Advertising Starts On Arena's Belviq

| About: Arena Pharmaceuticals, (ARNA)

Three months after launching the anti-obesity drug Belviq, Arena Pharmaceuticals (NASDAQ:ARNA) partner Eisai (OTCPK:ESALY) has started an advertising campaign directed at consumers. The company took out full page ads in print magazines such as Oprah's O, and Cooking Light.

The advertisements are very straightforward and no nonsense. They are not sexy or eye catching, but then again, they are not likely designed to be. At this stage in the process, the desire is to simply get the name "Belviq" out to the market and to begin to build consumer awareness.

What we are seeing now is the very beginnings of an ad campaign. In theory a campaign will develop a message that carries through to radio and television ads as well. These early ads build an awareness and also serve as a reference point for future advertising regarding information relating to all of the legal disclaimers that come with advertising a prescription drug.

For investors, direct to consumer (DTC) advertising is a welcome bit of news. One challenge facing the launch of any drug is a lack of consumer awareness. In essence the early stages of a launch are a push campaign. Pharmaceutical reps push the drug to physicians in hopes that the doctors will in turn push the product onto consumers. DTC advertising is the beginning of the "pull" side of the equation. This is where consumers learn about the product and go to doctors requesting it. In essence, the consumer is pulling the product from the pharmacy shelves. When a product is being pulled by consumers it can create a great dynamic in sales.

It is important to realize that these DTC ads are simply the beginning of a bigger campaign. Advertising in the magazine of Oprah Winfrey does not mean that Oprah is a spokesperson or even endorses Belviq. These early ads are very plain and simple. They are pretty much advertising versions of the FDA label, inclusive of indications for use, potential side effects, and warnings. In my opinion these ads will not offer an immediate impact in weekly sales. This is a process. What they can offer is stability in weekly sales and then a gradual growth. The crescendo will be bigger campaigns on radio and television that could be more sales driven and even have a spokesperson.

There is a very real potential that DTC advertising can help this equity establish a bottom that serves as a foundation for future growth in the stock price. As is typical, nothing is cast in stone, but at least we can now count on the fact that this drug that has had minimal exposure will at least be out in front of consumers.

Script numbers as reported by IMS Health could, this week, top 4,000 for the first time. What we will want to see is the sales figures hit 5,000 in two or three weeks. If this can happen, we could be on a path for sales growth that is higher than a linear path and at the beginnings of an exponential path.

Arena recently dipped into the $5's. In theory, we want to see a bottom form on this equity. Script numbers are the most compelling data points on Arena. Sales are still not demonstrating immediate blockbuster status, but have not been a bust either. A DTC campaign can allow more substantial growth to occur. This could give longer term investors the impetus to stock price appreciation. Just bear in mind that this is still a process and will still take time. Stay Tuned!

Disclosure: I am long ARNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no position in Eisai