What happens when you combine speculation of a buyout with the release of a first-of-its-kind drug? Well for Arena Pharmaceuticals (ARNA) in the immediate term it has led to a spike in share price, but the longer term implications of these developments may not be so simple.
Market Madness
Rumors in investing circles began spreading earlier this week that the firm that specializes in biotech could be the target of a takeover by a larger pharmaceutical firm. Whether or not this speculation will amount to anything in the long term remains to be seen, but the rumors were enough to boost Arena’s share price twelve percent on Tuesday and another 3.4% in after-hours trading, only to drop back down to $8 per share in open trading hours. Thursday’s share prices are currently down 4.06% to $7.9, on par with Tuesday’s afternoon prices when the rallying began.
Interactive chart: Changes in share price:
Approval
Arena recently received approval from the Food and Drug Administration to sell this anti-obesity medicine. The drug is designed to assist the weight management of adults who experience chronic difficulty in this area and display a body mass index above 30. The company has already reached an agreement with the Japanese-based Eisai Inc. to market and distribute the drug in North and South America.
Considering the drug is the first of its kind, Arena is anticipated to garner as much as $65 million upon its release from Eisai, an attractive payday for any pharmaceutical company who is considering buying them out.
Business Section: Investment Ideas
How will the continued speculation of a takeover and the release of BELVIQ effect Arena’s share price in the coming days?
Listed below are the companies mentioned above along with a few competitors to help you start your research.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. Arena Pharmaceuticals, Inc. (ARNA, Earnings, Analysts, Financials): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap at $1.B, most recent closing price at $8.26.
2. GlaxoSmithKline plc (GSK, Earnings, Analysts, Financials): Engages in the discovery, development, manufacture, and marketing of pharmaceutical products, over the counter (OTC) medicines, and health-related consumer products worldwide. Market cap at $116.33B, most recent closing price at $46.67.
3. Amylin Pharmaceuticals, Inc. (AMLN, Earnings, Analysts, Financials): Develops, and delivers innovative medicines that help patients prevail over serious diseases. Market cap at $53.28B, most recent closing price at $31.73.
4. Bristol-Myers Squibb Company (BMY, Earnings, Analysts, Financials): Develops, and delivers innovative medicines that help patients prevail over serious diseases. Market cap at $53.28B, most recent closing price at $31.73.
5. VIVUS Inc. (VVUS, Earnings, Analysts, Financials): Engages in the development and commercialization of therapeutic products for underserved markets in the United States. Market cap at $2.33B, most recent closing price at $23.24.
Written by Dan Connelly
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- Arena Pharmaceuticals, Inc. (ARNA, Chart, Download SEC Filings)
- GlaxoSmithKline plc (GSK, Chart, Download SEC Filings)
- Amylin Pharmaceuticals, Inc. (AMLN, Chart, Download SEC Filings)
- Bristol-Myers Squibb Company (BMY, Chart, Download SEC Filings)
- VIVUS Inc. (VVUS, Chart, Download SEC Filings)
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ARNA post-FDA has been a disaster. Sell on rumor? VVUS is showing the costs to market the drugs will be high, but VVUS has bigger challenges than ARNA. The thing to look at is the Easei partnership. VVUS is limited to where it can sell. ARNA has no health risks like VVUS. Time will tell where ARNA is worth a year from now.
The way Arena handles the media has a lot to do with investors' confusion. Arena is always silent about everything. They could be doing a lot to help boost the stock price, but their silence is poison to their stockholders. They obviously can disclose news about plans of expansion, updates about their EU application, new experiments, and also about the advance in their other drugs, but, their silence is killing the stock value.
Here is the strategy the shorts are playing with ARNA stock: First they call their bodies at Street (Cramer and his gang) to talk negatively about Arna the night before, then they sell some 20k stocks after hours, or before trading starts to push the price down before the opening bell. This gives them an advantage creating fear among the investors who do not know about this manipulation. And lastly, they sell at market value between 1 to 5 million stocks in the first hour of trading. This has been working for them, and it is time to stop them! The SEC doesn't do anything because they are full of shorts as well. Big money is involved here people.
You are absolutely right, but as and when the product of ARNA will be launched, and it's effectiveness will be noticed this manipulation will automatically stop.
Very poorly written and researched article. What’s happening w. Arena is pure maniuplation.
There was a massive hedge fund short position. Now they are trying to save face and institutions are realizing this is a gold mine. All are conspiring to keep analyists quiet and price low.
All this at the expense of poor sap retail investors.