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Arena Investors Need To Pay Attention To Celgene And Ozanimod

May 02, 2018 1:45 AM ETPfizer Inc. (PFE)CELG22 Comments
Spencer Osborne profile picture
Spencer Osborne


  • Arena's Etrasimod is seen as a competitor to Ozanimod.
  • Celgene acquired Ozanimod in a $7.2 billion deal.
  • Ozanimod may have issues that will delay its development.  This could be good for Arena.

Sometimes when one creates comparisons between their product and the product of someone else, there can be unintended consequences. Arena Pharmaceuticals (ARNA) has spent the better part of the last 18 months making direct comparisons between its new drug candidate Etrasimod and a candidate of Celgene (CELG) called Ozanimod. The drugs have similar characteristics and target some of the same receptors.

One of the main reasons that Arena was drawing comparisons is that Celgene saw enough potential in Ozanimod to acquire Receptos for $7.2 billion. If Arena has a drug that can rival a drug that was just acquired for $7.2 billion, that is a good thing. As clinical data began to come in, it was apparent that Etrasimod may actually be a better candidate on three fronts. This trifecta was dosing, safety, and clinical results. When this became evident, Arena stepped up its sales pitch on Etrasimoid in a big way. After all, better dosing profiles, better safety profiles, and better clinical results are nothing to sneeze at.

Recently, Celgene had a bit of a hiccup with the FDFA on Ozanimod, and this week Morgan Stanley speculated that this hiccup could delay progress by 1-3 years. That is very substantial and the Morgan Stanley report sent Celgene stock down as much as 6%.

The concern expressed by Morgan Stanley was simple. The data on Ozanimod presented an active metabolite produced by the drug. It is speculated that the FDA could demand more trials and data to better understand the issue. Simply stated this could be a "more data needed" situation.

This brings us back to Arena Pharmaceuticals and its constant comparisons to the Celgene drug. In some ways Arena has hitched its wagon to Celgene and Ozanimod. Ozanimod has always been further along in clinical trials, so Arena had a bit of

This article was written by

Spencer Osborne profile picture
Spencer Osborne assesses equities in a data supported realistic manner that is often missing in analysis that the average retail investor receives. His analysis is what investors NEED to hear rather than what they WANT to hear. He believes that the foundation of an equity price is based on what is probable rather than what is possible, and the trade focuses on possible near term catalysts and news. Smart investing is understanding how the market works and how that market mentality impacts a given equity. Spencer believes that investors should model their expectations and maintain a critical eye on whether those expectations are being met. If an invesor finds herself making excuses for missing the mark, then they are losing objectivity.

Analyst’s Disclosure: I am/we are long ARNA. 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.

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