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Arena Pharmaceuticals (NASDAQ:ARNA) will announce earnings after the market closes at 5:00 PM Eastern time. The company will update financials, discuss the pipeline, and of course, give investors some insight into the sales of its anti-obesity drug Belviq.

The company will likely accentuate the positives throughout the call, and the stock may initially react positively. However, the pace of sales of Belviq have not been setting any records. Competitor Vivus, with Qsymia saw sales numbers that were meek compared to what were once great expectations. Arena could very well suffer the same disappointment despite its recent bullishness.

For perspective, Vivus (NASDAQ:VVUS) announced Q4 net sales of about $7.7 million for Qsymia on roughly 124,000 prescriptions sold. Arena's marketing partner Eisai (OTCPK:ESALY) has already disclosed that net sales of Belviq were about $7.6 million for the same quarter. Vivus keeps all of the net sales of its drug, while Arena gets about 31.5% of the net sales on Belviq. If the street punished Vivus of $7.7 million in revenue from its drug, it may well not appreciate an anticipated $2.4 million that Arena will get from its share of net sales. Arena will have some other revenue, but in the end, sales are not yet on a pace that instills confidence in the street.

The company will likely point to a tough holiday season, and rightfully so. However, sales are needed and the street expects compelling products to have consumer and physician reach. Thus far, the average consumer is more likely to know that you can lose weight from NOVO's Victoza than from Belviq. Victoza is a diabetes medicine with a side effect of weight loss, and advertises on television. Rumor has it that Belviq ads may start in April.

If I sound critical thus far it is because I am. Yes, there is potential here. The big question is when it will be realized. Eisai doubled the sales force in December of 2013, but current sales are trending only about 15% better than last quarter. Some will point to the weather, but again, time marches on, bills need to be paid, and revenue needs to come in despite holidays and weather. In the Summer and Fall it was said that it was not "weight loss season". Now that we are in weight loss season it is the weather. I am not saying that these things are not real and do not carry an impact, but we are only 3 months away from a full year on the market, and if the first year is excuse after excuse (even if they have some validity), the street will not likely remain as confident about the potential. Especially with a third competitor, Orexigen (NASDAQ:OREX), potentially gaining the nod from the FDA in June.

Positives are that insurance coverage is growing, sales are (for the most part) modestly growing, and advertising will soon be here. Whether or not these are enough to deliver compelling revenue results is yet to be seen.

The street is expecting a profit of $0.02 on revenue of about $35 million. Investors should note that some analysts have not updated in quite some time, and that Arena and Eisai extended their deal to what is essentially the rest of the world, bringing in a $60 million milestone payment. The deal extension will help the numbers along, but one-time payments (or costs for that matter) are not really indicative of company performance.

Potential wild cards today are news on the applications in Switzerland, Canada, and Mexico. These countries have all had Belviq applications in their respective hands for many months now. An approval in one of these countries could bolster confidence of investors.

In my opinion 2014 is a landmark year for Arena. While the company does have potential in its pipeline, Belviq is the foundation. If Belviq sales can ramp up, the company will have a residual income to develop its pipeline and the strength to cut stronger deals. In my opinion Eisai got a better deal than it would have because sales were slower than anticipated through the last half of 2013.

The conference call on Thursday afternoon will be followed up with weekly prescription sales results the following day. This dynamic has the potential to impact the stock greatly. Investors that are more active traders will want to pay close attention to the call, and have their finger on the trigger throughout Friday. Stay Tuned!

Source: Arena Earnings On Tap

Additional disclosure: I have no position in Vivus or Orexigen.