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Arena (ARNA) Q3 Earnings Top, Stock Down on Eczema Study Data

Zacks Equity Research
·5 min read

Arena Pharmaceuticals, Inc. ARNA incurred loss of $1.69 per share in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.92. The company had incurred loss of $1.46 in the year-ago quarter.

Arena recorded revenues of $20,000 in the reported quarter, falling short of the Zacks Consensus Estimate of $1 million. The company had recorded revenues of $1.4 million in the year-ago quarter.

Research & development (R&D) expenses escalated 32.3% from the prior-year level to $79.8 million, primarily as a result of the progress of its pipeline candidates to the next phase of clinical development, including phase III development program of etrasimod.

Selling, general and administrative expenses declined 6.9% from the year-ago figure to $19 million.

Pipeline Update

Arena’s pipeline currently consists of two key candidates, namely etrasimod (autoimmune diseases) and olorinab (pain and fibrotic diseases). It also has one early-stage candidate, ADP418.

In a separate press release, the company announced that the phase IIb study — ADVISE — evaluating etrasimod in atopic dermatitis (“AD”) patients failed to meet its primary endpoint of statistically significant effect on the Eczema Area and Severity Index (“EASI”) score. The company stated that the study was impacted by unwarranted dose interruption between weeks 4-8 in 19% of patients but not due to any drug safety issue. Adjusting for this disruption, the candidate showed statistically significant effect compared to placebo at week 12 in a post-hoc Completer Analysis with participants receiving full therapeutic exposure.

Moreover, the candidate achieved clear or almost clear skin in nearly one-third of participants as defined by the validated Investigator Global Assessment (vIGA) — the FDA endpoint for phase III registration. Based on this data, the company is planning to start a phase III program to evaluate etrasimod in AD patients soon.

Shares of Arena plunged 17.7% during the after-hours trading on ADVISE study data readout. However, the company’s stock has surged 54.1% so far this year against the industry’s 2.2% decline.

Etrasimod is presently in late-stage development for ulcerative colitis. Arena is evaluating the candidate in the pivotal phase III ELEVATE UC 52 study as a treatment for moderately-to-severely active ulcerative colitis ("UC"). Enrollment in the study is expected to be completed by year-end. The company initiated a second study— ELEVATE UC 12, a 12-week induction study — in September. Data from both studies under the program are expected in early 2022. The company continues to monitor the impact of the COVID-19 resurgence on study enrollment for ELEVATE UC program.

The company plans to initiate a phase II study — GLADIATOR UC — in the first quarter of 2021 to evaluate etrasimod in a less severe UC patient population compared to ELEVATE UC program. However, initiation is dependent on the severity of the pandemic in the remainder of 2020.

The company is also evaluating the candidate in the phase IIb/III CULTIVATE study in patients with Crohn's disease. The company has been unable to provide any guidance on the CULTIVATE study due to COVID-19 related disruptions. A phase II study was initiated during the quarter to evaluate etrasimod in alopecia areata (AA) patients. Another mid-stage study is expected to be initiated by the year-end to evaluate the candidate in eosinophilic esophagitis (EoE) patients. However, initiation is dependent on the severity of the pandemic in the remainder of 2020.

Enrollment in the phase II CAPTIVATE study evaluating olonarib as a treatment for abdominal pain associated with irritable bowel syndrome was completed during the quarter. The company anticipates to provide top-line data in the first quarter of 2021. The company also completed a phase I study evaluating APD418 for acute heart failure successfully during the quarter. A phase II study is expected to start soon.

Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Arena Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Arena Pharmaceuticals, Inc. Quote

Zacks Rank and Stocks to Consider

Currently, Arena is a Zacks Rank #3 (Hold) stock.

Some stocks to consider from the biotech sector include Emergent Biosolutions EBS, miRagen Therapeutics MGEN and Repligen RGEN. While Emergent and Repligen sport a Zacks Rank #1 (Strong Buy), miRagen carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent Biosolutions’ earnings per share estimates have moved up from $6.17 to $8.42 for 2021 in the past 60 days. The company delivered an earnings surprise of 106.11%, on average, in the last four quarters. The stock has risen 66.2% so far this year.

Miragen Therapeutics’ loss per share estimates narrowed from 51 cents to 42 cents for 2021 in the past 60 days. The stock has risen 133.3% so far this year.

Repligen’s earnings per share estimates have moved up from $1.42 to $1.44 for 2021 in the past 60 days. The company delivered an earnings surprise of 37.36%, on average, in the last four quarters. The stock has risen 107.3% so far this year.

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