For proof that biotech stocks can dole out gains — and losses — with no warning whatsoever, one only has to look at Arena Pharmaceuticals, Inc. (ARNA). On Wednesday, ARNA stock jumped 60% on news that one of the drugs in its pipeline performed well as an autoimmune disease treatment in a Phase 1 trial.
It’s not the sort of news most fans and followers of Arena Pharmaceuticals were expecting. The company is best known as the maker of Belviq (aka lorcaserin), which was approved in mid-2012 as a prescription diet pill. Though sales of the weight-loss drug got off to a slow start in early 2013, with its sales partner Eisai now at full speed, Arena booked $5.2 million worth of Belviq-sales proceeds last quarter. That was more than double the revenue seem in the same quarter a year earlier.
ARNA stock is a more diversified biopharma investment than even some of its shareholders might realize. And it’s a far more serious biotech play than that of a mere maker of a weight loss pill.
Proof of that materialized today.
Wednesday morning, Arena Pharmaceuticals announced its autoimmune disease treatment APD334 showed positive results in a Phase 1b trial of the drug as a therapy for autoimmune diseases. Specifically, APD334 caused a significant lowering of lymphocytes in the blood … up to 69% from average levels. The effects lasted about a week per dose, and no significant adverse side effects were observed.
It’s an important step in the war against autoimmune conditions. Lymphocytes are immune cells that can erroneously attack healthy cells inside the human body. APD334 essentially prevents so many lymphocytes from leaving lymph nodes, therefore reducing the amount of damage an individual’s immune system can do. Arena Pharmaceuticals believes the drug could be a viable therapy for several autoimmune conditions, including multiple sclerosis, psoriasis and rheumatoid arthritis.
CEO Jack Lief, however, explicitly said of the results, “Based on these impressive results, we plan to expedite APD334 into Phase 2 clinical trials for ulcerative colitis and Crohn’s disease.”
The stock-moving announcement came without any warning, shocking investors who quickly scrambled to get into — or back into — a position in ARNA stock.
For future reference, Arena Pharmaceuticals has even more buried potential treasure in its pipeline. Aside from already-marketed Belviq and APD334, it’s also got APD371, Ralinepag and Temanogrel in development:
- APD371 is also in Phase 1 testing as a pain treatment.
- Ralinepag is in Phase 2 trials as a treatment for pulmonary hypertension.
- Temanogrel is a Phase 1 candidate for thrombotic diseases.
News of success or progress about any of those drugs could spur ARNA stock higher just as easily as this morning’s announcement regarding APD334 did.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
