Arena (ARNA) investors received news today, but it was not the news that everyone has been waiting for. The big news would be a launch of the anti-obesity drug Belviq in the United States. What we have instead is an announcement that Arena partner Eisai has filed a Marketing Authorization Application (MAA) in Mexico.
The news regarding Mexico sweetens the Arena cash coffers by $500,000 and begins the process of garnering approval for Belviq in that nation through the Federal Commission for the Protection Against Sanitary Risk (COFEPRIS).
Mexico is seen as a market where the company can do pretty well with a treatment such as Belviq. Estimates state that 30% of the population in Mexico would be categorized as obese with 70% being classified as overweight or obese.
Thus far Arena is trying to gain launch or approval in the United States, Europe, and now Mexico. The intent is to globalize Belviq over a period of time.
Arena has seen a substantial wait in getting Belviq launched in the United States. Currently the only thing standing in the way of the launch is finalized DEA scheduling. The DEA proposed placing the drug in Schedule 4 last December and opened a comment and response period which are now both closed. In theory, a finalized schedule could happen at any time.
In Europe, Arena has applications for Belviq in front of governing bodies for quite some time. Arena has been asked for an oral presentation and agencies there want to understand some potential heart risks prior to moving further. Arena anticipates approval in Europe sometime in late spring or early summer.
Essentially Arena is on the cusp of a lot of things, but as yet unable to really get the ball rolling. The process in the United States and Europe have been cause for a lot of investor angst. One key to getting approved beyond U.S. borders is the fact that competitor Vivus (VVUS) already has its anti-obesity drug Qsymia on the market in the U.S. but failed to win over European regulators. A successful launch in Europe would give Arena some key advantages and a revenue stream unavailable to Vivus.
For investors it is good to see Arena and Eisai trying to open as many doors as possible. A third competitor, Orexigen (OREX), has an anti-obesity drug Contrave waiting in the wings for FDA approval. The more patients Arena and Eisai can win over with Belviq, the better positioned the company will be.
Whether or not a prescription drug can elevate to "Blockbuster" status, or how long that process may take is the big question at this point. Sales reaching $1 billion are possible but not a walk in the park. While the potential market is huge, there are hurdles to navigate such as the price point consumers are willing to pay and insurance companies offering coverage.
One substantial advantage Arena has with Belviq is its characteristics that seem to help improve diabetes, and issue with many that are overweight. Johnson & Johnson (JNJ) recently announced that it has received FDA approval for a diabetes drug, Invokana, that could bring in hundreds of millions. The Belviq advantage could be that it helps with both weight as well as diabetes.
The key here is that Arena is moving along when and where it can. The proverbial horse has to be cut loose sooner rather than later. It is at that point that things might get very interesting.
Additional disclosure: I have no position in Orexigen, Vivus, or Johnson and Johnson