Arena Pharmaceuticals, Inc. (ARNA) announced that it will be selling 21 million shares in an underwritten public offering of common stock. The offering is expected to close on or about Jan 26, 2015.
The underwriters were also granted a 30-day option to purchase up to an aggregate of 3 million additional shares of common stock.
Arena Pharma intends to utilize the net proceeds from the offering for the clinical and preclinical development of its pipeline candidates. Also, the company plans to use the net proceeds for general corporate purposes including working capital, costs associated with product sales and manufacturing services, capital expenditures and potentially for the commercialization of any new approved drug.
Currently, Arena Pharma’s growth is entirely dependent on its sole marketed product Belviq indicated for obesity. Belviq sales came in at $12.1 million for the first nine months of 2014. Other available therapies for obesity include VIVUS Inc.’s (VVUS) Qsymia.
The company’s pipeline currently has candidates like APD334 (autoimmune diseases, phase Ib) and ralinepag (pulmonary arterial hypertension, phase II) among others. Arena Pharma needs to develop these candidates successfully to reduce overdependence on Belviq. We expect investor focus to remain on Belviq’s performance and the company’s pipeline going forward.
Arena Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Celgene Corporation (CELG) and Alexion Pharmaceuticals, Inc. (ALXN). Both Celgene and Alexion carry a Zacks Rank #1 (Strong Buy).
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