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Arena Pharmaceuticals' (ARNA) Q2 Loss Widens, Revenues Meet

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Arena Pharmaceuticals, Inc.  incurred loss of $1.24 per share for the second quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $1.04 as well as the year-ago quarterly loss of 65 cents.

Moreover, Arena’s total revenues of $1 million in the reported quarter plunged 75% year over year. Meanwhile, the top line matched the Zacks Consensus Estimate. Revenues included $0.94 million of royalty revenues and $0.08 million of collaboration revenues. In the year-earlier period, Arena had recorded $4 million as collaboration/royalty revenues.

Shares of Arena have soared 56.4% so far this year versus the industry’s decline of 2.9%.

Research & development (R&D) expenses escalated 91.7% from the prior-year level to $51.2 million.

General and administrative expenses surged 76.9% to $18.4 million from the year-ago figure.

Pipeline Update

Arena’s pipeline currently consists of two key candidates, namely etrasimod (autoimmune diseases) and olorinab (pain and fibrotic diseases).

Etrasimod (APD334) is presently in mid-stage development for ulcerative colitis. In June, Arena dosed the first patient in the pivotal phase III ELEVATE UC 52 study evaluating etrasimod for treating moderately-to-severely active ulcerative colitis (UC).

The study is part of the ELEVATE UC registrational program, which comprises two pivotal studies to evaluate etrasimod in UC patients. On second-quarter earnings call, the company stated that it plans to initiate ELEVATE UC 12, a 12-week induction study, at a later date to optimize the candidate’s time to market.

Notably, etrasimod has the potential to be developed for additional indications beyond ulcerative colitis. The company is planning to start a phase IIb/III CULTIVATE study to develop it for Crohn's disease. It also intends to begin a phase IIb ADVISE study for treating patients with atopic dermatitis.

Meanwhile, last month, Arena initiated dosing in the phase II CAPTIVATE study on another candidate olonarib (APD371) as a treatment for visceral pain associated with gastrointestinal disorders. The study will evaluate three doses of olonarib in patients with abdominal pain associated with irritable bowel syndrome (IBS) including IBS with constipation (IBS-C) and IBS with diarrhea (IBS-D).

Earlier, Arena successfully completed a phase IIa study on olorinab as a treatment for pain associated with Crohn's disease.

We would like to remind investors that in January 2019, Arena out-licensed the global rights to its pulmonary arterial hypertension (PAH) candidate ralinepag to United Therapeutics, Inc. (UTHR - Free Report) . The company received an upfront payment of $800 million and is eligible to receive up to $400 million as potential milestone fees and tiered low double-digit royalties on the net sales of ralinepag from United Therapeutics. The agreement provided Arena with funds for continuing development of its clinical and pre-clinical studies.

Arena Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Zacks Rank & Stocks to Consider

Arena currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector are BeiGene, Ltd. (BGNE - Free Report) and Guardant Health, Inc. (GH - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BeiGene’s loss per share estimates have been narrowed 2.7% for 2019 and 2.2% for 2020 over the past 60 days.

Guardant Health’s loss per share estimates have been narrowed 1.4% for 2019 and 0.9% for 2020 over the past 60 days. The stock has skyrocketed 191.8% year to date.

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