Arena Scores Off Its Punt to Eisai

If the obesity drug market was a football game, then Arena Pharmaceuticals (NASDAQ: ARNA  ) just punted. To take that analogy even further, Arena even scored a few points by punting.

Arena announced its third-quarter financial results Thursday afternoon. Nothing overly spectacular there -- although the company did beat analysts' expectations with a loss of $0.08 per share. The big news, though, is related to an expanded marketing arrangement with Japanese pharmaceutical firm Eisai. This announcement excited investors enough to send Arena's shares up by more than 20% in intraday trading before giving up some of those gains.

Punting
Eisai already was responsible for marketing Belviq in most of North America and South America. Arena carried the ball by itself in most of the rest of the world.

That will change now. Arena is giving exclusive marketing rights for its obesity drug to Eisai for all countries except South Korea, Taiwan, Australia, Israel, and New Zealand. In return, Eisai is paying Arena $60 million upfront and could receive additional milestone payments of up to $176.5 million.

Arena also announced earlier this month that Eisai was beefing up its sales force in the U.S. The Japanese drugmaker committed to increasing its sales staff for Belviq to 400 by the December -- double the number employed when Belviq first went on sale in the U.S. in June. 

Early in the game
The market clearly applauded the latest move. Eisai brings resources for the global commercialization of Belviq that Arena couldn't come close to matching. Even with Eisai's large sales organization, though, Belviq got off to a slow start in the U.S. As prescription data came in in the early weeks of the launch, Arena's shares sank lower and lower.

But it's definitely still early in the game for all of the players in the obesity drug market. An expanded global role for Eisai combined with the firm's commitment to increasing its efforts in the U.S. could potentially mean better days are ahead for Arena and Belviq.

VIVUS (NASDAQ: VVUS  ) , meanwhile, has faced even more challenges with its launch of Qsymia. One of those challenges included a clash with a large investor, First Manhattan, which claimed that the company mishandled the commercialization efforts for Qsymia. VIVUS has gone through three different CEOs in the span of just a few months.

Another player is sitting on the bench anxiously waiting to enter the game. Orexigen Therapeutics (NASDAQ: OREX  ) recently submitted for regulatory approval in Europe for its obesity drug Contrave. If the results are positive from the  cardiovascular study that's near completion, Orexigen could submit for FDA approval by as early as the end of the year. 

Fervent fans
There's one way that the football analogy really applies to the obesity drug space. These three obesity drug companies have a fan base as fervent as those of any NFL team. If you doubt that, just read through the comments on any article written about Arena, VIVUS, or Orexigen.

Fans of Arena will look at the latest announcement about Eisai's expanded sales role and get excited. Fans of VIVUS will probably dismiss the news as meaningless. And fans of Orexigen will likely respond, "You ain't seen nothing yet" until Contrave hits the market. What's my take? I'll just enjoy the game.

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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 November 08, 2013, at 5:36 PM, JustPassinThru wrote:

    The term "punting" is commonly used to describe a last ditch attempt to grab a few points after the game's tactical position has stalled. Later the author says "Even with Eisai's large sales organization, though, Belviq got off to a slow start in the U.S."

    Weekly sales since the beginning of the drug roll-out have been increasing by approximately 6%. Most corporations would give their eye teeth to have a weekly sales rate increase of 6%. But this is characterized as a "slow start" by the author. Certainly a "foolish" call (but probably not "foolish" in the way "Motley Fool" likes to think of itself...).

    No punting going on by Arena. The doubling of the sales force currently underway, interaction with the international professional medical community is progressing, DTC advertising is expanding, new patents for novel drugs (with extended patent protection) are awarded almost weekly, etc.

    Will Vivus even make it to the end of 2014 before they file for bankrupcy? And Contrave making it to the market with their weight loss drug before 2015 (if at all) is only a foolish dream. Arena never did have any competitors, and all of the wishful thinking of those still foolishly short Arena won't matter.

    Cheers!

  • Report this Comment On November 08, 2013, at 6:14 PM, billcatedit wrote:

    How can you see this an anything but positive? Arena is a development company while Eisai is marketing and sales. Smart move and great future for both companies.

  • Report this Comment On November 08, 2013, at 6:23 PM, feelinIrie wrote:

    This article shows the desperation that Cramer, Feurstein.

    Credit Suisse's analyst Lee Kalowski.should be giving an upgrade to ARNA now, right Lee!

  • Report this Comment On November 08, 2013, at 6:27 PM, 1yossi1 wrote:

    I really hope you've managed to convince MANY "foolish" to short ARNA now!

    BELVIQ is going to be a blockbuster for sure!

    Lorc/Phen will "kill" Qsymia and Contrave,

    and ARNA is the BEST stock I know for next 6 months!

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