Not What the Obesity Doctor Ordered

Arena Pharmaceuticals announces dismal fourth-quarter sales. Can Aetna help VIVUS turn things around?

Feb 3, 2014 at 6:06PM

Sales of Arena Pharmaceuticals' (NASDAQ:ARNA) Belviq through the first six months of the launch have been rather pathetic, coming in at just $17 million. Arena Pharmaceuticals' marketing partner Eisai spilled the beans Monday morning during its quarterly earnings conference call.

A blockbuster would be able to do that level of sales in about six days. It took Eisai six months.

If you're looking for some kind of good news, sales are actually growing.


Q2 2013

Q3 2013

Q4 2013





Source: Arena disclosures. Sales in millions.

The second quarter was mostly stocking since the drug launched in June, so the only real comparison is the 39% quarter-over-quarter increase from the third to fourth quarter. Most biotechs would love that kind of growth, but working off such a small base, it's essentially meaningless.

If Belviq's sales continue at the same growth rate, it'll reach blockbuster levels -- $250 million per quarter -- in the third quarter of 2016. Arena really needs Belviq to see sales triple or quadruple in the coming quarters to get investors excited.

But how?
I don't think Arena or Eisai have done anything wrong launching Belviq. VIVUS (NASDAQ:VVUS) hasn't really done any better with its competing obesity drug Qsymia. The biotech hasn't released fourth-quarter sales figures yet, but Qsymia sales were just $6.4 million in the third quarter.

Unfortunately, the companies launched into a market where doctors are understandably a little skeptical of treating obesity with drugs. Having two drugs pulled from the market over safety concerns will do that.

I think the solution is to go to the patients and get them to ask their doctor about it. A doctor who's a little skeptical of a drug's risk-benefit profile might be more willing to prescribe the drug if a patient asks for it even if the doctor wouldn't initiate the prescription. Eisai already has print advertisements. The next logical step is television spots.

The other major stumbling block has been paying for the drug. Insurers are slowly adding Belviq and Qsymia to their coverage lists, but it's often at tier 3, which comes with high copays. Both Eisai and VIVUS have had to give free and discounted drugs to get and keep patients on their drugs.

From an insurer's perspective, the problem is that weight loss has long-term rather than short-term health benefits. Since insurers don't know if their member is going to be with them next year, it's hard to justify encouraging patients to use the drugs to lose weight.

Employers that self insure, on the other hand, have more motivation for their employees to lose weight. In addition to the health benefits, feeling good can make people more productive; the reason that employers offer memberships to gyms to their employees.

Last month, VIVUS announced that it was partnering with Aetna (NYSE:AET) to include Belviq as part of a weight loss program offered to Aetna's self-insured plans. Arena and Eisai would be well advised to follow suit with other insurers.

A better pick for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information