Arrowhead Pharmaceuticals priced a $625 million offering of 0.00% convertible senior notes due 2032 and a $3.1 million common‑stock offering on January 7, 2026. The notes mature on January 15, 2032, carry no coupon, and can be converted into common stock at the company’s election. The common‑stock offering consists of 3,100,776 shares priced at $64.50 each, with an option for certain investors to receive pre‑funded warrants instead of shares.
The convertible notes are priced at an initial conversion price of approximately $87.07 per share, and the company will use the net proceeds to fund capped‑call transactions that cap the share price at about $119.33 per share. The remaining proceeds will support general corporate purposes, including working capital, capital expenditures, research and development, clinical‑trial expenses, and commercialization activities. The common‑stock proceeds will be applied to similar corporate needs, providing additional liquidity for pipeline development and potential commercial launches.
Following the announcement, Arrowhead’s stock fell sharply, reflecting investor concerns about dilution from the new shares and the convertible notes. Insider selling intensified the negative sentiment, with key executives selling more than $3 million and $33 million of shares in the three months preceding the announcement. The market reaction underscored the tension between the company’s desire to strengthen its balance sheet and the immediate dilution impact on shareholders.
Arrowhead’s balance sheet remains robust, with a current ratio and quick ratio both above 4.8, but the company is not yet profitable, reporting a net margin of –0.2% and an EPS of –$0.08 for the most recent period. Management emphasized that the capital raise is intended to sustain the company’s RNAi‑based pipeline and to prepare for potential commercial launches. CEO Christopher Anzalone noted that a strong balance sheet “gives us the financial resources to move multiple innovative new medicines through the clinical and regulatory process and ultimately get them to the patients who need them.”
The financing supports Arrowhead’s strategy to maintain a launch‑ready position for its pipeline candidates, many of which are in pivotal Phase 3 studies. While the capital raise provides necessary liquidity, the dilution risk and insider selling signal that investors are weighing the short‑term impact against the long‑term potential of the company’s therapeutic portfolio. The market’s reaction suggests that, despite the company’s positive outlook, the immediate share‑count increase and insider activity have outweighed the perceived benefits of the new capital structure.
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