Arena Pharmaceuticals, Inc.
) reported net loss (excluding special items) per share of 10
cents in the third quarter of 2013, narrower than the Zacks
Consensus Estimate of a loss of 11 cents but in line with the
Arena Pharma recorded third quarter revenues of $3.6 million, up
140.9% from the year-ago period due to the launch of obesity
drug, Belviq. However, revenues were below the Zacks Consensus
Estimate of $6 million.
The third quarter reflects Belviq's first full quarter in the
U.S. market. Arena Pharma recorded Belviq sales of $2.0 million
(including $0.3 million from the 15-day free trial voucher
redemption). Arena Pharma had reported Belviq sales of $1.3
million in the second quarter of 2013 - the product was launched
in Jun 2013.
Arena Pharma is working on expanding the market reach of Belviq.
The company expanded its existing agreement with
Eisai Co., Ltd.
) in the reported quarter. As per the terms of the new agreement,
Eisai will enjoy exclusive commercialization rights across the
globe, excluding South Korea, Taiwan, Australia, Israel and New
Zealand. In exchange, Eisai will make an upfront payment of $60
million to Arena Pharma. Arena Pharma will also be eligible to
receive milestone payments of up to $176.5 million on the
achievement of regulatory and development targets. Arena Pharma
will continue to sell Belviq to Eisai for commercialization at
purchase prices ranging from 27.5% to 36.5%, depending on the
country and Belviq sales.
Arena Pharma and Eisai will also collaborate on evaluating Belviq
for additional indications including smoking cessation (in
combination with an appetite suppressant, phentermine).
Additionally, the companies will study Belviq's effects on
diabetes and cardiovascular outcomes. In Sep 2013, Arena Pharma
initiated a study evaluating Belviq 20 mg extended release
The company is working on advancing its pipeline along with the
expansion of the Belviq label. Arena Pharma has completed a
multiple-dose phase I trial on APD811, which is being developed
for the treatment of pulmonary arterial hypertension.
Third quarter 2013 research and development (R&D) and general
and administrative (G&A) expenses were up 25.6% to $14.6
million and 5.0% to $7.8 million, respectively.
Although Belviq sales were lukewarm in the quarter, we believe
that the company will benefit from the expansion of the Eisai
agreement. Arena Pharma's growth is highly dependent on Belviq,
the company's sole marketed product. The product represents
significant revenue potential and its successful
commercialization should drive a company like Arena Pharma to
Arena Pharma and Eisai are leaving no stone unturned to make the
drug a success. Eisai plans to double the size of the sales force
for Belviq, to approximately 400 representatives by Dec 2013.
The decision to augment the sales force follows the increase in
Belviq coverage by health plans and pharmacy benefit managers
since its launch. Eisai is working on improving the reimbursement
We believe the beefed up sales force will boost sales by
promoting the drug to more physicians. Increased awareness should
help Belviq sales to gain momentum.
Approval for Belviq is also being sought in other countries.
However, the approval process for Belviq in the EU has run into
rough waters with the company withdrawing its Marketing
Authorisation Application for the drug. The European Medicines
Agency's Committee for Medicinal Products for Human Use believes
that the results of non-clinical studies were insufficient for
the drug's approval.
Currently approved therapies for obesity include
) Qsymia, launched in Sep 2012. However, Qsymia sales are yet to
Arena Pharma, a biopharmaceutical stock, currently carries a
Zacks Rank #3 (Hold). However, biopharma stocks like
) look well positioned with a Zacks Rank #1 (Strong Buy).
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