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Deeper Research: What's Really Behind The IlDong Study

|Includes: Arena Pharmaceuticals, Inc. (ARNA)

In advance of posting this elsewhere, I am sending this early edition to my followers. You are welcome to pass it along to your friends and fellow investors.

"Deeper Research: What's Really Behind the IlDong Study"

Back on 11 May, Forbes magazine reported: "Volunteers weren't able to distinguish the 20 mg lorcaserin dose from placebo. These results led the researchers to conclude that lorcaserin had very low abuse potential." The quotation refers to the abuse potential of Belviq versus efficacy.

Why this is important is because the current IlDong study for Koreans is investigating two dosage levels: 10 mg and 20 mg. At first, this puzzled me until the pieces of a puzzle began to fall together.

After digging around, I came to the conclusion that Arena is using the IlDong study as a future platform for a higher dose (20 mg) version of Belviq. By turning to IlDong, Arena is passing along the cost of the phase 1 dosage study to IlDong since IlDong has contracted to market Belviq in South Korea. As an addendum, Arena is accomplishing the same task in a combo study of Belviq and Phentermine, but this time at the cost to Eisai.

What are we seeing?

We're seeing what Arena alluded to at a recent conference. That Belviq's fuller potential is the next step. That Belviq is its own product pipeline which means the financial value of Belviq is significantly greater than its current 10 mg version.

You could say that the 10 mg version got Arena's foot in the door with the FDA. Perhaps Arena is considering a 20 mg version to submit at a later date to the FDA and EMA.

What I'm getting at is the IlDong 10 mg and 20 mg study like the upcoming Eisai Belviq-Phentermine study is a window into the strategic development of Belviq for its much wider multi-product market opportunity. I would suggest that investors pay very close attention to the dose levels in the upcoming Eisai study.

Once analysts and hedge funds understand this, you can expect a bullish turn to the upside will shortly follow.

Disclosure: I am long ARNA.

Additional disclosure: Unpublished instablog.