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Some thoughts on Arena, which I was recently asked about.

ARNA, on paper, has a good looking drug in etrasimod for ulcerative colitis / crohns disease, and likely eventually MS & atopic dermatitis. Albeit that it is early as it has *only* passed a P2 trial, with *low* trial numbers - under 50 patients per arm, but did have a Fragility Index of 4 (again, reassuring for efficacy, but did I mention low trial numbers). The class itself has had trouble with ADRs, and it is entirely possible that etrasimod may just not have been tested on enough patients to truly demonstrate safety.

Now. if etrasimod works. IF it works. and IF it is safe... its potentially a 5-10b a year drug across all potential indications, and maybe more.


So, whats the hesitancy?
-ARNA has been around for 2 decades, and frankly does not have much to show for it. That's a huge red flag for me.
-They have a wide variety of clinical indications they are working on that are seemingly unrelated- pulmonary hypertension, weight loss, CHF, IBS, UC/Crohns? ... lack of focus also is a strike for me.
-Its been 4 months since Etrasimod data (Jan 7 was the completion date)... still planning a P3. Nothing on clinicaltrials/gov … their P2 took 4 years and only enrolled 150 patients in 3 arms.
https://www.clinicaltrials.gov/ct2/results?cond=&term=et...

-And NOTHING on olorinab... despite mentioning looking P2b studies.
https://www.clinicaltrials.gov/ct2/results?cond=&term=ol...
.... Theyve got beaucoup bucks in the bank - what are they waiting for??
........ it took them almost 4 years to do a 150 patient study, how freaking long is it going to take them to run a large P3 ?!?!?!

Oh, and UC/Crohns disease results for etrasimod are still not as good as Remicade:
http://invest.arenapharm.com/static-files/a9c94b8b-6383-4833...


So. It is entirely possible that they post fabulous P3 results, but I think best case is that they get bought out and someone else pushes this through (I'm looking at you Bausch Health [formerly Valeant], Takeda, Janssen, and UCB). I have a hard time respecting a weight loss company turned pulmonary hypertension company, turned S1P modulators who also dabbles in CHF.... That has minimal to show for 2 decades of being publicly traded, and cant seem to figure out future trial plans despite having YEARS to plan for it.


Wild guesses:
ceiling: 2-3x if lucky for a buyout.
basement: 250m cap.

Interest will dwindle over the next 1-2 years without data readouts coming, the price will lag, and maybe it gets lucky and gets bought out. Otherwise, I dont trust this management.
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