Arena Pharmaceuticals, Inc.
) reported net loss per share of 11 cents in the fourth quarter
of 2013, widely missing the Zacks Consensus Estimate of earnings
of 15 cents. Arena had incurred a narrower loss of 10 cents in
the year-ago quarter.
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Arena Pharma recorded fourth quarter revenues of $6.5 million, up
236.6% from the year-ago period due to the launch of obesity
drug, Belviq, and an increase in collaborative revenues. However,
revenues were way below the Zacks Consensus Estimate of $36
Full year loss came in at 9 cents per share, narrower than the
year-ago loss of 45 cents. The Zacks Consensus Estimate for the
full year was earnings of 11 cents per share.
Revenues for the full year came in at $81.4 million as against
revenues of $27.6 million in 2012. Full year revenues were below
the Zacks Consensus Estimate of $107 million.
Arena Pharma recorded Belviq sales of $2.4 million (including
$0.1 million from the 15-day free trial voucher redemption).
Arena Pharma had reported Belviq sales of $2.0 million in the
third 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 Nov 2013. 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.
To date, Eisai made an upfront payment of $60 million and
milestone payment of $0.5 million to Arena Pharma.
Arena Pharma and Eisai are leaving no stone unturned to make the
drug a success. Eisai doubled the size of the sales force for
Belviq to approximately 400 representatives. Meanwhile, Eisai
estimates that Belviq coverage in the U.S. has improved. The
company estimates that the commercially insured population with
coverage for Belviq has crossed 50% as compared to 30% at the
time of launch.
Arena Pharma and Eisai are evaluating Belviq for additional
indications. The companies are evaluating Belviq for smoking
cessation as well as weight management in combination with
phentermine (a 12-week pilot study initiated). Additionally, the
companies are also studying Belviq's effects on diabetes and
cardiovascular outcomes (CAMELLIA study). Arena Pharma has also
completed a study evaluating Belviq 20 mg extended release
Arena Pharma's pipeline includes several candidates including
APD371 (phase I for pain) and APD334 (phase I for a number of
conditions related to autoimmune diseases).
Fourth quarter 2013 research and development (R&D) and
general and administrative (G&A) expenses were up 36.5% to
$19.0 million and 11.1% to $8.1 million, respectively.
Arena Pharma expects to generate the majority of revenues from
Belviq in 2014. The company also expects to record $17.0 million
in collaboration and manufacturing services revenues. The 2014
Zacks Consensus Estimate currently stands at $49 million.
We are disappointed with Arena Pharma missing estimates on all
fronts. We expect investors to react negatively to the news.
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. The product
represents significant revenue potential and its successful
commercialization should drive a company of Arena Pharma's size
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
Currently available therapies for obesity include
) Qsymia, launched in Sep 2012.
Arena Pharma, a biopharmaceutical stock, currently carries a
Zacks Rank #2 (Buy). Investors may also consider other
biopharmaceutical companies like
Alexion Pharmaceuticals, Inc.
), which sports a Zacks Rank #1 (Strong Buy).