Arena Upgraded, Analyst Sees 44% Upside

With phase 2 results expected to be released in the near future, JMP analyst Jason Butler upgraded his rating on Arena Pharmaceuticals, Inc. ARNA to Market Outperform with a $27 price target.

“We believe the stock’s current valuation under-appreciates the potential for clinical and commercial success of either of these assets (Ralinepag in pulmonary arterial hypertension and strasimod in ulcerative colitis),” Butler said.

Ralinepag Has Performed Well Compared To Its Competition

“Ralinepag has demonstrated a superior preclinical profile to selexipag. Preclinical and early clinical studies have shown that ralinepag has the potential to be the best-in-class oral prostacyclin agonist. The drug is more potent than other oral nonprostanoid prostacyclin receptor agonists and has a superior pharmacokinetic profile, including lower Cmax, reduced peak-to-trough ratio and potential for once-daily dosing,” Butler noted.

This pushed Butler to believe ralinepag could be the best oral prostacyclin agonist for the treatment of pulmonary arterial hypertension.

Arena Has Even More In Its Arsenal

Arena has a couple of other strong assets in its portfolio. Specifically, Butler highlighted Etrasimod, which he sees Arena accelerating its time to market.

“We believe Arena’s focus on these orphan indications for etrasimod can accelerate development timelines and provide a differentiated commercial opportunity vs. other S1P1 modulators. “

He also stated how Axovant Sciences Ltd AXON is developing nelotanserin, a drug developed by Arena, and that Arena might be able to receive royalty payments and milestones from this product.

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