Even though short interest rose for VIVUS, Inc. (NASDAQ:VVUS), but declined for Arena by mid-April, investors need to determine how much bearishness there will be to weigh shares lower in the short term.
Short Interest in Arena
| Settlement Date | Arena -Short Interest | % Change | Avg Daily Share Volume | Days To Cover |
|---|---|---|---|---|
| 4/15/2013 | 62,304,084 | 2.9% | 3,718,007 | 16.75739 |
| 3/28/2013 | 64,168,688 | 7,063,367 | 9.084717 |
Short Interest in Vivus
| Settlement Date | Short Interest | % Change | Avg Daily Share Volume | Days To Cover |
|---|---|---|---|---|
| 4/15/2013 | 28,821,711 | -9.3% | 1,502,761 | 19.17917 |
| 3/28/2013 | 26,360,430 | 1,514,478 | 17.40562 |
Data Source: Nasdaq.com
Investors will also need to decide what it means for Arena to withdraw its application in Europe. Arena said that the move was strategic, and will evaluate the best method for submitting the application again at a later date. The region continues to be of strategic importance in gaining global sales for BELVIQ.
There are five additional things investors should consider for Arena, following its sharp drop.
1) Final DEA Scheduling to Lift Shares
Eisai will be handling the launch of BELVIQ in the United States, and the companies are waiting for the Drug Enforcement Administration (“DEA”) to complete scheduling. The delay limited the upside in Arena over the last few months, but Eisai is furthering its readiness for launching the drug. Activities include refining the reimbursement strategy so that it is ready when the designation of “effective” is scheduled.
Eisai has 50 internal reimbursement specialists assigned for BELVIQ. The company aims to have 70% of the patients with insurance, up from 33%.
On the conference call, Arena said that the U.S. launch will be supported in three ways:
1. Treatment guidelines for BELVIQ were published for reference for Endocrinologists.
2. A cost and savings study for federal health uses a 10-year scoring system. By using a 75-year horizon instead, a more accurate savings is scored
3. A report illustrates that an obesity cost curve in California would help the state save $81 billion over 20 years.
2) Combination Therapy Undergoing Study
Arena is studying treatments using a combination of BELVIQ and phentermine. Both Arena and Eisai will meet with the FDA in the current quarter to present the development proposal.
3) Costs Under Control
Arena has a healthy balance sheet. Arena generated revenue of $2.4 million, helped by a $500,000 milestone payment related to regulatory approval for BELVIQ in Mexico. Operational costs rose slightly to $7.3 million, compared to $6.4 million last year. The company ended the quarter with $136.3 million in cash in the first quarter, compared with $156.1 million in the previous quarter.
