Arena Pharmaceuticals (ARNA) Beats On Q3 Earnings And Sales

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) incurred a loss of 70 cents per share for the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 72 cents but wider than the year-ago loss of 61 cents (excluding a litigation settlement expense).

Total revenues in the reported quarter were $3.6 million, up 48% from the year-earlier period. Sales beat the Zacks Consensus Estimate of $1 million. Revenues comprised $3.2 million as royalty revenues and $0.4 million as collaboration revenues.

Shares of Arena have gained 9.5% so far this year against the industry’s decrease of 14%.

Research & development (R&D) expenses soared 67.2% from the prior-year level to $28.8 million.

General and administrative expenses surged 45.1% from the year-ago level to $10.8 million.

Pipeline Update

Arena’s pipeline mainly consists of three key candidates, namely ralinepag (vascular diseases), etrasimod (APD334; autoimmune diseases) and Olorinab/APD371 (pain and fibrotic diseases).

Ralinepag is being developed for the treatment of pulmonary arterial hypertension (PAH). The candidate is advancing to phase III development in the quarter under review.

In October 2018, the company announced positive long-term data from an open label extension of the phase II program, evaluating ralinepag on patients with pulmonary arterial hypertension (PAH). Data from the study showed that ralinepag demonstrated durable long-term improvements in both pulmonary vascular resistance (PVR) and a 6-minute walk distance(6MWD). The candidate also exhibited a favorable long-term tolerability profile.

Etrasimod, a once daily oral sphingosine-1-phosphate (S1P) modulator, is currently being evaluated in a phase II assessment for the treatment of primary biliary cholangitis (PBC).

Arena continues to make a substantial progress in the ongoing phase II OASIS study on etrasimod for treating ulcerative colitis. The company plans to initiate a phase III study for the same indication by the second quarter of 2019.

The company is on track to discuss the study design on etrasimod for a phase II/III study to address Crohn's disease. Arena expects to present the data readout next year. This apart, Arena is planning to evaluate etrasimod for atopic dermatitis (AD).

Olorinab, a cannabinoid 2 (CB2) receptor agonist, is being developed for treating visceral pain, specifically associated with Crohn's disease.

In September 2018, Arena announced positive top-line data from a phase IIa study, evaluating olorinab (APD371) for managing gastrointestinal pain associated with Crohn's disease. Findings from the study showed that treatment with olorinab for more than eight weeks led to a statistically significant reduction in abdominal pain.Olorinab was well tolerated with no new safety signals observed and no serious adverse events reported as well.

Apart from these three candidates, Arena plans to launch APD418, a first-in-class calcium-independent myofilament derepressor (CMD), which is in preclinical studies for the treatment of decompensated heart failure. The company plans to move the candidate into clinical studies in 2019.

Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Zacks Rank & Stocks to Consider

Arena currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Gilead Sciences, Inc. (NASDAQ:GILD) , Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences’ earnings estimates have been revised 4.4% upward for 2018 and 4.2% for 2019 over the past 60 days.The stock has inched up 0.4% so far this year.

Alexion’s earnings estimates have moved 4.8% north for 2018 and 1.8% for 2019 over the past 60 days. The stock has gained 6.4% so far this year.

Spring Bank’s loss per share estimates has been narrowed 7.6% for 2018 and 18.1% for 2019 in the last 60 days.

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