Arena Pharmaceuticals, Inc.
ARENA PHARMACEUTICALS INC (Form: 8-K, Received: 03/14/2017 16:10:04)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 14, 2017

 

Arena Pharmaceuticals, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

000-31161

23-2908305

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

6154 Nancy Ridge Drive,

San Diego, CA

 

92121

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (858) 453-7200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


In this report, “Arena Pharmaceuticals,” “Arena,” “Comp any,” “we,” “us” and “our” refer to Arena Pharmaceuticals, Inc., and/or one or more of our wholly owned subsidiaries, unless the context otherwise provides. Arena Pharmaceuticals® and Arena® are registered service marks of Arena Pharmaceuticals, Inc.

 

 

Item 2.02 R e sults of O perat i o n s and Financial Con d itio n .

 

On March 14, 2017, we issued a press release report i ng our f i n a nc i al resul t s for t he fourth quar t er and full year  ended December 31, 2016. The f u ll t ext of the press re l ease is furnished as E x hi b it 99.1 t o th i s Current Rep o rt on Form 8-K.

 

 

Item 9.01 Financi a l Statements and Exh i b i ts. (d)   E xhibits.

 

99.1     Press release issued March 14, 2017, rep o r t i n g f ina n c ia l res u lt s fo r th e fourth q ua r te r and full year  en d ed December 3 1, 2 0 16

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: March 14, 2017

Arena Pharmaceuticals, Inc.

 

 

 

 

 

By:

 

/s/ Amit Munshi

 

 

 

Amit Munshi

 

 

 

President and Chief Executive Officer

 

 

 

 


Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press release issued March 14, 2017, reporting financial results for the fourth quarter and full year ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

Arena Pharmaceuticals Provides Corporate Update and Reports Fourth Quarter and Full-Year 2016 Financial Results

 

- Clinical Data from Multiple Phase 2 Development Programs Expected in 2017 -

 

San Diego, CA – March 14, 2017 - Arena Pharmaceuticals, Inc. (Nasdaq: ARNA), a biopharmaceutical company focused on developing novel, small molecule drugs across multiple therapeutic areas, today provided a corporate update and reported financial results for the fourth quarter and full-year ended December 31, 2016.

 

“We are very pleased with our progress in 2016 as we have positioned the Company to deliver results on multiple Phase 2 programs in 2017. In the last nine months, since the arrival of the new management team, we prioritized our Phase 2 programs; strengthened our board and team to support our strategy; implemented cost reduction measures; renegotiated our agreement with Eisai; and took a methodical approach to maximizing the value of our assets,” said Amit Munshi, Arena’s President and CEO.

 

As previously disclosed, in February 2017, Arena appointed Jayson Dallas, M.D., Oliver Fetzer, Ph.D., and Garry A. Neil, M.D. as independent directors to the Company’s Board of Directors.  

 

“This year we expect to report results from all three of our proprietary Phase 2 programs, beginning with ralinepag in mid-year for pulmonary arterial hypertension,” Mr. Munshi stated. “For etrasimod, we remain focused on maximizing the broad clinical utility of this compound in a time and cost effective manner. We are pleased to have initiated Phase 2 trials in both dermatologic extraintestinal manifestations in inflammatory bowel disease patients and pyoderma gangrenosum. We also plan to initiate a study in primary biliary cholangitis this year. Additionally, we have made important adjustments to the Phase 2 ulcerative colitis trial to ensure a robust data readout by year-end 2017.”

 

Pipeline Update

 

Ralinepag – oral, selective IP receptor agonist targeting the prostacyclin pathway for the potential treatment of pulmonary arterial hypertension (PAH)

 

Phase 2 trial in PAH

 

o

Enrollment of the Phase 2 trial in pulmonary arterial hypertension was completed in December 2016

 

o

Data readout expected in mid-year 2017

 

Phase 1 pharmacokinetic and pharmacodynamic trial comparing current twice-daily formulation with a new once-daily formulation in healthy volunteers

 

o

Trial initiated in March 2017

 

o

Data readout expected mid-year 2017

 

Etrasimod – orally available next generation sphingosine-1-phosphate (S1P) receptor modulator for the potential treatment of a number of autoimmune diseases

 

Phase 2 trial in ulcerative colitis (UC)

 

o

Implementing protocol updates to the OASIS program that maintain study conduct, integrity, and patient safety; further the probability of a successful trial; and facilitate expected data readout in 2017


 

 

Phase 2 trial in dermatological extraintestinal manifestations (EIM) in patients with inflammatory bowel disease (IBD)

 

o

Trial initiated in March 2017

 

Phase 2 trial in pyoderma gangrenosum (PG)

 

o

Trial initiated in March 2017

 

Phase 2 trial in primary biliary cholangitis (PBC)

 

o

Intend to initiate clinical study in 2017

 

APD371 – orally available full agonist of the cannabinoid-2, receptor for the potential treatment of visceral pain, specifically pain associated with Crohn’s disease

 

Phase 2 trial in pain associated with Crohn’s disease

 

o

Currently incorporating feedback related to study design and conduct into the clinical protocol design and selecting sites

 

Collaborations Update

 

 

Axovant

 

o

On February 13, 2017, Axovant announced preliminary results from the planned interim analysis of the first 11 patients to complete its Phase 2 study of nelotanserin in Lewy body dementia patients.  Axovant has stated plans to initiate a Phase 3 in the second half of 2017

 

 

Eisai

 

o

On December 28, 2016, Arena and Eisai Co., Ltd. and Eisai Inc. (collectively, “Eisai”)  amended and replaced the BELVIQ® (lorcaserin HCl) marketing and supply agreement. Under the revised agreements, Eisai acquired global commercialization rights to BELVIQ and is responsible for all lorcaserin development expenses going forward. The financial terms of the revised agreement are expected to provide Arena with $23 million of cash payments, including $10 million received in the fourth quarter, and over $80 million of potential cost relief on lorcaserin development obligations in the next three years. In addition, Arena will continue to be eligible to receive royalty payments on net sales of BELVIQ and participate in the upside potential of lorcaserin from additional geographies and clinical trials such as the ongoing cardiovascular outcomes trial, CAMELLIA

 

o

As a result of the Eisai transaction, a significant amount of non-cash items were recognized in the 2016 financial statements

 

Financial Update

 

Fourth Quarter 2016 Financial Results

 

Revenues totaled $85.4 million, including $15.2 million in net product sales of BELVIQ, $1.3 million in milestone payments earned from Eisai and Ildong for BELVIQ, and $66.1 million of revenue associated with upfront BELVIQ payments

 

Research and development expenses totaled $11.9 million

 

General and administrative expenses totaled $7.3 million

 

Impairment of assets totaled $21.8 million

 

Net income was $38.3 million or $0.16 per share

 

 



 

Full Year 2016 Financial Results

 

Revenues totaled $124.0 million, including $26.3 million in net product sales of BELVIQ, $12.3 million of milestone payments earned from Eisai and Ildong for BELVIQ, and $72.1 million of revenue associated with upfront BELVIQ payments

 

Research and development expenses totaled $66.4 million

 

General and administrative expenses totaled $31.2 million

 

Restructuring charges totaled $6.3 million

 

Impairment of assets totaled $21.8 million

 

Net loss was $22.9 million, or $0.09 per share

 

At December 31, 2016, cash and cash equivalents totaled $90.7 million and approximately 243 million shares of Arena common stock were outstanding.

 

2017 Financial Guidance

The Company expects the full year 2017 net cash used in operating and investing activities to be $80 to $100 million, assuming no additional partnerships and no adjustment to our development plans.

 

 

Conference Call & Webcast Information

The Company will host a conference call and live webcast with the investment community today, Tuesday, March 14, 2017, at 4:30 p.m. ET to discuss the financial results and provide a corporate update.

 

When: March 14, 2017, 4:30 p.m. ET

Dial-in: (877) 643-7155 (United States) or (914) 495-8552 (International)

Conference ID: 80816089

 

Please join the conference call at least 10 minutes early to register.

 

You can access the live webcast under the investor relations section of Arena’s website at:   www.arenapharm.com . A replay of the conference call will be archived under the investor relations section of Arena’s website for 30 days shortly after the call.

 

 

About Arena Pharmaceuticals

Arena Pharmaceuticals is a biopharmaceutical company focused on developing novel, small molecule drugs with optimized receptor pharmacology designed to deliver broad clinical utility across multiple therapeutic areas. Our proprietary pipeline includes potentially first- or best-in-class programs for which we own global commercial rights. Our three most advanced investigational clinical programs are ralinepag (APD811) in Phase 2 evaluation for pulmonary arterial hypertension (PAH), etrasimod (APD334) in Phase 2 evaluation for multiple autoimmune indications, and APD371 entering Phase 2 evaluation for the treatment of pain associated with Crohn's disease. In addition, Arena has collaborations with the following pharmaceutical companies: Eisai Co., Ltd. and Eisai Inc. (commercial stage), Axovant Sciences (Phase 2 candidate), and Boehringer Ingelheim International GmbH (preclinical candidate).

 

 

Forward-Looking Statements

Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements include statements about expected results, data readouts and timing relating to ongoing clinical trials; expected payments and potential cost relief under the revised agreements with Eisai; financial guidance for 2017; and Arena’s focus, goals, strategy and clinical programs. For such statements, Arena claims the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from Arena's expectations. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited


 

to, the following:  the risk that we may need additional funds to advance all of our programs, and you and others may not agree with the manner we allocate our resources; risks related to developing and commercializing drugs; cash and revenues generated from BELVIQ and our revised agreements with Eisai; the risk that Arena's revenues are based in part on estimates, judgment and accounting policies, and incorrect estimates or disagreement regarding estimates or accounting policies may result in changes to Arena's guidance or previously reported results; the timing and outcome of research, development and regulatory review is uncertain, and our drug candidates may not advance in development or be approved for marketing; government and third-party payor actions, including relating to reimbursement and pricing; risks related to relying on collaborative arrangements; the entry into or modification or termination of collaborative arrangements; unexpected or unfavorable new data; nonclinical and clinical data is voluminous and detailed, and regulatory agencies may interpret or weigh the importance of data differently and reach different conclusions than Arena or others, request additional information, have additional recommendations or change their guidance or requirements before or after approval; Arena's and third parties' intellectual property rights; results of clinical trials and other studies are subject to different interpretations and may not be predictive of future results; clinical trials and other studies may not proceed at the time or in the manner expected or at all; and satisfactory resolution of litigation or other disagreements with others. Additional factors that could cause actual results to differ materially from those stated or implied by Arena's forward-looking statements are disclosed in Arena's filings with the Securities and Exchange Commission. These forward-looking statements represent Arena's judgment as of the time of this release. Arena disclaims any intent or obligation to update these forward-looking statements, other than as may be required under applicable law.

 

Contact:

Kevin R. Lind, Chief Financial Officer

klind@arenapharm.com

858.210.3636

 

(Tables Follow)



 


Arena Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31,

 

December 31,

 

 

2016

 

2015

 

2016

 

2015

 

 

(unaudited)

 

 

 

Revenues

 

 

 

 

 

 

 

 

Net product sales

$     15,245

 

$     3,939

 

$   26,349

 

$    19,726

 

Other Eisai collaboration revenue

61,546

 

2,091

 

79,701

 

9,505

 

Other collaboration revenue

7,730

 

670

 

13,796

 

4,845

 

Toll manufacturing

853

 

1,051

 

4,129

 

4,250

 

  Total revenues

85,374

 

7,751

 

123,975

 

38,326

 

 

 

 

 

 

 

 

 

 

Operating Costs & Expenses

 

 

 

 

 

 

 

 

Cost of product sales

5,136

 

2,461

 

9,297

 

8,590

 

Cost of toll manufacturing

1,168

 

787

 

6,044

 

4,585

 

Research & development

11,911

 

20,170

 

66,425

 

88,411

 

General & administrative

7,264

 

9,655

 

31,243

 

35,966

 

Restructuring charges

0

 

3,972

 

6,346

 

3,972

 

Impairment of long-living assets

21,766

 

0

 

21,766

 

0

 

  Total operating costs & expenses

47,245

 

37,045

 

141,121

 

141,524

 

 

 

 

 

 

 

 

 

 

Interest & Other Income (Expense)

 

 

 

 

 

 

 

 

Interest income

43

 

53

 

290

 

158

 

Interest expense

(1,605

)

(1,695

)

(6,512

)

(6,828

)

Gain from valuation of derivative liabilities

0

 

0

 

0

 

474

 

Other

1,747

 

477

 

472

 

1,415

 

  Total interest & other income (expense), net

185

 

(1,165

)

(5,750

)

(4,781

)

Net income (loss)

38,314

 

(30,459

)

(22,896

)

(107,979

)

Less net loss attributable to noncontrolling interest in consolidated variable interest entity

258

 

0

 

380

 

0

 

Net income (loss) attributable to stockholders of Arena

$  38,572

 

$  (30,459

)

$   (22,516

)

$  (107,979

)

 

 

 

 

 

 

 

 

 

Net income(loss) attributable to stockholders of Arena per share:

 

 

 

 

 

 

 

 

   Basic

$     0.16

 

$     (0.13

)

$      (0.09

)

$      (0.45

)

   Diluted

$     0.16

 

$     (0.13

)

$      (0.09

)

$      (0.45

)

 

 

 

 

 

 

 

 

 

Shares used in calculating net loss attributable to stockholders of Arena per share:

 

 

 

 

 

 

 

 

   Basic

243,325

 

242,566

 

243,133

 

240,671

 

   Diluted

243,495

 

242,566

 

243,133

 

240,671

 

 



 

Arena Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheet Data

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

December 31, 2015

 

 

1

 

1

 

Assets

 

 

 

 

  Cash & cash equivalents

$ 90,712

 

$ 156,184

 

  Accounts receivable

20,162

 

4,934

 

  Inventory

6,708

 

9,502

 

  Prepaid expenses & other current assets

2,307

 

4,218

 

  Land, property & equipment, net

43,828

 

71,828

 

  Intangibles & other non-current assets

5,293

 

10,126

 

       Total assets

$ 169,010

 

$ 256,792

 

 

 

 

 

 

Liabilities & Equity

 

 

 

 

  Accounts payable & accrued liabilities

$   25,073

 

$   25,493  

 

  Total deferred revenues

37,455

 

  109,042  

 

  Total lease financing obligations & other long-term liabilities

66,087

 

68,715

 

  Total equity

40,395

 

53,542

 

       Total liabilities & equity

$ 169,010

 

$ 256,792

 

 

 

 

 

 

1 The Condensed Consolidated Balance Sheet Data has been derived from the audited financial statements as of that date.

 

 

 

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