4 Superball Stocks

• Report this Comment On September 10, 2012, at 4:36 PM, Foreeverlong wrote:

  Rich,

  What is the point of referencing Arena in your article, and leaving your readers hanging? Do you even follow Arena? Because, there is no indication that you do follow the stock in your article.

  Let me help both you and your readers to make some sense out of the fall in Arena's PPS, and what CS was trying to accomplish with their guidance on Arena.

  First, Arena was not "cut off at the knees" by CS, who filed an analysis containing guidance that Arena's stock should be valued at $6 PPS, which was toally unfounded! Even more curious, CS was buying Arena's stock both before and after the guidance. Many Arena stockholders believe that the guidance filed by CS was nothing more than a "hit job" designed to decrease Arena's PPS so that CS and other institutions could buy in at a cheaper price.

  What you didn't tell your readers is that many HF's and institutions bet on the wrong horse thinking that Arena would not receive approval for Belviq (it did!), and that its effacy was not high enough (it is!). The realty is that its efficacy for "completers" of the clinical trials of Belviq put it at 11% weight loss, which when combined with its safety record, place it way ahead Qsymia, while Contrave has yet to be approved.

  So, what happened actually with CS is that its guidance was designed to discredit Arena, lower its price and allow institutions and HF's to buy in at cheaper prices before DEA labeling occurs in the next few months and the product is on the market by Dec. 1st, 2012.

  Want more proof that this was nothing more than a hachet job? Arena has no sales for its recently FDA approved Belviq drug that was praised by the FDA as a novel drug having capabilities to treat not only obesity, but other maladies such as Type II diabetes. In addition, to Arena having a very vauable pipeline of novel drugs ranging from treatment of pulmonary hypertention to chronic pain control. It is the safest, most efficacious weight control drug developed to date, and essentially has no competition, because Orexigen's drug, Contrave has yet to receive FDA approval, and at best will not be out for two years. Vivus'es drug, Qsymia received a FDA approval, and a very restrictive REMS that will make it difficult to sell in the worldwide market IMO.

  So, how does CS peg Arena's PPS at $6 when they have not sold one pill of Belviq? I have given you the answer in the preceding comments.

• Report this Comment On September 10, 2012, at 4:46 PM, NYGuy01 wrote:

  Full disclosure first. I do own Arena. It is a very small position and I have made money on it by holding through FDA and selling and buying a bit afterwards, but know I am holding it as a long term investment.

  Now with all due respect, I think it has to be reasonably mentioned and disclosed that the report from Credit Suisse had holes in the logic/statements and that their downgrade of ARNA and coverage/upgrade of OREX simply does not make sense. In the article the analyst states that there is probably room for maybe one blockbuster drug in the space which he vastly underestimates. Well OREX is at least 18 months away from being ready to release to sell if it even receives FDA approval. VIVUS and ARNA will be selling their drugs within 6 months. This gives them a year to corner a market that is allegedly small. Second Credit Suisse has doubled its position as of 6/30/2012 as compared to 3/31/2012. So I better see that CS has either held or reduced its position as of 9/30. If they have added then there is something that does not add up. Finally he states that ARNA has lofty goals for sales of Belviq that it might not live up to in light of some safety concerns. Those concerns are clearly expressed, will be reviewed as part of a series of post approval studies which will take years to complete. The anal-yst also mentioned efficacy issues with Belviq versus VVUS's Qysimia. Well the trial methodology was not the same therefore if you look at it apples to apples, the efficacy of Belviq is almost as good as Qysimia and Qysimia's best results come from its highest dose which is only advised as a desperate measure. Qysimia also has a REMS currently and has more health concerns attached to it based on labeling if you compare the two. Now stating that do I think VVUS has a bad product? No. Do I think OREX has a bad POTENTIAL drug? No. I'm just stating that bottom line, CS did not do their homework and even seems to have an agenda. Now you may say there goes another one of those crazy Areniacs, but this is how I see it.

• Report this Comment On September 10, 2012, at 11:33 PM, Riskon4life wrote:

  Irrationality Theory and the Sell-Side Analyst

  The truth is that I, as with many other devoted Arena longs, projected that we would witness an atypical post-approval divergence - in rationale - amongst the analyst community. It seemed logical that forecasters would struggle to extrapolate (Internally and externally) the supportive reasoning affecting Arena’s post-approval and future price per share valuation. Currently, some institutions have Arena's price per share target at $20, while others, as of late, have set it at $6. As we have all observed, this prophecy has now come to fruition.

  One might ask, “Why such a bifurcation?” Well, the answer is rather rudimentary in my opinion. Logic tells us that it’s because all pertinent research prior to the physical launch of Belviq (Or any other drug in a waiting period for that matter) is explicitly and unarguably a tentative engagement. Categorically speaking, all assumptions, models, and empirical evaluations pertaining to the product’s allure, marketability, sales revenue projection, and overall sustainability are therefore centered on a hypothetical premise. Hence, under these indistinct circumstances, it is fair-minded to expect a modest to significant variation in analytical opinions and their respective contradictory conclusions.

  Now, in my opinion, it’s unquestionably an organization’s prerogative to disseminate a report on the prospects of a company’s drug under the aforementioned “conjectural” conditions. Keep in mind, though, in order for any prominent grade analysis to be impactful, specifically in the sphere of an indubitably educated investment audience, the research should unequivocally include a balanced and unprejudiced evaluation of the facts. This includes future catalysts that, as most investors recognize, could just as easily propel Arena’s shares to much higher levels or to all-time highs.

  In my opinion, Credit Suisse’s report conclusively lacks this criterion. Their presentation blatantly chooses to exclude all potentially positive aspects and progressive outcomes that will, in all likelihood, significantly stimulate Belviq’s/Arena's future success and result in a subsequent increase in aggregate shareholder value. Moreover, they completely ignore and disrespect the company’s extraordinary accomplishments thus far, including a robust pipeline of novel drugs, which are in various phases of scientific development. Remember, Arena employs some of the preeminent scientists in the biotech industry, thus, additional NDAs will eventually be filed with the FDA. There is no question in my mind that Arena has a very bright future -- beyond Belviq.

  Since we have discussed the prospective catalysts on this and other forums a million times, I will not bother rehashing them here. My main point is that analysts have been all over the board with this name since day one; it’s no secret. They were oblivious then, and as witnessed by the recent downgrade and $6 price target by Credit Suisse, they’re still incompetent today. Please know that I am not at all worried about my investment in this remarkable company, but instead disappointed in the lack of proficiency and the basic inability of world class institutions to just get it right for a change.

  To conclude, I am a firm believer that most analysts’ research notes are merely self-promoting instruments that are predestined to oblige the underlying institution and its clients. Hard to believe? Not really. Just look at the recent accrual statistics and you will see that Credit Suisse has dramatically increased their stake in ticker symbol ARNA. To think otherwise, would be utterly nonsensical. With that said, I wouldn’t read much into any of these upgrade/downgrade cycles, but instead, allow the company’s innovative predisposition, potential forthcoming catalysts, and future financial performance to command the price per share instead. It won’t be long, in my opinion, before all the skeptics realize that they got it wrong once more.

  Best of luck to all of you!

  Riskon4life

  Disclosure: I am long Arena and staying that way

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