By Spencer Osborne
Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and marketing partner Eisai Co., Ltd. (ESALY) launched the anti-obesity drug, Belviq, on June 7th, 2013. Investors are eagerly awaiting some initial results on early sales, but as yet channel checks have not materialized. It could be that the first hints we get about the sales traction of Belviq will happen when Arena conducts a presentation at the Wells Fargo Securities Healthcare Conference in Boston, MA on Wednesday, June 19th.
It has long been my opinion that the sales of Belviq is the catalyst that the street is looking for. With competitor VIVUS, Inc. (NASDAQ:VVUS) seeing modest sales of its drug Qsymia, which launched last Fall, the biggest question is whether or not anti-obesity drugs can gain consumer traction in the current environment.
A big factor in this evolving story is tied to insurance and cost to patients. Over the past 9 months there has been progress on the insurance front with about 30% of the market offering at least some coverage. Eisai has a team of reps working on the insurance front and has a goal of getting insurance coverage to 40% or even 50% over the next 12 months or so.
The conference that Arena (ARNA) is presenting at today will be the first one that the company has presented at since launching Belviq. While I anticipate the focus of the conference to be on the longer term, I also anticipate that the company will in some manner have to address what is happening with Belviq. The street is hungry for numbers and information, and while what we get may just be some color, it is better than nothing. I anticipate that the company will make statements like, “We are excited about the launch”, “we are monitoring channel checks carefully”, “a large number of consumers are engaging us on discount programs”, and “it is still early in the process, but we are encouraged by what we are seeing”. I would also expect the company to speak to other positive developments on Belviq such as the presentation at the Endocrine Society Annual Meeting over last weekend by the well respected Dr. Louius Aronne.
Dr. Aronne highlighted that Belviq is independently able to lower glucose in the blood. While it may not sound earth shattering, the impacts can be enough to take someone that is pre-diabetic into a normalized range. This factor makes Beliviq an attractive weapon in the war against diabetes. This news is not an immediate equity driver, but does add to the potential of Belviq success.
While we will not hear from Arena until Wednesday, it is possible that some early independent channel checks could make their way to wires today, so investors should be ready for that event. If that does happen, it becomes more likely that Arena will address the sales issue during the presentation at the Wells Fargo event. I would caution investors that the early channel checks simply give an idea of sales at this point and may not be indicative of actual performance. It usually takes some time for extrapolation models to work well, and the initial data will represent a very short time period. Thus, while the data should be taken with a grain of salt, it will certainly be something that will impact the equity.
Watch the news flow carefully today. There are many that are eager (bulls and bears) to see early sales results.
Disclosure: Long ARNA
Spencer Osborne is a partner in SiriusBuzz.com and SiriusBuzz Premium, a website dedicated to discussion about SiriusXM Satellite Radio. He also writes exclusive articles for Seeking Alpha on a wide range of companies. Osborne brings researched based facets of companies to light that investors may want to consider.