More Than an Obesity Drug Company

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Arena Pharmaceuticals' (NASDAQ: ARNA  ) shareholders -- and those who short the stock, for that matter -- are anxiously awaiting the launch of the company's obesity drug Belviq. The Food and Drug Administration approved the drug back in June, but the biotech and its marketing partner Eisai can't launch until the Drug Enforcement Agency decides its potential for abuse.

Meanwhile, Arena isn't sitting around doing nothing. Earlier this month, the company said it's starting a phase 1 trial testing a new drug, APD334, in healthy adult volunteers. A phase 1 trial isn't going to produce data that will move the share price, but it's a necessary step toward that end.

APD334 targets the sphingosine 1-phosphate subtype 1 receptor, which is involved in numerous autoimmune diseases, including multiple sclerosis, psoriasis, and rheumatoid arthritis. All three diseases are large markets with multiple blockbuster drugs treating them. Biogen Idec (NASDAQ: BIIB  ) , for instance, has two multiple sclerosis drugs -- Avonex and Tysabri -- that are both blockbusters. AbbVie's (NYSE: ABBV  ) Humira, which treats both psoriasis and rheumatoid arthritis, posted sales of more than $9.2 billion last year.

Blockbuster obesity drugs have been a long time coming. If APD334 works in phase 2 and phase 3 trials, it's a clearer pathway to billion-dollar annual sales than the huge-but-unproven obesity market.

The rest of the pipeline
APD334 isn't the only drug Arena is working on. The company is focused on G protein-coupled receptors, which are involved in a wide variety of diseases, including 5-HT2C that Belviq targets and the S1P1 receptor that APD334 targets.

APD811, which targets the prostacyclin receptor, is being tested for patients with pulmonary arterial hypertension, or high blood pressure in the arteries that carry blood from the heart to the lungs. The company has completed phase 1 dosing of ADP811 in healthy volunteers, but plans to run another cohort of subjects to get the dose right before initiating a phase 2 trial.

Temanogrel is in the same boat. Arena has already run one phase 1 trial, but plans to run another phase 1 trial because the maximum tolerated dose wasn't reached in the first trial. Arena has licensed temanogrel to Ildong Pharmaceutical, which is responsible for funding the second phase 1 trial and the phase 2a trial in patients with serious thrombotic diseases including heart attacks, acute coronary syndrome, and stroke. 

Arena also has a few preclinical compounds targeting other G protein-coupled receptors.

Progress, but...
I'm impressed with Arena's progress. Compare it to a company like Onyx Pharmaceuticals, which for years insisted that Nexavar was sufficient for survival, only to eventually change its tune and acquire an external pipeline.

But in the short term, Arena is still highly dependent on Belviq. The biotech has a market cap of $1.8 billion; a company with three phase 1 compounds is only worth a tenth of that. It remains to be seen whether Arena and Eisai can compete with VIVUS' Qsymia, which produces greater weight loss but with potential for more severe side effects.

At least Arena has a backup plan.

Who will win the obesity drug market?
Can VIVUS pick up its lagging sales and fend off the competition, or will Arena Pharmaceuticals reign supreme in the obesity space? If you're in the dark, grab copies of The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals to stay up to date. Senior biotech analyst Brian Orelli gives investors the must-know information, including an in-depth look at the obesity market and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.

Read/Post Comments (4) | Recommend This Article (1)

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 April 15, 2013, at 1:21 PM, beatlesforever wrote:

    VIVUS' Qsymia has comparable efficacy to Belviq at the recommended Qsymia dose except that Belviq's safety is far better.

  • Report this Comment On April 15, 2013, at 4:00 PM, RSRdriver wrote:

    WRONG! Vivus Qsymia is at least 60% better than Belviq in efficacy!

    And as far as safety, the jury (DEA, EU, Insurance coverage and MD's) is still out!

  • Report this Comment On April 16, 2013, at 5:43 PM, beatlesforever wrote:

    Belviq's efficacy is comparable to Qsymia's recommended dose but with far better safety. Belviq responders lost 11-12% in a year. That's excellent efficacy with no increase in metabolism or risk of lip cleft.

  • Report this Comment On April 17, 2013, at 12:31 AM, JustPassinThru wrote:

    I appreciate this article by Brian. For a while now these MF articles on ARNA have been poorly researched and presented. That ARNA is steadily developing a wide array of novel drugs, each with obvious blockbuster potential, needs to presented to the investing public! And RSRdriver: I have been following this stock and the public commentary for almost 11 months. I was fortunate to initially buy in around $2.60/share. And I have observed your repeated attempts to lead astray new retail investors just finding out about this incredible company. The stock has been holding at $8.00+ for about 8 months now. Do you really think in these last days before the big run-up, that you'll be able to make any difference with the FUD you spew? Take a hint from all those informed investors who have been refuting your FUD for the last 11 months... Your input is not valued :)

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