Arena Pharma's Q2 Earnings Soar
Arena Pharmaceuticals, Inc.’s (ARNA) earnings (excluding special items) of 17 cents per share in the second quarter of 2013 were higher than the breakeven earnings reported a year ago. Second quarter earnings also beat the Zacks Consensus Estimate of 13 cents.
Quarterly Update
Arena Pharma recorded second quarter revenues of $68.9 million, a massive increase of 213% from the year-ago period, thanks to a $65 million milestone payment received from partner Eisai related to Belviq.
In Jun 2013, Arena Pharma launched its obesity drug, Belviq, in the U.S. Second quarter results reflect the first three weeks of Belviq sales after its launch with Arena Pharma recording Belviq sales of $1.3 million. About 12,500 prescriptions for Belviq were written until Jul 19.
The company’s revenues were well above the Zacks Consensus Estimate of $48 million. During the reported quarter, the company received a $0.5 million milestone payment from Eisai for the New Drug Submission in Canada for Belviq.
Research and development (R&D) and general and administrative (G&A) expenses were up 33.3% to $18.8 million and 65.4% to $8.6 million during the reported quarter, respectively.
Arena Pharma expects R&D spend of $70 million to $78 million and G&A spend of $28 million to $34 million in 2013.
Other Developments
Arena Pharma’s commitment for expanding the market reach of Belviq was evident in the quarter through strategic collaborations with local established players in countries outside the U.S.
In Jul 2013, Arena Pharma entered into an agreement with Taiwan-based CY Biotech for the marketing and supply agreement of Belviq in Taiwan.
The obesity market represents huge commercial potential. According to the World Health Organization (:WHO), the worldwide obese population has almost doubled since 1980. Furthermore, 1.5 billion people around the globe are overweight with 500 million falling under the obese category.
We note that the company is also evaluating Belviq for additional indications and its administration with other agents such as appetite suppressant, phentermine.
We are encouraged by the company’s efforts to develop its pipeline along with the expansion of the Belviq label. During the reported quarter, the company progressed on its pipeline candidates, APD811, APD334 and temanogrel, which are being developed for indications other than obesity.
Currently, Arena Pharma carries a Zacks Rank #3 (Hold). Biopharma stocks which look attractive include Actelion Ltd. (ALIOF) with a Zacks Rank #1 (Strong Buy), and Medivation, Inc. (MDVN) and Jazz Pharmaceuticals Public Limited Company (JAZZ) with a Zacks Rank #2 (Buy).
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