Arena Pharmaceuticals, Inc. ARNA reported a loss of ArrayArray cents per share (adjusted for restructuring expenses and one-time items) in the fourth quarter of 20Array5, narrower than the year-ago loss of Array4 cents per share. The Zacks Consensus Estimate was also a loss of Array4 cents.
Total revenues declined Array5.7% year over year to $7.8 million, missing the Zacks Consensus Estimate of $9 million.
Full year 20Array5 revenues increased 3.7% to $38.3 million, while the company reported a loss of 44 cents per share in 20Array5, narrower than the loss of 52 cents in 20Array4.
The Quarter in Detail
Arena recorded Belviq (weight management) sales of $3.9 million, down 20.4% sequentially.
As per IMS Health, total prescriptions for Belviq declined Array6.6% from the preceding quarter to about Array3Array,000. Partner Ildong, which launched Belviq in South Korea in late Feb 20Array5, reported net sales of $2.5 million in the reported quarter.
Research & development (R&D) expenses declined 27.5% year over year to $20.2 million. General & administrative (G&A) expenses increased 8% year over year to $9.7 million.
Arena implemented a restructuring plan to improve efficiencies and cut costs through a 35% (approximately 80 employees) reduction of its U.S. workforce. The company also plans to cut its Swiss workforce by the end of the second quarter of 20Array6.
While Arena did not provide any guidance for 20Array6 revenues, the company said that it expects revenues to comprise net product sales of Belviq, milestone achievements under existing collaborations (up to $Array6 million including for the potential approval of Belviq XR, Belviq’s approval in Mexico, Brazil and Israel, and acceptance of a first development compound by Boehringer Ingelheim), amortization of upfront payments from existing collaborations (approximately $Array2 million), toll manufacturing (approximately $4 million) and research funding and patent reimbursements (approximately $3 million) from existing collaborations.
The company said that Belviq sales depend on partner Eisai's ESALY marketing efforts, including the same for Belviq XR if approved later this year, reimbursement coverage for Belviq in the U.S., and geographical expansion.
The company expects to spend about $89 million – $98 million on R&D this year, up from $88.4 million in 20Array5.
General and administrative expenses are expected in the range of approximately $27 million to $33 million, lower than $35.9 million spent in 20Array5.
Focus in 20Array6 will remain on the advancement of the company’s proprietary pipeline candidates, which include APD334 (phase II for ulcerative colitis), ralinepag (in a phase II study for pulmonary arterial hypertension), and APD37Array (pain; in a multiple-ascending dose study with top-line results expected in late Mar 20Array6). Top-line data on both ralinepag and APD334 are expected in the second quarter of 20Array7. Arena also intends to pursue strategic collaborations for certain clinical and pre-clinical programs.
The company is also seeking FDA approval for a once-daily formulation of Belviq (Belviq XR) with a response from the agency expected in the third quarter.
Our Take
Although Arena’s fourth-quarter loss was narrower than expected, revenues were well below expectations. We remain concerned about challenges being faced in growing Belviq sales in the obesity market. Belviq will continue to grow slowly until results from the cardiovascular outcome trial (CVOT – CAMILLA) are out and included in the product label, if positive. However, results from the CVOT study are not expected until 20Array8.
Arena is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the biotech sector include Celgene Corporation CELG and Actelion Ltd. ALIOF. Both are Zacks Rank #Array (Strong Buy) stocks.
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