JPMorgan Healthcare Conference Highlights: Arena Pharmaceuticals, Inc.

On Monday we kicked off the start of the 2014 JPMorgan Healthcare Conference, which is arguably the most important health care conference of the year, bringing together pharmaceutical, biotechnology, and medical device makers all under one roof.

Just like the recently concluded Consumer Electronics Show in Las Vegas, this annual event gives health care companies a chance to demonstrate to investors and Wall Street where they've been and where they're headed. Because earnings guidance can be somewhat irrelevant for clinical-stage biotech and medical device companies, consider this event your chance to gain guidance from some 300 top health care companies.

Today, we're going to take a closer look at Arena Pharmaceuticals' presentation, which was given by CEO Jack Lief.


Arena Pharmaceuticals' past year
Generally speaking, 2013 was a transformative, but frustrating, year for Arena shareholders. The Food and Drug Administration in 2012 approved its weight control management treatment Belviq, but it took significantly longer than expected for the product to get scheduled by the Drug Enforcement Administration. As a result, the treatment only hit pharmacy shelves this past June.

Similar to VIVUS' Qsymia, Belviq sales have been less than stellar in the early going. Putting aside milestone and collaborative revenue, Belviq delivered just $5.4 million in total product sales in the U.S. in the third quarter, of which Arena is entitled to 31.5%, or $1.7 million, with the remaining going to licensing partner Eisai . Initial problems that have plagued sales for both Belviq and Qsymia include poor physician awareness and limited insurance coverage.

What Arena Pharmaceuticals had to say
While many pharmaceutical heavy-hitters gloss over numerous ideas during their presentations, Lief hammered home three points in his JPMorgan Healthcare Conference address: maximizing the value of Belviq, pursuing additional indications for lorcaserin (that's the scientific name for Belviq), and advancing its other pipeline drugs beyond weight management.

Clearly, Arena's biggest and most immediate opportunity lies with Belviq. Lief noted that Belviq is awaiting regulatory approval in Canada, Mexico, Switzerland, and South Korea, and that the company anticipates filing for approval in Brazil and Taiwan shortly. Perhaps most intriguing with regard to the strategy from Arena and marketing partner Eisai is the announcement Monday that Eisai had doubled its sales staff to 400 people in an effort to improve physician awareness of the product. If you recall, VIVUS' Qsymia offered greater weight reduction in trials, but Belviq had the more favorable safety profile, making it a strong choice to be prescribed by physicians.

Prescriptions have generally trended higher with Belviq, as you can see below, but the uptrend has been somewhat hard to predict and appears to be wholly dependent on consumers' insurance coverage.


Source: Arena Pharmaceuticals, IMS NPA.

Lief also highlighted four possible additional lorcaserin indications made possible by Arena's partnership expansion with Eisai in November, which resulted in a $60 million upfront cash payment. The indications Arena intends to explore are: lorcaserin as a treatment for smoking cessation; lorcaserin co-administered with phentermine for weight control management; an extended-release formulation of lorcaserin; and the initiation of a lorcaserin cardiovascular outcomes trial known as Camellia.

While pre-clinical evidence of higher doses of lorcaserin leading to reduced nicotine addiction is encouraging, and I'd have to say an extended-release formula would certainly improve patient convenience, the roughly five-year Camellia trial -- an FDA post-marketing requirement -- is what investors really care about. A primary concern about weight-control drugs has been their long-term effect on cardiovascular function. Beginning this month, Arena plans to enroll about 12,000 patients in this study.

Finally, Lief focused on what everyone else usually forgets -- that Arena has a completely separate pipeline of experimental drugs outside of lorcaserin/Belviq. Lief covered four compounds: APD811 for pulmonary arterial hypertension, or PAH, temanogrel for thrombotic diseases, APD334 for autoimmune diseases, and APD371 as a pain management drug.

We didn't hear a lot of new data here necessarily, but now have a better timeline as to when these pipeline products are expected to advance, with an APD811 trial for PAH due to start in the first half of 2014, a phase 2a trial for temaogrel expected in the second half of 2014, multiple-ascending dose trials expected for APD334 throughout 2014, and a phase 1 of APD371 already under way.


Source: Arena Pharmaceuticals. 

Making sense of it all
With groundbreaking new drugs sometimes you have to take the good with the bad. In the case of Arena, investors certainly get a hearty dosing of both.

On the positive side, I was glad to see that Eisai remains committed to helping advance Belviq in the U.S., and that there's a good chance Belviq will be approved in multiple additional nations before the year is up. Arena's lorcaserin and non-lorcaserin pipelines also show promise, but none of these studies have reached a point where I'm sold on their effectiveness as of yet.

Then again, I'm a bit disturbed that the best Arena and Eisai can come up with to boost Belviq sales is "throw more sales representatives at doctors and that'll do the trick!" This just feels like the wrong approach, when Arena and Eisai should be beating down insurers' doors to get them to cover this potentially breakthrough therapy. Consumers have proven they won't pay for Qsymia or Belviq using out-of-pocket money, so sales really can't be expected to take off until more insurers latch onto the treatment.

Another primary concern for Arena investors has to be the length of the Camellia study. Shareholders knew from the start that this gigantic study wasn't going to be completed overnight, but five years is more than enough time for a company like Orexigen Therapeutics , which is developing Contrave in partnership with Takeda Pharmaceuticals , to leave Qsymia and Belviq in the dust. Orexigen has already completed a cardiovascular safety trial involving some 9,800 patients known, with the results demonstrating no increase in adverse events. This could be the difference that clears the way for Contrave to be approved in Europe, a stomping ground that Qsymia and Belviq have found elusive, and it could be a reason for Contrave to be approved in favor of either Qsymia or Belviq in the U.S.

This will definitely be an important year for the development of Belviq, and I believe by the late second half of 2014 we'll have a good idea of whether it was just slow out of the gate or one of the biggest busts of all time.

Will this top stock leave Arena Pharmaceuticals in the dust in 2014?
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article JPMorgan Healthcare Conference Highlights: Arena Pharmaceuticals, Inc. originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
toppguyy

Shorts will not go quietly,,but they are done,the bashing is about to become background static. Big money big pharma knows,you wait for your contrave.,ps Smokers are already taking Belviq to quit,

Guess what It works

January 16 2014 at 2:02 PM Report abuse rate up rate down Reply