Cult biotech stock Arena Pharmaceuticals Inc. ($ARNA) was dealt a major blow on Aug. 29 when the company’s experimental lung drug APD811 encountered a major stumbling block. The drug, intended to treat pulmonary arterial hypertension, was supposed to progress to mid-stage trials in early 2014. However, a patient taking the drug experienced unexpected heart complications, seriously damaging the drug’s development from progressing further.
Still, the company has its share of vocal proponents. Jim Cramer said the company’s anti-obesity drug Belviq is “the best on the market” and recommended it for a speculative play. Arena bulls were further bolstered on Aug. 5, when the company released an earnings report that exceeded expectations.
Arena had first begun to gain major momentum on June 20 when the American Medical Association classified obesity as a “disease,” opening up the possibility for their anti-obesity drug Belviq to be covered under insurance plans. The success of Belviq was a major factor in the company’s healthy Q2 2013 earnings.
Besides their flagship drug Belviq and APD811, the company has two other drugs in clinical trials – an autoimmune disease drug and one designed to treat blood clot disorders.
Despite the biotech’s popularity with some investors and analysts, the stock has its doubters further bolstered by the setback for APD811. Of eight analysts reporting recommendations for Arena, four have a “hold” and one firm, Credit Suisse, puts the stock at “underperform.”
The stock is down 5.23 percent to hit $6.34, and down 25.75 percent on the year.
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