Arrowhead Pharmaceuticals (ARWR) saw its stock price plummet by 8.28% in pre-market trading on Thursday, following news that its partner Sarepta Therapeutics (SRPT) has significantly reduced its stake in the company. The sharp decline comes as investors react to Sarepta's decision to sell a substantial portion of its Arrowhead stock holdings.

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 large-scale sell-off by a major stakeholder has raised concerns among investors, leading to the significant drop in Arrowhead's share price.

Despite the stock sale, the two companies maintain their collaborative relationship. The $100 million milestone payment from Sarepta to Arrowhead was triggered following positive progress in their joint clinical study of SRP-1003, an investigational RNA interference therapeutic for the treatment of type 1 myotonic dystrophy. However, the market seems more focused on Sarepta's decision to exit its Arrowhead position, with H.C. Wainwright commenting that Sarepta has "lost credibility" by exiting Arrowhead at a loss less than a year after investing $325 million in the company. This rapid change in Sarepta's investment strategy has likely contributed to the negative sentiment surrounding Arrowhead's stock.