What happened

Shares of Arena Pharmaceuticals (NASDAQ:ARNA), a small-cap biotech company with a focus on a broad array of specialty disease indications, vaulted higher by 10% during the month of October, according to S&P Global Market Intelligence. The reason for the excitement appears to be an Oct. 19 press release detailing positive midstage results for its lead drug ralinepag, an oral, selective prostacyclin receptor agonist for the treatment of pulmonary arterial hypertension (PAH).

So what

The data release was tied to a poster presentation at the American College of Chest Physicians' annual meeting in Canada. The midstage study wound up demonstrating "a statistically significant absolute change from baseline in pulmonary vascular resistance (PVR) with ralinepag compared to placebo." That's notable because prostacyclin deficiency results in increased PVR, usually leading to right ventricular failure and possibly death.

A doctor holding a tablet and having a discussion with an elderly male patient.

Image source: Getty Images.

The study involved 61 adult patients with PAH and involved a 9-week medication titration, followed by a 13-week treatment period. In addition to the marked improvement in PVR, there was a noted numerical improvement in the six-minute walk distance, which was a secondary endpoint. And as icing on the cake, the adverse events profile between ralinepag and the placebo were similar.

Next up in ralinepag's development will be a discussion between Arena and the Food and Drug Administration with regard to designing a pivotal phase 3 study in a larger PAH patient population. 

Now what

Following a disaster with now-jettisoned weight-loss drug Belviq, which never worked out as planned, Arena Pharmaceuticals is hoping to reinvent itself as a specialized drug developer. Success with ralinepag could be a good first step. If there is a nitpick to be made at this point, it's that PAH is becoming a highly competitive indication. However, that shouldn't hurt the drugs' chances of success given the pricing power held by PAH drug developers.

Arena's S1P receptor modulator Etrasimod, and cannabinoid receptor-2 agonist APD371, may also hold promise. Investors are particularly interested in APD371 for Crohn's disease pain. Given that opioids are commonly used to treat pain associated with Crohn's disease, and opioids are highly addictive and led to more than 20,100 overdose-related deaths in 2015, any effective substitute would be viewed as a positive. Focusing on the naturally occurring cannabinoid receptor system within our bodies could be an intriguing fix.

While this investor will remain skeptical of Arena considering how much its valuation has already run up following ralinepag's data release, it's nevertheless worth adding to your watchlist on the promise of its specialized pipeline.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.