JPMorgan Muted on Arena Pharma (ARNA) After Approval, Lifts Target to $11

June 28, 2012 2:44 PM EDT
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Price: $1.37 +0.74%

Rating Summary:
    5 Buy, 10 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Earlier, JPMorgan boosted its price target on Neutral-rated Arena Pharma (NASDAQ: ARNA) from $8 to $11 after Belviq was approved with a fairly clean label although they note potential for early discontinuation bears watching.

The firm's base case is $1 billion peak sales by 2017.

The firm comments, "Belviq’s (lorcaserin) label states that if a patient has not lost >5% of body weight at wk 12 the drug should be discontinued. In pivotal trials, 42% without diabetes and 32% of pts with the disease cleared this hurdle. However, pending combination use with other therapies such as phentermine (which the company does not expect…at least initially), we suspect the “real world” success rate could be lower (<30%) in a generally less motivated patient population with less dietary guidance than in a clinical trial. Belviq will likely not launch until 1Q13, although the precise timing is contingent on the DEA's final scheduling of the drug (expected to take 4-6 mos). The FDA has recommended a Schedule 4 classification, which ARNA noted has no limitations on product sampling, advertising, or automatic refills. On its conf call, ARNA provided limited details on the launch plans, pricing, or reimbursement of Belviq given that partner Eisai is leading commercialization efforts. Post-marketing requirements include 6 studies; 5 in pediatrics and a CV outcomes trial (CVOT), which includes ECG assessment (expected to start in mid-2013 as ARNA expects to take 6-9 mos to establish/finalize the study design with the FDA). Lastly, there is no REMS for Belviq but a voluntary patient package insert is included with a prescription."

For an analyst ratings summary and ratings history on Arena Pharma click here. For more ratings news on Arena Pharma click here.

Shares of Arena Pharma closed at $11.39 yesterday.

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