Arena Pharmaceuticals: 4 Different Insiders Have Sold Shares This Month

Apr.25.14 | About: Arena Pharmaceuticals, (ARNA)

Summary

4 insiders sold Arena stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

3 of these 4 insiders decreased their holdings by more than 10%.

Arena Pharmaceuticals (NASDAQ:ARNA) is a biopharmaceutical company currently focused on chronic weight management.

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Insider selling during the last 30 days

Here is a table of Arena's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Harry Hixson Director April 22 36,900 Yes 82,876 shares + 2,699 options 30.1%
Tina Nova Director April 14 35,000 Yes 18,728 shares 65.1%
William Shanahan CMO April 1 60,000 Yes 35,000 shares 63.2%
Donald Belcher Director April 1 1,905 Yes 68,728 shares 2.7%
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There have been 133,805 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Arena's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2014 133,805 0
March 2014 25,000 0
February 2014 0 0
January 2014 221,666 0
December 2013 0 0
November 2013 20,000 0
October 2013 0 0
September 2013 220,000 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 83,750 0
April 2013 71,250 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 775,471 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Arena reported the full-year 2013 financial results on February 27 with the following highlights:

Revenue $81.4 million
Net loss $19.4 million
Cash $221.9 million
Debt $72.8 million
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The four insiders sold their shares after these results.

Outlook

Arena's 2014 guidance is as follows:

R&D expenses $90.0-$98.0 million
G&A expenses $30.0-$36.0 million
CapEx $9.0-$10.0 million
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Pipeline and upcoming milestones

Arena's key anticipated milestones for 2014 include the following:

Belviq approvals outside of the United States
Completing the lorcaserin Phase II smoking cessation trial and the lorcaserin and phentermine pilot studies
Initiation of Phase II trials for APD811 and Temanogrel
Completing Phase I development of APD334 and APD371
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(Source: Investor presentation)

Competition

Arena's competitors include Vivus (NASDAQ:VVUS), and Orexigen Therapeutics (NASDAQ:OREX). Here is a table comparing these companies.

Company ARNA VVUS OREX
Market Cap: 1.33B 513.41M 619.04M
Employees: 310 98 50
Qtrly Rev Growth (yoy): 2.37 21.35 N/A
Revenue: 81.39M 81.08M 3.43M
Gross Margin: 0.92 0.81 N/A
EBITDA: -14.73M -120.95M -77.10M
Operating Margin: -0.28 -1.50 -22.52
Net Income: -19.43M -174.95M -77.67M
EPS: -0.09 -1.72 -0.81
PEG (5 yr expected): 0.11 -0.36 -0.20
P/S: 16.62 6.47 179.93
Insider Ownership: 0.57% 24.95% 11.49%
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Arena has the lowest insider ownership among these three companies.

Here is a table of these competitors' insider activities since January 2013.

Company Insider buying / shares Insider selling / shares
VVUS 596,924 10,654
OREX

0

264,767
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Only Arena has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Arena, and there have not been any insiders buying Arena during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Arena has an insider ownership of 0.57%.

I believe Vivus could be the best pick out of these three weight loss companies currently based on the insider buying and a relatively low valuation.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in VVUS over the next 72 hours. 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.