Company Update (NASDAQ:ARNA): Arena Pharmaceuticals, Inc. Announces 4Q and Full-Year 2016 Financial Results


Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) reported financial results for the fourth quarter and full-year ended December 31, 2016 and provided a corporate update.

“We are very pleased with our progress in 2016 as we have positioned the Company to deliver results on multiple Phase 2 programs in 2017.  In the last nine months since the arrival of the new management team, we prioritized our Phase 2 programs; strengthened our board and team to support our strategy; implemented cost reduction measures; renegotiated our agreement with Eisai; and took a methodical approach to maximizing the value of our assets,” said Amit Munshi, Arena’s President and CEO.

As previously disclosed, in February 2017, Arena appointed Jayson Dallas, M.D., Oliver Fetzer, Ph.D., and Garry A. Neil, M.D. as independent directors to the Company’s Board of Directors.

“This year we expect to report results from all three of our proprietary Phase 2 programs, beginning with ralinepag in mid-year for pulmonary arterial hypertension,” Mr. Munshi stated.  “For etrasimod, we remain focused on maximizing the broad clinical utility of this compound in a time and cost effective manner. We are pleased to have initiated Phase 2 trials in both dermatologic extraintestinal manifestations in inflammatory bowel disease patients and pyoderma gangrenosum. We also plan to initiate a study in primary biliary cholangitis this year. Additionally, we have made important adjustments to the Phase 2 ulcerative colitis trial to ensure a robust data readout by year-end 2017.”

Pipeline Update

Ralinepag – oral, selective IP receptor agonist targeting the prostacyclin pathway for the potential treatment of pulmonary arterial hypertension (PAH)

  • Phase 2 trial in PAH
  • Phase 1 pharmacokinetic and pharmacodynamic trial comparing current twice-daily formulation with a new once-daily formulation in healthy volunteers
    • Trial initiated in March 2017
    • Data readout expected mid-year 2017

Etrasimod – orally available next generation sphingosine-1-phosphate (S1P) receptor modulator for the potential treatment of a number of autoimmune diseases

  • Phase 2 trial in ulcerative colitis (UC)
    • Implementing protocol updates to the OASIS program that maintain study conduct, integrity, and patient safety; further the probability of a successful trial; and facilitate expected data readout in 2017
  • Phase 2 trial in dermatological extraintestinal manifestations (EIM) in patients with inflammatory bowel disease (IBD)
    • Trial initiated in March 2017
  • Phase 2 trial in pyoderma gangrenosum (PG)
    • Trial initiated in March 2017
  • Phase 2 trial in primary biliary cholangitis (PBC)
    • Intend to initiate clinical study in 2017

APD371 – orally available full agonist of the cannabinoid-2, receptor for the potential treatment of visceral pain, specifically pain associated with Crohn’s disease

  • Phase 2 trial in pain associated with Crohn’s disease
    • Currently incorporating feedback related to study design and conduct into the clinical protocol design and selecting sites

Collaborations Update

  • Axovant
    • On February 13, 2017, Axovant announced preliminary results from the planned interim analysis of the first 11 patients to complete its Phase 2 study of nelotanserin in Lewy body dementia patients.  Axovant has stated plans to initiate a Phase 3 in the second half of 2017
  • Eisai
    • On December 28, 2016, Arena and Eisai Co., Ltd. and Eisai Inc. (collectively, “Eisai”)  amended and replaced the BELVIQ® (lorcaserin HCl) marketing and supply agreement. Under the revised agreements, Eisai acquired global commercialization rights to BELVIQ and is responsible for all lorcaserin development expenses going forward. The financial terms of the revised agreement are expected to provide Arena with $23 million of cash payments, including $10 million received in the fourth quarter, and over $80 million of potential cost relief on lorcaserin development obligations in the next three years. In addition, Arena will continue to be eligible to receive royalty payments on net sales of BELVIQ and participate in the upside potential of lorcaserin from additional geographies and clinical trials such as the ongoing cardiovascular outcomes trial, CAMELLIA
    • As a result of the Eisai transaction, a significant amount of non-cash items were recognized in the 2016 financial statements

Financial Update

Fourth Quarter 2016 Financial Results

  • Revenues totaled $85.4 million, including $15.2 million in net product sales of BELVIQ, $1.3 million in milestone payments earned from Eisai and Ildong for BELVIQ, and $66.1 million of revenue associated with upfront BELVIQ payments
  • Research and development expenses totaled $11.9 million
  • General and administrative expenses totaled $7.3 million
  • Impairment of assets totaled $21.8 million
  • Net income was $38.3 million or $0.16 per share

Full Year 2016 Financial Results

  • Revenues totaled $124.0 million, including $26.3 million in net product sales of BELVIQ, $12.3 million of milestone payments earned from Eisai and Ildong for BELVIQ, and $72.1 million of revenue associated with upfront BELVIQ payments
  • Research and development expenses totaled $66.4 million
  • General and administrative expenses totaled $31.2 million
  • Restructuring charges totaled $6.3 million
  • Impairment of assets totaled $21.8 million
  • Net loss was $22.9 million, or $0.09 per share

At December 31, 2016, cash and cash equivalents totaled $90.7 million and approximately 243 million shares of Arena common stock were outstanding.

2017 Financial Guidance

The Company expects the full year 2017 net cash used in operating and investing activities to be $80 to $100 million, assuming no additional partnerships and no adjustment to our development plans.

Shares of Arena Pharmaceuticals are up nearly 16% to $1.65 in after-hours trading Tuesday. ARNA has a 1-year high of $2.16 and a 1-year low of $1.34. The stock’s 50-day moving average is $1.50 and its 200-day moving average is $1.54.

On the ratings front, ARNA has been the subject of a number of recent research reports. In a report issued on February 13, FBR analyst Rahul Jasuja reiterated a Buy rating on ARNA. On January 5, Needham’s Alan Carr reiterated a Hold rating on the stock.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rahul Jasuja and Alan Carr have a yearly average loss of -8.3% and a return of 11.2% respectively. Jasuja has a success rate of 45% and is ranked #4113 out of 4517 analysts, while Carr has a success rate of 49% and is ranked #313.

Arena Pharmaceuticals, Inc. is a biopharmaceutical company engages in the discovery, development, and commercialization of novel drugs that target G protien-coupled receptors. It offers a range of drugs for treatment in the field of cardiovascular, central nervous system, inflammatory, and metabolic diseases.

 

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