Is the Wait Over? – Arena Pharmaceuticals, Inc. (ARNA), VIVUS, Inc. (VVUS), Orexigen Therapeutics, Inc. (OREX)

The obesity industry is new on the stock block, but it has already become one of the most followed industries in our market. The two major competitors VIVUS, Inc. (NASDAQ:VVUS) and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) have both received FDA approval for their drugs. Orexigen Therapeutics, Inc. (NASDAQ:OREX) is still trying to get approval for its obesity treatment Contrave. VIVUS, Inc. (NASDAQ:VVUS) has already launched its obesity pill Qsymia into the US market. The launch of Arena’s Belviq was initially delayed as the company had to wait for a DEA review of the abuse potential of Belviq. It has partnered with Eisai to launch the drug in America; while this reduces a lot of risk on the part of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), it reduces margins as well, as the company has to pay 33% from all wholesale collections to Eisai.

In my recent articles on the obesity sector I have discussed the market potential of both drugs and compared both products as well. In my most recent article on Arena, I discussed the market impatience with the launch of Belviq. The market was expecting Arena to give a clear schedule for Belviq launch during its recent conference call. The company failed to live up to the Street’s expectations and did not give a clear guidance on Belviq launch. The stock slipped 6% on the news, but the company has already regained its pre-conference valuation.

Earnings

Arena not only let investors down by not announcing concrete information on Belviq launch, but also missed the Street’s earnings expectations. The Street was expecting Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) to post quarterly EPS of $-0.03, but the company missed expectations and posted earnings of $-0.10. This was the third time in the last four quarters that Arena has failed to live up to expectations. However, at this stage the earnings for the company are irrelevant as the stock is moving on Belviq news. Although the stock has recovered, the company will have to provide solid information on the drug launch.

European Approval

In more bad news for Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) investors, the market is becoming more pessimistic on European approval of its obesity treatment. According to a couple of research firms, the chances of Belviq approval in Europe are now pretty slim. Needham and Oppenheimer have both suggested to their investors that the tough regulatory environment in Europe will likely result in rejection for Belviq. The competing drug Qsymia has already failed to receive approval in Europe due to potential cardiovascular risks that the drug might pose.