Arena Pharma Q3 Loss Narrower than Expected - Analyst Blog
09 11월 2013 - 7:00AM
Zacks
Arena Pharmaceuticals, Inc. (ARNA) 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 year-ago loss.
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.
Belviq Update
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. (ESALY) 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 tablets.
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.
Other Expenses
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.
Our Take
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 profitability.
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 for
Belviq.
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 VIVUS
Inc.’s (VVUS) Qsymia, launched in Sep 2012. However,
Qsymia sales are yet to pick up.
Arena Pharma, a biopharmaceutical stock, currently carries a Zacks
Rank #3 (Hold). However, biopharma stocks like Actelion
Ltd. (ALIOF) look well positioned with a Zacks Rank #1
(Strong Buy).
ACTELION LTD (ALIOF): Get Free Report
ARENA PHARMA (ARNA): Free Stock Analysis Report
EISAI CO LTD (ESALY): Get Free Report
VIVUS INC (VVUS): Free Stock Analysis Report
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