Stock market investment –
What: Shares of Arena Pharmaceuticals , a biopharmaceutical company primarily focused on the development of weight control management products, sank as much as 10% on Thursday after the company announced its second-quarter earnings results.
So what: For the quarter, Arena’s revenue sank by 28% to $9.18 million from the $12.8 million it reported in the year-ago quarter. Although net product sale revenue recognition for weight control management drug Belviq rose to $4.29 million from $3.53 million in Q2 2014, collaborative revenue from Belviq’s licensing partner Eisai dropped $5.3 million.
In terms of sales growth for Belviq, IMS Health estimated that in the neighborhood of 183,000 prescriptions for Belviq were filled during the quarter, which would represent 66% year-over-year script growth and nearly 9% sequential quarterly growth.
Net loss for the quarter was $26.8 million, a saddening reversal from the $7.5 million profit recorded in the year-ago quarter. On an EPS basis, Arena lost $0.11 compared to a profit of $0.03 in Q2 2014.
Comparatively speaking, Wall Street had been expecting a wider loss of $0.14 per share, but it had also been expecting more robust revenue of $10.9 million.
Source: Arena Pharmaceuticals.
Now what: Although Arena Pharmaceuticals’ other pipeline products have demonstrated early stage promise — APD334, for instance, demonstrated a dose-dependent lowering of lymphocyte counts in patients’ blood of up to 69% in a phase 1b study — the cement block tied to its metaphorical ankles is the disappointment of Belviq.
Belviq was expected to be a potential blockbuster drug considering that more than a third of adult Americans are considered obese based on the Body Mass Index. However, things haven’t panned out. Whether it’s a concern on physicians’ part over the long-term safety of weight control management drugs, increased competition, or the struggles of gaining insurer coverage, Belviq has failed to generate substantial revenue and is looking more like a flop with each passing quarter.
My suggestion would be to avoid this stock until it has successfully brought other products to market and dramatically lowers its cash burn rate.
The article Arena Pharmaceuticals Slims Down After Its Q2 Report originally appeared on Fool.com.
Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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