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Arena (ARNA) Q3 Loss Wider Than Anticipated, Revenues Nil

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Arena Pharmaceuticals, Inc. incurred a loss of $3.21 per share for third-quarter 2021, wider than the Zacks Consensus Estimate of a loss of $2.42 and the year-ago loss of $1.69.

This wider loss was owing to a milestone payment of $70 million to Aristea Therapeutics, as part of a strategic collaboration to advance the clinical development of RIST4721, an oral CXCR2 antagonist being developed by Aristea for the treatment of palmoplantar pustulosis and other neutrophil-mediated diseases. Excluding this, adjusted loss per share was $2.07 compared with the year-ago quarter loss of $1.69.

Arena recorded no revenues for the reported quarter. The Zacks Consensus Estimates for revenues was pegged at $1 million. The company recorded revenues of $0.02 million in the year-ago quarter.

Shares of Arena have plunged 18% so far this year in comparison with the industry’s 8.9% decrease.

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Quarter in Detail

Research & development expenses escalated 18% from the prior-year level to $94.2 million, primarily as a result of the progress of its pipeline candidate, etrasimod, to the next phase of clinical development and an increase in personnel expenses.

Selling, general and administrative expenses increased 59.5% from the year-ago figure to $30.3 million due to an increase in personnel costs.

The company ended the quarter with approximately $0.8 billion in cash, cash equivalents and investments balance compared with $1 billion as of Jun 30, 2021.

Pipeline Updates

Arena’s most advanced candidate is etrasimod, which is presently in late-stage development for ulcerative colitis (UC). Top-line data from two pivotal phase III studies on the candidate, “ELEVATE UC 12 and ELEVATE UC 52, is expected in first-quarter 2022.

The company is also evaluating etrasimod in a phase IIb/III CULTIVATE study for Crohn's disease. In August 2021, Arena increased target enrolment for the said study and announced a collaboration with Second Genome to identify microbiome biomarkers in the CULTIVATE study. Data from the study is anticipated in second-quarter 2022.

In July 2021, the company reported positive data from the phase II ADVISE study evaluating etrasimod in patients with atopic dermatitis, which showed a statistically significant effect on clear skin score. Based on this data, it is planning to start a phase III program soon.

Arena initiated two separate phase II studies evaluating APD418 in acute heart failure and temanogrel in Raynaud’s phenomenon secondary to systemic sclerosis in July 2021. The company randomized the first participant in the phase II study for temanogrel earlier this month.

Zacks Rank

Arena currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector include Alkermes (ALKS - Free Report) , Regeneron Pharmaceuticals (REGN - Free Report) and Xencor (XNCR - Free Report) , each carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes’ earnings per share estimates for 2021 have increased from $0.61 to $0.68 in the past 60 days. The same for 2022 has risen from $1.06 to $1.11 in the past 60 days. The stock has rallied 52.1% in the year so far.

Regeneron’s earnings per share estimates for 2021 have increased from $54.28 to $63.53 in the past 60 days. The same for 2022 has risen from $44.11 to $46.69 over the same period. The stock has rallied 34.1% in the year so far.

Xencor’s loss per share estimates for 2021 have narrowed from 75 cents to 33 cents in the past 60 days. The same for 2022 has narrowed from $3.14 to $2.92 over the same period.


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