Arena Pharmaceuticals, Inc. (ARNA): The Mystery Objectors

Vivus’ Qsymia has been on the shelves in U.S. pharmacies for roughly six months now. Earlier there had been reluctance on the part of physicians to prescribe Qsymia due to cardiovascular risk associated with long term use of phentermine. Cardiovascular risk of Qsymia (a combination of phentermine and topiramate) had not been closely assessed during trials. Improvement in blood pressure and/or cholesterol along with weight loss reduces cardiovascular risk. Data from the analysis bodes well for future sales of Qsymia, as they would allay the fears of physicians to a great extent.

VIVUS, Inc. (NASDAQ:VVUS) is primarily a single drug company and totally dependent upon Qysmia, inasmuch as all of its Q1 2013 product revenue of $4.11 million was comprised of sales of Qsymia.

My take on Belviq

The projected market size for a safe and effective drug like this is roughly $3.7 billion. Despite a good head start, Qsymia sales have been anything but sluggish. Belviq, however, stands a better chance to capture the obesity market as it comes without the restrictive REMS.

The DEA scheduling is a big booster as it paves the way to the launch of Belviq. Belviq is expected to hit the market a month from now. While I do not expect it to be a roaring success soon after it is launched, Belviq has a strong marketing partner in Eisai, which is a big positive for building up Belviq sales.

All these positive indicators are likely to make short sellers run for cover as they would be expecting an increase in investor interest in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). The evidence is already there – a reduction in short interest and the stock gaining 10% on news of DEA scheduling designation. Arena shares are likely to see further upward movement as more short sellers start covering their positions.

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) looks good for the short term as well as long haul. I would not wait if I wanted to invest in the obesity drug sector.

The article Shorting Arena Is Not a Good Idea Now originally appeared on Fool.com and is written by Shas Dey.

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