A Glimpse Into Two Climbing Biotechs: Arena Pharmaceuticals, Inc. (ARNA) and Ocular Therapeutix Inc (OCUL)

Arena Pharmaceuticals, Inc.

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) shares jumped nearly 50% in Tuesday’s trading session, after the drug maker reported positive top-line results from its Phase 2 trial of ralinepag in Pulmonary Arterial Hypertension (PAH). The trial met primary endpoint of change in Pulmonary Vascular Resistance (PVR) at week 22 relative to placebo.

Cantor analyst William Tanner commented, “We believe data from the Phase 2 trial of ralinepag in PAH establish a solid basis for the belief that the drug is approvable and that it could represent an important new therapy for treating the condition. Critical, too, is the concordance between the compound’s pharmacologic profile (in vitro and in vivo) and the clinical effect observed in the trial, in our opinion. As a consequence, we believe investors should have increased confidence that ARNA can develop novel pharmacophores for treating conditions beyond PAH, a testament to the company’s GPCR-targeting drug development expertise, the upshot of which could be the creation of long-term share value.”

“We believe the early success should have effects on investor viewpoint of new managements’ competency. We believe it reasonable that some investors may have harbored ambivalence towards ARNA stock given the track-record with obesity therapy Belviq. Declaration of drug candidates for treating PAH, Crohn’s disease, etc., absent clinical evidence, may have engendered little investor confidence, in our opinion. We believe the data released yesterday should convince investors that new ARNA management can effectively advance the development pipeline,” the analyst added.

As such, Tanner reiterates an Overweight rating on shares of Arena Pharma, with a price target of $37, which represents a potential upside of 37% from where the stock is currently trading. (To watch Tanner’s track record click here.)

Out of the 9 analysts polled by TipRanks (in the past 3 months), 5 rate Arena Pharmaceuticals stock a Buy, while 4 rate the stock a Hold. With a downside potential of 58.9%, the stock’s consensus target price stands at $11.10.

Ocular Therapeutix Inc

Ocular Therapeutix Inc (NASDAQ:OCUL) shares are up nearly 13% today, after the drug maker announced the submission of an amendment for its NDA resubmission of DEXTENZA, for the treatment of ocular pain following opthalmic surgery. Previously, a manufacturing issue that was raised cited the observation of aluminum particulate matter, potentially associated with wear and tear of the aluminum blade arm. In order to fully address this issue, Ocular is requesting an extended review period of three months, in order to provide data from a full commercial batch with the changed equipment.

However, BTIG analyst Dane Leone remains skeptical, noting, “We downgraded our recommendation of OCUL back in May 2017 when the Form 483 was first disclosed, as we felt that management was under appreciating the potential for a delay in approval. Since the delay scenario is currently playing out, it is unclear how much credibility will be afforded to management that another facility inspection will not be needed prior to the approval of DEXTENZA.”

The analyst continued, “From the disclosures by management, it sounds as though the company has provided a full informational package regarding corrective actions to the FDA. That said, it is ultimately the decision of the FDA whether to require another facility inspection. While this risk is hard to quantify, given the now lengthy history of manufacturing issues and lapses in oversight, we would rather err on the side of caution and assume that the FDA will require another inspection.”

In closing, Leone reiterates a Neutral rating on shares of Ocular Therapeutix, without providing a price target. (To watch Leone’s performance click here)

As of this writing, the 8 analysts polled by TipRanks (in the past 3 months) are bullish on OCLR. With a return potential of nearly 27%, the stock’s consensus target price stands at $29.67.


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