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Arena (ARNA) Q4 Loss Wider Than Expected, Etrasimod in Focus

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Arena Pharmaceuticals, Inc. incurred a loss of $2.54 per share for fourth-quarter 2021, wider than the Zacks Consensus Estimate of a loss of $2.41 and the year-ago loss of $2.10.

Arena Pharmaceuticals recorded $0.05 million of revenues for the reported quarter. The Zacks Consensus Estimate for revenues was nil. ARNA recorded revenues of $0.04 million in the year-ago quarter.

Shares of ARNA have risen 17.3% in the trailing 12 months against the industry’s 40.7% decrease.

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In December 2021, Arena Pharmaceuticals announced a definitive agreement to be acquired by Pfizer (PFE - Free Report) whereby the latter will acquire the former in an all-cash transaction for $100 per share or a total equity value of $6.7 billion.

The deal was unanimously approved by the board of directors of both Arena Pharmaceuticals and Pfizer. However, neither ARNA nor Pfizer provided any timeline for closing this deal, which is subject to customary closing conditions, including approval from ARNA’s shareholders and regulatory authorities.

Quarter in Detail

Research & development expenses rose 9.9% from the prior-year level to $110.3 million, primarily as a result of the progress of ARNA’s pipeline candidate etrasimod to the next phase of clinical development and higher personnel expenses.

Selling, general and administrative expenses declined 1.1% from the year-ago figure to $34.5 million due to a decline in share-based compensation expenses.

Arena Pharmaceuticals ended the quarter with $0.7 billion of cash, cash equivalents and investments balance compared with $0.8 billion as of Sep 30, 2021.

Full-Year Results

Arena Pharmaceuticals reported revenues of $0.05 million compared with $0.3 million in the year-ago period. ARNA incurred a loss of $10.14 per share against earnings of $7.39 per share in the year-ago period.

In 2021, Arena Pharmaceuticals made 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, curently being developed by Aristea to treat palmoplantar pustulosis and other neutrophil-mediated diseases. Excluding this, adjusted loss per share was $8.99 compared with the year-ago quarter’s loss of $7.39.

Pipeline Updates

Arena Pharmaceuticals’ 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, namely ELEVATE UC 12 and ELEVATE UC 52, are expected in first-quarter 2022.

Apart from UC, etrasimod is being studied for multiple indications. Arena Pharmaceuticals is evaluating the candidate in a phase II/III CULTIVATE study for Crohn's disease. Data from the phase II portion of the study is anticipated in second-quarter 2022. Top-line data from a phase II study evaluating etrasimod for alopecia areata is anticipated in second-half 2022. The candidate is also being evaluated in a mid-stage study as a potential treatment of eosinophilic esophagitis. ARNA is also developing a controlled-release formulation of etrasimod in an early-stage study.

Other than etrasimod, Arena Pharmaceuticals has two mid-stage candidates, namely APD418 and temanogrel in its pipeline, currently being developed to treat cardiovascular disorders in separate phase II studies. Temanogrel is also being evaluated in a phase II study for Raynaud’s phenomenon secondary to systemic sclerosis.

Zacks Rank & Stocks to Consider

Arena Pharmaceuticals currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector are Adaptimmune Therapeutics (ADAP - Free Report) and Vertex Pharmaceuticals (VRTX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adaptimmune Therapeutics’ loss per share estimates for 2022 have narrowed from 99 cents to 91 cents in the past 30 days. Earnings of Adaptimmune Therapeutics beat estimates in three of the last four quarters and missed the mark once, the average surprise being 0.9%.

Vertex Pharmaceuticals’ earnings per share estimates for 2022 have increased from $13.35 to $14.33 in the past 30 days. The same for 2023 has risen from $14.12 to $15.31 in the past 30 days. The stock has risen 6.3% in the past year. Earnings of Vertex Pharmaceuticals beat estimates in each of the last four quarters, the average being 10%.


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