3 Things to Watch With Arena Pharmaceuticals

Arena Pharmaceuticals (Nasdaq: ARNA  ) is a clinical-stage biopharmaceutical company focused on developing oral drugs that treat cardiovascular, central nervous system, inflammatory, and metabolic diseases. It currently has one FDA-approved drug to treat obesity, Belviq.

Today, let's look at three things that investors should be watching regarding Arena Pharmaceuticals, as they will provide us with better insight into the company.

1. European Medicines Agency decision
With Belviq approved by the FDA, Arena has fought about half of the battle. Next on the docket is the review from the Drug Enforcement Agency, which should give investors a better idea of what protocol will need to be undertaken in order to prescribe Belviq, and the big decision by the EMA as to whether Belviq will get a thumbs-up or down in Europe.

Considering that Belviq passed the hurdle of approval in the U.S., it seems likely that the EMA will also approve it as long as the safety profile meets its high standards. Since receiving its 120-day assessment in June, we know that the EMA will make its decision on, or before, Nov. 12. The question now is: Can Belviq become the first drug approved worldwide to treat chronic weight management problems -- and will its marketing partner, Eisai (OTC: ESALY), step up and purchase the company if Belviq gets the nod of approval in the European Union? Arena has already been moving higher on these rumors, and the idea isn't completely far-fetched if the EMA approves Belviq.

2. Safety concerns
Let's get back to talking about the safety issues soon to be addressed by the DEA review letter. Since the DEA is labeling Belviq as a scheduled drug, it means that there are still safety concerns that will require Arena to complete six additional tests to satisfy the DEA.

First off, it looks like there could be a warning label applied to Belviq saying that it shouldn't be used during pregnancy because of adverse side effects, which could include serotonin syndrome. Don't feel bad, Arena shareholders; VIVUS (Nasdaq: VVUS  ) -- which just had its obesity drug, Qsymia, approved by the FDA -- will probably also contend with a pregnancy warning as one of its components, topiramate, has been linked to birth defects in the first trimester of pregnancy.

It's also worth noting that the FDA's approval letter didn't mention requiring that an echocardiogram be performed prior to prescribing the drug despite an increase in serotonin-2B levels noted in patients on the drug. This statement will likely result in a warning for those with moderate to severe cardiovascular problems (i.e., heart disease) who are prescribed Belviq. Among Arena's six safety trials, Eisai will be paying to run trials looking at Belviq's effects on heart attacks and strokes. Similarly, Orexigen Therapeutics (Nasdaq: OREX  ) will be running a cardiovascular safety review on its obesity drug, Contrave.

3. Drug launch
This is the part where Arena shareholders either hold their breath or gasp in horror. We've seen how big of a nightmare drug launches can be on more than one occasion over the past couple of years. Dendreon's (Nasdaq: DNDN  ) Provenge prostate cancer treatment was meant to revolutionize treatment and life expectancy for late-stage patients. Instead, sales of the drug limped out of the gate because of its enormous $90,000-plus price tag and physicians' unwillingness to prescribe it on fears that they may not get reimbursed. The recently purchased Human Genome Sciences had the first approved lupus treatment in more than 50 years, and it also failed to launch effectively.

On one side, we can clearly see the advantage of having a premier marketing partner that understands how to launch a drug. Eisai, which holds marketing rights for Belviq in most of North and South America, is one of the world's largest pharmaceutical companies and likely won't have any problem generating sales with its experienced marketing team. On the flip side, having a marketing partner also means that Arena will be sharing its total revenue with Eisai. Don't get me wrong, with Wall Street analysts  having projected peak sales of $2 billion, that still leaves the potential for huge profits, but considering that VIVUS owns Qsymia outright, it could give the profitability edge to VIVUS, assuming it can launch Qsymia effectively.

Foolish roundup
Now that you know what to watch for, it should be easier to analyze Arena Pharmaceuticals' successes and pitfalls in the future and hopefully give you a leg up on other investors.

If you're still craving even more info on where this company's headed, get your copy of our latest premium research report on Arena Pharmaceuticals. It gives you an in-depth look at opportunities and events that could move Arena's share price and comes with one year of regular updates. Click here to get this report and claim your investing edge.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on Motley Fool CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (14) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 10, 2012, at 3:33 PM, Foreeverlong wrote:

    To your points watch out for on Arena's Belviq:

    1. EMA approval: most are aware that it is generally harder to get FDA approval than EMA approval, and Belviq not only received FDA approval, but was praised as novel drug that can not only treat obesity safely and efficatiously, but has the potential to become a 1st or 2nd line treatment for type II diabetes.

    2 Safety concerns; essentially non-existent, and particularly compared to Qsymia that received a very restrictive REMS.

    3. Drug launch: Arena has a top 20 BP partner with a proven track record, who should be marketing and selling the drug by Dec. 1st, 2012.

    All in all, Arena is not much of a risk on any of these points.

  • Report this Comment On September 10, 2012, at 5:38 PM, beatlesforever wrote:

    What a bunch of lies and garbage. Think twice before publishing such lies - it carries liability - AND makes MF look bad.

  • Report this Comment On September 11, 2012, at 2:52 AM, TrackUltraLong wrote:

    beatlesforever/Reza,

    And exactly what part(s) have I presented in this benign article that are lies?

    TMFUltraLong

  • Report this Comment On September 11, 2012, at 3:48 AM, beatlesforever wrote:

    "European Medicines Agency decision

    With Belviq approved by the FDA, Arena has fought about half of the battle."

    Going through DEA scheduling is minimal effort compared to years it takes to go through the FDA so your saying "half the battle" is wrong.

    And chances of getting EU approval is greater for drugs that have FDA approval than those that don't.

    "we know that the EMA will make its decision on, or before, Nov. 12."

    This is pure BS> Where do you pull that Nov 12 date out of?

    "will its marketing partner, Eisai (OTC: ESALY), step up and purchase the company"

    1) Eisai doesn't have the money to buy the company

    2) Eisai's CEO has said they're not interested in acquisitions.

    It helps to do some research before propagating opinions.

    "2. Safety concerns"

    There is no safety concerns. You're full of FUD. FDA has ruled that Belviq is safe. End of the story.

    "Since the DEA is labeling Belviq as a scheduled drug, it means that there are still safety concerns that will require Arena to complete six additional tests to satisfy the DEA."

    Wrong. Arena is not conducting 6 tests to satisfy the DEA. The FDA has required additional tests. Maybe you can't tell the difference between DEA and FDA. DEA doesn't require trials.

    "First off, it looks like there could be a warning label applied to Belviq saying that it shouldn't be used during pregnancy"

    What are you smoking dude? The label is established by the FDA - it's a done deal, finito.

    "This statement will likely result in a warning for those with moderate to severe cardiovascular problems"

    Dude, the label is a done deal. FDA has approved Belviq and all the conditions are spelled out already. You're full of FUD.

    "3. Drug launch ... Dendreon's "

    Eisai has solid experience marketing blockbusters. Dendreon had zero experience in a launch. Plus, DNDN's drug costs 90,000. Belviq costs around 4 bucks a day (price isn't announced yet). Your reasoning is weak at best. You tell people that some investors are "holding their breath their breath or gasping in horror" and you provide ZERO justification for that. You admit Eisai is hot, so no worries there, so what's there to gasp about - that Arena is not getting 100% of the revenue? Give me a break. Your gasping comment is just FUD.

    "get your copy of our latest premium research report on Arena Pharmaceuticals"

    If it's anything that resembles the kind of analysis that went into your article, nobody should spend a penny on it. You're giving MF a bad reputation.

  • Report this Comment On September 11, 2012, at 4:51 AM, TrackUltraLong wrote:

    Reza,

    "Going through DEA scheduling is minimal effort compared to years it takes to go through the FDA so your saying "half the battle" is wrong."

    This is in reference to half the battle being FDA approval, and the other half being an effective drug lunch. Not sure where you're pulling the DEA part from.

    "This is pure BS> Where do you pull that Nov 12 date out of?"

    MSN Money list the non-BS date of Nov. 12 for the EMA verdict. You can find said non-BS article here:

    http://money.msn.com/top-stocks/post.aspx?post=4ee41c83-046c...

    "1) Eisai doesn't have the money to buy the company

    2) Eisai's CEO has said they're not interested in acquisitions.

    It helps to do some research before propagating opinions."

    Actually, Eisai's CEO said he saw a "huge" medical need for the drug which would only make sense to speculate that a buyout would make sense:

    http://online.wsj.com/article/BT-CO-20120814-712506.html

    And we're talking about Eisai, one of the larger pharmaceutical partners. As of 3/31/12 Eisai had $2.4 billiion in cash + short-term investments using data found here on Bloomberg, and the most recent Dollar/Yen exchange of 1 USD = 78.2288978

    http://www.bloomberg.com/quote/4523:JT/balance-sheet

    Last I checked Arena was worth $1.78 billion. Since you want to be so snarky about it, it would appear that again I'm correct and Eisai has enough cash on hand to make the purchase.

    "There is no safety concerns. You're full of FUD. FDA has ruled that Belviq is safe. End of the story."

    That's a load of mularkey... because if Belviq was safe, the DEA would never have stepped in and called it a scheduled drug. Do I need to give you the defintion of a scheduled drug again?

    "What are you smoking dude? The label is established by the FDA - it's a done deal, finito."

    This is also pretty cut-and-dried. You can see most of the safety info from the FDA here:

    http://www.forbes.com/sites/matthewherper/2012/06/27/arena-o...

    "Eisai has solid experience marketing blockbusters. Dendreon had zero experience in a launch. Plus, DNDN's drug costs 90,000. Belviq costs around 4 bucks a day (price isn't announced yet). Your reasoning is weak at best. You tell people that some investors are "holding their breath their breath or gasping in horror" and you provide ZERO justification for that. You admit Eisai is hot, so no worries there, so what's there to gasp about - that Arena is not getting 100% of the revenue? Give me a break. Your gasping comment is just FUD."

    This is where the "other half of the battle comes in" that you so blatantly took out of context. As you said above, you have no knowledge of drug price yet, so why even bother going there? Let's see them launch a drug first before you get your stomach in a knot.

    All told this was a neutral article. I'm absolutely indifferent on Arena's outlook if you bothered to look at my CAPS record. I have 664 CAPS pick which means I keep a steady record of my bullish and bearish calls. This was merely an informative things to watch article which you have taken as a blatant attack on Arena longs.. when its not. Take my words out of context all you want, but all the links you need are above.

    Fool on!

    TMFUltraLong

  • Report this Comment On September 11, 2012, at 5:07 AM, TrackUltraLong wrote:

    Reza,

    And one last note on credibility since you seem to be questioning mine... I'm not jumping to any conclusions here, but I noticed you owned shares of Arena as late as September 5th based on your MF blogger articles which revolve around weight control management treatments. Yet as of your recently posted article you list owning shares of "no companies mentioned." Have you indeed sold shares of Arena and are just vigilantly defending it to no end (which I can commend) or did you fail to disclose your ownership in Arena? An inquiring mind wants to know.

    Thanks,

    TMFUltraLong

  • Report this Comment On September 11, 2012, at 11:20 AM, UCLA1989 wrote:

    What a nonsensical piece of analysis. We are now resorting to high school graduates writing analysis on drugs they know nothing about.

    Regarding the DEA - this author has no clue on what the DEA's function is. It is to provide a scheduling label.

    "First off, it looks like there could be a warning label applied to Belviq saying that it shouldn't be used during pregnancy because of adverse side effects, which could include serotonin syndrome."

    The DEA does not issue these warnings, the FDA does. It is a pregnancy category X: And this is what this category says with respect to Belviq:

    Risk Summary

    BELVIQ is contraindicated during pregnancy, because weight loss offers no potential benefit to a pregnant

    woman and may result in fetal harm. Maternal exposure to lorcaserin in late pregnancy in rats resulted in lower

    body weight in offspring which persisted to adulthood.

    Where does it warn about serotonin syndrome in this category.Furthermore, in the preclinical studies performed by Arena there were no teratogenic or embryocidal effects.

    This is the category Arena has been given, period .

    Then this uninformed author writes:

    "It's also worth noting that the FDA's approval letter didn't mention requiring that an echocardiogram be performed prior to prescribing the drug despite an increase in serotonin-2B levels noted in patients on the drug. This statement will likely result in a warning for those with moderate to severe cardiovascular problems (i.e., heart disease) who are prescribed Belviq. Among Arena's six safety trials, Eisai will be paying to run trials looking at Belviq's effects on heart attacks and strokes."

    All obesity drugs will be required to run CVOT for your information.

    First I want to ask you - what are serotonin-2B levels. Serotonin is a circulating neurotransmitter. You have obviously confused what 2B is. You probableyread something about 5HT-2B receptors but did not understand what you are reading. Receptors and neurotransmitters are two different things - what a clown. Belviq does not increase 5HTB levels - these are receptors. Belviq has minimal activity at these receptors and has very low functional potency as reported by the FDA briefing document.

    Furthemore, there is no need for echocardiograms because of two very important reasons: Belviq had the largest trial of echocardiogram studies done on an anti-obesity drug and demonstrated no increase in valvulopathy. Second, internists and cardiologists do not use echocardiograms to screen for valvular disease - a simple stethoscope is all that is needed which will discover over 90% of valvular problems.

    The DEA has nothing to do with indications or precautions regarding pregnancy, possible adverse effects, etc. The FDA is responsible for this. The DEA is concerned with addictive properties and hallucinogenic of drugs and if you did your research you would find that Belviq not only has been not been shown to demonstate addictive properties it has shown the opposite. 5HT2c agonists actually can be used to treat addiction and furthermore, Belviq (lorcaserin) has been shown to be useful in nicotine addiction.

    I could go on demonstrating the stupid statements and extremely poor analysis of this article above but I fear the author may not understand what I am saying.

    I don't understand SEC laws but to make outright incorrect statements regarding the DEA and its requirements regarding Belviq would seem to be intentional deception because they were not stated as opinions but as facts.

    The analysis of Belviq by ill informed journalists has become a tremendous joke and the ultimate comedy of errors,and there is no end to this.

    The name motley FOOL seems to be apropos with regard to this article. I have not seen a more foolish attempt at analysis.

    Daniel

    UCLA MD

  • Report this Comment On September 11, 2012, at 11:28 AM, rckings99 wrote:

    Game, set, match. Dr. Dan.

  • Report this Comment On September 11, 2012, at 12:12 PM, sheepdog21 wrote:

    Dr.Dan exposed you as what you truly are. A tool for the short hedgies who need to manipulate this stock down. I am sending this false article to the SEC

  • Report this Comment On September 11, 2012, at 12:23 PM, PhillyDan wrote:

    There are many factual errors in your article.

    1. DEA does not address safety concerns. That is done by the FDA. The FDA in approving Belviq, recommended Schedule IV. The DEA's is responsible for reviewing this recommendation to determine if Belviq should be Schedule IV or Schedule V or not a scheduled drug at all.

    If DEA sticks with the FDA's reco, all it means for prescribers is they only can prescribe Belviq for 6 refills at a time. That is the only impact on the label by being designated Schedule IV.

    Don't believe it, then go to the DEA site and read about the CSA act and the section on drug scheduling?

    2. EMA approval at the latest should happen by April 1st, 2013. The next event is Arena's response to the CHMP's 120 day questions. This should happen this month or early Oct. When the CHMP receives Arena's response, the clock on the 210 day review process starts again. There is the potential for additional questions at 180 days related to Arena's response. My guess is this will not happen.

    Then the CHMP makes the approval recommendation which is submitted to the EMA, in turn, they submit to the EU member countries for approximately a 30+ day review, mainly of reommended labeling and packaging before doctors can start writing prescriptions.

    3. Yes, Arena will be sharing revenues with Eisai for the Americas. But due to Purchase Price adjustments, for the first 4-5 years, Arena will receive greater than 50% of this revenue without incurring sales+marketing costs which will be subtracted from Vivus' gross profits.

    4. Arena and Eisai like Vivus will be running post approval studies. Most of the studies Arena/Eisai will run will be pediatric studies. Arena like Vivus will do a CVOT - cardiovascular outcomes study, which will be the most expensive study. The CVOT will look at the number of MACE that occur in the study population over a period of at least 2-3 years.

    As we all know, there were no CV signals in the Belviq studies but there were in the Q studies.

    As noted by the author, Eisai pays 90% of the costs of these studies. Vivus, well they are on their own!

    Which will be a significant hit to their bottom line.

    5. Regarding buyout's, it is all guesswork at this time.

    These are the facts based on due diligence from the DEA, EMA, press releases, Belviq Labeling websites.

  • Report this Comment On September 11, 2012, at 12:26 PM, beatlesforever wrote:

    M, TrackUltraLong:

    First as for the disclaimer, I do own shares of ARNA and set that on the original posting of the latest article but for some reason in one of the iterations it must have gotten lost and replaced with MF standard disclaimer. I've asked MF to fix it.

    Second, Dr. Dan puts you in your right place so I'll keep this short. You shouldn't really be blogging about something you don't understand because not only you spread FUD and misinformation you confuse investors. I don't know if you have an agenda or not but there are plenty of crooks doing plenty of short&distort.

    "This is in reference to half the battle being FDA approval, and the other half being an effective drug lunch. Not sure where you're pulling the DEA part from."

    Dude, first, it's launch and not "Lunch". I got DEA right from your very paragraph where you discuss half the battle and you say nothing about the "lunch" there - you mention DEA scheduling and EMA as the second half. If you mean to say launch and you neglected it as the second half you need a serious writing lesson because your readers can't guess that what you write is not what you mean and then guess what you really mean.

    "MSN Money list the non-BS date of Nov. 12 for the EMA verdict. You can find said non-BS article here:"

    I don't see anywhere that date. If MSN Money said (your link doesn't show it) it they're wrong because nobody knows, even the company doesn't know and you should know that because that's how the process works. But you don't and writing about something you have no clue about.

    "Actually, Eisai's CEO said he saw a "huge" medical need for the drug which would only make sense to speculate that a buyout would make sense:"

    If you had done your homework better you'd know that Eisai CEO said he is not interested in any large acquisitions.

    "And we're talking about Eisai, one of the larger pharmaceutical partners. As of 3/31/12 Eisai had $2.4 billiion in cash"

    That's not much compared to what real big pharma has and not enough to buy ARNA with. They can borrow but when CEO says not I guess second guess him.

    "That's a load of mularkey... because if Belviq was safe, the DEA would never have stepped in and called it a scheduled drug."

    Again you're talking nonsense and you have no idea what you're talking about.

    Please, just write about what you know. Roger told the bloggers this a few months ago. You already pushed down other better researched more accurate posts down the newsfeed with this garbage.

  • Report this Comment On September 11, 2012, at 2:57 PM, beatlesforever wrote:

    You should remove / desyndicate your crap piece from

    http://www.dailyfinance.com/2012/09/10/3-things-to-watch-wit...

    Shame! Your garbabge is misleading investors and bashing Arena and helping the crooks push the price down.

  • Report this Comment On September 11, 2012, at 4:56 PM, clawmann wrote:

    Arrived too late to comment the way I wanted. All of the errant nonsense in this article has already been pointed out by others.

    More blogosphere quackery.

    You get a time out Mr. Williams.

  • Report this Comment On September 12, 2012, at 3:49 AM, Riskon4life wrote:

    Now that’s a “Foolish roundup” alright.

    In all honesty, I needed a good laugh today, so for that I thank you. In fact, I had to recite a few parts over in my head just to make sure I understood them correctly.

    As previously revealed by former respondents, your medical pronouncements and broad-spectrum of expressions relating to Arena’s lorcaserin hydrochloride are transparently of substandard competence. (And believe me; I am being nice when I say that).

    Remember, most of us replying to your piece on this forum have studied this company for almost a decade now and can immediately identify inaccuracies in any data-set pertaining to the subject matter herein.

    Fortunately, for the sake of accurate reporting, our multifarious competency (Because we do work as a team, if you haven’t noticed) allows us to point out the obvious imprecisions, which in turn gives readers the opportunity to experience a precise and truthful assessment of the facts -- rather than a demonstration of “glittering generality.”

    In my opinion, it is an imperative obligation and a strongly recommended prerequisite that prior to publishing an article involving relatively complex scientific facts and acumens, that the author conduct a stringent schedule of due diligence.

    Examples: Briefing Documents; 10Ks; Company originated press releases; FDA minutes and transcripts; Slide presentations; FDA post approval criteria; Partnership contractual agreements, etc.

    Most of us serious longs have not only read the aforementioned documents, but have likely memorized much of the material; hence, the harsh rebuttals to an inaccurate article.

    Nevertheless, I encourage you to keep writing because it's part of the American way, but please don’t be “foolish,” and in the future, complete your due diligence prior to hitting that publish button.

    Regards -

    Riskon4life

    Disclosure: I am long Arena and staying that way

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2011441, ~/Articles/ArticleHandler.aspx, 10/1/2014 4:18:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement