Shares of Arrowhead Pharmaceuticals (ARWR) tumbled 5.50% in pre-market trading on Thursday, following news that its partner Sarepta Therapeutics (SRPT) has sold a substantial portion of its Arrowhead stock holdings. The sell-off by a major stakeholder appears to have triggered concerns among investors, leading to the sharp decline in Arrowhead's share price.

According to a late Wednesday announcement, Sarepta Therapeutics sold approximately 9.3 million common shares of Arrowhead Pharmaceuticals, generating at least $174 million in gross proceeds. Additionally, Sarepta will transfer about 2.7 million Arrowhead shares to satisfy $50 million of a previously announced $100 million milestone payment obligation. This significant reduction in Sarepta's stake in Arrowhead has likely contributed to the downward pressure on Arrowhead's stock.

Despite the stock sale, the two companies maintain a collaborative relationship. The $100 million milestone payment from Sarepta to Arrowhead was triggered following a review of safety data and Arrowhead achieving the first of two predetermined enrollment targets in the phase 1/2 clinical study of SRP-1003. This investigational RNA interference therapeutic, developed in partnership between the two companies, targets the treatment of type 1 myotonic dystrophy. While the progress in their joint project is positive, the market seems more focused on Sarepta's decision to reduce its Arrowhead holdings, leading to the pre-market plunge in Arrowhead's stock price.