Arena Pharmaceuticals (NASDAQ:ARNA) ended down 3.8% Friday after announcing earnings on Thursday night that included a rather paltry $2.3 million in revenue from sales of its obesity drug Belviq.

The sales don't seem to justify the downturn. We've known about the fourth-quarter sales since Arena's marketing partner Eisai issued earnings earlier this month.

I haven't exactly been a short-term Arena bull, but it seems like things are going about as good as could be expected.

  • Eisai appears dedicated to growing sales, doubling the sales force and running television commercials in the second quarter.
  • Private insurance coverage for Belviq has reached 50%, and Eisai is shooting for 75% coverage by March 2015.
  • There are plans to test Belviq as a smoking cessation drug, and it's already in a pilot study in combination with phentermine for weight loss.
  • Belviq is under regulatory review in five more countries: Switzerland, Mexico, Canada, Brazil, and South Korea.

What more could investors hope for? Oh yeah, decent net sales so the 31.5% that Arena collects from Eisai on net sales of Belviq amounts to something reasonable enough to cover Arena's expenses. Operating expenses in the fourth quarter were still more than four times revenue, even including reimbursement of clinical trial costs from Eisai.

While Belviq's sales numbers aren't anywhere near its potential -- only 2% of overweight and obese patients are using prescription weight loss products such as Belviq or VIVUS' (NASDAQ:VVUS) Qsymia -- they're not particularly surprising. Convincing doctors to prescribe the drugs, and patients to pay for them, is going to take time. VIVUS only recorded $7.7 million in Qsymia sales in the fourth quarter.

I didn't hear anything on the conference call that would decrease the long-term potential of Belviq or Arena's pipeline. As best as I can tell, today's downturn is simply because investors were hoping for a more upbeat report on the prospects for the company.

While investors are right to focus on Belviq -- where expectations will determine near-term valuations -- they shouldn't forget about Arena's pipeline, consisting of four different molecules in or ready for clinical trials. The compounds are all in early-stage trials, but Arena's valuation in the long term could be determined as much by its pipeline as the sales potential of Belviq.

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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 may not 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.