Why Arena Pharmaceuticals Inc. Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnology company Arena Pharmaceuticals (NASDAQ: ARNA  ) surged 17% today after expanding its marketing deal with Japanese drug maker Eisai for its obesity drug Belviq.

So what: Under the agreement, Eisai will give Arena an upfront payment of $60 million and milestone payments of up to $176.5 million for the rights to market Belviq in all countries worldwide (except South Korea, Taiwan, Australia, Israel, and New Zealand), reigniting optimism over the drug's adoption trajectory. Additionally, Arena will receive up to about 36% of Eisai's net sales on the drug based on certain conditions, suggesting that Arena's top line is starting to pick up steam after Belviq's disappointing launch.

Now what: Eisai also announced plans to double Belviq's U.S. sales force to 400 reps by this December.

"Additional work is needed to continue building the weight management market, and we are pleased with Eisai's commitment to realizing the medical and commercial potential of BELVIQ," said Arena CEO Jack Lief. "We look forward to the market growth of this important treatment option as we move into 2014."

So while Arena might still be too speculative for average investors, today's positive news, coupled with the fact that the shares remain well off their 52-week highs, make the stock an interesting pick for biotech experts.

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Comments from our Foolish Readers

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  • Report this Comment On November 08, 2013, at 12:20 PM, biogemfinder wrote:

    Where is Brian Orelli?? I thught he has arena and all the obesity drug companies all figured out and according to him arena is not worth anything..where is he hiding now..or is he busy concocting another bash fraud FUD article??

  • Report this Comment On November 08, 2013, at 2:39 PM, RSRdriver wrote:

    The drug still sucks and nothing will change that.

  • Report this Comment On November 08, 2013, at 3:48 PM, marpieslice09 wrote:

    ohhh rs drivel so sad to see youve lost here

    maybe try spencer and adams next bash

    we have a 1,56 BILLION milestone to make room for

  • Report this Comment On November 08, 2013, at 3:48 PM, marpieslice09 wrote:

    maybe VVUS is better for losers like you

  • Report this Comment On November 08, 2013, at 7:55 PM, gazoo99 wrote:

    RSR... didn't take kindly to my comment....

    Reported it & Deleted it......

    Guess he's licking wounds.

    Funny how one sided this can be here.

  • Report this Comment On November 09, 2013, at 8:55 AM, marpieslice09 wrote:

    rsDRIVEL/adam fraud/ spencer azzbo

    your anaylsis of arna is no longer needed

    you can stay and watch or you can move along

    we dont care

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