Seeking Alpha

Spencer Osborne's  Instablog

Spencer Osborne
Send Message
Spencer Osborne is founder of Satellite Standard Group [SSG], and a partner of Sirius Buzz (http://siriusbuzz.com/). Sirius Buzz covers the satellite radio industry as well as companies that do business in this sector. Sirius Buzz provides information and opinion to readers with an interest in... More
My company:
SiriusBuzz Premium
My blog:
SiriusBuzz
  • Arena Inks Belviq Deal For Israel 2 comments
    Jul 21, 2014 9:32 AM | about stocks: ARNA

    Arena Pharmaceuticals (NASDAQ:ARNA) has announced that its wholly owned subsidiary, Arena Pharmaceuticals GmbH, has entered into an exclusive marketing and supply agreement for the anti-obesity pill Belviq with Teva Pharmaceutical Industries Limited's local Israeli subsidiary, Abic Marketing Limited. Under the agreement, Arena granted Abic the rights to market and distribute Belviq in Israel for weight loss or weight management in obese and overweight patients, subject to regulatory approval by the State of Israel Ministry of Health (NYSE:MOH).

    "Founded in Israel in 1901, Teva is the leading pharmaceutical company in the Israeli market," said Jack Lief, Arena's President and Chief Executive Officer. "Their local presence and proven commercialization expertise are important factors toward making Belviq available in Israel as a new treatment option for chronic weight management."

    Abic is responsible for regulatory approval and, ultimately, marketing and distribution of Belviq in Israel, including related costs and expenses. Arena will manufacture finished drug product at its facility in Switzerland, which it will sell to Abic at a purchase price equal to a percentage of Abic's annual net sales of Belviq. In addition, Arena will receive an upfront payment, and is eligible to receive milestone payments upon regulatory submission and regulatory approval of Belviq as well as one-time purchase price adjustment payments based on Abic's annual net sales. Specific terms of the deal are not available.

    While Arena longs will celebrate this news, there is an important caveat that perhaps many will miss. The way I read the press release, the deal is for the use of Belviq as a weight management drug. Could it be that if Belviq is found to be useful in other indications, such as diabetes or smoking cessation that Arena still maintains those rights? It is a point of clarity that we may get more flavor on in the upcoming quarterly conference call.

    This news is welcomed, but not a driver of the equity at this stage. It will move the needle in the immediate term and then settle back into its groove. The process for application and approval is, as we know, a long one. Bringing a new partner into the fold is good. A little boost in some cash is good. We now need to see how quickly the application in Israel is filed and then await a decision there.

    For perspective, Under the agreement with IlDong for South Korea, Arena received an upfront payment of $5.0 million, and will receive an additional $3.0 million upon the approval . Arena will receive a purchase price starting at 35% of Ildong's annual net product sales. The purchase price will increase on a tiered basis up to 45% on the portion of annual net product sales exceeding $15.0 million. The agreement for Taiwan was granted to CYB. Arena will sell finished product to CYB for a purchase price at 45% of CYB's annual net product sales. Arena received an upfront payment of $2.0 million, and is eligible to receive purchase price adjustment payments based on CYB's annual net product sales.

    Israel has about 8 million people. South Korea has 50 million people, and Taiwan has 23 million people. The upfront payment for Israel is likely less than what was granted for Taiwan if we look at the market in a logical manner.

    Disclosure: The author is long ARNA.

    Stocks: ARNA
Back To Spencer Osborne's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (2)
Track new comments
  • Spencer Osborne
    , contributor
    Comments (8187) | Send Message
     
    Author’s reply » Readers....

     

    A little more perspective. Teva used to market Reductil until it was recalled in 2010.

     

    http://bit.ly/1nuVzew

     

    "About 10,000 patients use the drug in Israel."

     

    Teva also markets Orlistat in the UK.
    21 Jul 2014, 03:48 PM Reply Like
  • Spencer Osborne
    , contributor
    Comments (8187) | Send Message
     
    Author’s reply » I had stated that the up front payment was likely less than than the $2 million that represented the South Korea deal. The company has now disclosed that the up front payment was $500,000. Some were expecting $4 or $5 million for whatever reason, but those big numbers simply made no sense.
    2 Aug 2014, 09:19 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.