Arena/Eisai 3Q16 – Belviq (lorcaserin) revenues total $7 million, down 24% YOY and 23% sequentially; Belviq XR launched in the US – November 17, 2016

Arena recently provided its 3Q16 update in a call led by President and CEO Mr. Amit Munshi. Arena reported $3.3 million in net product sales and $11 million in milestone payments from Eisai for the co-partnered obesity drug Belviq (lorcaserin). Arena’s revenues represent a portion of Eisai’s full Belviq revenues, which were recorded at ~$7 million (722 million JPY) in Eisai’s earlier 3Q16 update. This represents a 24% year-over-year (YOY) decrease, as reported. Sequentially, Belviq revenues declined 23% as reported against a tough comparison of a 23% sequential increase in 2Q16. Arena’s portion of Belviq revenues fell 36% YOY and declined 23% sequentially, as reported. This represents Arena’s lowest quarterly revenue for Belviq since 4Q14 ($3.2 million). Arena’s management did highlight the September 2016 launch of once-daily Belviq XR in the US but Belviq’s weak performance appears to have shifted attention of both companies away from obesity. This de-emphasis on obesity was clearly reinforced in Arena’s 2Q16 update in which the company issued a statement announcing a strategic shift to streamline its operating costs and allocate greater resources toward developing its (non-obesity) pipeline products. We are disappointed but not surprised by Arena/Eisai’s challenging third quarter – the under-diagnosis and under-treatment of obesity, in combination with poor-reimbursement for obesity drugs, makes the obesity market extremely challenging.

• Pooled revenue for all major obesity drugs totaled $92 million in 3Q16, up 2% YOY and 1% sequentially. Novo Nordisk’s Saxenda (liraglutide 3.0 mg) is the clear frontrunner, capturing 69% of the market by value (an even higher share than in 2Q16, when it accounted for a remarkable 63% of all obesity sales). In fact, excluding Saxenda, pooled obesity revenue was only $29 million, and was fell 19% YOY and 15% sequentially. Like Qsymia, all other major obesity drugs experienced YOY decline in 3Q16. Qsymia captured 13% of the market by value, Orexigen’s Contrave (naltrexone/bupropion extended-release) fell 26% YOY and captured 10% of the market, while Arena/Eisai’s Belviq (lorcaserin) fell 24% YOY and captured 8%. This follows trends from the first half of 2016, with pooled obesity revenue excluding Saxenda down by double-digit YOY margins in both 1Q16 and 2Q16. Some have expressed questions as to what differentiates Saxenda so substantially from other obesity therapies – liraglutide’s potency in stimulating weight loss certainly comes to mind, compared to the high price of the drug, and the marketing that’s gone into Saxenda since it’s very recent US launch in 2Q15. The graph below displays obesity market trends since 1Q13.

Figure 1. Total Obesity Market Sales (1Q13-3Q16)

-- by Abigail Dove, Sarah Odeh, and Kelly Close