Arena Pharmaceuticals, Inc. ARNA reported a loss of 11 cents per share in the second quarter of 2015, in-line with the year-ago loss but narrower than the Zacks Consensus Estimate of a loss of 14 cents.
Total revenues declined 28.3% year over year to $9.2 million, missing the Zacks Consensus Estimate of $13 million.
The Quarter in Detail
Arena Pharma recorded Belviq (weight management) sales of $4.3 million (including $0.1 million from the 15-day free trial voucher redemption), down 34.8% sequentially.
Eisai ESALY recorded net product sales of $12.1 million for Belviq in the reported quarter. As per IMS Health, total prescriptions for Belviq increased approximately 8.6% from the preceding quarter to about 183,000. Arena Pharma recorded sales of $0.4 million in the second quarter of 2015 from South Korea, where Belviq was launched by partner Ildong in late Feb 2015. Ildong reported net sales of $0.8 million in the quarter.
Eisai has been focusing on increasing prescription refill rates including through its pay no more than $75 savings card and on improving insurance coverage for Belviq. Arena Pharma and Eisai are looking to re-submit Belviq in the EU around Mar 2016.
Arena Pharma and Eisai are evaluating Belviq for additional indications like weight management in combination with phentermine and smoking cessation. The companies are currently evaluating recently received feedback from the FDA regarding the weight management indication before deciding on a course of action.
Arena Pharma is also conducting market research on the U.S. prescription market for the smoking cessation indication. With the research expected to complete in the fourth quarter, studies for this indication won't commence this year.
Meanwhile, the companies are looking to submit a new drug application for a once-daily extended release formulation of Belviq (Belviq XR) in the U.S. later this year.
As far as the rest of the pipeline is concerned, Arena Pharma is conducting a phase II study on APD334 for ulcerative colitis with data readout expected at the end of 2016. Apart from APD334, the pipeline includes ralinepag (phase II – pulmonary arterial hypertension) and APD371 (pain and fibrotic diseases) among others.
Research & development (R&D) expenses declined 10.4% year over year to $24.2 million. General & administrative (G&A) expenses decreased 3.2% year over year to $8.8 million. The company updated its R&D guidance to $103 million – $111 million, down from the previous guidance of $114 million – $122 million.
Our Take
Arena Pharma’s second quarter results were mixed – although loss was narrower-than-expected, revenues missed expectations. Moreover, Belviq revenues declined on a sequential basis. Arena Pharma is a Zacks Rank #3 (Hold) stock. Investor focus will remain on Belviq’s performance.
Some better-ranked stocks in the health care sector include Gilead Sciences, Inc. GILD and Actelion Ltd. ALIOF. Both are Zacks Rank #1 (Strong Buy) stocks.
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