Arena Pharmaceuticals, Inc. (ARNA - Snapshot Report) reported a net loss (excluding one-time items) of 13 cents per share in the third quarter of 2014 in line with the Zacks Consensus Estimate but wider than the year-ago loss of 10 cents per share. The company’s share fell 3.2% following the news.

Arena Pharma recorded third-quarter revenues of $8.2 million, below the Zacks Consensus Estimate of $10 million. Revenues however shot up 128.2% from the year-ago quarter.

Third-quarter 2014 research and development (R&D) and general and administrative (G&A) expenses were up 68% to $24.5 million and 3.5% to $8 million, respectively.

Belviq Update

Arena Pharma recorded Belviq sales of $5.7 million (including $0.5 million from the 15-day free trial voucher redemption) compared with $2 million in the third quarter of 2013. Arena Pharma is working on expanding the market reach of Belviq.

We note that Arena Pharma has a collaboration agreement with Eisai Co., Ltd. (ESALY) for Belviq.

Eisai recorded net product sales of $16.8 million for Belviq in the third quarter of 2014. Total prescriptions for Belviq increased 30% from the preceding quarter to more than 143,000.

Arena Pharma and Eisai are leaving no stone unturned to make the drug a success. Eisai added 200 representatives to the existing sales force of approximately 400 for Belviq.

Arena Pharma and Eisai are evaluating Belviq for additional indications. The companies are evaluating Belviq for smoking cessation in a phase II study, top-line results of which have recently been announced. Results from the study demonstrated a statistically significant improvement in reducing the number of patients who smoke after 12 weeks of Belviq treatment as compared to placebo.

Arena Pharma and Eisai are also studying Belviq for weight management in combination with phentermine in a 12-week pilot study. Top-line results from the study showed that the short-term combination of Belviq and phentermine does not appear to be associated with an exacerbation in the proportion of pre-specified adverse events when compared to lorcaserin alone. Additionally, Arena Pharma initiated two phase I studies evaluating Belviq 20 mg extended release tablets in children.

Arena Pharma’s pipeline includes several candidates including Ralinepag (pulmonary arterial hypertension, phase II), APD334 (autoimmune diseases, phase I multiple-ascending dose study data expected by year end), temanogreal (thrombotic diseases, phase I) and APD371 (pain, phase I, data expected in the first quarter of 2015). Arena Pharma has collaborated with Ildong Pharmaceutical Co., Ltd. for the development of temanogreal.

Our Take

Although Arena Pharma’s overall results were disappointing, we are encouraged by Belviq sales in the quarter. We are also positive on the beefed up sales force for Belviq. We believe it can boost sales by promoting the drug to more physicians. Arena Pharma’s growth is highly dependent on Belviq, the company’s sole marketed product.

Currently available therapies for obesity include VIVUS Inc.’s (VVUS - Analyst Report) Qsymia.

Arena Pharma carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is AMAG Pharmaceuticals, Inc. (AMAG - Snapshot Report) sporting a Zacks Rank #1 (Strong Buy).

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