieved in October of 2014 at a offering price of $5.86 for similar purposes. In that offering they sold both stock and convertible preferred stock, and raised $60 M for work on ARC-520, DPC and pipeline development.

By comparing what the institutions are doing, you might get some insight into their view of ARWRs money raising capabilities, and whether progress with DPC has brought it to a stage where it is ready for deals and investments by BP. 



www.fiercebiotech.com/biotech/arrowhead-closes-private-offering-net-proceeds-of-60-million

Arrowhead Closes Private Offering with Net Proceeds of $60 Million

Financing led by RA Capital Management, LLC with a syndicate of healthcare-focused institutions



PASADENA, Calif.--(BUSINESS WIRE)--



Arrowhead Research Corporation (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. About ARC-520 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. About Arrowhead Research Corporation Arrowhead Research Corporation is a biopharmaceutical company developing targeted RNAi therapeutics. The company is leveraging its proprietary drug delivery technologies to develop targeted drugs based on the RNA interference mechanism that efficiently silence disease-causing genes. Arrowhead technologies also enable partners to create peptide-drug conjugates that specifically home to cell types of interest while sparing off-target tissues. Arrowhead's pipeline includes clinical programs in chronic hepatitis B virus and obesity and partner-based programs in oncology. For more information please visit www.arrowheadresearch.com, or follow us on Twitter @arrowres. To be added to the Company's email list to receive news directly, please send an email to [e-mail] Safe Harbor Statement under the Private Securities Litigation Reform Act: This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including our ability to finance our operations, the future success of our scientific studies, our ability to successfully develop drug candidates, the timing for starting and completing clinical trials, rapid technological change in our markets, and the enforcement of our intellectual property rights. Arrowhead Research Corporation's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q discuss some of the important risk factors that may affect our business, results of operations and financial condition. We assume no obligation to update or revise forward-looking statements to reflect new events or circumstances. Contact: Arrowhead Research Corporation Vince Anzalone, CFA 626-304-3400 or The Trout Group Lauren Glaser 646-378-2972 [e-mail]

[end2war]

For the sake of more completeness, I note that ARWR issued an additional stock offering only 6 months later in April 2014, this time raising $102 M, as they took advantage of the run up in the ARWR stock price to about $19. That opportunistic raise was at a time when biotech stocks were soaring and ARWRs stock was becoming frothy. ultimately reaching nearly $28/share. If you want to read a great historical account of CAs thinking in November 2014 in between these two raises see the article I have posted below.


www.epvantage.com/Universal/View.aspx?type=Story&id=466248

It is interesting to consider if ARWR would do another cash raise if positive developments and another biotech run would push ARWRs PPS to numbers like they saw in 2014. CA is a smart fund raiser, and absent a big licence deal with a large pharma that he thinks is satisfactory, he could sell another round of stock later this year or in 2017, and indeed, absent such a deal, he will need to do so. Lets just hope the milestones come in positively for ARWR and the PPS by the time of any future raise is far higher than at present. 

[mudbug021]

Aug 11, 2016 10:20:24 GMT -5 watopguy said:

...
not trying to steal your theory

Im not worried about it watopguy. I just find it curious that ARWR did stop at such an odd number. Obviously, $45mn cant get a single drug through Phase 3 let alone get the other 5 drugs in the pipeline through P3. Management has to have a plan.  

In my mind, my theory seems to have a bit more teeth to it the more I understand Rule 144 (and the FAQ) Im also starting to think the 7 mill unregistered shares will eventually be converted to Preferred shares.

I just found it a bit interesting how the 8-K file lists restrictions in the way a preferred stock investor would think.

[holdencf]

watopguy
outside of this string I won't be posting any more.  As long as End2War is allowed to post I have no intention toi participate in this board.  Even in his response to my post he states that he was right when clearly he was wrong and clearly his post was a pathological need to say something when he had no idea what he was saying. Sad really.    Its his MO   Can't help himself.  He then went on to try to provide cover for himself by citing boiler plate 33 Act language that is part of every private equity placement issued by any exchange-traded company in the US.  Once again, same MO.  Blurt out blatantly wrong comment.  Argue until blue in the face, often with wrong or non-sequitur follow-up.  Keep arguing until original poster gets tired of arguing with foolishness.

That said, since I started the string I will answer your two questions.  As I knew, (and management has also now stated) the private placement was done with multiple investors.  Private placements always require NDAs because their woiuld-be placements are themselves, material non-public information.  Given that Canter no doubt called every institutional investor, it is safe to say that anyone actively trading (in this case selling) the stock would decline signing an NDA.  But anyone interested to participate would sign the NDA.  At that point the company could decide what information it would provide to the signers of the NDA.  The company cannot, however,  asymmetrically dispense information.  Before Canter went out to investors it would have worked with management to determine what information it would provide to ALL prospective investors.  When Canter went out with the deal it would secure feedback from each investor.  If a large majority of investors ask for the same information and they all say we aren't going to do this deal if we can see _____ then the company has to make a call.  It is a balancing act.  The goal is to get the book oversubscribed with the highest quality investor while releasing as little information as possible. Regardless, under no circumstance can management provide blinded data because that would jeopardize the trials with the regulatory authorities.  The type of investors Canter was calling (not to be confused with retail investors on YMB) would know this and wouldn't even ask if or when they would make blinded data available, beyond what the company has already said.  

All unregistered shares are restricted under Rule 144.  As part of an unregistered share sale the Company agrees, in good faith, to file to have the shares registered with the SEC.  This is all disclosed in the 8-K filing following the announced sale.  These specific shares were not sold under what is called a "shelf registration," which is something the company would have had to file and have the SEC approve before registered shares were sold.  It is the NDA that allows the company to disclose non-public information, not the 144 restrictions.  ARWR could disclose the same or more information to a prospective partner, regardless of whether that NDA included the sale of unregistered shares.

I didn't see Mud's comments.  Looking, however, at your summary, I will attempt to answer.  Pre-placement, management had cash into or through 1Q17. "Normalized" burn is in the $15Mn-&16Mn range, meaning, pre-placement, ARWR has $45Mn cash or three quarters from 6/30/16 or enough cash through 1Q17. Add to that $45Mn or appx 3 quarters, less that $7Mn Oct 31 2016 one-time leasehold improvement payment, they have cash into (about half way through) 3Q17. Lets say August 15, 2017 since that is exactly a year from today.  By my math ARWR will be done with most Monarch and 2001 ext open label studies by 1Q17. While I think we will see much data at AASLD and EASL we will see at least some completed top line data in 1Q17.  Unless they hit a snag, we will also preliminary see completed p2 data for 521.  521 p2b is also open label as will be AAT.  So they will have very rich data on all three current clinical programs available to prospective partners at the latest by end of 1Q17.  Since all above-mentioned studies are open label management has the ability to show same to partners before top line is publicly released.  I have said in the past that I believe a partnership will be secure before data are publicly released.  Conclusion, I don't think management painted itself in a corner.  I would characterize is as management buying the company as much runway as it needs to have some buckets of completed or largely studies that it can use as leverage when negotiating a partnership.  Clearly management and the BOD did not find the offers to be compelling enough for what they would have had to give up.  

Given that non-insider shareholders are on the outside looking in we have two simple choices.  1)  Sell  2) Trust that management is doing the right thing.  I have said many times, it is foolish to own the stock of a company who's management team one does not trust.  Logic would dictate that "If not "2" then "1."

[holdencf]

"The securities to be sold in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or other jurisdiction’s securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state or other jurisdictions’ securities laws. The Company has agreed to file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock to be issued and sold in the private placement."


This quote from the PR is a cut and paste from the 8-K which is a document filed with the SEC that requires precision language.  In that filing "the Company" is defined earlier in the document so this is incorporated essentially by reference to another document.  Because of that implied reference I am 100% certain that SEC council would not allow a change to the language under any circumstance, even to appease a retail investor who might not have a clue why "the Company" doesn't change "the Company" to arrowhead.