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Co. Maintains Confidence in Products, Pipeline

Arena Pharmaceuticals Inc. has mapped out a plan to overcome heavy spending and stagnant stock values by developing new weight loss formulations and drug compounds to treat a variety issues from autoimmune disorders to nicotine addiction.

Despite more than tripling net product sales of its weight-loss drug, Belviq, San Diego-based Arena is still struggling to stay in the black due to heavy investment in research and development.

Second quarter 2014 financial reports indicated a net income of about $7.5 million compared with the net loss of $25.3 million in the previous quarter. But a closer look at the statements shows the reason for this higher revenue was due to a $33 million sale of TaiGen Biotechnology Co. Ltd. stock after the Taiwanese company went public. Without the sale of securities, the quarter would have ended with a net loss of about $25.8 million, a slightly greater loss than the previous quarter.

Arena’s stock has hovered around $7 per share over the course of the year, but closed the day on the Nasdaq at $4.12 under the ticker symbol ARNA on Aug. 28.

‘A Good Trajectory Overall’

“One of the reasons for the drag on our stock lately has been people looking at our week-to-week numbers,” said Craig Audet, senior vice president of operations and head of global regulatory affairs at Arena. “People really want to see that hockey stick takeoff. But we’ve got a good trajectory overall.”

Arena has experienced steady growth in the number of prescriptions for Belviq over the year, recently showing 43 percent growth from 77,052 prescriptions in the first quarter of this year to 110,000 prescriptions by the second quarter.

“We want a consistent growth, and that’s what we’re seeing,” Audet said. “It’s just not fast enough for some people.”

Audet said despite some of the weak numbers, the company sees great things to come. Arena invested about $21 million in research and development in the first quarter of this year, and an additional $27 million during the second quarter. Audet said that Arena has plans to widen application of Lorcaserin Hydrocholoride (Belviq) to more than just weight loss.

Opportunities in the Pipeline

Arena is in phase two clinical trials testing the use of Lorcaserin to help people stop smoking. The drug affects the pleasure response when people do things like eat french fries or smoke a cigarette.

“This drug reduces the amount of dopamine that is released in your brain so you don’t get the reward,” Audet said.

The use of Lorcaserin for smoking cessation was tested in two independent studies conducted by the University of Toronto and Duke University. The results showed that lab rats reduced their self-administering of nicotine while on a dose of Lorcaserin. Arena hopes to begin phase three of the clinical trials by the end of this year.

Arena’s commercialization arm and partner, Eisai Inc., is running a safety study on the combination of Lorcaserin with an old weight loss drug from the 1950s, Phentermine.

“The hope is that by combining the two weight loss drugs you will experience greater weight loss,” Audet said.

If the safety study is successful, Audet said the company will consider designing a safe formulation, rebranding the combination drug and selling it alongside Belviq.

Arena’s third attempt at value creation is an attempt to develop a version of Belviq that is taken only once per day. Currently, the drug is taken twice per day. Once Arena successfully develops this formulation, it will receive a $10 million milestone payment from Eisai.

Weight-Loss Drug Roadblocks

Arena has developed a drug for one of the most common conditions in America — obesity. According to the National Institutes of Health, two in every three adults in America are currently considered to be overweight or obese.

“You don’t have to build this market,” Audet said. “The market for weight-loss drugs is already there.”

Audet said the obstacles come in other forms. Communication between patient and physician can be stunted due to the sensitivity of the topic of obesity.

Patients may also be unaware of their options regarding weight-loss drugs, Audet said, and therefore are unable to ask their physicians for a prescription. Arena and Eisai are attempting to increase patient awareness through advertising. Eisai has run television ads over 12,000 times since mid-April, boosting applications for Belviq trial vouchers by 200 percent.

The next challenge for the drugcomes in the form of reimbursement. Eisai has helped raise health insurance coverage for Belviq from 30 percent to 60 percent so that patients can pay less for the drug out of pocket.


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