Arena Pharma Could Be Developing Several Best-In-Class Agents

Leerink initiated coverage of Arena Pharmaceuticals, Inc. ARNA with an Outperform rating and a $5 price target.

New Management As A Catalyst For Growth

Leerink analyst Joseph Schwartz noted several opportunities could create a significant amount of shareholder value, including the following:

• Management has "greatly improved its exposure to the company’s legacy Belviq franchise by renegotiating its agreement with Eisai.”
• "Arena Pharmaceuticals is now focusing its efforts on developing differentiated specialty medicines which the company could commercialize on its own or garner outside interest in."

Specifically, Schwartz noted the company’s new management team is transitioning them into a new strategic direction. Arena is “developing potential best-in-class agents targeting blockbuster opportunities,” Schwartz said. The team has already “greatly improved its exposure to the company’s legacy Belviq franchise by renegotiating its agreement with Eisai, and is focusing its efforts on developing differentiated specialty medicines which the company could commercialize on its own or garner outside interest in, we believe,” according to Schwartz.

Arena’s drug candidates have several attractive properties. Specifically, Schwartz added, “Preclinically, ralinepag showed greater vasorelaxation, platelet aggregation and smooth muscle cell (SMC) proliferation benefits than Uptravi, and etrasimod has activity against sphingosine-1-phosphate receptors S1P1, 4 and 5 while avoiding S1P2 and 3 which may translate into an improved safety profile and open up a broader range of indications to treat, particularly in T-cell mediated inflammation.”

Arena Pharmaceuticals Outlook

Overall, Leerink noticed “a robust string of catalysts which offer multiple opportunities for upside upon potential proof of concept.”

Arena Pharmaceuticals was trading at $1.30, up 13.04 percent at the time of publication.