Arena Pharma (ARNA) Reports In-Line Q4 Loss; Offers FY16 Outlook

Arena Pharma (NASDAQ: ARNA) reported Q4 EPS of ($0.13), in-line with the analyst estimate of ($0.13). Revenue for the quarter came in at $7.8 million versus the consensus estimate of $8.26 million.

016 Financial Guidance

Absent any new collaborations, Arena expects its 2016 revenues will primarily consist of (i) net product sales of BELVIQ, (ii) milestone achievements under existing collaborations, (iii) amortization of upfront payments from existing collaborations, (iv) toll manufacturing and (v) research funding and patent reimbursements from existing collaborations. Arena does not believe it can accurately predict the amount of future net product sales of BELVIQ or the timing of milestone achievements, if any, and, accordingly, is not providing guidance for its overall 2016 revenues at this time. The amount of BELVIQ net product sales is expected to depend on Eisai's marketing efforts, including relating to BELVIQ XR if approved later this year, the extent of reimbursement coverage for BELVIQ in the United States, and receiving regulatory approval in countries outside the United States. Potential milestones payments for 2016 of up to an aggregate of approximately $16.0 million include milestones for obtaining regulatory approval for the once-daily formulation of lorcaserin, BELVIQ XR, in the United States, regulatory approval of the twice-daily formulation of lorcaserin, BELVIQ, in Mexico, Brazil and Israel, and acceptance by Boehringer Ingelheim of a first development compound. Amortization of upfront payments from existing collaborations is expected to be approximately $12.0 million, toll manufacturing revenue is expected to be approximately $4.0 million, and research funding and patent reimbursements from existing collaborations are expected to be approximately $3.0 million.

Arena expects full year 2016 research and development expenses of approximately $89.0 million to $98.0 million, including non-cash expenses of approximately $11.0 million. The research and development expenses include external clinical and preclinical study fees of approximately $45.0 million to $49.0 million, most of which relates to Arena's continuing Phase 2 clinical trials for APD334 and APD811 and its share of the costs for the BELVIQ cardiovascular outcomes trial. Arena also expects full year 2016 general and administrative expenses of approximately $27.0 million to $33.0 million, including non-cash expenses of approximately $7.0 million. In addition, Arena expects to spend approximately $1.0 million to $2.0 million for capital expenditures and approximately $9.0 million for payments related to its financing obligations for the sale and lease back of certain of its real property. Arena may adjust its expenses based on the cash it receives during the year, including from BELVIQ net product sales or any milestones or new collaborations.

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