Cart (0)
business newsArena Garners Low-Faith Deal From Eisai for Its Obesity Drug
The licensing deal pushes the pharma company ahead of Vivus and Orexigen Therapeutics.
PRINT
 |
|
Arena Pharmaceuticals (ARNA) has pulled into the lead of the obesity drug race. The San Diego-based biotech has garnered a US licensing deal for its obesity treatment lorcaserin that's currently awaiting approval.
This puts Arena ahead of its two competitors: Vivus (VVUS) and Orexigen Therapeutics (OREX). All three drugs are currently awaiting approval from FDA, but the chance of approval is anyone's guess at this point. Vivus and Arena will face approval dates in October, while Orexigen will face the FDA in January.
All three drugs have their merits: Vivus's Qnexa has shown the largest margin of weight loss during clinical trials, but has also shown some severe side effects; Arena's lorcaserin appears to have the best profile of safety and tolerability, but has only shown mild weight loss; meanwhile, Orexigen's Contrave seems to have the best balance of safety and effectiveness.
All three companies have been trying to grab Big Pharma's attention with the prospects that the $2 billion obesity treatment category offers. Yet, Big Pharma still seemed unprepared to put its faith in a category that has evaded success time and again.
Arena's deal with Japan's Eisai doesn’t quite show complete faith either. The Japanese company is only giving the biotech $50 million upfront -- that's a small amount for a drug that has such big prospects. The deal is weighted heavily toward sales after approval, meaning Eisai won't face a huge loss if the regulatory process for lorcaserin hits a snag. The rest of the deal includes milestone payments of up to $160 million, with the bulk of those payments coming upon approval and delivery of the product. There's the potential for a $1.16 billion sales-related payment, as well as a purchase price that goes from 31.5% of sales to 36.5% of sales as the drug becomes more widely used.
The prospects for these drugs will become clearer after the first of them, Qnexa, faces an advisory panel on July 15 -- revealing how the FDA is viewing the pharmacotherapy for obesity treatments.
Investors reacted with vigor when the news first broke, pushing shares up almost 30% in pre-market trading, but have pulled back a bit since, with shares up about 15% at the start of the trading day.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
