Seeking Alpha

Moral Investing's  Instablog

Moral Investing
Send Message
Private investor.
View Moral Investing's Instablogs on:
  • Deeper Research: The Commercial Potential Of Belviq

    In this report, I'd like to reference an older, published article, that takes a scholarly look at the 5-HT2c receptor written by scientists with no connection to Arena and was not written to 'sell and/or promote Lorcaserin (Belviq).' However, this is not just a step back in time as you will eventually understand the significant financial value Belviq represents to Arena and Arena shareholders who have been badgered by shorts of late. It may also hint to potential big pharma interest, but readers can drawn their own conclusion.

    As is often discussed, Belviq is FDA approved for obesity, and secondarily, with positive diabetic effects. But Belviq is much more and I intend to prove that--

    To be specific, in the scholarly article "Serotonin and drug reward: focus on 5-HT2c receptors" an investor such yourself will discover the potential commercial opportunities for a drug targeting the 5-HT2c receptor such as Belviq. These scientists, one from Schering-Plough Research Institute (now Merck) and the other from the Centre for Addiction and Mental Health in Canada expand upon how a drug designed to target the 5-HT2c receptor presents a broader opportunity for "therapies for substance abuse disorders" (abstract). Meaning, Belviq's value may go well-beyond weight-loss and diabetes; to understand this is to grasp the investment potential Belviq may represent and why short hedge funds are at war for the eventual long climb up propped up by institutions such as Vanguard's Wellington Fund.

    To understand the context of said scholarly article, the authors are aware and make reference to the historic understanding of the 5-HT2c receptor for treating obesity, but this expanded outlook for substance abuse disorders is not a trite observation, but represents the potential pioneering future for Belviq to be commercialized for other medical indications. Meaning, this is not a Long whim, but is supported by a decade plus of research well beyond the laboratories of Arena.

    To simplify this instablog report, I will add what other medical indications scientists have explored targeting the 5-HT2c receptor and in certain cases: Lorcaserin (Belviq) -- the point being that Belviq's future regarding other indications is not "pie in the sky" or internet chat room banter. Short hedge funds in particular don't want this information going out to the public. Nevertheless, scientists from a variety of research labs and large pharmaceutical firms have been studying and tracking Belviq's progress/potential medical use for many years.

    To stimulate your interest in reading the referenced article, here are some excerpts introduced by the medical indication:

    1. Alcoholism

    Indeed, some workers have noted in a very limited separation between effective doses required to reduce food intake and, for example, ethanol self-administration, suggesting that such drugs may affect consummatory behaviours in general (PDF pg 1/Article pg 151).

    2. Cocaine and Amphetamine addiction

    From this brief overview, it can be seen that there are a number of inconsistencies in the effects of serotonergic manipulations on reward-related behaviour. Despite this, two general conclusions can be drawn. First, there is a consensus between different laboratories using different self-administered drugs, and different schedules of reinforcement that generalized elevations in 5-HT neurotransmission appear to reduce cocaine and amphetamine self-administration. The fact that such effects are seen using progressive ratio schedules of reinforcement suggests a reduction in the reinforcing effectiveness of the self-administered drug. This effect also seems to extend to reinstatement of drug-seeking behaviour as well. The second conclusion is that under some circumstances, reduced 5-HT function can enhance reward-related behaviour. This effect is not always observed, and inconsistencies between experiments may be due to differences between the type of reinforcer used, the method of reducing 5-HT function, and, in the case of 5-HT lesions, the pattern and extent of 5-HT depletion. (4/154)

    3. Smoking Cessation

    After a cursory introduction, the authors then move to the 5-HT2c receptor (Belviq's primary target). What is particularly fascinating is that the authors explore "Ro 60-0175" which elsewhere was compared in another study (be certain to view this) comparing R0 60-0175 versus Lorcaserin. In this other study conducted in Canada it is stated:

    Inhibitory effects of 5-HT2C agonists against a nicotine cue overlap with doses effective in feeding tests highlighting bioequivalence against food and nicotine motivated behaviour. In addition to previously reported effects of lorcaserin and Ro 60-0175 against the stimulant and reinforcing property of nicotine and in a model of relapse -these experiments support the consideration of 5-HT2C agonists, such as lorcaserin, as treatments to support smoking cessation.

    You the reader must go to PDF pg 6 / Article pg 156 to see the chart that examines the 5-HT2c receptor response in: food, cocaine, nicotine, and ethanol. Just remember, the novelty of Belviq is that it specifically targets the 5-HT2c receptor.

    Now, if you are ready to dismiss Belviq's behavioral medicament potential, then you really ought to read "Evaluation of chemically diverse 5-HT2c receptor agonists on behaviours motivated by food and nicotine and on side effect profiles" published in April 2013. Here these authors years later report:

    These studies support the utility of 5-HT2C agonists as a therapeutic approach to treat nicotine dependence. Plasma exposure levels after acute lorcaserin treatment suggest that equivalent dosages could be used to evaluate these drugs in obesity and smoking cessation trials. Finally, there may be differences in the side effect profiles between lorcaserin and CP-809101, raising the possibility for tolerability differences amongst 5-HT2C agonists. (My note: Indeed CP-809101 is genotoxic!)

    What is the point? The point is simple:

    1. The expanded commercial potential of Belviq is no secret to the wider pharmaceutical industry: weight-loss, diabetes, smoking cessation, alcoholism, cocaine addiction, etc.

    2. Shorts are without ammo to counter over a decade of research outside Arena labs that supports Belviq's 5-HT2c target for expanded commercial opportunities.

    3. Arena owns the proprietary rights to Belviq so all-comers must come to Arena. If you add in the combination discussions going on such as Eisai's plan to study with Arena Belviq + Phentermine, investors will grasp why the current short attack is all noise with no substance.

    4. Consider the safety profile Belviq is gaining since FDA approval for obesity. The drug's safety record post-marketing is going to carry considerable weight towards future medical indications. Consider how Arena has brokered a low-risk/zero-cost Belviq study with IlDong (10 mg and 20 mg Belviq) and is about to launch a Belviq + Phentermine study with Eisai; it is plain to the observer that Arena is not sitting idle as chat boards banter, but is moving forward in a very strategic manner.

    5. I would not be the least bit surprised if Arena announced additional partnerships for these other medical indications. For example, one of Arena's high level executives recently mentioned smoking cessation. Just about everyone knows that diabetes is on the table.

    6. Some muse Belviq's multi-potential may be grounds for a much larger pharmaceutical firm to move in and buy-out Arena. That we don't know unless it were to happen, but if Belviq's 5-HT2c target is as the science supports, it's worth pondering.

    Very unfortunately an instablog like this will get buried unless readers take it upon themselves to copy/paste, post links elsewhere, and/or use for their own study. You are welcome to make full use of this instablog as a non-published article.

    For reasons this instablog represents, I maintain Arena is a VERY STRONG BUY now that it has dipped into the $4 range.

    Disclosure: I am long ARNA.

    Additional disclosure: SA authors and other authors are welcome to refer to and/or quote from my instablog assuming they credit said author. This unpublished instablog is not for investor advice under any circumstances, but represents Moral Investor's "Deeper Research".

    Tags: ARNA
    Oct 08 10:07 PM | Link | 7 Comments
  • Deeper Research: Eisai Advertising Key Role Position

    The title of this instablog makes me feel like a recruiter, but to supplement an Osborne "unverified" rumor, I prefer to provide objective evidence to today's catch-up news from a published SA article.

    As it stands, first and foremost, Eisai is advertising a very critical and strategic position in its organization. There is no question in my thinking seeing the Americas scope of responsibility that Belviq falls under this person's responsibility. The full document can be searched on Eisai's website under careers, but I will provide some excerpts:

    TitleDir, Sales Training & Develop
    Department NameSales Training
    Location/Territory NameWoodcliff Lake, NJ
    Job DescriptionThis role will provides strategic leadership to the sales training function for a portfolio of products focused in oncology and specialty markets to ensure maximum effectiveness of the sales force. The Director is responsible for the overall creation and delivery of tailored training and development solutions for an evolving market place.This includes oversight of content development and implementation/execution of all sales training programs. This extends to all of the Americas including Canada and Latin America.

    Furthermore, it is common knowledge that Eisai has been advertising additional sales positions. I may banter with Mr. Osborne, but in this case I think his "unverified" rumor has legs.

    However unlike some, I still maintain Arena is a STRONG BUY. Just remember, Eisai is on record of Belviq becoming a billion dollar block-buster in six years not only repeated in print in August 2013, but also going back in time. Despite any stock volatility, I remain VERY BULLISH on Arena Pharmaceuticals as the company also secured three very important patents just yesterday 1 October 2013:

    185464291,2,3-trisubstituted aryl and heteroaryl derivatives as modulators of metabolism and the prophylaxis and treatment of disorders related thereto
    The present invention relates to certain trisubstituted aryl and heteroaryl derivatives of Formula (NYSE:I) that are modulators of metabolism. Accordingly, compounds of the present invention are useful...
    285463795HT2C receptor modulators
    The present invention relates to novel compounds of Formula (I): which act as 5HT2C receptor modulators. These compounds are useful in pharmaceutical compositions whose use includes the treatment...
    385463785HT2C receptor modulator compositions and methods of use
    The present invention relates to a composition comprising phentermine and a selective 5HT-2C receptor agonist. In addition, the invention relates to a composition comprising phentermine and a...

    I would be honored if you chose to FOLLOW ME as I will continue to write future unpublished reports since SA has chosen not to publish my articles.

    Disclosure: I am long ARNA.

    Additional disclosure: Unpublished instablog. Feel free to copy/paste and share with others.

    Tags: ARNA
    Oct 02 10:13 AM | Link | 7 Comments
  • Deeper Research: Eisai's Licensed Territory Sales Forecast For Belviq

    Once again the published writers will be playing catch-up to this unpublished instablog trying to explain how they reconcile imaginary hockey sticks and Credit Suisse lowered projections completely contradicted by what Eisai has committed to print as recently as August 2013.

    I am pleased to bring to the attention of Arena investors that Eisai has published its licensed territory (Americas) sales projection for Belviq (See page 10 of Eisai's Annual Report published August 2013). PLEASE REMEMBER, EISAI IS PROJECTING ITS ENTIRE LICENSED SALES TERRITORY BEYOND THE U.S. ALONE.

    To uncomplicate things, numbers are rounded-off throughout this report for simplicity. Of that chart we dissect the portion allotted to Belviq (View Eisai's chart and you'll understand why.)

    March 2014 combined licensed territory sales forecast for Halaven, Fycompa, and Belviq: 80B Yen or U.S. currency = ~$818M.

    Carefully examining the chart, Belviq's portion from Eisai's graph accounts for ~40% (hereafter).

    Keeping in mind that Eisai's full year sales forecast grows out of zero and didn't account for Belviq's delay into the market, I'll help readers by adjusting Eisai's figures to account for the start date and a 3/4 year for only June 2013 - March 2014; thereafter I'll use the full 12 month calendar cycle. Irrespective though, here are Eisai's published sales forecast for Belviq by:

    Start: Eisai's March 2012 now June 2013 = ~$0

    March 2013 now March 2014 = ~$230M

    March 2014 now 2015 = ~$327M

    March 2015 now 2016 = ~$409M

    March 2016 now 2017 = ~$573M

    March 2017 now 2018 = ~$818M

    March 2018 now 2019 = ~$1B

    March 2019 now 2020 = ~$1.18B

    March 2020 now 2021 = ~$1.28B

    March 2021 now 2022 = ~$1.5B

    Charted out it looks like this.

    (click to enlarge)

    The linear line is added to improve the extrapolation from Yen to dollars.

    Now investors can do what they like with this information, but it's all there if you follow the link provided above. Finally, of all five drugs that Eisai is moving forward, Belviq all alone accounts for the highest sales percentage. And remember, Eisai's projection is for all its licensed territory covering the Americas.

    Of special interest, on page 16 Eisai reports that they are targeting "20 Latin American countries" versus the usual mention of Brazil and Mexico.

    For the sake of analysts, Eisai projects Belviq will hit $1B in sales in six years for all its licensed territories.

    Disclosure: I am long ARNA.

    Additional disclosure: Unpublished instablog post. Accuracy not guaranteed. Readers are free to copy/paste and share this article for free with others.

    Tags: ARNA
    Sep 30 10:29 PM | Link | 17 Comments
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


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.