Arena Pharmaceuticals Falls on Wider-than-Expected Q2 Loss - Analyst Blog


Arena Pharmaceuticals, Inc. ( ARNA ) fell approximately 3.7% after the company reported a net loss (excluding one-time items) of 12 cents per share in the second quarter of 2014 wider than the Zacks Consensus Estimate of loss of 11 cents. Arena had reported earnings of 17 cents per share in the year-ago quarter.

Arena Pharmaceuticals, Inc - Earnings Surprise | FindTheBest

Arena Pharma recorded second quarter revenues of $12.8 million. The Zacks Consensus Estimate was $13 million. The company reported revenues of $68.9 million in the second quarter of 2013 benefiting from revenues received from Eisai Co., Ltd. ( ESALY ). Arena Pharma is collaborating with Eisai for its obesity drug, Belviq.

Second quarter 2014 research and development (R&D) and general and administrative (G&A) expenses were up 43.5% to $27 million and 6.1% to $9.1 million, respectively.

Belviq Update

Arena Pharma recorded Belviq sales of $3.5 million (including $0.4 million from the 15-day free trial voucher redemption). Arena Pharma is working on expanding the market reach of Belviq.

Eisai recorded net product sales of $9.9 million for Belviq in the second quarter of 2014. Total prescriptions for Belviq increased 43% from the preceding quarter to more than 110,000.

Arena Pharma and Eisai are leaving no stone unturned to make the drug a success. Eisai added 200 representatives to the existing sales force of approximately 400 for Belviq.

Arena Pharma and Eisai are evaluating Belviq for additional indications. The companies are evaluating Belviq for smoking cessation (phase II study ongoing, data expected around the end of the year) as well as weight management in combination with phentermine (12-week pilot study ongoing, data expected around the end of the year). Additionally, the companies are also studying Belviq's effects on diabetes and cardiovascular outcomes (CAMELLIA study). Arena Pharma also plans to initiate a study evaluating Belviq 20 mg extended release tablets in children in the third quarter of 2014. Results from the study will be released in the second quarter of 2015.

Arena Pharma's pipeline includes several candidates including APD811 (pulmonary arterial hypertension, planning to initiate phase II study in 2014), APD334 (autoimmune diseases, phase I multiple-ascending dose study, data expected early 2015), temanogreal (thrombotic diseases, phase I) and APD371 (pain, phase I). Arena Pharma has collaborated with Ildong Pharmaceutical Co., Ltd. for the development of temanogreal.

Our Take

We are disappointed with Arena Pharma missing estimates. Although Belviq sales were lukewarm in the quarter, we believe that the company will benefit from the promotional efforts undertaken by Eisai. Arena Pharma's growth is highly dependent on Belviq, the company's sole marketed product.

We are positive on the beefed up sales force for Belviq. We believe it can boost sales by promoting the drug to more physicians. Increased awareness should help Belviq sales to gain momentum.

Currently available therapies for obesity include VIVUS Inc.'s ( VVUS ) Qsymia.

Arena Pharma currently carries a Zacks Rank #4 (Sell). Some better ranked stocks in the health care sector include Alexion Pharmaceuticals, Inc. ( ALXN ) carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ALXN , VVUS , ARNA , ESALY

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