3 Things You Really Need to Know About Arena Pharmaceuticals, Inc. Q3 Results

By Markets Fool.com

Like many biotechs, Arena Pharmaceuticals, Inc. (NASDAQ: ARIA)hasn't had a great year in 2016, so far. Shares of the biopharmaceutical company are down more than 20% year to date.

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Arena announced its third-quarter results after the market closed on Monday. Were there signs that the year might finish better than it started? Here's what you need to know about Arena's results.

Image source: Getty Images.

1. Good news and bad news from Belviq

Arena reported revenue of $19.2 million in the third quarter, more than double the total from the prior-year period. The company's revenue figure reflected good news and bad news for its weight-loss drug, Belviq.

Net product sales in the third quarter for Belviq totaled just over $3.3 million. Unfortunately, that's almost 32% lower than the drug's sales in the same period a year ago.

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On the positive side, though, Arena received $11 million in milestone payments related to Belviq from its partner, Eisai. This collaboration revenue helped Arena's top line look much better than it did in the third quarter of last year.

2. Still losing money, but not as much

Thanks largely to the additional revenue from Eisai, Arena's bottom line improved in the third quarter from a year ago. The company reported a net loss of $12.4 million, or $0.05 per share. That's much better than the $26.4 million loss, or $0.11 per share, posted in the third quarter of 2015.

Lower operating costs made a big difference, also. Arena decreased its research and development expenses by nearly 21% year over year. The company's cost of product sales in the third quarter were nearly half of what they were in the same period last year, although lower sales of Belviq played a big role.

3. Cash position all right for now

Controlling costs is important for Arena to prevent the necessity of raising more cash.Arena reportedcash and cash equivalents of$101.6 million at the end of the third quarter. That's a drop from the $156.2 million on hand as of Dec. 31, 2015.

For now, Arena's cash position should allow it to hold off on conducting another stock offering. However, the company probably won't be able to go beyond late 2017 before more cash is needed.

Looking ahead

Arena and Eisai announced the availability of a once-dailyformulation of Belviq XR in October. That could help spur sales to some extent.

The company's pipeline is, perhaps, the more important focus for investors. Arena CEOAmit Munshi said: "We continue to make significant progress focusing the company on our unpartnered clinical programs and building a high-performing product-development organization. We have expanded our clinical development and management team to facilitate better execution in a timely and cost-effective manner."

Munshi added, "We are enthusiastic about our strategy to focus on our clinical-stage programs, with a goal of developing first- or best-in-class assets with our three proprietary compounds, which includes evaluating ways to expand their indications."

Arena's pipeline includes two candidates in mid-stage clinical studies.Etrasimod targets treatment of ulcerative colitis, while ralinepag focuses on treatment of pulmonary arterial hypertension. Arena also has an early-stage candidate, experimental Crohn's pain drug APD371.

The company's better-than-expected third-quarter results could help Arena begin a rebound. Shares traded nearly 3% higher in after-hours trading on Monday.

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