Pharmaceutical stocks without any product on the market and generating losses quarter after quarter tend to trade at a low market capitalization. These companies cannot be judged on their balance sheet because future earnings depend on FDA approval and successful sales and marketing. This was case in point with Arena Pharmaceuticals, Inc. (ARNA) which gained FDA approval to market Belviq, a drug used to treat obesity.
It was the first weight loss-loss pill cleared by the FDA in 13 years and the effect on its share price continue to be astounding.
Was it a Pump and Dump?
Arena is trading lower than the $10 price in July, because of profit taking, investor concerns over marketing costs, and aversion for stocks in the biotechnology sector.
Arena’s trading action looks negative, like a pump and dump:
The company is far from a speculation. Why is Arena a good company to add to your Kapitall.com watch-list? These are the main reasons:
1) Wall street wants Arena to fall
2) Arena is a takeover candidate
3) The threat of Vivus Pharmaceuticals’ (VVUS) Qnexa is exaggerated
4) Arena insiders are more bullish than VVUS insiders
5) Skepticism for Belviq is exaggerated
6) There is high revenue potential.
A detailed discussion on each point was discussed in detail here.
Other biopharmaceuticals firms investors should add to their watchlist:
1. Theravance Inc. (THRX, Earnings, Analysts, Financials): Engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas. Market cap at $2.56B, most recent closing price at $26.39. Theravance reported positive results for its UMEC/VI medicine, which is used to treat chronic obstructive pulmonary disease. A detailed discussion on Theravance is available on Seeking Alpha.
2. 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 $2.07B, most recent closing price at $20.66. VVUS is less-favorable than Arena, but investors should monitor developments of Qnexa.
3. Valeant Pharmaceuticals International, Inc. (VRX, Earnings, Analysts, Financials): A specialty pharmaceutical company, develops, manufactures, and markets pharmaceutical products in the areas of neurology, dermatology, and branded generics. Market cap at $15.59B, most recent closing price at $52.32. Unlike the above companies, Valeant has an established product pipeline and is growing through company acquisitions.
Kapitall users interested in less-risky, large-capitalization pharmaceuticals that pay a dividend should look at:
4. Pfizer Inc. (PFE, Earnings, Analysts, Financials): A biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Market cap at $176.95B, most recent closing price at $23.69. Dividend yield at 3.72%.
5. Merck & Co. Inc. (MRK, Earnings, Analysts, Financials): Provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. Market cap at $130.78B, most recent closing price at $42.94. Dividend yield at 3.92%.
6. Johnson & Johnson (JNJ, Earnings, Analysts, Financials): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Market cap at $186.87B, most recent closing price at $67.78. Dividend yield at 3.6%.
7. Bristol-Myers Squibb Company (BMY, Earnings, Analysts, Financials): Develops, and delivers innovative medicines that help patients prevail over serious diseases. Market cap at $53.09B, most recent closing price at $31.62. Dividend yield at 4.3%.
8. Eli Lilly & Co. (LLY, Earnings, Analysts, Financials): Develops, manufactures, and sells pharmaceutical products worldwide. Market cap at $48.98B, most recent closing price at $42.21. Dividend yield at 4.64%.
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Theravance Inc. (THRX, Chart, Download SEC Filings)
- VIVUS Inc. (VVUS, Chart, Download SEC Filings)
- Valeant Pharmaceuticals International, Inc. (VRX, Chart, Download SEC Filings)
- Pfizer Inc. (PFE, Chart, Download SEC Filings)
- Merck & Co. Inc. (MRK, Chart, Download SEC Filings)
- Johnson & Johnson (JNJ, Chart, Download SEC Filings)
- Bristol-Myers Squibb Company (BMY, Chart, Download SEC Filings)
- Eli Lilly & Co. (LLY, Chart, Download SEC Filings)
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Great article. Thanks for sharing. Long Arena for the long run.