Arrowhead Pharmaceuticals Plummets 11% Amid Sarepta Fallout—Is the Biotech Giant's Partnership in Jeopardy?

Summary
• Arrowhead Pharmaceuticals (ARWR) tumbles 11.6% to $14.91 amid investor panic over Sarepta partnership risks
• 2025-07-21 sees intraday swing from $17.00 high to $14.325 low, worst single-day drop since March 2020
• Analysts highlight 197.70% projected upside from $14.78 price despite immediate bearish technicals

Arrowhead Pharmaceuticals is hemorrhaging value as a toxic combination of regulatory red flags and partnership uncertainty triggers a liquidity crisis. With the stock down 21% year-to-date and Sarepta Therapeutics (SRPT) facing a 90% YTD decline, biotech investors are bracing for a sector-wide reckoning. The $14.91 price represents a 11.6% collapse in a single session, with volatility metrics and options activity painting a grim picture of near-term risk.

Sarepta's FDA Pause Casts Shadow Over Arrowhead's Partnership
The 11.6% freefall in ARWR shares directly correlates to Sarepta Therapeutics' recent regulatory setbacks. The FDA's emergency request to halt shipments of Sarepta's gene therapy Elevidys—following two patient deaths—has created a domino effect for Arrowhead. As a key collaborator in Sarepta's neuromuscular disease pipeline, Arrowhead faces potential delays in receiving $300 million in near-term milestones under their 2024 partnership. This liquidity risk has triggered a self-fulfilling prophecy: investors are selling both stocks as the perceived value of Arrowhead's biotech assets becomes increasingly contingent on Sarepta's survival.

Biotech Sector Volatility Intensifies as Sarepta's Restructuring Sparks Chain Reaction
The biotechnology sector is experiencing heightened volatility as Sarepta's strategic restructuring and pipeline prioritization announcements collide with regulatory scrutiny. While companies like Regeneron (REGN) are posting 0.97% gains, the sector's exposure to gene therapy risks has created a bifurcation. Arrowhead's partnership with Sarepta now serves as a litmus test for investor confidence in high-risk, high-reward biotech collaborations. The recent 18% surge in Sarepta shares following its restructuring plan contrasts sharply with Arrowhead's collapse, highlighting the sector's sensitivity to regulatory and operational shocks.

Options Playbook: Capitalizing on Biotech Volatility with Precision
• 200-day MA: $17.74 (above) • RSI: 53.89 (neutral) • MACD: 0.61 (bearish divergence) • Bollinger Bands: $14.56 (lower bound) • Implied Volatility: 105.25% (elevated)

The technical landscape for ARWR suggests a continuation of the bearish trend, with key support levels at $14.56 and $14.325. With the 50-day MA at $16.34 and 200-day MA at $17.74, the stock is in a clear downtrend. The 53.89 RSI indicates oversold conditions but not extreme enough to trigger a reversal. The 105.25% IV suggests continued volatility, making options a more attractive vehicle than direct equity exposure.

ARWR20250815P14 (Put Option):
• Code: ARWR20250815P14 • Type: Put • Strike: $14 • Expiry: 2025-08-15 • IV: 84.28% (moderate) • Leverage: 16.47% • Delta: -0.35 • Theta: -0.01 • Gamma: 0.11 • Turnover: 4,635
• IV: High volatility premium • Delta: Moderate sensitivity to price • Gamma: Strong sensitivity to price swings • Turnover: High liquidity
This put option offers a balanced risk-reward profile with 16.47% leverage and 84.28% IV. The -0.35 delta provides downside protection while the 0.11 gamma ensures responsiveness to further price declines. With 4,635 contracts traded, liquidity is robust enough to manage position sizing.

ARWR20250815P15 (Put Option):
• Code: ARWR20250815P15 • Type: Put • Strike: $15 • Expiry: 2025-08-15 • IV: 97.12% • Leverage: 9.27% • Delta: -0.46 • Theta: -0.01 • Gamma: 0.10 • Turnover: 7,143
• IV: Elevated volatility premium • Delta: Strong downside sensitivity • Gamma: Responsive to price changes • Turnover: High liquidity
The $15 strike offers a 97.12% IV premium with 9.27% leverage. The -0.46 delta provides stronger downside exposure while the 0.10 gamma ensures position value remains dynamic. With 7,143 contracts traded, this option offers excellent liquidity for both entry and exit.

Under a 5% downside scenario ($14.16), the ARWR20250815P14 would yield a $0.84 payoff (K - ST = $14 - $14.16 = -$0.16, but capped at $0). The ARWR20250815P15 would generate a $0.84 payoff as well ($15 - $14.16 = $0.84). These put options provide asymmetric risk-reward profiles ideal for capitalizing on the biotech sector's volatility. For aggressive bears, these contracts offer a calculated way to leverage the Sarepta-Arrowhead partnership risk without full equity exposure.

Backtest Arrowhead Pharmaceuticals Stock Performance
The ARWR ETF has experienced a total of 630 events where it plunged by more than -11% intraday. The 3-Day win rate is 47.46%, the 10-Day win rate is 50.16%, and the 30-Day win rate is 49.21%. The maximum return during the backtest period was 1.49%, which occurred on day 58 after the plunge event.

Biotech Investors Must Act Fast—Arrowhead's Liquidity Crisis Could Spill Into Q3
Arrowhead Pharmaceuticals' freefall underscores the fragility of biotech partnerships in a regulatory environment growing increasingly hostile to high-risk therapies. With Sarepta's Elevidys in regulatory limbo and Arrowhead's own liquidity tied to milestone payments, the $14.56 support level becomes a critical inflection point. Investors should monitor Regeneron (REGN)'s 0.97% gain as a sector benchmark—its resilience suggests biotech isn't dead, just selectively pressured. For those with risk appetite, the ARWR20250815P14 and P15 options provide precise tools to capitalize on this liquidity crisis. Watch for a breakdown below $14.325 to confirm the bearish thesis and consider adding to short positions if the FDA's Sarepta probe escalates.