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Arena Pharmaceuticals Inc. Reports Operating Results (10-Q)

August 09, 2012 | About:
10qk

10qk

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Arena Pharmaceuticals Inc. (ARNA) filed Quarterly Report for the period ended 2012-06-30.

Arena Pharmaceuticals, Inc. has a market cap of $1.44 billion; its shares were traded at around $7.36 with and P/S ratio of 113.6. Arena Pharmaceuticals, Inc. had an annual average earning growth of 0.7% over the past 10 years.

Highlight of Business Operations:

Revenues. We recognized revenues of $22.0 million for the three months ended June 30, 2012, compared to $3.3 million for the three months ended June 30, 2011. Our revenues for the three months ended June 30, 2012, included (i) a $20.0 million non-refundable milestone payment from Eisai that we earned in connection with the FDA approval of lorcaserin, (ii) $1.1 million under our manufacturing services agreement with Siegfried Ltd, or Siegfried, and (iii) $0.9 million from amortization of both the $50.0 million non-refundable, upfront payment we received from Eisai in July 2010 when we entered into the original marketing and supply agreement and the $5.0 million non-refundable, upfront payment we received from Eisai in May 2012 when we entered into the amended marketing and supply agreement. Our revenues for the three months ended June 30, 2011, included (i) $1.3 million under our manufacturing services agreement with Siegfried, (ii) $1.0 million from Eisai for reimbursements related to additional lorcaserin development work and (iii) $1.0 million from amortization of the July 2010 upfront payment from Eisai.

Revenues. We recognized revenues of $24.2 million during the six months ended June 30, 2012, compared to $7.2 million during the six months ended June 30, 2011. Our revenues for the six months ended June 30, 2012, included (i) a $20.0 million non-refundable milestone payment that we earned in connection with the FDA approval of lorcaserin, (ii) $2.3 million in manufacturing services revenue under our manufacturing services agreement with Siegfried, (iii) $1.7 million from amortization of the $50.0 million non-refundable, upfront payment we received from Eisai in July 2010 and (iv) $0.1 million from amortization of the $5.0 million non-refundable, upfront payment we received from Eisai in May 2012. Our revenues for the six months ended June 30, 2011, included (i) $2.7 million under our manufacturing services agreement with Siegfried, (ii) $2.0 million from amortization of the July 2010 upfront payment from Eisai, (iii) $1.9 million from Eisai for reimbursements related to additional lorcaserin development work and (iv) $0.5 million, primarily for patent activities, related to our former collaboration with Ortho-McNeil-Janssen Pharmaceuticals, Inc.

As of June 30, 2012, we had $143.8 million in cash and cash equivalents. We believe our cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months. Other potential sources of liquidity in the short term include (i) payments from Eisai upon achievement of milestones and Eisais sales of lorcaserin, (ii) entering into new collaborative, licensing or commercial agreements for lorcaserin outside of North and South America or one or more of our other drug candidates or programs or our patent portfolios, (iii) equity, debt or other financing and (iv) the sale or lease of facilities or other assets we own.

Under the milestone method, we recognize revenue that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is an event (i) that can be achieved in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due us. A milestone payment is considered substantive when the consideration payable to us for each milestone (a) is consistent with our performance necessary to achieve the milestone or the increase in value to the collaboration resulting from our performance, (b) relates solely to our past performance and (c) is reasonable relative to all of the other deliverables and payments within the arrangement. In making this assessment, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether any portion of the milestone consideration is related to future performance or deliverables. Other contingent event-based payments received for which payment is either contingent solely upon the passage of time or the result of our collaborators performance are not considered milestones and are recognized when earned.

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