Arena Scores Off Its Punt to Eisai

Arena Scores Off Its Punt to Eisai

If the obesity drug market was a football game, then Arena Pharmaceuticals just punted. To take that analogy even further, Arena even scored a few points by punting.

Arena announced its third-quarter financial results Thursday afternoon. Nothing overly spectacular there -- although the company did beat analysts' expectations with a loss of $0.08 per share. The big news, though, is related to an expanded marketing arrangement with Japanese pharmaceutical firm Eisai. This announcement excited investors enough to send Arena's shares up by more than 20% in intraday trading before giving up some of those gains.

Eisai already was responsible for marketing Belviq in most of North America and South America. Arena carried the ball by itself in most of the rest of the world.

That will change now. Arena is giving exclusive marketing rights for its obesity drug to Eisai for all countries except South Korea, Taiwan, Australia, Israel, and New Zealand. In return, Eisai is paying Arena $60 million upfront and could receive additional milestone payments of up to $176.5 million.

Arena also announced earlier this month that Eisai was beefing up its sales force in the U.S. The Japanese drugmaker committed to increasing its sales staff for Belviq to 400 by the December -- double the number employed when Belviq first went on sale in the U.S. in June.

Early in the game
The market clearly applauded the latest move. Eisai brings resources for the global commercialization of Belviq that Arena couldn't come close to matching. Even with Eisai's large sales organization, though, Belviq got off to a slow start in the U.S. As prescription data came in in the early weeks of the launch, Arena's shares sank lower and lower.

But it's definitely still early in the game for all of the players in the obesity drug market. An expanded global role for Eisai combined with the firm's commitment to increasing its efforts in the U.S. could potentially mean better days are ahead for Arena and Belviq.

VIVUS , meanwhile, has faced even more challenges with its launch of Qsymia. One of those challenges included a clash with a large investor, First Manhattan, which claimed that the company mishandled the commercialization efforts for Qsymia. VIVUS has gone through three different CEOs in the span of just a few months.

Another player is sitting on the bench anxiously waiting to enter the game. Orexigen Therapeutics recently submitted for regulatory approval in Europe for its obesity drug Contrave. If the results are positive from the cardiovascular study that's near completion, Orexigen could submit for FDA approval by as early as the end of the year.

Fervent fans
There's one way that the football analogy really applies to the obesity drug space. These three obesity drug companies have a fan base as fervent as those of any NFL team. If you doubt that, just read through the comments on any article written about Arena, VIVUS, or Orexigen.

Fans of Arena will look at the latest announcement about Eisai's expanded sales role and get excited. Fans of VIVUS will probably dismiss the news as meaningless. And fans of Orexigen will likely respond, "You ain't seen nothing yet" until Contrave hits the market. What's my take? I'll just enjoy the game.

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Originally published