Arena (ARNA) recently kick started its Phase I multiple dose study with APD811, aimed at treating pulmonary arterial hypertension (PAH). The study, which focuses on the company's drug's safety and tolerability, will enroll 30 candidates in randomized, double-blind and placebo-controlled trial. Currently, the PAH market has leading candidates like Gilead Sciences Inc (GILD), GlaxoSmithKline (GSK), United Therapeutics Corporation (UTHR) and Acetlion Ltd (ALIOF.PK).
ARNA has yielded a one-year return of ~600%; a positive catalyst for the stock is the upcoming DEA decision, which will potentially take the stock beyond $10. Although the drug has received an approval from the FDA, Belviq must receive a DEA schedule before it hits the market. The will determine the potential of drug abuse and assign it a rating from a scale of 1 to 5, with 1 representing the highest potential of abuse.
When exactly the DEA will decide on the matter is difficult to say with certainty, but a standard time period is between four-to-six months. The DEA initiated the process back in July. Investors are anticipating the important decision, which will prove to be a short-term catalyst for the stock. Also, ARNA will respond to the EU's 120 day list of questions by October 25. Once the response is submitted, EU regulators will commence their decision-making process. Till then, the EU authorities are on hold.
Also, like Vivus (VVUS), ARNA will report on November 5. The report should provide details on the APD811 trial and the progress with the EU on the approval process.
On the other hand, VVUS has announced that it submitted an amendment to its Risk Evaluations and Mitigation Strategy (REMS) to the FDA, which if approved, would allow the company to make its drug (Qsymia) more widely available for customers. After concerns were cited about the limited availability of the drug through mail orders, the new submission to the FDA will prove to be a further catalyst for the stock.
Both stocks are poised to gain from their relative pending decisions, with Arena providing the base for substantial price appreciation following the DEA decision. We were initially bullish on Arena on the fact that its drug had a better safety profile than Vivus's Qsymia and will most likely gain approval in the EU. Vivus has already cited concerns over probably disapproval in EU but the recent deal with Express Scripts (ESRX) had made investors optimistic. We retain our initial positive outlook for Arena and also acknowledge the fact that should Vivus be able to obtain approval from the FDA for a wider availability for its Qsymia, the news will be an important catalyst for the stock. We presented valuations for both Arena and Vivus in our earlier article.
