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Arena Pharmaceuticals (ARNA) Q4 Earnings Beat, Sales Down Y/Y

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Arena Pharmaceuticals, Inc. ARNA reported a loss of 36 cents per share in the fourth quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 65 cents. However, the company posted earnings of $2.02 in the year-ago quarter.

Following the earnings release, Arena’s shares were down almost 9% on Mar 14. However, the stock outperformed the industry so far this year. While shares of the company have gained 6%, the industry registered 2.9% growth.

Total revenues in the quarter were $15.4 million, down 77.7% from the year-ago quarter, due to lower collaboration and other revenues. However, the top line beat the Zacks Consensus Estimate of $4 million. Revenues include $14.2 million from collaboration revenues and $1.2 million in royalty revenues under a collaboration agreement with Japanese pharma company Eisai for Arena’s marketed drug, Belviq.

Note that, the collaboration revenues include an upfront payment of $12 million received from Everest Medicines related to a development and commercialization agreement, entered in December 2017, for Arena’s key pipeline candidates, ralinepag and etrasimod. Everest Medicines is responsible for commercializing candidates in mainland China, Taiwan, Hong Kong, Macau and South Korea.

Quarter in Detail

During the fourth quarter of 2017, the company did not record any sale of Belviq, the only approved product in Arena’s portfolio for chronic weight management in adult patients.

Notably, Belviq, the first obesity drug to be approved by the FDA in over a decade, is yet to impress with its performance. An extended-release version was launched in October 2016. However, sales have been lackluster so far.

Research & development (R&D) expenses increased 78% from the year-ago level to $20.7 million.

Selling, general and administrative (SG&A) expenses were also up 18.6% to $8.3 million in the fourth quarter of 2017.

2017 Results

Full-year sales were $21.3 million, missing the Zacks Consensus Estimate of $27 million. Moreover, the top line declined 76.9% compared with the year-ago figure of $92.2 million.

The full-year loss of $2.87 per share was narrower than the Zacks Consensus Estimate of $3.13. However, the bottom line is wider than the year-ago loss of 49 cents.

Pipeline Update

Arena’s pipeline consists of several early to mid-stage candidates, targeting different therapeutic areas. These include ralinepag (pulmonary arterial hypertension), etrasimod (a number of autoimmune diseases) and APD371 (pain and fibrotic diseases).

At the annual meeting of American College of Chest Physicians 2017 (CHEST), the company presented positive results from a phase II study on ralinepag for PAH in October 2017. The company expects to start phase III study on candidates in the second half of 2018 for the given indication.

Etrasimod is currently being evaluated in multiple phase II studies. Data from a phase II study on ulcerative colitis is expected this month. The company is also enrolling patients in inflammatory bowel disease and pyoderma gangrenosum studies.

The company is enrolling patients in phase II trial on APD371 for the treatment of pain, linked with Crohn’s disease, with data expected by in the second quarter of 2018.

Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

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

Zacks Rank & Key Picks

Arena carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector are Regeneron Pharmaceuticals, Inc. REGN, Ligand Pharmaceuticals Incorporated LGND and Enanta Pharmaceuticals, Inc. ENTA. While Regeneron sports a Zacks Rank #1 (Strong Buy), Ligand and Enanta carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings per share estimates moved up from $17.02 to $18.68 and from $20.29 to $21.60 for 2018 and 2019, respectively, in the last 60 days. The company pulled off a positive earnings surprise in three of the last four quarters with an average beat of 9.15%.

Ligand’s earnings per share estimates moved up from $3.78 to $4.20 for 2018 and from $4.75 to $5.32 for 2019 in the last 30 days. It delivered a positive surprise in three of the trailing four quarters with an average beat of 24.88%. Share prices of the company have surged 65% over a year.

Enanta Pharma delivered a positive surprise in three of the last four quarters with an average beat of 373.1%. Share prices of the company have skyrocketed 194.9% over a year.

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