Arena Pharmaceuticals Inc.'s
) loss (excluding special items) of 7 cents per share in the
third quarter of 2012 was narrower than the year-ago loss of 16
cents per share and the Zacks Consensus Estimate of a loss of 8
cents per share.
Arena Pharma recorded third quarter revenues of $1.5 million
compared with $3.5 million in the prior-year quarter. Revenues
during the quarter missed the Zacks Consensus Estimate of $4
Operating expenses at Arena Pharma declined 9.6% to $20.6
million on account of lower research and development (R&D)
expenses. R&D expenses recorded a decline of 22.4% to $11.6
million due to decrease in salary and other personnel-related
expenses. General and administrative (G&A) expenses decreased
22.6% to $7.4 million in the reported quarter.
In June 2012, the US Food and Drug Administration (FDA)
approved Belviq (lorcaserin HCl) as an adjunct to a healthy diet
(low on calories) and increased physical activity for chronic
weight management in obese (Body Mass Index, or BMI, >30) or
overweight (BMI >27) adults suffering from at least one
weight-related co-morbid condition. The move marks the first FDA
approval for a weight-loss drug in 13 years.
While clearing the drug, whose safety and efficacy when
co-administered with other weight loss products and the effect on
cardiovascular morbidity and mortality are yet to be established,
the FDA recommended Belviq to be classified by the US Drug
Enforcement Administration (DEA) as a scheduled drug.
Eisai Co., Ltd.
), which will market Belviq in the US, is preparing for the
launch of the drug after the DEA gives its verdict on the matter.
Eisai is currently expecting Belviq to hit the US market in early
We note that Belviq received a 120-day assessment report from
the European Medicines Agency (EMA) for the Marketing
Authorization Application (MAA) submitted in the EU earlier this
year. Arena Pharma expects a final decision from the regulatory
authorities in the EU and Switzerland by the first half of
Arena Pharma maintained its 2012 revenue guidance in the band
of $91-$97 million. This includes $65 million which Arena Pharma
will receive as milestone payments from Eisai following the DEA
scheduling of Belviq. The company also mentioned that revenues
could be lower by $65 million if the company fails to receive DEA
scheduling in 2012.
Arena Pharma also continues to expect R&D expenses in the
range of $57-$67 million. Arena Pharma also kept its G&A
expenses guidance unchanged at $20-$24 million.
We currently have a Neutral recommendation on Arena Pharma
which carries a Zacks #3 Rank (short term 'Hold' rating). The FDA
approval of Belviq is a huge boost for the company. The drug
targets the highly lucrative obesity market. Competition however
is intensifying with
) obesity drug Qsymia launched in the US in September this year.
We expect investor focus to remain on the DEA scheduling of
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