July 2018

Purpose of this letter is to share our research about Arena. This is not an investment advice.

Arena Pharmaceuticals (Nasdaq: ARNA) is an unheralded, undervalued gem which can significantly boost a large healthcare company’s pipeline and market position.

Arena is a world leader in development of novel, small molecule drugs with optimized receptor PK/PD. Its highly selective targeting GPCR technology produces highly efficacious drugs with very clean safety profiles. This has been proven by an approved drug and a rich pipeline with stellar data. Arena is poised to deliver at least three more first- or best-in-class compounds addressing multi-billion dollar markets.

·      Ralinepag, a best-in-class agent for pulmonary arterial hypertension (PAH) with stellar phase 2 trial data, demonstrated an unprecedented 20% improvement in pulmonary vascular resistance in patients that were already on dual background therapy. The pharmacokinetic (PK) and pharmacodynamic (PD) characteristics of ralinepag deliver unprecedented intravenous-like pharmacology in an oral medication. FDA discussions are ongoing and phase 3 trial plans (possibly fast-track) will be out shortly.  Three independent phase 3 trials for ralinepag are expected to launch in 2H 2018.  The ralinepag extension study is ongoing.

·      Etrasimod is a best-in-class S1P modulator with strong receptor selectivity for both S1P1 and the additional therapeutic targets S1P4 and S1P5.  Unlike competitor compounds, etrasimod has no off-target activity against the deleterious S1P2 and S1P3 receptors.  Etrasimod was generally safe and well tolerated with no serious adverse events recorded at the high dose (2 mg).  Market research indicates that etrasimod has over eighty commercially viable target indications. So far, it has shown class-leading, rapid onset (and offset) of T-lymphocyte counts on a background of no significant off-target safety concerns (cardiovascular, ocular, or hepatic) as seen with competitor compounds.  Etrasimod P2 data readouts (both primary and secondary) were spectacular with 33% of patients in the high dose (2 mg) group achieving clinical remission despite having been exposed to heavy (and often unsuccessful) pre-treatment with biologics.

·      Olorinab is a potential best-in-class cannabinoid receptor type 2 (CB2) full agonist for visceral (and other types) of pain and, based upon the literature, may have potent anti-inflammatory activity as well.  ARNA will have P2 data in 3Q 2018. As with Arena's other drugs, olorinab has shown excellent safety. Preclinical data indicates morphine-like efficacy without psychotropic or addictive properties.  Olorinab has virtually zero CB1 activity and does not penetrate the blood brain barrier.

·      Nelotanserin is a serotonin receptor inverse agonist licensed to Axovant for study in sleep and movement disorders in patients with Lewy body dementia.  P2 data is due in 2H 2018. Nelotanserin binds to a receptor of the central nervous system, called the 5HT2a receptor, which has been implicated in mental disorders and is associated with neuropsychiatric disturbances, including visual hallucinations. Although Nelotanserin binds to the 5HT2a receptor, it prevents the receptor from activating its response (inverse agonist).

·      Belviq (lorcaserin) is a best-in-class 5HT2c agonist approved for obesity and is designed to avoid the off-target activity (against the 5HT2b receptor) that contributed to the downfall of fenfluramine (fen-phen).  Please see appendix (below) for more info.

·      The The ARNA spin-off – Beacon Discovery GPCR research engine – has inked collaborations with Johnson & Johnson, Boehringer Ingelheim, Takeda, Escient Pharmaceuticals, and others. Arena will have a share of Beacon's success. https://www.beacondiscovery.com/our-collaborators.

·      Arena has a large inventory of other compounds and a rich IP war chest.  Management has stated that a new phase 2 ready cardiovascular asset is to be introduced in the 2H of 2018. 

·      Arena spent a billion dollars developing lorcaserin and therefore has a huge tax-loss write-off potential that could prove to be very favorable. 

·      Arena is financially strong and organizationally lean, having gone through a major reset the last two years, with 90% new management.


VALUATION: Currently, Arena is grossly undervalued at around $2 billion (current fair value is $8B+ in our opinion).

·      Ralinepag alone, which has demonstrated best-in-class characteristics and superiority to selexipag (Uptravi), has a fair value of at least $7 billion (J&J paid around $7 billion for Selexipag as part of their Actelion acquisition). 

·      Etrasimod shows significant superiority over ozanimod in efficacy and safety at the same level of development and should be valued at $7 billion. Celgene paid that much for Receptos just to get ozanimod.   Recent and unexpected clinical data released by Celgene has raised significant concerns about safety issues (e.g. very long-half life) with ozanimod.   A short half-life (claimed by Receptos) was one of the differentiating safety factors (vs. Gilenya) responsible for the acquisition of Receptos by Celgene.

·      Olorinab is the first-ever highly specific full agonist of the CB2 receptor in development and may represent a suitable replacement for opioids in many pain situations (value: $15 billion+?).

We do not represent the company, so for more information, please visit www.arenapharm.com or contact Arena’s CFO, Mr. Kevin Lind, at (858) 210-3636.

Here’s a link the company’s latest slide deck. https://cc.talkpoint.com/ubsx001/052118a_as/content/69_RCRJ51F/69_RCRJ51F.pdf


Arena Private Investor Group

Click Here For Latest Corporate Presentation

From NASDAQ.com- summary of analyst ratings as of 24 July 2018:

From NASDAQ.com- summay of analyst ratings as of 1 July 2019

This website is not sponsored by Arena Pharma. It's put together by a group of investors.You can request to join our mailing list by contacting "mailings.arna" at -- gmail -- dot -- com

Arena's official site is www.arenapharm.com


Belviq (lorcaserin) is a best-in-class 5HT2c agonist approved for obesity and is designed to avoid the off-target activity (against the 5HT2b receptor) that contributed to the downfall of fenfluramine (fen-phen).  The medical community has been eagerly awaiting the results of a 6-year, 12,000 patient P4 cardiovascular outcome trial (CVOT) and today (July 17, 2018) Eisai released topline results from this trial where it was established that Belviq met its primary safety objective, finding that long-term treatment with BELVIQ does not increase incidence of MACE, defined as cardiovascular death or non-fatal myocardial infarction or non-fatal stroke, in overweight and obese patients at high risk for CV events. With this result, BELVIQ becomes the first- ever weight loss medication approved for chronic weight management to achieve this objective in a dedicated long-term cardiovascular outcome trial.  These results most importantly demonstrates that chronic use of Belviq does not cause the valvular pathology that was associated with the use of the weight loss blockbuster drug fen-phen.   This alone removes a huge impediment that caused many weight loss doctors to be very cautious about prescribing Belviq for weight loss.   In summary todays preliminary results demonstrated:

1)   BELVIQ became the first medicine used for chronic weight control to establish cardiovascular safety per FDA guidelines
2) A reduction in progression to type 2 diabetes in patients without diabetes

3) Improvement in multiple cardiovascular risk factors including beneficial changes in lipid profiles, blood pressure, blood glucose and renal function.

  1. blood lipid profiles improved
  2. blood pressure lowered
  3. blood glucose levels decreased and
  4. improved renal function

We expect the release of additional detailed and positive data from this trial in the coming months that should help establish Belviq as the premier weight loss drug available today and additionally open up the use of Belviq in additional indications (currently under study) for application in smoking cessation, cocaine abuse, opioid abuse and others

 (Please see www.belsuccess.com, where some patients describe having profound weight-loss of over 100 pounds without any side effects.) CVOT results will allow for label expansion to Type 2 diabetes (T2DM) (interim data suggests prevention of progression to T2DM). Arena receives a tiered royalty (9.5–18.5%) from partner Eisai.


An important talk on the Big Wireless deception:

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