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Arena Pharmaceuticals (ARNA) Q2 Loss Narrower Than Expected

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Arena Pharmaceuticals, Inc. ARNA incurred loss of $1.61 per share in the second quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.08. The company had recorded earnings of $1.24 in the year-ago quarter.

Arena did not record revenues in the reported quarter. The Zacks Consensus Estimate was pegged at $1 million. The company had recorded revenues of $1 million in the year-ago quarter.

Shares of Arena have increased 41.9% so far this year compared with the industry’s 5.8% rise.

Research & development (R&D) expenses escalated 26.8% from the prior-year level to $64.9 million, primarily driven by progress of its pipeline candidates to the next phase of clinical development, including phase III development program of etrasimod.

General and administrative expenses increased 24.5% from the year-ago figure to $22.9 million, mainly driven by higher personnel expenses.

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.

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").

The study is part of the ELEVATE UC registrational program, which comprises two pivotal studies to evaluate etrasimod in UC patients. The company has plans to initiate ELEVATE UC 12, a 12-week induction study, in the remainder of 2020.

Notably, etrasimod has the potential to be developed for additional indications beyond ulcerative colitis. The company is evaluating the candidate in the phase IIb ADVISE study for treating atopic dermatitis. In December 2019, the company initiated the phase IIb/III CULTIVATE study to evaluate etrasimod 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. Initiation of two mid-stage studies to evaluate etrasimod as a treatment for eosinophilic esophagitis and alopecia areata is dependent on the severity of the pandemic in the remainder of 2020.

A phase II CAPTIVATE study is evaluating another candidate, olonarib, as a treatment for abdominal pain associated with irritable bowel syndrome. Although the study is facing certain hurdles due to COVID-19, the company anticipates to provide top-line data in the first quarter of 2021.

The company is evaluating APD418 in a phase I study for acute heart failure. Top-line data is expected in the fourth quarter of 2020.

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 better-ranked stocks from the biotech sector include Emergent Biosolutions Inc. EBS, Horizon Therapeutics HZNP and Unum Therapeutics Inc. UMRX, all sporting a Zacks Rank #1 (Strong 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 $3.45 to $3.58 for 2020 in the past 30 days. The company delivered an earnings surprise of 127.41%, on average, in the last four quarters. The stock has risen 145.7% so far this year.

Horizon Therapeutics’ earnings per share estimates have increased from $1.78 to $2.00 for 2020 in the past 30 days. The company delivered an earnings surprise of 43.99%, on average, in the last four quarters. The stock has surged 97.9% so far this year.

Unum Therapeutics’ loss per share estimates have narrowed from 53 cents to 47 cents for 2020 in the past 30 days. The company delivered an earnings surprise of 36.6%, on average, in the last four quarters. The stock has surged 294.3% so far this year.

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