What happened

After the company unveiled phase 2 data results for its clinical-stage ulcerative colitis drug, etrasimod, shares in Arena Pharmaceuticals (NASDAQ:ARNA) are shooting 31.6% higher as of 1 p.m. EDT today.

So what

The ulcerative colitis market is worth billions of dollars in sales annually. Arena Pharmaceuticals hopes etrasimod can vie for a share of that market someday, if late-stage data confirm results from its midstage study.

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IMAGE SOURCE: GETTY IMAGES.

In a randomized trial, patients receiving 2 mg of etrasimod daily saw improvements in lymphocyte counts, clinical remission rates, and disease activity.

Specifically, 33% of patients achieved clinical remission as measured by the three-component Mayo Clinic score, and 24.5% of patients achieved clinical remission as measured by the Total Mayo Clinic score. Those numbers matched up favorably versus remission rates of 8.1% and 6%, respectively, in the placebo arm of the study.

Etrasimod's safety profile was solid, and it was well-tolerated by patients. There were no severe adverse events experienced by patients in the 2 mg dose arm of the study, and there were no increases in liver function tests, swings in heart rate, or cases of macular edema. This is important because etrasimod's an S1P modulator, and those safety risks have been observed with other S1P modulators.

Now what

The race is on between Arena Pharmaceuticals' etrasimod and Celgene Corp.'s (NASDAQ:CELG) ozanimod, another S1P modulator that's in clinical trials for use in ulcerative colitis patients. Ozanimod is already in phase 3 studies in the indication, so it has a head start. Nevertheless, ozanimod is less selective than etrasimod, and if nonselectivity causes unwanted side effects, that could end up giving etrasimod a safety edge.

We're still pretty far away from having late-stage data in hand for etrasimod, but we could have phase 3 results sooner for ozanimod. According to Celgene's management, enrollment in ozanimod's late-stage ulcerative colitis study should be complete this year. Because a clean safety profile in that late-stage study could neuter etrasimod's possible best-in-class safety argument, investors will want to pay attention to Celgene's future press releases.

Todd Campbell owns shares of Arena Pharmaceuticals and Celgene. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.