Arena Pharmaceuticals, Inc. (ARNA - Free Report) recently announced an agreement with Taiwan-based CY Biotech for the marketing and supply agreement of obesity drug, Belviq, in Taiwan. As per the agreement, CY Biotech will have marketing and distribution rights of Belviq in Taiwan for weight loss or weight management in obese and overweight patients after getting approval from the Taiwan regulatory body, Taiwan Food and Drug Administration (TFDA).
Belviq will be manufactured at Arena Pharma’s production facility in Switzerland and CY Biotech will purchase the product at a price of 45% of CY Biotech’s annual sales. Additionally, CY Biotech paid $2 million to Arena Pharma upfront. Arena Pharma will also receive a milestone payment after the first additional indication for Belviq is approved by the TFDA. CY Biotech will shoulder the responsibility of the development and regulatory approval of Belviq in Taiwan.
We note that Arena Pharma has a marketing and supply collaboration with Eisai Inc.’s subsidiary, Eisai Limited for the U.S. and its territories. In 2012, the agreement was amended and Eisai received commercialization rights in most areas of North and South America. In Jun 2013, both companies announced the submission of a marketing application for Belviq for the treatment of obesity in Canada.
In June 2013, Arena Pharma launched Belviq in the U.S. and received a milestone payment of $65 million from Eisai. However, the company has faced some hurdles in gaining approval for Belviq in the EU. In May 2013, Arena Pharma announced that it has decided to withdraw its application in the EU. However, the company plans to file the application again.
The obesity market represents huge commercial potential. According to the World Health Organization (WHO), the worldwide obese population has almost doubled since 1980. Furthermore, 1.5 billion people around the globe are overweight with 500 million falling under the obese category.
Currently approved therapies for obesity include VIVUS Inc.’s (VVUS - Free Report) Qsymia, which was launched in Sep 2012. Qsymia’s sales are yet to pick up – first quarter 2013 sales were $4.1 million.
Arena Pharma currently carries a Zacks Rank #3 (Hold). At present, companies like Jazz Pharmaceuticals (JAZZ - Free Report) and Medivation, Inc. look well positioned with a Zacks Rank #1 (Strong Buy).