Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)

CAPS Rating: 3 out of 5

A clinical-stage biopharmaceutical company focused on discovering, developing and commercializing oral drugs in four major therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases.

Recs

8
Player Avatar DarthMaul09 (29.77) Submitted: 7/23/2010 11:17:09 AM : Underperform Start Price: $5.40 ARNA Score: +7.10

Even if a new med is found to be clinically useful and has made it past the FDA, then it needs to get past insurance companies and be marketed adequately to physicians, who still remember Fen/Fen and Vioxx. ARNA's financials look pretty ugly (see Google Finance) so they can't take too long to come to market, which is like turning over your cards and finding out only then whether you have won or lost. There is obvious optimism based on the recent stock rise, but smart investors should try to cash out at least half of their investment to hedge against this stock going to zero. What percent of promising drugs actually make a significant profit for a company? If you invest in these small companies you should know this in order to understand the risk. Basically, these companies are more speculation than investing, which is OK if you win.

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Member Avatar DarthMaul09 (29.77) Submitted: 9/14/2010 12:02:04 PM
Recs: 5

Sept. 14 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses and prices are as of 8:55 a.m. in New York unless stated otherwise.

Arena Pharmaceuticals Inc. (ARNA US) fell 3.4 percent o $6.62. The San Diego-based biotechnology company was cut to "underweight" by Barclays AG after reports a competing drug Meridia may be pulled off the U.S. market, making it less likely Arena's lorcaserin will be approved.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/09/13/bloomberg1376-L8PFZ60YHQ0Y01-3UKNNDNA2BSB2GOIRRGPUG3UL4.DTL

Member Avatar DarthMaul09 (29.77) Submitted: 9/17/2010 11:10:47 AM
Recs: 3

* SEPTEMBER 17, 2010, 10:12 A.M. ET

Arena Pharma Shares Drop On Questions Of Diet Drug's Future

By Thomas Gryta Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Shares of Arena Pharmaceuticals Inc. (ARNA) plunged to their lowest level ever Friday as the future of its weight-loss drug lorcaserin is thrown into question after a Food and Drug Administration Panel recommended against its approval Thursday.

The San Diego company now faces the challenging task of addressing questions about lorcaserin's safety--including a possible cancer risk that wasn't known publicly until this week--for a drug that has moderate effectiveness and could be used in millions of relatively healthy people for a long period of time.

"We struggle to see how [Arena] will mitigate these concerns without long-term preclinical/clinical data," Oppenheimer analyst Bret Holley said. Company officials have declined to speculate on whether additional trials would be needed.

The panel's negative recommendation is a severe setback for Arena, which has no other products of note, as well as the other companies with obesity drugs because it suggests the high bar that the government agency has for these treatments. The wider FDA is expected to make its decision by Oct. 22.

Because of the uncertainty surrounding lorcaserin and its unknown development timeline, Arena's stock price is sliding closer to the company's cash holdings, which was bolstered in July by the lorcaserin partnership pact the company signed with Japan's Eisai Co. (ESALY, 4523.TO). Under that agreement, Eisai agreed to give Arena $50 million up front, along with potential later payments, and the companies said they would split development costs before approval.

On a conference call Friday, Arena executives said it expected to have $142 million to $152 million in cash at the end of the year, which translates to about $1.36 to $1.46 per share, based on shares outstanding at the end of June.

Arena shares recently fell 45% to $2.05. The stock has lost 71% of its value since Monday.

Although potential safety problems were known about lorcaserin, the panel's main concern about the drug is that high doses increased the risk of certain cancers in rats. This data hadn't previously been disclosed, which put significant pressure on the stock this week when the information was released in FDA briefing documents for the panel.

Arena said it previously informed the agency of the data, and "it was determined" that the clinical trials should proceed as planned. The company defends not disclosing the information.

"We did not and still do not believe the data is relevant to humans and as such didn't believe it was material to investors," Chief Executive Jack Lief said Friday.

Lief expressed regret that there weren't any cancer-related experts on the panel. "My view is that they were having difficulty understanding our presentation," he said.

The company declined to comment beyond the call.

In an August conference call, Arena executives repeatedly stressed its awareness that safety would be the focus of the FDA panel and said it wasn't expecting "any surprises."

Cowen & Co. analyst Phil Nadeau expects that any launch of lorcaserin won't occur for at least two more years. At minimum, he believes Arena will need to submit data from an ongoing study in diabetes patients that shows the drug's use in a more diverse patient population than the current data, as well as more preclinical cancer-related studies to better understand why it may increase cancer risk. The diabetes data is expected in coming months, according to Arena.

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Key stats and ratios
    ......................Q2 (Jun '10)    2009
Net profit margin    -1169.46%    -1474.96%
Operating margin    -1096.54%    -1356.18%
EBITD margin    -    -1237.68%
Return on average assets    -49.92%    -64.15%
Return on average equity    -157.57%    -159.42%
Employees    358    -

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There only hope now appears to be a buyout. Their financial position is unlikely to improve with the recent news and expecting this company to be around in a couple of years to see their diet drug come to market is quite hopeful.

Member Avatar Thyelysium (21.87) Submitted: 10/9/2010 3:30:19 PM
Recs: 0

Firstly with around 45 million shorts with a closing price of $1.67 it is already inbuilt into the price that FDA will reject ARNA.

Secondly at a all time low of $1.51 which it hit on two different days I strongly believe it has built resistance at this price.

Now no one is so stupid that they will short at this price, at the same time if any positive news comes from FDA this stock is heading only North. It will be fast and furious, those who take the risk to hold or to buy at this price will be handsomely rewarded.

Finally there are so many others stocks there to short I don't think the shorts are going to stick to this one too long. Considering a person who has shorted at $8 levels it would be very risky for them to not cover now. So worst scenario this stock is going back to at least $2.50. If good news comes this stock could go back to $8 levels because there will be major players buying and shorts covering at the same time.

I will close by quoting the legendary Warren Buffett be fearful when others are greedy and greedy when others are fearful.

Member Avatar zzlangerhans (99.85) Submitted: 11/17/2010 4:41:09 PM
Recs: 5

You are being greedy when others are greedy.

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