Shares of Arena Pharmaceuticals Inc. were down nearly 10 percent Friday following Thursday's after-market release of first-quarter earnings, which included news that the San Diego-based biotech is pulling its European marketing application for obesity drug Belviq (lorcaserin), though the bigger disappointment may be the ongoing delay in Belviq's U.S. launch.
The stock (NASDAQ:ARNA), which traded at more than 30 times its normal volume, closed Friday at $7.63, down 77 cents.
Arena's drug made headlines when it became the first of the top three obesity drugs to gain FDA approval last June. But commercialization partner Eisai Inc. hasn't been able to make Belviq available to patients due to pending Drug Enforcement Agency (DEA) scheduling. The FDA recommended that Belviq be a Schedule IV controlled drug, prompting the DEA review; that process initially had been anticipated to take four to six months but has now stretched to nearly a year. (See BioWorld Today, June 28, 2012.)
During the firm's earnings call, Arena execs said the DEA has not provided any update on timing and, because Eisai is responsible for direct dialogue with the agency, could offer no details on what was holding up the process. All they could tell investors is that they hope completion of the review is "imminent," and assure that pre-launch activities have continued.
"Although we are disappointed in how long it's taking the DEA to complete the scheduling, Eisai has used this initial time to hone their launch readiness and to further pursue their reimbursement strategy," said Jack Lief, president and CEO. "We and Eisai are ready to go."
The DEA requirement meant that the second obesity drug to win FDA approval, Vivus Inc.'s Qsymia (phentermine/topiramate extended-release), got a head start on the commercialization front, though sales have been slower than expected, possibly due to physician prescribing patterns. Critics of the firm, too, have pointed to the lack of a big pharma partner to expand Qsymia's reach. (See BioWorld Today, Oct. 23, 2012.)
Lief said Belviq already has picked up some momentum. The drug was included in a recent diabetes management report from the American Association of Clinical Endocrinologists. "We believe that mention will increase awareness" for physicians, increase patient use and help with reimbursement, he added.
Piper Jaffray analyst Edward Tenthoff anticipates launch this quarter, with Woodcliff Lake, N.J.-based Eisai hosting a sales force of about 200 representatives. He predicts U.S. sales of $68 million for this year and $214 million in 2014. "Based on a 31.5 percent royalty, we forecast Arena will receive $22 million in Belviq revenues this year and $141 million in 2014," he wrote in a research note.
Launch of Belviq also would earn Arena up to $65 million in milestone payments under its licensing deal with Eisai.
The drug's future in Europe is less certain. The companies opted to withdraw the marketing authorization application amid the Committee for Medicinal Products for Human Use (CHMP) review. Specific details were not provided, but Craig Audet, senior vice president of operations and head of global regulatory affairs, cited nonclinical issues. "We'll evaluate the best opportunity for resubmitting at a later date," he told investors.
Belviq isn't the only obesity drug to hit a roadblock overseas – Vivus is appealing a negative CHMP opinion for its Qsymia – and analysts haven't expected much from European sales. "We always modeled the EU opportunity as upside to our estimates," Leerink Swann analyst Marko Kozul, wrote in a research report, adding that his firm's valuation "is based solely on U.S.-derived revenues." (See BioWorld Today, Oct. 22, 2012.)
Because of the commercialization delay in the U.S., Arena's first-quarter figures fell short of estimates. The firm posted revenue totaling $2.4 million, far below consensus estimates of $50.4 million, and a net loss of $18.9 million, or 9 cents per share. Consensus estimates has projected net income of 11 cents per share.
The good news is that Arena had about $136.3 million on its balance sheet as of March 31. With the anticipated launch milestone from Eisai, Piper Jaffray's Tenthoff said the firm should have "sufficient cash to reach profitability."
Arena also highlighted during its earnings call earlier-stage pipeline programs, including APD811, an oral candidate targeting the prostacyclin receptor for the potential treatment of pulmonary arterial hypertension. That program is in a Phase I multiple-dose study.
Also in Phase I development is APD334, an oral candidate targeting sphingosine 1-phosphate subtype 1, which could have potential in various autoimmune diseases.
Eylea Sales Wow Again
Regeneron Pharmaceuticals Inc. raised its full-year revenue guidance from sales of wet age-related macular degeneration (AMD) drug Eylea (aflibercept ophthalmic solution) after first-quarter numbers blew past projections, continuing the product's impressive growth trajectory.
U.S. sales of Eylea totaled $314 million for the quarter, ahead of consensus estimates of $297 million, while ex-U.S. sales are "off to a strong start," noted Cowen and Co. analyst Phil Nadeau in a research note. Partner Bayer AG previously reported overseas Eylea revenue of $65 million for the quarter, besting consensus estimates of $39 million.
Regeneron now estimates full-year Eylea U.S. sales to reach $1.25 billion to $1.325 billion.
Even better for the Tarrytown, N.Y.-based firm, Allergan Inc. said last week development of its Darpin (designed ankyrin repeat protein) ophthalmology candidate, largely considered the most near-term competitive threat to Eylea, could be delayed for up to two years, citing less-than-stellar data from mid-stage studies. Allergan licensed rights to the Darpin technology from Molecular Partners AG for development in AMD and other eye diseases. (See BioWorld Today, Aug. 22, 2012.)
And Eylea has fared well so far against Roche AG's Lucentis (ranibizumab), due to its lower cost and a label that calls for less frequent dosing, and even to cancer drug Avastin (bevacizumab), a cheaper, off-label alternative.
"We expect Eylea's solid performance to continue," Nadeau said.
Shares (NASDAQ:REGN) gained $17.53 to close Friday at $266.16.
Regeneron posted total revenues of $440 million for the three months ending March 31, and non-GAAP net income of $201 million, or $1.78 per share, soundly beating estimates of 95 cent per share.
The company also added to its ophthalmology portfolio, disclosing Friday a deal to acquire full exclusive rights to two families of antibodies developed at Regeneron and previously included in its antibody collaboration with Paris-based Sanofi SA. In exchange for rights to antibodies targeting platelet-derived growth factor receptors, Regeneron agreed to pay Sanofi $10 million up front, up to $40 million in development milestones and royalties on sales. For antibodies targeting the angiopoietin2 receptor, Regeneron will pay $10 million up front, a potential l$5 million development milestone payment and royalties.
Elsewhere in its pipeline, Regeneron has several other programs, most notably late-stage candidate alirocumab (REGN727), an antibody targeting PCSK9 to reduce low-density lipoprotein cholesterol, which is in a global Phase III program, with initial results expected in the second half of this year. That program is partnered with Sanofi. (See BioWorld Today, July 26, 2012, and Nov. 6, 2012.)
As of March 31, Regeneron had cash and marketable securities totaling $663 million.
Gilead's Pipeline Overshadows Earnings Miss
In its first-quarter earnings call, Gilead Sciences Inc. reported total revenues of $2.53 billion and non-GAAP net income $801.9 million, or 48 cents per share, falling short of analyst estimates of $2.58 billion in revenue and earnings per share of 50 cents.
But Wall Street was more than willing to overlook that miss, sending shares of Gilead (NASDAQ:GILD) up $2.97 to close Friday at $55.15, in favor of enthusiasm for the firm's much-lauded programs in hepatitis C virus (HCV).
Gilead has been leading the race for an all-oral, interferon-free HCV regimen. The company is conducting two Phase III trials, ION-1 and ION-2, testing a once-daily, fixed-dose combination of sofosbuvir and ledipasvir (formerly GS-5885). The data and safety monitoring board for ION-1 recently concluded that the trial should continue, testing the combination product with and without ribavirin for 12 and 24 weeks in treatment-naïve, genotype 1 (GI) patients.
Meanwhile, the firm has completed enrolling in ION-2, which is testing the regimen for 12 weeks with ribavirin and for 24 weeks with or without ribavirin in treatment-experienced G1 HCV patients.
Last week, Gilead reported promising data from the Phase II LONESTAR study evaluating eight- and 12-week courses of therapy with the sofosbuvir and ledipasvir combo, with and without ribavirin, in 60 G1, treatment-naïve, noncirrhotic HCV patients. Those data "reinforced our belief that sofosbuvir/GS-5885 will be the dominant all-oral regimen in treatment-naïve G1 HCV," analyst Bret Holley, of Guggenheim Partners, said in a research note.
Overall product sales totaled $2.39 billion for the quarter, with the 8 percent increase over the first quarter of 2012 driven mainly by the antiviral franchise, particularly growing sales of recently approved HIV single-tablet combination products Complera/Eviplera (emtricitabine/rilpivirine/tenofovir disoproxil fumarate), which pulled in $148.2 million, and Stribild (elvitegravir/cobicistat/emtricitabine/tenofovir disoproxil fumarate), which reached $92.1 million in sales.
Those increases helped offset decreases in other HIV products, including Truvada (emtricitabine/tenofovir disoproxil fumarate), which dropped 8 percent year over year for sales of $700.2 million. Atripla (efavirenz/emtricitabine/tenofovir disoproxil fumarate) sales totaled $877.6 million.
Gilead's cardiovascular products, which include pulmonary arterial hypertension drug Letairis (ambrisentan) reached $214.4 million for the quarter.
As of March 31, Gilead had about $42.63 million in cash, equivalents and marketable securities.
The company's shares (NASDAQ:GILD) jumped $2.97 Friday to close at $55.15.
In other earnings news:
• Cell Therapeutics Inc., of Seattle, reported total revenues of $1.1 million for the first quarter, solely attributable to net sales of Pixuvri (pixantrone), which recently was launched in European Union countries for use in patients with multiply relapsed or refractory aggressive B-cell non-Hodgkin's lymphoma. The company said it is currently pursuing pricing and reimbursement for Pixuvri in France, Germany, Italy, Spain and the UK. Cell Therapeutics posted a net loss of $19.4 million, or 18 cents per share. As of March 31, the firm had about $44.3 million on its balance sheet. Shares (NASDAQ:CTIC) closed Friday at $1.13, down 4 cents.