Here’s Why Arena Pharmaceuticals, Inc. (ARNA) Shares Are Lower

Shares of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) have fallen $0.23 per share, or 15.5%, on Tuesday after the company executed a spot secondary of 60 million shares at $1.15 a piece. Leerink and Citi are the book runners of the offering, with which Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) intends to use the net proceeds to fund the clinical and preclinical development of drug candidates, as well as for general corporate purposes, including working capital and costs associated with manufacturing services, and for capital expenditures.

Although the offering gives Arena more resources, some Wall Street bulls aren’t too happy. Also on Tuesday, Edward Tenthoff of Piper Jaffray trimmed his price target on Arena to $2.5 from the previous $3.5 per share, citing the dilution caused by the offering. Tenthoff maintains his ‘Overweight’ recommendation, however.

What Does The Smart Money Sentiment Say?

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11 institutions (out of the 742 top funds that we track) reported long positions of $22.93 million of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and accounted for 6.60% of the float on December 31, versus 9 funds and $32.61 million on September 30. In terms of noteworthy individual activity, Jim Simons‘ Renaissance Technologies raised its stake by 9% in Q4 to 7.52 million shares at the end of December.

The Bottom Line

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) shares are down due to a secondary. For more reading, check out ‘11 Most Commonly Used Illegal Drugs‘.

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