An Article About a Press Release About an Advertisement

Arena Pharmaceuticals (NASDAQ: ARNA  ) issued a press release pointing out that its marketing partner Eisai had started direct-to-consumer advertising for their obesity drug Belviq, including a full-page advertisement in O, The Oprah Magazine.

You read that right: a press release about an advertisement.

It's a sure sign that Arena knows its investors are a little worried about the launch. Management needn't look further than Arena's stock price to see.

ARNA Chart

ARNA data by YCharts

Ouch!

I'm not surprised by the slow launch, but Arena's share price decline is surprising. Investors must have had a higher expectation of the launch than I did. It seemed pretty obvious after VIVUS's (NASDAQ: VVUS  ) slow start launching its obesity drug, Qsymia, that Belviq wouldn't be an instant blockbuster.

Sure, Arena had a few things going for it. Belviq was available in drugstores on day one of the launch; Qsymia was initially available only through mail-order pharmacies. Belviq has fairly mild side effects, while there's a risk of birth defects with Qsymia, which is governed by a REMS. And Arena has a Big Pharma marketing partner, while VIVUS launched alone.

Unfortunately, none of those issues are the main reason Qsymia's launch was so slow. The bigger issue is that doctors are fundamentally uninterested in treating obesity with drugs and patients don't want to pay for the drugs out of pocket.

Both issues are fixable. Doctors will become less worried about the risk-benefit of using drugs the longer they're on the market, and Eisai and VIVUS are making progress getting the drugs covered by insurance, although there's still a long ways to go.

Eisai's new direct-to-consumer advertisements may help drive prescriptions -- some doctors will prescribe drugs if asked even if they wouldn't have initiated it if the patient didn't ask -- but there's still the sticker shock of paying for the drugs for the majority of people who aren't covered by insurance.

It's going to take time to convince doctors and insurers that the drugs are worth prescribing and paying for. Orexigen (NASDAQ: OREX  ) and Takeda, which hopefully will be able to launch their obesity drug, Contrave, next year, might end up having the best initial launch of the three, walking into a market primed by Eisai and VIVUS and learning from what's worked for them.

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Read/Post Comments (14) | Recommend This Article (4)

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 16, 2013, at 5:17 PM, RSRdriver wrote:

    That same PR firm left a flyer on my windshield!

    Arena is pulling out all the stops. Too bad they can't change the dismal efficacy or lower that stratospheric price!

  • Report this Comment On September 16, 2013, at 6:22 PM, AreaRich wrote:

    What is too bad is that most don't understand that Belviq efficacy is fine. It did pass FDA scrutiny, but what really makes it stand out is the fact that not only does it treat obesity, but also diabetes. It works just as well and in some cases better than, and with less side effects, than diabetes drugs currently on the market. And some of those very drugs earn billions a year in revenues. I believe the future looks bright for Belviq. We must remember that Viagra was developed as a blood pressure drug originally and look what happened there. Now you know the rest of the story.

  • Report this Comment On September 16, 2013, at 6:25 PM, AreaRich wrote:

    One other comment. While we are talking about its supposed stratospheric cost, just keep in mind that the current line of diabetes drugs cost 2 to 3 X the cost of Belviq.

  • Report this Comment On September 16, 2013, at 7:05 PM, feelinIrie wrote:

    RSDRIVER

    HMMM, talk about still not knowing Anything.

    It is Eisai that is doing what they have had planned to do. Arena has nothing to do with the advertising.

    Get a clue.

    _______________________________________

    September 16, 2013, at 5:17 PM, RSRdriver wrote:

    That same PR firm left a flyer on my windshield!

    Arena is pulling out all the stops. Too bad they can't change the dismal efficacy or lower that stratospheric price!

  • Report this Comment On September 16, 2013, at 7:40 PM, feelinIrie wrote:

    Don't you mean "Eisai", as ARNA has nothing to do with the advertising.

    Please do your diligence correctly.

  • Report this Comment On September 16, 2013, at 8:06 PM, enilson2000 wrote:

    This was not a PR about one Advertisement. This was a PR about the start of a Direct to Consumer campaign. I like thousands of other Belviq users, who are using Belviq and losing a substantial amount of weight,, have received support brochures in the mail. There will now be many more advertisements than just the one Oprah advertisement. This was obviously a hit article and not the first one by Motely Fools. I use to have several subscriptions to Motley fools, and I have lost money following Motely fools advice. I have now unsubscribed from all Motley fools emails due to their biased and uninformed attacks on Belviq.

  • Report this Comment On September 17, 2013, at 12:55 AM, AlanPithy wrote:

    An article about a press release about an advertisement to sell a subscription to a newsletter.

  • Report this Comment On September 17, 2013, at 5:52 AM, RSRdriver wrote:

    Notice how these "investors" in Arena always avoid the issue that has and will continue to define the PPS-efficacy and cost!

    Doctors are not Areniacs and ultimately all advertising is meant for them. Doctors see literally thousands of drug ad's. They are not swayed by pumps as some here have been!

    Only a fool would continue to hold this stock in the face of reality and the obvious!

  • Report this Comment On September 17, 2013, at 7:57 AM, adumfraudstain wrote:

    Hey Brian and RSRdriver- when are you guys going to ever cover your huge sub $3 ARNA short trades? Lol!

  • Report this Comment On September 17, 2013, at 10:42 AM, Foreeverlong wrote:

    Another worthless article form Brian Orelli. Honestly Brian, your articles show no insight, strong bias against Arena/Belviq, and frankly are not worth reading. Most of the sophisticated investors in Arena don't even bother to comment, because we are tired of trying to educate you. Do you even care to do the research? What is the purpose of these articles?

    RS! Don't even bother to comment because we all know you are a Moron!

  • Report this Comment On September 17, 2013, at 11:21 AM, CER4040 wrote:

    Yeah insurance companies ruthless as it seems are probably doing the statistical analysis of whether to hedge their bets on is it cheaper to treat obesity or risk the cost of treating the many diseases caused by obesity. Most people probably don't consider obesity a life threatening disease yet because so many suffer from it and the impact on health from the disease is not immediately obvious to many. In fact it was only recently declared a disease by the AMA this summer. Wow!! really? It took them this long...sad but true.

    Considering obesity has recently been declared a disease I think coverage will improve. It's just the unfortunate nature of our financially motivated political system and how it is tied into health care costs which is delaying eventual coverage.

  • Report this Comment On September 17, 2013, at 1:38 PM, JustPassinThru wrote:

    "It's a sure sign that Arena knows its investors are a little worried about the launch." and "Investors must have had a higher expectation of the launch than I did."

    You've been writing hit articles on Arena for some time now Brian, and I understand that you aren't interested in getting "educated" about Arena and it's weight loss drug Belviq that has just now begun Direct to Consumer marketing.

    This comment is supplied to other Motley Fool investors who might accidentally click on this article. I wouldn't want them completely mislead by the distorted perspective offered in this article.

    During Belviq's drug roll-out sales have exceeded by 2 and 1/2 times the sales of their nearest competitor (Vivus/Qsymia). Real-world efficacy and responder percentage is 2 to 3 times what was seen in clinical trials. And real-world effectiveness is the bottom line when it comes to drug value. One of Belviq's main selling points is its safety with no significant side effects. And as AreaRich commented above, Belviq is as effective as most currently available diabetic treatment drugs, but with no side effects and lower cost.

    This company's 'disruptive technology" will be impacting major medical markets worth 100's of Billions of dollars over the next couple of years, and that creates a POWERFUL incentive for those companies to try to interfere with Arena's success by manipulating the stock price downward. But this shorting activity can only continue for the short term. As Warren Buffet said, "If a business does well, the stock eventually follows."

    Arena keeps hitting home runs (new drug distributors worldwide, advertising in quality venues like Oprah, new drugs successfully making their way through clinical trials, etc.).

    This company IS succeeding. I guess MF will be one of the last boys on the block to get it. Or maybe just MF's customers?

  • Report this Comment On September 18, 2013, at 3:19 AM, jodycastro wrote:

    It's big news to me!

    Circulation averages for the six months ended: 6/30/2013 for O OPRAH is 2,417,589.

    http://abcas3.auditedmedia.com/ecirc/magtitlesearch.asp

  • Report this Comment On September 18, 2013, at 3:34 AM, jodycastro wrote:

    oh yeah... and COOKING LIGHT Magazine 1,796,440. That's 4,214,029.00 people that will learn about Belviq!!!

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