E Shares Of Arena Pharmaceuticals Soar 65% After Early Positive Results In Autoimmune Diseases

Shares of Arena Pharmaceuticals (ARNA) soared 65% after the company reported early positive results using APD334 for the treatment of Autoimmune diseases. Autoimmune diseases occur when a person's immune system starts to attack the various healthy cells in the body. Today's news showed that patients receiving APD334 displayed a dose dependent decrease of lymphocytes in the blood by about a mean decrease of about 69% from the normal baseline. Today's volume change is pretty drastic as well, trading about 25 times normal average daily volume.

This news is significant because this type of efficacy seen in the phase 1b trial using APD334 against autoimmune diseases has also been seen in late-stage phase 2 and phase 3 trials using the same exact molecule type. This molecule type is known as an oral S1P1 receptor built for a biological response in the immune system. The reason for the high rise in share price is because this drug made by Arena could be applied to many big diseases that target large markets. These markets include: Multiple Sclerosis, psoriasis, and rheumatoid arthritis. 

In terms of safety the drug APD334 displayed no signs of heart rate problems or elevated liver enzymes in the body. This makes the drug remarkably safe as well as very efficacious. Now that the company has established this final phase 1b finding they can begin to test a phase 2 trial in any autoimmune disease of their choice. Arena has already chosen to expedite this drug compound to be tested in phase 2 trials for Ulcerative Colitis and Crohn's disease. 

Arena Pharmaceuticals already has an approved drug for weight loss known as Belviq which is being marketed by Eisai Inc. (ESALF). We believe that Arena is a good long term biotechnology company to own because it has a nice pipeline of drug compounds that have shown to some degree to be efficacious. Plus the risk is slightly minimized since the company already has one FDA-approved drug product on the market. 

Disclosure: No position in any stocks mentioned.

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Trevor Lowenthal 5 years ago Contributor's comment

Very insightful analysis. Thanks. My only concern is that the technology is still in early stages of development, and I don't see Belviq revenues rising significantly any time soon. Thus, unless Arena announces a partnership or acquisition, I don't see the share price rising beyond what occurred in the past several days. Do you see the stock price increase as an indication that shareholders believe the company could be acquired, considering Arena's potential to develop treatments targeting major indications? Do you think the share price increase is warranted? Thanks in advance.

Joe Black 5 years ago Member's comment

Wow, ARNA closed up 75.9% today, makes me wish I was a day trader and I'd taken your advice, Terry.