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Taking Stock of Arrowhead Pharmaceuticals’ Financial Performance

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Revenue trend

In 2017, Arrowhead Pharmaceuticals (ARWR) generated revenue of $31.4 million compared to $158,000 in 2016. This increase was attributable to the upfront payments Arrowhead received from Amgen (AMGN) related to their collaboration agreement for drug candidates ARO-LPA and ARO-AMG1. The two companies entered into this collaboration agreement in September 2016.

For 2018, Arrowhead Pharmaceuticals is expected to report revenue of $12.9 million, while its peers Gilead Sciences (GILD) and Loxo Oncology (LOXO) are expected to report revenues of $22 billion and $36.8 million, respectively, in the year.

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Operating expenses

In 2017, Arrowhead incurred total operating expenses of $68.4 million compared to $81.9 million in 2016. This decrease in expenses was the result of lower research and development expenses, which fell from $41.4 million in 2016 to $31.6 million in 2017, and a fall in stock-based compensation, which fell from $11.6 million in 2016 to $7.8 million in 2017.

The general and administrative expenses incurred by the company also witnessed a fall from $9.9 million in 2016 to $6.8 million in 2017. Meanwhile, stock-based compensation fell from $11.5 million in 2016 to $7.8 million in 2017.

As a result, the company’s operating losses narrowed from $81.7 million in 2016 to $36.9 million in 2017. This improvement was reflected in the company’s bottom line. Its earnings per share rose from -$1.34 to in 2016 to -$0.47 in 2017. During this period, the company’s average number of outstanding shares rose from 61 million in 2016 to 73.8 million in 2017.

Notably, Arrowhead Pharmaceuticals makes up ~0.02% of the SPDR Portfolio Small Cap ETF’s (SPSM) total portfolio holdings.

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