The ability to continuously monetize R&D is a strength, not a weakness, of an RNAi platform. Besides, Arrowhead owns full rights to at least seven drug candidates across cardiometabolic, lung, and complement-mediated diseases; plus full rights to additional discovery-stage assets.

Consider how unique it is for a drug developer to reproducibly generate and sell assets across therapeutic areas.

Know-how in single domains is difficult to extend

Most drug developers develop assets in a single therapeutic area, such as liver disease or blood cancers. It's difficult to translate that expertise to completely unrelated areas because the technology stack and know-how is rarely relevant across domains.

RNAi doesn't have that problem because it works at the genetic level. If you can design a short-interfering RNA (siRNA) molecule to disable gene expression, then the therapeutic area is irrelevant. Genetic diseases? Lung diseases? Brain diseases? Cardiometabolic diseases? Have a field day.

Of course, you still need to deliver the payload to the proper tissues in the body to realize the potential, but RNAi drug developers have demonstrated promising progress with next-generation targeting ligands.

Most therapeutic modalities are limited by intellectual property

Similarly, expertise and know-how in many therapeutic modalities doesn't offer extensive intellectual property protection in unique domains. Do you have a kick ass technology platform for developing small molecule tyrosine kinase inhibitors or monoclonal antibodies? Sweet, but so do dozens of other companies.

This forces drug developers to go deep in a single focus area (Revolution Medicines is all-in on pan-RAS inhibitors) or broad in a single therapeutic area (AbCellera generates hundreds of monoclonal antibodies for partners but retains little economics for individual assets).

Depth or breadth can each be valuable, but RNAi platforms don't have to choose. They're not limited by intellectual property. Alnylam Pharmaceuticals, Novo Nordisk, Arrowhead Pharmaceuticals, Wave Life Sciences, and one or two others own substantially all the proprietary ways to design clinically-meaningful siRNA molecules. They invented the ways to modify siRNA structures regardless of therapeutic area, which is unique to this therapeutic modality.

In other words, any drug developer can develop a monoclonal antibody to treat a brain disease. But if you want to treat a brain disease by silencing gene expression using RNAi, then you have to partner with one of a handful of companies. That allows RNAi specialists to extract significant economics for relatively immature assets.