Arena Pharmaceuticals (ARNA) Investors Nervous as June PDUFA Date Approaches

June 4, 2012 3:46 PM EDT
Investors in Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) may be getting nervous as the June 27, 2012 PDUFA date on obesity drug Lorcaserin gets closer and closer.

Although an FDA panel voted 18 to 4 on May 10, 2012 that the benefits of lorcaserin outweigh the potential risks, like rival Vivus, Inc. (NASDAQ: VVUS), a three month PDUFA date extension could be in the cards.

Analysts at Jefferies for one think that a slight delay should be expected. Specifically, they see a delay of 3-6 months.

The firm notes that during the company's mid-May conference call was the disclosure that ARNA is still in "very preliminary" discussions with the FDA on post-marketing commitments and a potential risk mitigation and evaluation strategy (or REMS). In fact, Arena has yet to even propose a REMS program. In addition, Arena has not submitted a design for a post-marketing CV outcomes study, which the firm believes will be required.

"Whether a potential delay would occur though a three-month PDUFA extension, as was the case for Vivus' Qnexa, or through a complete response letter, which we believe would delay approval to early 2013, would depend on whether ARNA can negotiate and file a proposed REMS/post-marketing study designs quickly. We assume a modest delay (3-6months), but this has no material impact on our valuation. We now assume a lorcaserin launch in early 2013 (vs. 3Q12 previously)"

Despite the potential delay, analysts at Jefferies remain bullish on the stock on likely FDA approval and eventual blockbuster combination sales. They have a Buy rating and $9 price target on the stock.

For Arena Pharmaceuticals investors looking to take comfort in the fact that a PDUFA date delay has yet been announced, they should look at the fact that Vivus' PDUFA date extension did not come until 8 days ahead of the original scheduled PDUFA date. That would suggest that Arena's potential PDUFA delay announcement may not be announced until June 19th.

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PuffieWillie on 2012-06-08 16:21:04
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A $9 target is absurd! I did NOT buy ARNA to make less than 500% profits! How ridiculous can $9 be? FDA approval will bring it to at least $12 and who knows where the buying-selling frenzy will take it after that?

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